5 Reasons Why Your Fundraising Strategy Isn’t Working
Is your fundraising strategy not yielding the results you expected? Take a look at 5 of the most common mistakes that impact start-ups make when it comes to securing funds.
In the world of social business and nonprofit organizations, a successful fundraising campaign hinges on having the right strategy and tactics set in place.
Are you clear on the type of funding required for your social impact business or nonprofit?
Do you know what investors or donors are looking for in your strategy?
Is there a clear plan for what funds and donations will be used for?
Without a solid understanding of fundamental and strategic questions that center specifically on the fundraising process, it’s possible that your efforts might veer off course – ultimately leading to wasted time, missed opportunities, and squandered financial resources.
Luckily, it doesn’t have to be this way.
To avoid this setback, understanding why your previous or current fundraising strategy isn’t yielding the results you want is incredibly important. After all, this is what will inform you about what might be hindering your progress.
But before we dive into the solution, let’s take a look at five of the most common reasons your funding strategy might be falling short, as well as what you can do to recalibrate your approach for a more successful outcome.
What is a fundraising strategy?
First things first, let's get clear on what exactly constitutes a "fundraising strategy."
Contrary to what you might believe, a fundraising strategy is more than just a series of tactics or a single plan of action: it's a comprehensive process that aims to provide clarity and direction that’ll lead you to your fundraising efforts.
However, a strategy isn’t just a static roadmap from point A to point B. That’s where many organizations go wrong when it comes to thinking about and approaching strategy.
Instead, it's an ongoing process that involves understanding the underlying reasons behind your decisions and ensuring that they’re aligned with your organization's overarching goals.
This same principle of adaptability and alignment also applies to fundraising strategy.
A well-defined fundraising strategy typically encompasses various essential components, some of which might include the following:
Identifying the types of funding your organization qualifies for
Evaluating all of the available opportunities and resources that can be leveraged
Assessing your financial data – including funding targets, organizational costs, existing funding gaps, and specific needs
Outlining the purpose and utilization of the funding
So, while other aspects of your strategy can be refined over time, the importance of clarity concerning the types of funding your organization qualifies for can’t be overstated.
After all, without this fundamental understanding, you and your team risk the misuse of valuable company resources – both tangible and not – that can potentially lead you to look for funding avenues that may not align with your organization's mission or eligibility criteria.
How do you know what type of funding is right for your organization?
Before you can figure out what the right type of funding for your business or organization might be, it’s important to set the foundation for success.
This means gaining a clear understanding of what it is that distinguishes your organization in the marketplace, and how you can leverage this uniqueness to attract the most suitable funding opportunities.
1. Define your organization’s identity
Your organization's identity is what makes it stand out in an already crowded landscape that’s filled with different business and social impact ventures.
Whether you're a nonprofit organization, a tech-enabled product impact startup, or a service-based social enterprise – all of which differ from one another in terms of structure and goals – each type of entity is made up of a unique set of characteristics that will ultimately shape its funding journey.
For example, while a product impact startup may align well with venture capital investment because of its growth potential and scalability, a nonprofit organization may find institutional or philanthropic funding more suitable, considering these entities are driven by their mission-driven objectives.
That said, understanding your organization's nature, mission, and the value it brings to the market is crucial.
Once you know this, it’ll be a lot easier to navigate the funding landscape effectively – aligning your funding pursuits with your organizational identity, focus areas, and funding requirements.
2. Research the funding landscape and build your benchmark
In addition to understanding your organization's identity, it's crucial to conduct thorough research and establish benchmarks based on the practices of equivalent (or similar) organizations in your sector.
Start by analyzing what funding opportunities these organizations are pursuing and then dig deeper into their strategies for securing said funding. This involves gathering information on the types of funding they’re seeking, as well as the methods they employ to access it.
Furthermore, it's essential to look into the landscape that these organizations operate within. Understand the trends, challenges, and opportunities within the funding ecosystem relevant to your sector, and make sure that your research is comprehensive and up-to-date.
By studying both the successes and failures of others in your field, you’ll gain valuable insights that will inform your fundraising strategy and enable you to set realistic benchmarks for success.
3. Assess your growth stage
At a granular level, it's also important to assess the stage of growth your organization is currently in. This involves understanding where you stand and identifying the type of funding opportunities that align with your current stage of development.
