Home Funding Sources Developing a Funding Strategy

Developing a Funding Strategy

Developing and implementing a funding strategy is crucial to the sustainability of your organisation. It helps organisations raise funds to continue or increase their services.

A funding strategy is an integral part of your core functions. It should be linked to your vision, mission, and strategic goals. Funding strategies should cover a three to five year period. Do not file it away after it has been developed. Treat it as a living, action-orientated document and continuously evaluate and review your targets and efforts.

A funding strategy identifies:

Your funding needs
Potential sources of income or support
How relationships with current funders will be nurtured and maintained
Team roles in fund development
How the strategy will be implemented, monitored, and evaluated
How the outcomes will be reported.

For more information about developing a team to formulate a funding strategy see Funding Development Team.

Your Funding Strategy

A funding development strategy is in part a business plan. When developing a funding strategy, you need to:

Assess all funding opportunities
Consider the type of funding needed (e.g., project support, general funds, in-kind contributions)
Identify the type of organisation or funding arrangement which will meet your need
Plan long-, medium-, and short-term goals to maximise opportunities
Recognise and promote your organisation's assets and strengths.

Keep your funding strategy short. The basic information required in every funding strategy is:

What funding is needed – how much, for what types of activities, when?
Where funds will come from?
What activities are needed to raise funds, when do they need to happen, and who will undertake them?

Service Duplication

Funding bodies want to minimise duplication. To avoid duplicating services, conduct an environmental scan of:

Similar services in your area
Services in other areas which may be suitable for your community and consumer group
New research and modes of working to ensure the services you are offering reflect best practice.

Consider how your activities:

Complement, but do not duplicate, the work of others
May be improved by incorporating new ideas and service delivery options.

Review and Evaluate

Your funding strategy needs to have the flexibility to react to new opportunities or to limit activities that are not practical or profitable. It should be:

Monitored and evaluated throughout the year (at least once a quarter)
Reviewed on a yearly basis.

At the end of each year, review what you said you would do and compare it to what was done. Hold an evaluation session so everyone can contribute. Ask yourself:

If we are not hitting our targets, what can we do to improve the situation?

Warning: You must adhere to certain laws when making an appeal for public funds. The rules are different in each state and territory. To find out how fundraising rules may affect you, see the Our Community Website.

Why Develop a Funding Strategy?

A funding strategy helps organisations to:

Focus, prioritise and plan their objectives
Incorporate funding activities as part of routine activities
Identify additional help from Board members, volunteers, or external stakeholders
Plan the team involved in developing proposals and writing applications
Identify the strengths and weaknesses that team members bring to the fund development process
Work towards achieving concrete funding strategy targets.

An Ask Letter

An Ask Letter is an unsolicited letter written to a funding body to request their support.

When writing an Ask Letter, it is important to:

Keep your letter formal and to the point
Communicate how the funding body's contribution will help the identified problem
Personalise the letter
Conclude by thanking the funding body for their time and consideration.

The letter should contain three simple paragraphs:

Introduce yourself and your organisation’s mission
Outline your request to the funding body and indicate what they will get in return
Thank the funding body for their time and invite them to contact you with any questions.

A good Ask Letter may be used again. However, ALWAYS adapt it to reflect each specific funding body and their priorities.

Anatomy of An Ask highlights the components of an Ask Letter.

Why Do Alcohol & Drug Organisations Need To Apply For Funding?

Funds are distributed through competitive grant, tender, and procurement arrangements because funders:

Are accountable to stakeholders
Must demonstrate the work funded was worthwhile
Have limited financial resources
Receive more applications for assistance than they can fund
Assess which bids offer best value and community benefit
Are required to be transparent in their decision-making
Establish criteria upon which to base their decisions.

Government bodies, in particular, must:

Follow formal public procurement, tendering, and grant rules when distributing public funds
Act on an objective, fair and transparent basis.

For further information about government funding opportunities and procedures, see the table below. Please note that information was not available for all states and territories. Check with your relevant state and territory if you require further information.

