Ten Nonprofit Funding Models

by William Landes Foster, Peter Kim, and Barbara Christiansen, The Stanford Social Innovation Review, Spring 2009.

This article recommends that a new shorthand lexicon is needed for nonprofit leaders to articulate quickly and clearly how their organisations are focused and financed.

The authors provide a useful cheat-sheet to alleviate funding fuzziness in the nonprofit sector. They identify the following ten nonprofit funding models:

1) Heartfelt connector – focusing on a cause that resonates with people at all income levels (e.g. breast cancer research)
2) Beneficiary builder – relying on people who have benefited from services to supplement future beneficiaries (e.g. hospitals and universities)
3) Member motivator – supporting activities that members already seek (e.g. many arts and culture groups)
4) Big bettor – relying on major grants from a few individuals (often a primary donor focusing on a deeply personal issue)
5) Public provider – providing essential social services for which the government has previously defined and allocated funding (e.g. some legal services)
6) Policy innovator – convincing government funders to support alternate methods by presenting their solutions to social issues as more effective and less expensive than existing programs (such as a new approach to dealing with homelessness)
7) Beneficiary broker – competing nonprofits in an area where beneficiaries are free to choose the nonprofit from which they will get the service (like employment services or student financial aid)
8) Resource recycler – collecting in-kind donations from corporations and individuals and distributing these donated goods to needy recipients who could not have purchased them on the market (e.g. a hunger relief)
9) Market maker – providing a service where the market is unable to for legal or ethical reasons. These organisations generate the majority of revenues from fees or donations linked to their activities (e.g. organ donation)
10) Local nationaliser – building a national network of locally based operations to focus on issues that are important to local communities across the country where government alone cannot solve the problem (e.g. children in need of adult role models)

To access full article see: www.ssireview.org/articles/entry/ten_nonprofit_funding_models

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