Stages Of A Nonprofit Organization’s Development

Most nonprofit organizations go through predictable life cycles. Like other living organisms, they start live, grow, develop into adulthood and mature. For each stage in the life cycle, there are certain challenges, successes and developmental issues. This article is a short overview of organizational life cycles.

A. Start Up

A group of volunteers has a vision and a passion, and develop a project. This model is called “Founding Board.” The work is done by volunteers. Volunteers do the program work, and many of the same volunteers govern the organization by serving on the board. This can become confusing, especially as the organization starts to grow, and core volunteers become stretched by the combined workload of program activity and board service. Critical to early success is the vision of the founding group, and the power of that small core to both carry the work and invite others to become involved. Usually, after a year, or two (or more), the founding group will become tired and burned out, and it will find it cannot sustain the work or the momentum. If the organization is to be successful, it needs to expand the level of support for its project work so that it can hire staff. The organization needs to build a few core sources of financial support.

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2. Special events including events such as “AID and Comfort,” Rape Crisis Center’s “Hot Salsa” dance party, Big Brothers Big Sisters “Bowl for Kids Sake.” Special events require a 6-9 month lead time, a strong group of volunteers, active Board involvement, and corporate involvement to donate many items to keep costs down).

3. Small events can be house parties for major donors, thank-you events for donors and volunteers or other small events. Small events are excellent ways to involve new major donors, when current major donors are willing to serve as hosts and invite their friends.

4. Telethons (though people often cringe at the idea of calling people, phone contacts can be extremely effective when calling those who are regular, loyal donors. Agencies often send letters out in advance asking for a donation and letting people know the volunteers will be calling; often people send in donations. Calls should be short and to the point, thanking the person for their support. Always use volunteers.

5. Individual Solicitations (primarily for those giving larger gifts).

B. Institutional Donors

Institutional donors include all of the different institutions that provide grants, contracts and donations. These usually include:

1. Federal Government – grants and contracts 2. State Government – grants and contracts 3. Local Government – grants and contracts 4. National foundations 5. Local/regional foundations 6. Corporations and corporate foundations 7. Civic groups 8. Faith communities

C. Earned Income

Earned income includes all income received from sales of any kind. This would include patient fees, subscriptions, tuition, workshop fees, ticket sales and other sales. Most nonprofit earned income is considered to be “substantially related” to mission and not taxable under requirements of the “Unrelated Business Income Tax” law.

Develop a fund raising plan by using these steps:

Analyze your current income. Do you have revenue from multiple sources? Are there areas where you do not receive income, but could potentially develop? Most nonprofits have limited income from individuals, and could significantly increase individual income by developing a plan to use appeal letters, events and direct contact with donors and prospects. (Approximately 87% of all philanthropic resources comes from individuals; foundations, corporate foundations and bequests constitute the 13% balance.)

Develop a plan with specific strategies for diversifying your revenue. Build support for the plan with your board, volunteers and staff.

Implement strategies in the priority areas. Share results and build in support.

Share your experiences with other nonprofits; tap into the expertise within your own network and the state fund raising professionals’ association. If you hire a consultant, check with peers for references, develop specific goals, and don’t develop a percentage arrangement.

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Your fund raising plan will guide staff, board and volunteers as they implement different goals and strategies — from the annual appeal to the events to major donor development.

Your Fund Raising Plan is made up of three simple building blocks:

A. Individual Donors B. Institutional Donors C. Earned Income

For each of the three building blocks, there are a wide range of strategies for developing revenue, as the following exemplify:

A. Individual Donors

1. Direct mail (best for donors giving smaller gifts. Direct mail never makes money when acquiring donors – only through repeat gifts from those who are current donors. It is always a good idea to send out mailings multiple times each year).