A Guide to Sustainable Fundraising for Foundations

Throughout this article, you will see references to “investors.” That’s because at Convergent, we approach fundraising by positioning your organization as an irreplaceable community asset worthy of investment. By reframing donors as investors, we shift the focus away from one-time gifts and toward sustainable funding. 

Foundations rely on fundraising—without it, they won’t have the financial means to operate their programs and keep everything afloat. For that reason, they have to cultivate relationships with all sorts of investors to solicit major contributions. 

But this fundraising setup has a problem: it creates a cycle of chasing the next grant or donations. This practice leads to donor fatigue and administrative burnout, and can be difficult to maintain during periods of economic volatility. In the end, your foundation may suffer.

That’s why sustainable fundraising is important for foundations. It’s more than just budgeting or managing grants—it also means learning how to diversify your revenue streams. That way, if any single revenue stream fails, your foundation will still have the incoming funds to continue furthering your mission.

In this article, we’ll guide you through the different ways you can make fundraising sustainable for your foundation.

Diversify through strategic partnerships

Don’t put all your eggs in one basket. Instead, find and cultivate as many funding sources as possible, rather than relying on just one or two. Funding sources—even government grants and corporate partnerships—can disappear at any time, so if you rely heavily on a few, you’ll face difficulties if any of those dry up.

Fortunately, there are different ways you can fundraise. Some of the most common strategies that foundations go for are as follows:

• Annual Appeal/Campaign: monetary contributions made in either one lump sum at the end of the year or through installments throughout the year
• Capital Campaign: a fundraiser with the sole purpose of acquiring funds to improve a physical asset (e.g., construct a new building, purchase equipment)
• Peer-to-Peer Fundraising: a campaign in which your supporters can participate in events like a marathon. They can also invite their friends, families, and colleagues to join in. 
• Partnerships with Corporate and Government Entities or Other Organizations: these institutions can provide support through a grant process.

With all these different options, planning a comprehensive campaign is a smart idea. But it can also be quite overwhelming, so you might want to hire a fundraising consultant. For example, Convergent offers fundraising services that consultants normally offer, such as conducting feasibility studies and campaign strategies.

Leverage technology and data

Using technology has two main benefits for foundations: it improves operational efficiency, and it saves you money in the long run. That’s why we encourage you to leverage it as much as possible.

One way to achieve this is to use fundraising tools. For example, instead of keeping a spreadsheet with all your funders’ details and your campaign materials, find a fundraising constituent relationship management system (CRM) that works for you. A CRM will help you with tasks such as collecting investor data, segmenting your audience by interest, and personalizing communications.

If you’re planning to secure a grant, it’s worth considering investing in grant management software. This type of software has various tools that provide benefits to your foundation, such as:

• Automated Workflow Management: you can receive notifications for key status changes, dates, and milestones. You can also configure the workflow to match the approval process, so you can see the stage where you’re currently at in the grant process.
• Advanced Compliance and Eligibility Tools: most granters have strict compliance rules and eligibility criteria, and you must adhere to them. Fortunately, grant management software can keep track of the requirements in real-time, thus preventing ineligible applications from being submitted.
• Collaboration and Communication Tools: the software will also have built-in messaging and notifications, so you can communicate with the various stakeholders, like grantmakers and approvers, in real-time.

This type of software streamlines your application processes and improves data accuracy, enabling better decision-making and more efficient fund distribution. As such, you can more easily acquire the funding you need to make an impact on the communities you serve.

Engage loyal investors

Loyal funders are what propel your organization’s mission. And research supports this— About Loyalty conducted a study in which they discovered that even just a tiny increase of 1% in donor loyalty leads to 20% more income and 15% more retained funders over three years.

You can implement various strategies to build funder loyalty. Here are some that we recommend:

• Foster non-transactional opportunities with investors. For example, invite them to volunteer for one of your programs or events, or even ask them to join you in your advocacy efforts. 
• Develop a sense of community. Make sure that your funders feel welcome, no matter how much they give. To do this, celebrate funder accomplishments, such as the anniversary of their first gift or when they hit certain donation quantities (e.g., their 10th donation).
• Show your appreciation. Let investors know that you sincerely appreciate their involvement and that their gifts make a real difference. This is critical, as research shows that about 30% of millennials and 27% of Gen Z investors said that they stopped giving because their efforts weren’t acknowledged or valued.

There are more things you can do, but these three are the most effective ways to ensure loyalty from your funders and maintain a steady stream of donations. 

Foster transparency with investors

Remember that sustainable fundraising is a two-way street. Your investors need to know that they can trust you, that you won’t be using their donations for your own gains, and you need to prove that. Fund accounting is the best way to do that, as it provides transparency.

If you have a grant, leverage best practices for grant reporting and disclose how funds are used and the results the funded programs are expected to deliver. You should also specify if some of the funds are restricted and what actions you’re taking to honor the funders’ wishes.

Grant reporting not only supports accountability and transparency, but it also shows your funders that you can be trusted. And when they can see that you’re trustworthy, they’re more inclined to support you further. 

The same sentiment applies to the rest of your investors. Perhaps you can send an impact data report via your newsletter, in which you detail how the contributions from your investors have been used in your foundation. If some of the funds are restricted, provide them with an update on that as well (i.e., have you already used it at your investor’s behest? Or is it still in progress?).

Sustainable fundraising is a marathon

While fundraising is essential for foundations, remember to keep your mission front and center. Attract supporters by showing them that your mission aligns with their goals and by cultivating a relationship with them. Their financial support will follow in due time.