If you are relatively new to fundraising, or question how to reset your business development or fundraising priorities given COVID, trying to find the right type of donor-partner to activate your programs may seem daunting. There are so many types of donor-partners to prospect, and it’s unclear what type of donor is best for your program’s needs.
Do you take steps to engage all potential donor-partners, or do you segment?
How do you prioritize?
Hearing these concerns from our community, we often clarify that not every donor-type is right for every organization. Start-ups will require a different type of funding to scale operations than a nonprofit that’s focused on testing solutions for societal problems, or scaling a research pilot. Corporates looking for match funding to advance social impact or sustainability programs are also in a very different scenario than nonprofits, start-ups or social enterprises.
So how does one differentiate? What are the factors to consider?
Below are five different donor-partner types, along with their traditional methods of engagement. Included are recommendations about how to identify whether each donor type is right for your fundraising and business development needs.
1. Family and philanthropic foundations: These more traditional donors represent pooled funds (or family endowments) that are allocated to causes identified as a priority by the family or operators of the foundations. These donors tend to range in size from very small, niche, local donors, to global philanthropic thought leaders that give sizable sums of money (think Rockefeller or Ford Foundation). Consider engaging with family and private foundations if your program or project matches their priorities only. Most foundations do not accept unsolicited proposals, so building relationships is a critical element to getting noticed by these donors. There won't be much opportunity for engagement if your priorities don't overlap. Building a strong partnership with foundations is a great way to stay under their radar when funding becomes available. At times foundations will issue proposal requests, so following as many whose priorities align with yours is important. Keep an eye out for news. These proposal requests are highly competitive, which also makes building a relationship with these potential donor-partners a critical element to successful fundraising.
2. Public/government agency donors: Government funding programs are meant to engage partners for delivering on policy aims, while in the case of international development programs, promote global goodwill. For example in the United States, agencies including the U.S. Agency for International Development (USAID), Millennium Challenge Corporation (MCC) and Development Finance Corporation (DFC) have countless programs in place, and many developing and progressing at once, to work with implementing partners all over the world to deliver support around infrastructure, access to basic necessities like water, housing, medical care, jobs and technology. These programs are large in size and cumbersome to engage in. Also once you receive funding from a government agency, you are locked into their reporting requirements, which can be quite onerous. The dollar values are quite high, however, as is the potential for large-scale collaboration with bigger contracting firms that are used to working with these agencies. These donor-partnership opportunities are often more robust, broad and somewhat flexible in scope. Geographies are often pre-determined. To engage with public agency donors, it's best to find a partner that is used to receiving funding from the agencies. They are well poised to manage the reporting requirements, and have a good sense of how priorities are determined. Government donors often issue requests for proposals, and smaller, more nimble grant programs are becoming more attainable given interest by these agencies to work with social enterprises, smaller private sector actors and smaller nonprofits.
3. Corporate foundations: Corporate foundations are funding programs set up by corporations for social impact and/or sustainability programs that are often in line with a company’s business aims, but that deliver on a more philanthropic set of goals. These programs are often in conjunction with the company’s corporate social responsibility (CSR) priorities. Funding from corporate foundations may come in the form of a request for proposal, or be unsolicited. Similar to private foundations, forming strong relationships and building partnerships with a corporate foundation should be a high priority if your program or projects align with the priorities. These may be around education, environmental sustainability, social issues or employee giving for various causes. As more corporations imbed social impact and sustainability in their business goals, corporate foundations are more limited in their giving potential compared to decades’ past. Finding a way to make your program relevant as a business benefit can help here. Also considering how to engage with a company’s decision makers outside of the foundation may also be worth your partnership-building effort and time given the opportunity for long-term and more targeted impact if geographies and program priorities are in line.
4. Accelerators and innovation programs/awards: Seemingly popping up everywhere, and around every issue, accelerators, innovation programs, awards and challenges offer teams with very specific solutions to ongoing social or sustainability problems an opportunity to test, refine, compete and submit proposals for funding, resources, mentorship, recognition and more. It seems nearly every big company, global agency (i.e. United Nations Development Program, for example) and even governments (see the UK’s TRANSFORM initiative) have developed these targeted funding and/or competition programs for social entrepreneurial ideas/solutions to global problems. Engaging with these programs are pure bilateral plays. In other words you submit a proposal and hope to win the award. Building partnerships or engaging in relationship building may not help your chances as well as in other donor-partner funding opportunities. The competition is high. Funding tends to be on the lower side as well, but the prizes are very attractive, especially for start-ups or nascent program developers. Technology and innovation projects tends to be well suited for these awards/programs.
5. Collective action networks/partnerships for impact: As opportunities to engage in collective action become more standard practice, donors are getting involved as well. Over the last year, collaborative donor programs, like that of Co-Impact, a "global collaborative for systems change", are encouraging out of the box thinking, systems change level solution development, and attaching big dollar values to their funding accordingly. Since building collaborations is in the DNA of these groups, partnership engagement is one element of engaging these groups, but not essential, as requests for proposals pop up every few months. These donor networks/partnerships are most suitable for organizations that have systemic solutions (i.e. widespread, community-led, big picture, global in view or scalable).
Want more guidance on how to find the right partner to advance your Sustainable Development Goals? Please reach out to us for a chat!