In a follow up to their 2009 article 'Ten Nonprofit Funding Models,' Peter Kim, Gail Perreault and William Foster of the Bridgespan Group argue organizations often have a clearer vision of what their programs will be in five years than of the funding that will support them. They offer a road map for leaders seeking to develop appropriate funding models for their organizations:
Getting a deep understanding of one’s own fundraising approach and history, learning from peers, tallying the likely costs of change and weighing them against expected benefits—are three critical steps on the road to a funding model. And when the time comes to pilot and implement the one or two most promising funding models, a well-developed plan is essential.
And they remind why a critical but oft-overlooked aspect of strategy is knowing what to say 'no' to:
Moving forward with more than two [models] carries a high risk of overtaxing management and development staff. Then why not just settle on a single funding model right now?
The issue is uncertainty. At this stage, it may still be difficult for a nonprofit to know which model will work best, and there could be benefits in trying out the two most promising options to see which has the best prospects.
The authors offer two disclaimers in the form of size and a necessary precondition: organizations must be 'free of immediate financial distress and [able to] focus on developing a long-term funding strategy' as well as over $3 million in annual revenue. Below this level, the more 'idiosyncratic' approaches that predominate are likely to be as productive, therefore not justifying the significant investment inherent in their process.
Finding Your Funding Model (SSIR article)
Finding Your Funding Model: A Practical Approach to Nonprofit Sustainability (Bridgespan website with tool)