Every nonprofit organization needs to raise enough money to meet budgetary commitments on an annual basis. In doing so, they must attract the most appropriate resources by the most efficient means. A systematic approach to financial planning is crucial, for both new and veteran development staff, to guide the growth of their organization's income generation. A comprehensive income plan will reflect long-term strategies encompass overall goals and defined objectives; and, assign responsibilities for staff, Board and other volunteers within a realistic timeframe. In an extensive planning initiative, the process provides multiple opportunities. Monitoring progress throughout the year and evaluating results upon completion are key components in building success year after year.

Income planning is more than just increasing each line item on the income side of the annual budget according to an arbitrary or speculative formula - it is not projecting a 10 percent increase across the Board. Nor is it finessing the same old tired benefit into a moneymaker, applying for another government contract, or expanding the foundation hit list.

Comprehensive income planning is a disciplined approach to detail strategies for a diverse array of revenue sources through organized efforts by the staff, the Board of Directors, and fundraising volunteers.

Many executives, particularly those who operate without the support of development staff, may resist undertaking an involved income planning process because they lack the time. The realities of working in small to mid-sized nonprofit organizations often preclude sustained planning activities. However, it is experience of the authors after assisting hundreds of nonprofit organizations, that the upfront investment of time and effort in an income planning process will reap greater financial rewards as a result.

Indeed, this is a breakthrough strategy for moving the organization to a higher, and often more sophisticated, level of income generation. Most nonprofit organizations rely on external sources to fund their operations because their ability to earn income is usually not adequate to sustain self-sufficiency. Stated simply, nonprofit organizations always have and forever will need to raise money.

Several typical situations that smaller organizations face identify them as groups which are in need of a more concerted focus on income planning.

• Until now our revenues have consisted of one or two significant government contracts and some personal donations be Board Directors.
  
  
• We have gained a wider range of support, largely through staff-driven efforts, but we haven't really tapped corporate contributions.
  
  
• We're losing support from foundations, because they've funded us for several years and now want to consider only special projects.
  
  
• Our agency is ready to expand, but we need to attract more donors who will make larger investment to finance programs over an extended period of time.

Within the context of the funding environment, each scenario represents specific challenges that can be addressed through comprehensive income planning process. This approach begins at the organization's current stage of development, analyzes its patterns of funding, capitalizes on current trends in the resource environment, and devises strategies to position the organization for increased funding.

If it involves several parties from the start, the process of developing a plan enhances teamwork. A thorough plan clarifies roles and responsibilities with assignments to appropriate staff members, Board Directors, and other fundraising volunteers who might be involved through committees or auxiliaries. With a document that projects timeframes for completion, all members of the fundraising team understand their part in a coordinated effort. The finished plan instills confidence, demonstrating how all the pieces fit together to achieve common goals. Furthermore, when the plan maps involvement of the Fundraising (or other appropriate) Committee and the Board of Directors, it tends to increase their participation and build ownership for the "bottom line".

An organization will usually find that when a thoughtful plan is presented, a donor's confidence in the organization's ability to attract sufficient support for the goals described in proposals is significantly bolstered. Added together, these factors equal greater fundraising success.

Income planning also allows an organization to respond more quickly to a new funding opportunity. Having organized its efforts, a nonprofit executive can efficiently assemble the players and tools to act. Such opportunities do not frequently present themselves to nonprofit organizations… all the more reason to be prepared.

Income planning cannot occur in a vacuum. In fact, it must support the organizational and programmatic goals that uphold the mission. It is assumed that the Board of an organization periodically affirms its reason for being and links the programs directly to the fulfillment of that purpose. Fundraising strategies merely attract the resources necessary to realize organizational goals; never should a source of funds determine those goals. Smaller nonprofit groups usually lack a diverse revenue base, and therefore, are more valuable to external factors. As one example, some very exciting and creative ventures of the 1960's, 1970's and 1980's no longer exists, because they did not plan beyond the start-up funds.

… to be continued …

Written by: Management Cornerstones Inc. for Jossey-Bass Inc.