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Many have heard the saying, “Don’t put all your eggs in one basket.” This is a good rule to apply to fundraising. To the degree that your organization is able to, it should incorporate at least two or three types of funding sources in its fundraising strategy.

Many start-up nonprofits think of soliciting grants first to fund their organization. Grants are a great source of support, but they have limitations. Most funders give grants for a specific purpose so grants are many times considered a restricted source of funds. Also, most foundations want to see a track record of your work. So you will have to do something before they give you money. Some will only give you money once, so you will have to find another funding source to replace them when their funding term is complete.

Again, grants are a great source of funding, but you have to diversify. In fact, many foundations will ask about the sustainability of your project exclusive of their funding. Diversity of funds will provide a more sustainable flow of income for your organization.

During a class at the foundation center in Atlanta, the instructor gave a great illustration of the funding mix. Picture a stool with three or four legs. The seat of the stool is your organization’s programs and the legs of the stool are the different funding sources that support your programs.

Below are different sources of funding to incorporate into your fundraising strategy.

Earned Income –

Earned income is when you sell goods or services that are directly related to the mission of the organization. An example of this would be a nonprofit theater organization that sells tickets for its plays. Putting together a theater production is the mission of the organization and they sell tickets for the patrons to see it. There are several things to consider before embarking on an earned income strategy. Nevertheless, it is still a viable income source to consider.

Grants –

Grants are a free source of income that usually covers the cost for a specific purpose of the organization. Usually they are called restricted funds on financial statements. Organizations need to meet specific criteria to qualify and usually have to submit an application. Many times grants provide large sums of money versus individual donations.

Events –

Events are a great way to let people know about your cause. They can be fun, but costly. Know that to consider an event a success it has to bring in more than you spent to have the event. Make sure to solicit as many gifts – in – kind donations and sponsorships to decrease the costs.

Individual Contributions –

This is a great way to raise funds. When you have a lot of individuals giving to your organization it helps broaden the risk. This is especially true when the economy is bad. The hope is that not all of your individual donors fall into economic hardship at the same time. Attracting individual donors does take a lot of marketing, public relations, and cultivating.

Corporate Sponsors –

Sometimes corporations will give funds to an organization to help spread goodwill and as a means for marketing their companies. Check out company websites and look for information regarding corporate social responsibility or call the marketing department as a start to reach the right person at some companies. Some companies have forms on their websites to complete.

Gifts – in – Kind Donations –

As much as cash is needed and wanted, gifts – in – kind are also very valuable. Sometimes they can be more valuable than cash. Types of gifts-in-kind donations include free space, free items you need to carry out your programs, free office equipment, free food for a fundraising event, to name a few. Some organizations list needed gifts-in-kind donations on their websites.

So there are various types of funding sources. Let me know if there are any more that you know about.