Funding Model Costs

In this blog series we have been looking at how to identify a new funding model for your organization based on research conducted by Kim, Perreault, and Foster in The Stanford Social Innovation Review. In considering the different models we have discussed funding sources, peer research, and internal goals and capabilities.  Committing to a new funding model comes at a cost, and we have been looking at revenue potential against associated costs.

The level of investment you are willing to make is a significant factor in which model you will choose.  The higher the return, the higher the risk; and how can you predict what increasing investments will be required?  Four key areas must be analyzed prior to choosing your new funding model:

  • Programs – Your organization might need to refine current programs to meet a new funding source’s requirements, or create an entirely new program to serve a new group of beneficiaries.  However, be sure to stay true to your fundamental mission and service areas for consistency and proven success.
  • Personnel – Greater time commitments and new skill areas may be required for a new funding model.  Consider adding new staff, changing priorities for current staff, and offering training for new skills.
  • IT Systems – Existing software and processes may not fit your new capabilities and requirements, as well as your new donor management system.
  • Communications – As with any shift in planning and process, it is vital to have effective internal and external communication.  Internal staff must be kept current with changes in processes and expectations; and marketing efforts to new and current donors as well as social media and press coverage might be an important element in your new funding model.

Each of these areas must be considered as part of your risk analysis.  Also consider outside factors such as budget cuts, waning funds from donor sources, and new competition.  No risk analysis will be completely accurate, but by considering each of these four areas you will have a good start.


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