Smart charities are getting creative with their funding strategies.
Grant-funding is big business. In Australia alone, state and federal governments and local councils grant over $56 billion every year to charities and nonprofits.
With numbers like these, you’d expect your chances of success to be high. But in an increasingly crowded marketplace where over 600,000 NFPs (including 54,000 charities) all compete for funding, securing grants for your cause can be tough.
If you’re a smaller charity, your chances of success are even slimmer - which is why it’s never been more important to have a multi-faceted funding strategy
Three reasons why you shouldn’t rely solely on grants to achieve your funding goals
1. Grant-seeking can be a big drain on resources.
Filling out grant applications is almost always a time-consuming process (it’s one of the reasons why bigger, well-resourced organisations routinely apply for more grants than small teams with limited staff and time). In fact, the 2017 Grants in Australia report found that a significant amount of time is wasted on applications that are started but then abandoned: over 50% of the 1200 people surveyed admitted to this, citing lack of time as the number one factor for failing to complete applications.
What’s more, if you’ve applied for a grant recently, you’re probably familiar with the increasingly common request for evidence of outcomes. The challenge here is that measuring outcomes (or at least, measuring them effectively) can be an expensive exercise - and it’s typically something you’ll need to fund yourself. That’s fine if you’ve got the budget available - but let’s face it, if you’re applying for funding, every cent counts!
2. There are no guarantees.
Multi-year grants are becoming less and less common, and just because you were fortunate enough to receive funding last year doesn’t mean you’ll be first in line this year. Another challenge is that unsuccessful applicants rarely receive feedback on why the application failed - information which would, of course, assist you in improving and refining your approach in the future.
3. Small charities face an uphill struggle.
The fact of the matter is that grant-funding is skewed towards bigger organisations: they have the means, connections, and resources to dedicate to the task that smaller teams simply don’t have. The numbers support this: according to the Grants in Australia report, NFPs with annual revenue of more than $1 million are winning more grants across the board - even smaller grants of less than $5000 are being disproportionately awarded to big organisations.
Ultimately, with so much competition and the marketplace constantly changing, you need to make sure you have alternative funding sources in place to meet your goals. That’s not to say that the grant system doesn’t work: it distributes valuable funds to help support important causes all over Australia. But being heavily reliant on grant-funding is a potentially risky enterprise, which is why smart charities are now directing more of their efforts into alternative funding sources.
Online peer-to-peer campaigns: funding stream of the future?
As highlighted by Nonprofit Tech for Good's most recent Global Trends in Giving report, 59% of donors in Australasia prefer to give online (up 5% on the previous year), as do the majority of Millennials, Gen Xers, and Baby Boomers globally (64%, 65%, and 62% respectively).
It’s a trend that we can expect will keep on growing, as more of our daily interactions and transactions migrate into the digital space and we place ever more value on ease and convenience - two things that the internet facilitates better than any other giving platform.
Even more interesting are the statistics around peer-to-peer fundraising. Almost 1 in 5 respondents from Australia or Oceania said that they had created online peer-to-peer fundraising campaigns to benefit causes they felt passionate about - more than any other nation.
This, combined with the growing popularity of online giving, suggests that charities who invest less time in grant-chasing and more time into developing digital P2P campaigns will improve their funding prospects long term.
The organic nature of this method of fundraising, which enables you to recruit new donors and reach new networks of people through the social networks of your supporters, makes it a cost-effective, low-effort fundraising tool that shouldn’t be underestimated.
What’s more, the return-on-investment, both in time and money, is likely to be far greater than the often fruitless hours many charities still spend on filling out grant applications.
If you’ve not already dipped your toe into the world of online P2P fundraising, there’s never been a better time.