4 of the Best Alternative Funding Options for Nonprofits

Securing funding and grants are eternal challenges for nonprofits. Raising money and awareness for your causes might seem intimidating at first, but a systematic approach to fundraising will solve several issues. Ultimately, raising funds successfully is more about consistency than trying fancy marketing gimmicks.

However, this doesn’t mean you should discount creativity. The trick is to balance traditional fundraising routes, such as using Google for nonprofits, with alternative ones. Over time, with consistent application, you’ll see results from these efforts.

The alternative funding options and methods for nonprofits listed in this article have unique quirks. Take time to get to know them deeply, and you’ll raise money without many issues.

1. Crowdfunding

Crowdfunding might be old news these days, but it remains a viable alternative source of charity funding. The trick is to direct people to your campaign efficiently and leverage the fundraising platform’s algorithm. You might think this sounds like a lot of work, but the truth is you don’t need technical expertise.

The best way to work with a platform’s algorithm is to help it find you easily. This means coming out of the gate strong and indicating that your campaign is generating a lot of interest. Crowdfunding success is much more than putting up a campaign page and relying on the platform. The truth is, the platform doesn’t care about your cause.

It pushes anything its users care about. Begin your campaign by planning events that bring people together. These could be online or offline. For instance, you could hold a virtual call with select donors who you know are interested in your cause. Energize them by describing what you’re looking to achieve and tie your fundraising to specific goals.

You can also turn them into referral networks by incentivizing them. For instance, you could award them merchandise or a gift connected to your cause. You don’t have to break the bank with this, remember you’re raising funds for a good cause. A reward as simple as featuring them on your promotional material as a top donor usually works.

Let them know when your campaign will go live and communicate the importance of them donating funds soon after launch. Crowdfunding platform algorithms love instant engagement, and big donations right out of the gate attract a lot of interest.

Don’t neglect smaller donors. Get in touch with them via your email list or other communication methods. If you don’t have many small donors, canvass your local area to drum up some interest. You could host an event in a local gathering spot and let everyone know what you’re looking to accomplish.

As a rule of thumb, you want to hit 25% of your crowdfunding goal within 24 hours of launch. You can work backward from your funding goal, and average donation amounts to figure out how many people you’ll need. Remember, that creating a buzz is the key.

Choose a platform with a large number of users, and the remaining 75% will take care of itself.

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2. Microfinance

Microfinance won its creator a Nobel Prize, but it isn’t talked about much in charity circles. This lack of chatter gives your organization a unique niche to tap into. Microfinance can combine the best of a for-profit method with a charitable cause when done well.

Currently, many charities position themselves as microfinance charities, but they tend to make many mistakes when communicating their goals and outcomes. However, before getting into those details, how does a microfinance charity work? In short, these charities provide microloans to people in need by sourcing funds from donors.

The charity runs its operation using the interest payments on the loans. Typically, the interest rates on these charitable micro-financial loans are far lower than what people would receive with traditional outlets. The charity usually has an application review process that determines whether the applicant needs funds.

To successfully position your charity, you must define these application suitability criteria clearly. This gives donors the transparency they need when assessing their donation choices. Currently, most microfinance charities offer opaque and vague language when describing their aims and criteria. A transparent application process will instantly set you apart.

Next, understand that you’ll be loaning money to people in need. This means you can’t give the money away for free. Most people will be using your funds to get out of debt or buy essentials. You must have a robust repayment system in place to help people back on their feet and reduce their financial burden.

Again, the application process helps. You might have to reject people with severe debt since more money will not fix that problem, for example. One reason for limiting your criteria is to quantify your social impact. Donors need visibility into the impact you’ve created too, along with your aims.

Thus, create application criteria that are robust and will help you achieve your goals. In short, when running a microfinance charity, transparency, and quantifying impact is key. Give this to your donors, and you’ll successfully raise funds.

3. Impact investing

Thanks to the rapid rise in popularity of social causes like ESG investing and socially responsible investing (SRI,) charities have more ways to access funds than ever before. Note that a lot of ESG and SRI funds go towards for-profit enterprises. However, partnering with companies that attract these funds or investment managers who run such funds is a great way to get on the radar of people looking to give to causes.

The good news is that many ESG funds are measured by the social impact they generate instead of the monetary return they produce. Thus, quantifying and documenting the impact you have created in your community is a great way to get on these funds’ radar.

If you’re running a charity, begin by gathering your marketing materials and donor lists, and tweak your messaging to appeal to these ESG-minded funds and investors. Funds are all about performance, so quantify your impact. You must list concrete numbers and other metrics that help these funds understand what they can expect from you.

Not every cause generates interest from impact investors. For instance, environmental causes like clean energy, alternative fuel sources, and social issues such as women’s empowerment and trauma assistance, attract significant funds. Causes related to animals, for instance, do not attract many ESG funds.

Evaluate whether your organization is appealing to these investors’ goals. If yes, make sure your impact metrics are visible in all your materials. Contact the people you have assisted to gather testimonials to demonstrate impact. Usually, video testimonials work best.

You can also get in touch with large donors and convince them to give you a testimonial. These testimonials are rare, and you don’t have to make them public. However, including them in your outreach program will leave a mark since few charities ever think of doing this.

Keep reaching out to these funds, and you’ll eventually start attracting attention from them, making it easy for you to raise funds. In line with impact investing outreach, you should also reach out to corporations with a firm ESG and social focus. These companies love offering their employees the chance to invest in worthy causes.

By reaching out to these companies, usually their human resource departments, you can make it easy for them to give their employees a chance to do some good.

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4. Community-based campaigns

Every charity undertakes some form of community-based work. However, few expand online and offline to fully leverage the impact they’re creating in their local communities. Community-based campaigns are smaller in scale compared to traditional charity fundraisers.

However, they’re a great way of making a deep impact since you’ll witness your results first-hand. Community-led programs also build deep grassroots connections, making it easy for you to raise funds continuously. After all, if the people donating money receive the majority of the benefits, raising money becomes less challenging.

Successful community-based programs address issues relevant to the people living in a location. Often, charities make a big mistake in generalizing their aims. For instance, zeroing in on a particular location and defining your aims in terms of the impact you’re looking to create is a great way of getting locals on board.

Too many nonprofits currently seek to maximize fundraising instead of tailoring their aims to generate impact. The reason is that the bigger their target radius, the more funds they can raise. However, this method only dilutes their messaging and leads to fewer funds raised since no one feels a connection to the cause the charity represents.

Community-led campaigns are unique since they depend on the people living in an area to spread the word. You can organize volunteer runs and other events to energize the locals and bring more people on board to assist you in your mission.

These events also draw significant political attention, further boosting your cause. When combined with free advertising from Google Grants and other online sources of funding, you can leave a significant impact on your location, leading to more awareness, more funding, etc.

Alternative funding methods offer a solution for nonprofits

While traditional fundraising methods continue to offer nonprofits a great way to raise funds, you must weave in alternative ways of fundraising to give yourself more opportunities. Pick the ones that suit you the best and execute them consistently. Over time, you’ll find that fundraising becomes less of a challenge.