To conduct this assessment effectively, take a close look at your organization's growth trajectory and determine which funding options are most suitable for your current needs and objectives. This assessment should be conducted at a micro-level, and consider factors such as revenue, customer base, market penetration, and operational scalability.
At FairForce, we utilize the concept of "funding readiness" to help social impact founders gauge their eligibility for different funding opportunities based on their current stage of development. This framework enables organizations to identify how prepared they are to pursue funding and highlights areas for improvement.
Getting your fundraising strategy right
Successfully navigating the world of fundraising demands patience, consistency, and unwavering determination. However, the key to a successful fundraising strategy lies in the ability to iterate and refine it continuously as you progress through the execution phase and gather feedback.
In other words, this means staying open to adjustments and learnings along the way – especially since they often lead to breakthrough moments. Embracing this iterative approach allows you to adapt and evolve your strategy based on real-world feedback and experiences.
And while flexibility is essential, it's equally important to proactively mitigate potential setbacks by also taking stock of the available funding opportunities. After all, identifying funding avenues that align with your organization's objectives and are readily accessible can streamline the fundraising process and enhance your chances of success.
That way, by combining strategic foresight with adaptive agility, you can optimize your fundraising strategy and propel your organization toward its goals with greater efficiency and effectiveness.
5 reasons why your fundraising strategy isn’t working
Fundraising is a subtle art that continually evolves through the power of feedback and refinement.
However, if your fundraising efforts aren't yielding the desired results, there could be several underlying reasons hindering your progress.
1. You’re confusing your action plan with a strategy
It's easy to get caught up in the whirlwind of activities without a clear strategy guiding your efforts. Sending emails, pitches, and applications without a well-defined direction can lead to scattered actions and missed opportunities.
To avoid this, take the time to reflect on your goals, intentions, and the questions investors will likely ask.
Without a strategic vision, your fundraising efforts may lack focus and effectiveness.
2. You’re targeting the wrong funding opportunities
Pursuing funding opportunities that don't align with your organization's identity can be counterproductive. That said, it's essential to match your fundraising pursuits with the nature and mission of your organization to increase the likelihood of success.
Whether this means seeking institutional support or exploring venture capital avenues is entirely up to you – just make sure you’re aligning your choices based on your organization's unique identity and needs, not just chasing opportunities blindly.
3. Your fundraising targets are unrealistic
Setting overly ambitious fundraising targets without a clear rationale can deter potential investors.
Ensure that your fundraising goals are grounded in reality and aligned with your business stage and growth objectives. At the end of the day, unrealistic asks might signal a lack of strategic planning and preparedness.
On the other hand, by understanding what impact investors are looking for – and how you can meet their criteria – it’ll be easier to gain their support and secure the funding you need.
4. Your process is messy or inconsistent
A haphazard execution process can impede progress and hinder feedback loops.
When it comes to executing your fundraising strategy, consistency is key, and establishing a robust execution plan can help you and your team keep up the momentum and ensure a steady flow of progress.
5. You aren’t ready for funding
Sometimes, businesses just aren't in the right stage to seek funding. That’s why it’s so important to solidify core business aspects, consolidate strategic assets, and build proof of concepts before embarking on fundraising endeavors.
Ensure that your business is adequately prepared and positioned to attract and utilize funding effectively. Otherwise, you may risk squandering valuable opportunities from potential investors and funders who don’t see the potential for return on their investment.
Choosing the right fundraising strategy for your impact start-up
As we mentioned earlier, securing the right funding and support for your business is a labor of love. It takes patience, knowledge, and strategic foresight to succeed – which means that you and your team need to be prepared to navigate the complexities of the process.
Along with determination, there are various reasons why securing funding might not be going right for you at the moment.
Five of these reasons include the fact that…
You’re confusing your action plan with a strategy
You’re targeting the wrong funding opportunities
Your fundraising targets are unrealistic
Your process is messy or inconsistent
You aren’t ready for funding
Luckily, you don’t have to go it alone.
At FairForce, we specialize in working with organizations to refine and optimize their fundraising strategies – and achieve success. With over 9 years of experience in organizational growth, we understand the importance of setting the right course and offer tailored solutions to address your specific challenges.
Ready to elevate your fundraising game? Schedule a Discovery Call with FairForce founder, Margherita, to learn more about how we can collaborate to address your fundraising strategy gaps and revitalize your efforts for greater success.