5 Questions To Ask Yourself When Developing a Funding Strategy

Here at VMC, we’re all about simple, tangible advice, based on our extensive experience. With that in mind, here are 5 questions you should ask yourself when you’re developing a funding strategy.

1. What are your funding needs and goals?

You can’t have an effective funding strategy if you don’t have a clear and compelling overall vision and strategy, but for the purposes of this, let’s assume that you do. The first question to ask is what your funding needs to do to enable the delivery of your strategy, and consider the benefits and drawbacks of each funding stream. This means questions like:

• How much can you invest in generating new income?

• Do you need multi-year funding, or is short to medium term funding ok?

• How much do you need to raise?

• What do you need to spend it on? (e.g. are specific projects ok, or do you need more freedom to invest?)

• Do you need certainty from a pipeline of funding, or can you be more speculative due to your overall cash levels?

It’s important you consider all of these things, starting from a clear understanding of how you best support your beneficiaries. Funders won’t always fund the perfect solution, so you need to always be aware of how much you’re willing to work back, or trade off, from your ideal position.

Ultimately what you’re trying to do here is ensure a funding make up which enables you to best serve your beneficiaries, whilst balancing the various sustainability challenges your charity has. To be more specific, a strategy based solely on individual giving means high cost in terms of investing time and money, relatively low return, high levels of uncertainty, but freedom to invest in what you want. A legacy based strategy may mean significantly higher income, but far less certainty, and no ability to plan into the future. A strategy based on delivering contracts can be relatively lucrative, but will likely need investment in your internal systems and processes, higher levels of performance management, potentially some trade offs in your delivery, and investment in the right type of Business Development.

2. Who is your target audience?

Once you know your ideal funding strategy, you need to understand who you’re targeting. Individuals? Corporates? Commissioners?

You’ll need consider your brand, messaging, and how you are going to move your potential donors on a journey to wanting to fund your charity. Are you targeting delivery of government contracts? You’ll need to ensure your brand and messaging gives confidence that you’re able to deliver. Looking to increase individual donation? You’ll need to create messaging which encourages people to give money to you over another cause.

Start every area with a really long list, slowly narrowing it down as you consider the implications of each (potential income/ time and money required to invest/ what it would mean for your charity). Assigning a score for each to give you a guide is never a bad thing.

Your brand and messaging should be tailored to the different audiences you are trying to influence, and the impression you’re trying to give.

3. How will you influence?

Your goal is to move those potential funders along a journey to funding you, whether it’s major donations, corporate income, or building relationships with a commissioner. Tactics and approach will need to differ accordingly, but it’s vital that you have a plan, and a system to ensure effective influencing. We recommend using Trello - a platform which is easily shared, and enables you to build a clear pipeline, and shared notes on how the plan is progressing. It’s vital each stakeholder has a “where are we trying to get them to”, “where are they now”, and “who is responsible”.

You can only spend your time once, so be intentional about who you’re influencing and what you want them to think of you, as well as ensuring you have accountable owners for each stakeholder you’re working with.

4. How will you make it happen?

Your stakeholder management shouldn’t be over complicated. There’s a temptation to put reams and reams of information into whatever system you’re using, but our advice would be the opposite; plug in sufficient information to ensure there is an accurate view of where that stakeholder is vs where you want them to be, and any other key information you’ve gleaned which will help the person responsible, manage and influence effectively. But we’d always go for an approach of trusting the accountable person to make it happen, and everyone else’s job is to either get out of the way, or to facilitate it via their own indirect messaging or intelligence they’ve picked up.

Consider the information you’ll want to have to hand, and ensure it’s easily digestible, such as a one pager about your charity’s impact, or information about your track record.

Be aware from the outset about the inevitable distractions which will come along. It’s one thing to ensure you’re reactive and ready for opportunities which may arise, it’s another thing to end up reacting to every little thing, becoming so distracted that you’re not making sufficient progress. Remember, by definition a strategy is a choice of things you are doing, with a conscious decision to not do other things.

A good exercise is to put yourself 3 years into the future, and imagine your funding strategy has been successful. Working back from that, what are the 5 to 10 big things which have happened, which have resulted in that outcome? This gives you your list of key objectives you need to achieve.

5. How will you retain and grow?

Finally, remember it’s far easier to retain and grow current funding than it is to source new, so don’t forget your current funders, and ensure you are able to clearly demonstrate the impact of their funding, linking it to the things they really care about.

Don’t lose sight of your current funding by chasing the new. It’s usually easier to retain and grow current income, that to find new sources of funding (though clearly the latter is very important!)

Are you in need of a new funding strategy, or refreshing your current?

Get in touch with us for a discussion.