13.7 Nonprofit Funding Models

Fundraising  

Fundraising is the process of soliciting financial support for a nonprofit’s mission, often through campaigns, events, or direct appeals to donors. Nonprofits use a variety of strategies to raise funds and connect with potential donors. Individual giving campaigns, which often involve direct mail or digital appeals, encourage people to contribute to the organization. Crowdfunding has become a popular tool, allowing nonprofits to raise money through online platforms by mobilizing small donations from a large group of supporters. Events, such as galas, auctions, and charity runs, are another effective way to generate revenue while also building community engagement. Major gifts from wealthy donors, as well as planned giving through bequests and estate plans, provide substantial financial support for many nonprofits. Each fundraising strategy plays a role in helping organizations meet their financial needs.

Grant Writing  

Grant writing is the process of applying for funding from government agencies, foundations, or other organizations that offer financial support. A strong grant proposal clearly explains the purpose of the project, why funding is needed, and how the money will be used. Key parts of a proposal include a description of the problem, project goals, a budget, and a plan to measure success. Grant writing requires research to find the right funding opportunities and an understanding of what funders are looking for. Since many organizations compete for limited funds, following the application guidelines carefully and building relationships with funders can improve the chances of success.

A high-profile example of a nonprofit in Cleveland benefiting from a major grant is Cleveland Neighborhood Progress (CNP). In 2023, The George Gund Foundation awarded CNP a $5 million grant to support neighborhood revitalization efforts, affordable housing initiatives, and economic development programs across the city. Large grants like this allow nonprofits to expand their impact, launch new programs, and sustain long-term initiatives that benefit Cleveland residents.  

Government funding is a critical source of revenue for many nonprofits, particularly those that provide social services. Federal, state, and local governments offer grants and contracts to organizations that deliver essential services, such as healthcare, housing, and education. These funds are often awarded to nonprofits because they have the expertise and infrastructure to meet community needs effectively. However, government funding can come with strict reporting and compliance requirements, and competition for grants is often intense. Despite these challenges, government support remains a vital component of many nonprofits’ funding models.

The Greater Cleveland Food Bank regularly receives government grants to support its hunger relief programs. In 2023, the Food Bank was awarded funding from the Ohio Department of Job and Family Services through the Emergency Food Assistance Program (TEFAP). This grant helped provide nutritious food to low-income families and individuals across Northeast Ohio. Government grants like this allow the Food Bank to purchase and distribute food, keeping shelves stocked and ensuring that those in need have access to meals.

Seeking Sponsorships

Sponsorships involve getting financial or in-kind support from businesses or other organizations in exchange for promotion or recognition. Unlike grants, sponsorships are often part of a company’s marketing or community outreach efforts. To attract sponsors, organizations should explain how the partnership will benefit the sponsor, such as increased brand visibility or goodwill in the community. Personal outreach, strong networking, and aligning sponsorship requests with a company’s goals can help secure support.

For example, let’s turn again to the Greater Cleveland Food Bank. The Food Bank has received sponsorships from companies like Giant Eagle, Sherwin-Williams, and Progressive Insurance, which help fund food distribution programs, hunger relief initiatives, and community outreach efforts. For example, Giant Eagle regularly sponsors food drives and donates both money and goods to support the organization’s mission of fighting hunger in Northeast Ohio. These corporate partnerships provide essential resources while also demonstrating the companies’ commitment to social responsibility.

Earned Income Strategies

In addition to traditional funding sources, some nonprofits generate earned income by offering services for a fee, selling products, or operating social enterprises.

• For example, Cleveland Sight Center provides vision rehabilitation services and operates a call center, where employees who are blind or visually impaired provide customer support for businesses.

• Similarly, Towards Employment, a workforce development nonprofit, offers job training programs and charges fees to partner organizations for customized employment services.

• Another example is EDWINS Leadership & Restaurant Institute, which trains formerly incarcerated individuals for careers in the culinary industry while generating revenue through its fine-dining restaurant in Cleveland.

These earned income strategies help nonprofits diversify their funding, reduce reliance on grants, and sustain their missions.