Today, nonprofit organizations are looking at the future of their funding strategy and realizing that they may need to look beyond traditional types of funding. No longer can they rely solely on philanthropy to fund their organizations. The time has come to develop a sustainable funding strategy that will prepare them to thrive financially in the future using diversified funding methods.
Most likely your nonprofit will seek to expand its services in order to meet the current and expected demand. In order to successfully expand and maintain required funding you will need to remain credible and visible to the community, constituents, and potential funders. One way to maintain financial relevance is to diversify your funding streams. By doing so you will not only strengthen your financial viability but you will also expand your influence through new partnerships you may not have considered in the past.
Social finance is an approach to managing money which delivers a social dividend and an economic return, creating opportunities for new investors who want to support your initiatives because they feel they benefit society in some way.
Another financial strategy is Impact Investments. Impact investing refers to investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial, social or environmental impact alongside a financial return. It is a form of socially responsible investing that serves as a guide for various investment strategies. Impact investing has great potential to tap into sums of private investment capital in conjunction with meeting felt needs that are considered global challenges.
Program Related Investments. The IRS defines those in which:
- The primary purpose is to accomplish one or more of the foundation’s exempt purposes,
- Production of income or appreciation of property is not a significant purpose, and
- Influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose.
Social Enterprise. Social enterprises are businesses that aim to tackle social problems, improve communities, people’s life chances, or the environment. They make their money from selling goods and services in the open market, but they reinvest their profits back into the business or the local community. Nonprofit organizations will take advantage of this strategy to earn income which is then reinvested to further their mission. In addition to raising funds through social enterprises this is a great way to raise awareness and support for your organization or mission. Social enterprising may look like selling goods and or services for which profits are reinvested back into the organization.
The world of fundraising for nonprofits is expanding and changing at a rapid pace. Consider these fundraising opportunities as you prepare and plan your financial strategy for the future.
As Beck and Company’s Certified Public Accountants and Business Advisors, we understand that you want to do all that you can to remain financially healthy in order to carry out the vision and mission of your nonprofit organization. To learn more about our accounting services to help you navigate through these processes, visit here.
Contact us here at Beck and Company CPAs so we can help you with your unique needs as small business owners navigating healthcare and the Affordable Care Act.