A Funding Rationale is — simply — why you need the funds and what they will do for your impact. More completely, the arrival at a compelling funding rationale is part messaging and part cost-accounting. A funding rationale describes the funding-need, or ‘ask’, in terms of a compelling project, program, or priority-initiative.
Another way to explain funding rationales is in the context of a sales operation. If you’re committed to sales — as a system for fundraising — then the funding rationales are your ‘products’ and ‘services’ – they’re the compelling things you have to sell — around your IMPACT! A funding goal without a strong funding rationale is like having a quarterly sales goal without any specific products to sell.
Examples of funding rationales:
- A Program: Programs are elements of your ongoing impact. Often, you have line-items in your budget for programs — or you have a regular practice of cost-accounting your personnel across programs. How you package and frame the program (for funding) is the funding rationale. This could be:
- In terms of ongoing support/subsidy.
- Funding a unit of impact. (Eg. It requires $1000 to underwrite the gap for each school.)
- Around a time-based goal/outcome. This describes where you are taking the program over the next 3-5-10 years, for example.
- A ‘Project’: While ‘project’ can have many applications, we commonly refer to incremental and time-based expenditures as ‘projects’. Examples:
- Prototyping a new program.
- A building project.
- Start-up investment.
The focus should be on framing the project in a compelling way so that it supports the vision, or offers a compelling vision in-and-of-itself.
Note: Most organizations are familiar with ‘projects’ since the grantmaking world favors project-related-funding.
- A Priority Initiative: Priority Initiatives are like mini-campaigns within the context of your total vision. They enable you to package (or bucket) a number of projects and/or programs and build a narrative (typically self-evident from the way the priority initiatives are named/framed — and goals are described).
- A Vision (a ‘campaign’ as a project): You can package a total funding need in terms of the vision and the outcome. The vision-as-a-project works best when the project and vision are one-and-the-same, like a new hospital. For more complex plans, the vision is more likely to serve as a container for multiple funding rationales.
Bonus: The examples above speak to the cost-accounting/budgeting approach. There are select times when a funding rationale can be effective when built around the role of the funder’s involvement (eg. leadership, legacy and transformation).
