Yesterday, we published “The Art of Discovery” as an introduction to the discovery process for funders and nonprofits. It includes some considerations, approaches, and questions that your organization might take to improve your odds of forming positive new partnerships. But how do you know when you’re ready for the discovery process?

Partnership formation can be complex, expensive, and time-consuming on both sides. Not all partnerships are created equally, and almost all partnerships have a time limit. If you want long-lasting partnerships that take your organization to the next level, it is essential for both the funder and the nonprofit to prepare before meeting.

A bad partnership between funders and nonprofits can have negative consequences for both parties. For funders, it can result in a waste of resources and a loss of trust among peers, making it difficult to provide future funding and giving both sides a bad reputation. For nonprofits, a bad partnership can result in a loss of funding and support of other funders, which can severely impact their ability to carry out their mission and serve their communities. Most of all, bad partnerships can hinder positive impact, causing major issues to go unaddressed.

Preparation de-risks your organization for any partner while also building confidence in the impact of your work – setting potential partnerships up on the path toward success. For the nonprofit, preparation involves clearly defining its mission, goals, and programs or services, as well as developing a detailed plan for how the funds will be used. This includes creating a compelling case for support that explains why the organization is worthy of funding and how the funds will be used to make a positive impact. The nonprofit should also anticipate and prepare for any potential challenges or obstacles that may arise during the partnership. For the funder, preparation involves clearly defining its mission, goals, and priorities for charitable giving. This includes developing a plan for how funds will be allocated and identifying areas where the funder can make the greatest impact. The funder should also develop a process for evaluating and selecting organizations to receive funding, and anticipate and prepare for any potential challenges or obstacles that may arise during the partnership.

Preparing before a meeting between a funder and a nonprofit seeking investment is essential for ensuring a productive, successful partnership that makes a positive impact.

What should nonprofits prepare before seeking new funding?

• Clearly define the organization’s mission, goals, and programs. This is usually articulated through a strategic plan. Here is an example of a strategic plan by MakeWay, an intermediary organization that both grants and fundraises.
• Develop a detailed plan for how the funds will be used, including a budget and expected outcomes or impacts.
• Collate information about the organization’s history and track record, including any successes or achievements. Personally, I recommend also include some strategic stories of failures to build trust with the funder and show them our ability to problem solve and course correct.
• Create a compelling case for support that explains why the organization is worthy of funding and how the funds will be used to make a positive impact. Here is an example of what Habitat for Humanity has created for their case for support. Cases for support have evolved and I find two critical components cannot be overlooked:
  • 1. Data Room: a cloud-based drive where your essential files (team biographies, financials, strategic plan, are stored and easily shared with funders and prospective funders.
  • 2. Deck: a .pdf that tells your story while showing elements of your case for support (bonus points if you customize the deck for each prospect).
• Understand the funder’s goals and values, and ensure that the potential partnership aligns with these, without compromising your mission and goals.
• Anticipate and prepare for any potential challenges or obstacles that may arise during the partnership. Consider the challenges you may face, can your potential prospect help you to overcome these challenges? Do you have the systems and capacity to implement?
• Develop a plan for regularly reviewing and assessing the partnership to ensure its effectiveness and showcase your commitment to the success of the partnership.
• Gather all financial documentation including balance sheets and statements, including tax documentation, to provide to the funder upon request.
• Prepare a proposal or application that clearly outlines the organization’s needs and how the funds will be used to meet those needs. Do not share this until you are sure that this is what the funder wants to see.
• Identify the potential funders you will focus on and research their funding priorities and requirements.

What should funders prepare before seeking nonprofits to invest in?

• Clearly define the funder’s mission, goals, interests, and priorities for charitable giving. This is usually articulated through a theory of change. Here is an example of a theory of change from AccountabilityLab. Here is a guide for creating a theory of change from the UN Development Group.
• Develop a plan for how funds will be allocated, including any specific criteria or requirements for organizations to be eligible for funding. Will you consider only certain geographies, for instance?
• Gather information about your history, track record, and any successes or achievements in supporting charitable organizations or in other investments. Prepare examples of ideal investments and investments that you would do-over.
• Understand the needs and challenges facing the charitable sector, and identify areas where you as the funder can make the greatest impact. Remember that the most impactful funding for nonprofits is funding with the fewest restrictions and conditions.
• Develop a process for evaluating and selecting organizations to receive funding, including any necessary due diligence or background checks. Write this down and share it with prospective partners to increase the quality of the proposals you receive.
• Anticipate and prepare for any potential challenges or obstacles that may arise during the partnership, such as changes in funding levels or program priorities.
• Develop a plan for regularly reviewing and assessing the partnerships to ensure their effectiveness.
• Determine how you will disburse funding and what information you need to collect to send funds to nonprofits that you will invest in.
• Prepare guidelines or application materials for organizations to apply for funding.
• Identify a network of other funders, nonprofits, and community leaders that can help to introduce you to the best potential matches. One way to do this is to join Orgmatch to meet a like-minded community of funders, and easily find aligned nonprofits.

Thorough preparation and strong documentation can help to lay the foundation for a successful partnership between funders and nonprofits. If you need help getting started or would like feedback on your work, you can contact Orgmatch and our team will be happy to help you.