Australian Government Funding Policies (current as at August 2014)
Jurisdiction	Department	Resource
Australian Government	Department of Finance	Australian Government Grants Policy Framework
	Department of Social Services	General Information on Funding
	The Australian National Audit Office	Implementing Better Practice Grants Administration
Australian Capital Territory	Health Promotion Innovation Fund	The Health Promotion Funding Guidelines
New South Wales	NSW Department of Family and Community Services	Community Services Funding Policy
	NSW Health	Operational Guidelines Non-Government Organisation Grant Program
		Grant Management Improvement Program (GMIP) Taskforce Report
		Goods and Services Procurement Policy Manual
Queensland	Department of Housing and Public Works	Queensland Government QTenders Website
South Australia	Department of Communities and Social Inclusion	Procurement Approvals and Processes Policy and Guidelines
Victoria	Tenders VIC	https://www.tenders.vic.gov.au/tenders/index.do
	Department of Human Services	http://www.dhs.vic.gov.au/for-service-providers/for-funded-agencies
	Department of Health	http://www.health.vic.gov.au/pch/service_providers/funding.htm
Western Australia	Department of Finance	Factsheets and Frequently Asked Questions webpage

TIPS: Developing a Funding Strategy

Try to otain funds from a variety of sources.
Develop a funding calendar that lists funding opportunities awarded on a cyclical or advertised basis.
Identify the types of activities your organisation wants to undertake, why these activities will benefit the community, and the kind of funding required.
Create a file to store relevant grants, procurements, and tender processes; policy documents; names of key contacts.
Think creatively and laterally about funding sources. Consider alternative fundraising strategies if you fail to secure funding through the usual streams.
The larger your organisation or the more you do, the more you may need to diversify your funding sources.
Understand your organisation’s tax status before you start exploring funding options. This will affect the type of funding you are eligible to receive. See Organisational Compliance and the Australian Tax Office (ATO) website for more information.

The Benefits of Developing a Funding Strategy

Enhances the organisation's reputation
Responds to challenges
Capitalises on opportunities
Engages stakeholders
Increases understanding of what works and why
Uses meaningful criteria to measure success
Attracts more loyal funders and money.

References & Resources

Australian Government Department of Finance Website. This website contains tools and information about selling services to the Australian government
Australian National Council on Drugs. (2013).Complementary Funding for Non-Government Organisations. A Brief for the AOD Sector. Downloaded from http://www.ancd.org.au/images/PDF/Generalreports/ComplementaryFundingNGOs.pdf
Bond, Networking for International Development Resource:Core Funding Strategy
Joyaux, S.P. (2011). Strategic Fund Development: Building Profitable Relationships That Last. John Wiley & Sons
Management Accounting for NGO (MANGO) Website. This website contains the Guide to Financial Management
Management Accounting for NGO (MANGO) Website. (2010).Types of Funding
Martini, A., Marlina, U., Dwyer, J., Lavoie, J., O’Donnell, K. & Sullivan, P. (2011).Aboriginal Community Controlled Health Service Funding: Report to the Sector. The Lowitja Institute, Melbourne
Our Community Website, Funding Centre:Developing a Fundraising Strategy. Downloaded from http://www.fundingcentre.com.au/help/fundraising-strategy
Price, K. (2008). A Guide to Writing a Fundraising Strategy. Downloaded from http://www.grantnet.com/HelpfulReports/fundraisingstrategy.pdf
The Advocates for Youth Website:Seven Components of Organizational Sustainability
The Funding Central Website:Writing a Fundraising Strategy. Downloaded from http://www.fundingcentral.org.uk/page.aspx?sp=6313
The Nonprofit Hub Website: Anatomy of An Ask Letter. Downloaded from http://www.nonprofithub.org/featured/how-to-ask-for-donations-nonprofit-infographic/
The Volunteering Queensland Website:Why Develop a Funding Strategy? Downloaded from http://www.volunteeringqld.org.au/web/documents/Why%20a%20Funding%20Strategy.pdf

YouTube Videos

Watch the You Tube videos below for information about how to develop a funding strategy.

Activities

Complete the activities below by entering text into the fields provided and/or completing the attached documents. If you download and complete an attached document, you will have to save this to your personal file.

You may also:

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Activity 5.1.1 List Current and Potential Funding Sources

Relying upon one source of funding may be a threat to your organisation’s sustainability.

5.1.1.pdf (142 KB)

More info Does your organisation depend on one funder?

If you answered yes to this question, it is recommended that you develop a funding strategy to diversify your support structure.

More info Does your organisation have diversified sources of income?

Diversified sources of income relates to more than just the source of funding. It also relates to the types of funding received. For example, an organisation may receive a grant for core activities from a government department, but fund staff development training through corporate sponsorships.

More info Current Funding Sources: Map Your Current Funding Sources

If you receive funding from more than one source, make a list of organisations from whom you currently obtain funding. If you completed the mapping activity in Your Organisation’s Track Record, copy and paste your current sources of funding into this list. Alternatively, complete the worksheet attached to map your current funding sources.

Record the type of funding received and your forecast for continued funding (High, Med, Low).

More info Potential Funding Sources: Identify Future Funding Sources

Consider your organisation's vision, mission, and strategy (see Your Vision, Mission, and Strategy) and look through the Database of Funding Sources and Resources to identify organisations you would like to approach for funding.

