Daily Nuggets • • Nick Fellers
A few weeks ago we published “10 Action Steps to Help you Engage in 2016.” Over the next 10 weeks, we are going to use each action step as a week long theme to help you get it done!
This week’s theme is BUILD YOUR FUNDING RATIONALE.
Here is a list of some of the framing devices we often use to create Funding Rationales. (i.e., you need these numbers to rationalize the ASK!)
In an abridged form:
- The Gap: Using a gap number to justify the ASK.
Tuition: Tuition is $6K, cost per student is $8K. Gap is $2K. Could ask someone to underwrite THE GAP for five students.
Project: Receive federal grants to the tune of $45K/year for $60K/year program. Ask someone to fund the gap for three years = $15K/year or $45K ASK.
- The Widget: Break down projects/programs/model into a cost per person or cost per unit. Package this as the ASK. Typically, I use the widget to create the simplest and strongest sell.
“One child for one year.”
See also: See Chipotle vs. Max and Erma’s
- Funding the Prototype: This is a different way of funding your annual operating budget for a start-up. Communicate how your model works and what is needed to make the model happen – then run a funding pyramid.
Example: This year we need $1.1M to build the prototype.
Going to need:1 @ $200K
2 @ $100K
3 @ $75K
4 @ $50K
6 @ $25K
10 @ $10K
- Funding the Vision: Think of this as funding the model/prototype and future projects/priorities for the next 3-5 years. If you will, this is ‘the campaign pitch’ but with a more holistic view of ALL funding priorities. Within Funding the Vision:
Leadership Commitments: Top tiered commitments that validate the funding plan.
Momentum Commitments: TIMELY gifts. Could be Leadership or not… but means so much because of the timing. Provides a lot of leverage, energy, etc.
- TRANSFORMATION: Justifies all caps on that one. Sometimes it’s simply about a number that would completely TRANSFORM our organization, the investor, etc. This is a rationale that extends far beyond a ‘campaign lead’.
- Project Sponsorship: “Can you underwrite the medical program for three years @ $30K/year?”
Note: If it were me… get rid of the notion of asking people to fund ‘operating’ or ‘infrastructure’. Literally everything you do can be packaged as a project, priority or program.
- Angel Investment: “We’re going to need 10 investors at X to get this idea off the ground. We’re taking something of an angel-investment approach. Can you be one of these angels?” – Very much about timing, the level, the funder, etc.
- Strategic Partner: Often a corporation or foundation that provides ongoing, high-level funding support on an ongoing basis. It’s a great relationship because you [the org] are a means of delivering on the funder’s priorities in the community or sector.
- Protection: This is a rationale or way of asking someone to ‘protect’ and annual investment with a planned gift/legacy gift. More on that here.
- Leverage: We need to raise X to generate 10X.
Note: Yesterday I was on the phone with an organization that needs to raise $5M to generate $1Billion. To make my point. They need to raise $5M to generate $1,000,000,000,000.
Obviously, you don’t need all of these. I’m hoping the brief descriptions can spark some answers to common questions like:“What do we ask for?”
“How do we package our operating to justify a big ask?”
“How do we rationalize the number?”