Start-ups Must Approach Executive Fundraising With A Finite Strategy To Make Sure It Is The Right Direction For Their Organization

How Should a Startup Approach Executive Fundraising?

Startups that seek funding can expect to get more “no’s” than “yes’s,” at least in the beginning. But don’t let that be a deterrent. It’s possible to secure funding for starting an organization and for executive salaries if you know where to look and which opportunities to pass over. Once you discover where to look, you’ll need to know how to make a pitch and how to avoid the major pitfalls that lead to polite denial form letters.

In most cases, board directors can expect to face more challenges in getting donations for executive salaries than for special projects. As a rule, most donors prefer to make donations to well-established nonprofit organizations. Among other things, they’ll want to know that the nonprofit is capable of doing some successful fundraising on their own. Donors also generally prefer to donate to special projects, rather than for payroll, even when an organization needs the leadership of an executive director to get the nonprofit up and running well.

The best place to find funding for executive salaries is to look for a grant. Finding just the right grant may be challenging, but those who look for them in the right places and pursue them tenaciously will have the best chance at success.

Challenges in Getting Grants for Startups

On a positive note, there are many philanthropists and foundations in the nation with lots of money to give to worthy causes. On the flip side, there are many more grant-seekers than there are people and organizations willing to help organizations that need funding. The competition for grants can be fierce.

It helps to understand what motivates donors to say “yes” to a grant application. In giving away funds, they want assurance that their donation will be used to further the organization’s mission and help people. They’re less likely to donate to startups because well-established organizations have already proven their worth and are likely to stay around.

Donors are well aware of the many challenges that startup organizations face and how many of them fail. According to an article in Forbes, about half of nonprofit organizations are due to fail, mostly due to failure to do strategic planning and plan for leadership succession. Donors give with the intent of helping nonprofits grow and flourish, and they want to see a strong track record that proves nonprofits are moving in the right direction.

Projects are more likely to be approved for grants over applications that request funds for salaries because donors have a difficult time assessing staff performance. Executive director performance falls under the duties of board members, who assess performance after annual evaluations. Donors have no control over how nonprofits are using their money when boards apply it to salaries.

Where to Look for Grants

Start your search by looking for a federal grant at Grants.gov. This site leads you through the lifecycle of a grant, guides you toward potential grant opportunities, and gives you the proper terminology to use in the application and interview processes.

Look for grants from private foundations at The Foundation Center, which is an informational and educational site that assists organizations seeking grants.

Large corporations often set up charitable programs to take on a particular cause. For example, Jockey International set up a program called Jockey Being Family, which offers funding for post-adoption services, education and information for adoptive families.

Seeking the Right Kind of Grant

Most grant applications make it clear the types of organizations they are likely to fund and those they won’t fund. Take a pass at grants where your organization clearly won’t meet the guidelines. You’ll have the best luck looking for grant-makers that will offer funding for general operating support or organizational development.

You may need to dig deeper or get a little creative to find the perfect grant. Be sure to read applications all the way through. Some donors offer funding for specific projects, and they’ll include a portion of the grant that nonprofits can use to support salaries.

Making Your Best Pitch

There are many known nuances to grant-writing. Many nonprofits find that it’s helpful to send one of their board members or members to a grant-writing workshop. Some are free, and any nominal fees are usually offset by your organization getting a better shot at a grant.

Be sure to highlight the vision for your charity’s future in your application. Give a detailed picture about how you’re building your organization’s infrastructure.

Be truthful about having little funds to start with. Most grant-makers will overlook that as long as you have a plan for growth and sustainability.

Tips for Applying for Grants

It may be tempting to go for the largest grants you can find. However, you might have better luck being approved for smaller grants in the beginning. These additional tips may help.

Make sure that the members of your organization who are applying for grants have the answers to the questions grant-makers may ask during interviews. Donors will want to know how old the organization is and may ask to see a copy of the latest financial report. It’s often helpful for board directors to speak with someone from a donor organization on the phone first before formally filling out an application.

For the best results, try to find an experienced grant writer to mentor you through the process. Don’t be afraid to network with other nonprofits to share notes about potential grants. They’re usually equally willing to share their own information.

Ask board directors to review applications and offer feedback. The details you provide during the application process are important. Board members may have insights on how to enhance the application, or they may know someone personally at the funder’s organization.

Don’t discard your grant applications even if you get a denial letter. You can always save the information to use in a future grant-maker opportunity.

Responding to Interested Grant-makers

Be prepared to show grant-makers how much money you’ve raised and your plans to continue fundraising. Donors want to know that you’ll be pursuing additional sources of funding, and that your fundraising efforts are strong. Prime donors will be looking at your governance principles and fiscal management as well.

Alternatives to Raising Executive Director’s Full Salary

There are a few other ways to work around funding for executive directors’ salaries. Look for ways to keep salary costs low, such as hiring a part-timer and limiting office hours. Some organizations put their newly appointed executive directors to work by asking them to raise funds to pay their own salaries.

Finally, look for opportunities to get volunteers to help with seeking grants. Local universities may have special internship programs where they can swap labor for college credit and job experience. AmeriCorps also offers a program where nonprofits will find students for some extra manpower. Nonprofits may have to pay part of the members’ workers’ compensation, but the total may be less than paying a board director’s salary.