Make a list of organisations that you will contact to discuss future opportunities. Assess your relationship with each funding body by answering the questions below.

More info Do you know the organisation well enough to ask for funding?

Regardless of how well you think you know an organisation, it is beneficial to develop a brief profile of them to foster your institution's knowledge and create a corporate memory. Complete Activity 5.1.2.

More info Does this organisation know you well enough to provide you with funding?

If the funding source is not aware of your organisation, develop a plan to build your relationship with the funder (see Building Relationships for more information and complete Activity 5.2.2)

More info Do you need to do any further research?

If yes, go back and look at previous sections of this resource.

What are the funding body's attitudes, values and beliefs about your community's need, the proposed solution, and your organisation's expertise?

What does the funding body expect and need from your application?

Activity 5.1.2 Fund Source Profiles

Read through the information listed on potential funders’ websites. Contact a nominated representative if you wish to obtain a more in-depth understanding.

5.1.2.pdf (116 KB)

More info Write down what you know about each funder's values and objectives and identify shared goals.

Answer the questions below to ascertain whether the funding source is a right fit for your organisation’s objectives.

How would seeking funding from this organisation meet your organisation's needs and fulfil your aspirations?

How does this organisation's priorities compare to my organisation's objectives?

What do you still need to find out about this funding body?

What information should you collate prior to contacting the agency?

More info When will you contact each agency on your list?

If the funding source’s objectives match your organisation’s objectives, ensure you contact a nominated representative to discuss your ideas (see Building Relationships and complete Activity 5.2.2).

Activity 5.1.3 Should You Develop a Funding Strategy?

If you answer yes to any questions below, it is time to develop and implement a funding strategy.

5.1.3_Copy.pdf (108 KB)

Does your organisation need to develop a funding strategy?

Do you tend to submit applications in an ad hoc and reactive manner?

Do you have limited resources both in time and money?

Do you sometimes miss important funding opportunities to develop our organisation?

Do you operate in an increasingly competitive environment?

Is there a potential funder that is largely unaware that you exist?

Do you need to raise funds?

Do you feel that applying for funding is a waste of time and you should get on with real work?

Are there other non-government organisations doing similar work and getting more sustainable funding than you?

Activity 5.1.4 Your Funding Plan

All organisations' resources, needs and strengths are different, and not all funding opportunities will work for everyone. The following process is designed to help you work through your organisation's funding options and create a plan of what you want to achieve over the next 12 months.

5.1.4.pdf (152 KB)

Step 1: Establish funding targets - What do you hope to achieve?

What opportunities do you have to promote your organisation to funders?

How can you improve your profile in the community?

Step 2: Research past fundraising activities - What activities have you undertaken previously?

What has worked?

What has not worked?

More info Step 3: Identify who will fund what - What kind, and how much funding do you need?

From the list of current and potential funding sources you developed previously, write down what activities you will be asking each funding source to provide support for.

If you did not previously develop a list of current and potential funding sources, construct a list now and determine what activities you will be asking each funding body to provide money for.

What funding bodies might potentially support your work?

Are there any other kinds of funding or finance options which you could investigate?

Is there a natural partnership between your organisation's and a local or national business' objectives?

Step 4: Develop a case to support each prospective funding activity - Why do you think the activity will/will not be successful?

More info Step 5: Decide on and describe the methods you plan to use to raise funds

Remember the golden rule: Diversity is the key to a good funding strategy.

Set an estimated target for each funding development activity.

Write your targets below.

How many staff and work hours will you devote to completing fundraising activities?

How will you implement each fund development activity?

More info Step 6: Allocate responsibilities to Board and staff so that everyone knows what they have to do, and by when. - Who will complete the fund development activities?

Refer to the staff matrix developed in Funding Development Team.

Do any of the staff involved in the fund development activities need training or support?

More info Have you fully utilised your Board and volunteers?

If you answered no, go back and review your fund development strategy to ensure greater involvement of Board members and volunteers.

More info Step 7: Who will authorise your strategy?

It is important to obtain organisational and staff support for your strategy. Send your draft funding strategy to the Board or CEO for endorsement. Incorporate comments and suggestions into the final document.

Write down who authorised your strategy and when it was signed.

More info Step 8: Develop a Funding Calendar

Once you have set your funding activity targets, identified the skill sets required, available opportunities, and allocated team roles, develop a funding calendar with closing dates for publicly advertised funding rounds and potential funding sources.

Many funding bodies call for applications on a periodic basis. If the funding source does not have a cyclical call for applications, record deadlines for staff activities and when you want to have the completed application submitted.

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