Achieving Security with Funding Diversity: 13 Funding Sources Every Climate Organization Should Know

Finding steady, reliable, and robust sources of funding is often the Achilles’ heel of even the most established, well-run climate community-based organizations (CBO). And without good funding, an organization can only make a limited impact in its community.

The good news is that securing funding for your organization does not need to be an overly complicated process — the overarching key to success is to diversify your CBO’s revenue streams. Ideally, you should look to secure funding from the business community, individual donors, grants, and through recurring revenue streams. To do so, it’s helpful to know how you might conduct outreach with these sources, and what criteria these potential funders are looking at when deciding whether or not to support a CBO.

Businesses:

Businesses can be one of the most important sources of funding for your CBO, as they are often able to provide significant amounts of funding on a consistent basis. They also hold influence in a community that can translate to increased visibility and engagement with residents.

1. Large Businesses

Large businesses — businesses with 40+ employees — are a great place to start looking for funding. These can be your large household names that typically sell consumer goods, like Hannaford’s, Walmart, Whole Foods, etc. Another type of large business may be businesses that don’t necessarily sell to or directly interact with the local community, but have operations or headquarters in your city or town — for instance, a biomedical, manufacturing, or energy company. 

2. Small, Local Businesses

You’ll also want to build rapport with the local business community. While smaller “main street” businesses may provide less funding than larger businesses, there are a myriad of other benefits that make this a mutualistic relationship for both your CBO and the local business:

Local businesses are constantly seeking more visibility in the community, and the CBO can highlight that building strong partnerships is one of its top priorities. These relationships also create virtuous cycles for everyone in the community. When local businesses donate to CBOs, the CBOs use these philanthropic dollars to implement programs or projects that benefit the community at large. In experiencing the tangible benefits of these local businesses’ contributions, community members may then be more inclined to shop local.

What are Businesses looking for?

Some businesses are going to be more inclined to support CBOs than others, and it’s important to discern who those businesses are. You can figure this out by looking at tax records of other local nonprofits (whether or not they operate in the climate space) to see which businesses regularly donate to local nonprofits, or by asking for recommendations from representatives in government or city hall who might have more knowledge.

And just as you’re sizing up businesses to see who’s likely to donate, businesses are looking to see if your CBO has the longevity and ability to make an impact before they commit their hard-earned dollars. As you’re looking for funding from businesses, you’ll want to ensure that your CBO has a solid business plan, clearly defined programs and activities, and a well-functioning team to execute these programs.

Individual Donors:

Individual philanthropic donors can be another important funding source for your CBO. As with businesses, these donors range in size.

3. Larger Donors ($5K+)

You will want to look for at least a few individual donors who are able to commit larger amounts ($5K or more). A great place to source these potential donors is through leveraging personal and professional networks, particularly those of the board of directors, who are likely going to be in networks that are wealthier, more philanthropic, and have a history of supporting local nonprofits in the community. 

One strategy to make use of networks is by asking each member of your board of directors to provide the names of 20 individuals who could be potential donors. You can then narrow the list down by identifying people that are the ‘low-hanging fruit’ — individuals who would be highly likely to donate, or with whom you may already have close or longstanding relationships. From there, you should meet with these potential donors and further cultivate those relationships. 

Large donors also include family foundations, which are foundations set up and run by families that make recurring charitable donations. 

4. Mid-Sized Donors ($100+)

Your organization should also look for mid-sized donors, who may not have as deep of pockets as your larger donors, but whose support can still be critical to supporting your organization’s efforts. These donations often come through special targeted initiatives like end-of-year fundraising appeal letters or social media campaigns. 

5. Donation Jar ($5-$20)

Finally, your organization should also look to collect donations at events, whether as a physical donation jar or, increasingly, through online payment options like Zelle or Venmo. Though these funds are likely to be a drop in the bucket compared to your overall funding needs, they help to increase your CBO’s visibility and cultivate the philanthropic spirit of the community.

What are Individual Donors looking for?

As with businesses, individual donors will be looking at your business plan, who’s involved, what partnerships your CBO has, and the impact it has had on the local community.

It’s also important to note that donors often look closely at whether or not your organization’s goals and initiatives align with THEIR areas of focus or passion areas. For that reason, an individual choosing not to donate may not necessarily be an indicator of an issue with the CBO, but may simply reflect that they are funneling their philanthropic dollars to another cause.

Similarly, not all donors will donate to your CBO because they necessarily care about sustainability or climate action: They may care about issues like housing insecurity, public health, community-building, etc, which are areas that a climate CBO’s work often overlaps with. 

Grants:

About a third of U.S. nonprofit revenue comes from government grants, making them an important source of funding for your CBO. Grants can, however, be highly competitive and less stable than other sources of funding. Unlike business and individual donors, grant research and writing is time consuming and takes a special skill - so we highly recommend hiring a specialist for grant work. That specialist will also know how to navigate a grant platform like Instrumentl to find the most appropriate grant opportunities. 

6. Federal Grants

Federal grants can be a substantial source of funding for many nonprofits, though they are generally much more competitive than state or local grants. They are also often targeted for projects or organizations that address national priorities. Hence, as national priorities change, federal grant opportunities change.

Choose federal grant opportunities carefully — while the larger award amounts can be tempting, writing proposals can be a lot of work. Try to ensure that your CBO has a decent shot at being awarded the grant before committing the time to apply. A good grant professional can help with this assessment.

7. State grants

Similar to federal grants, there are various grants offered at the state level or by statewide organizations. These grants tend to be smaller, but may also be less competitive and offer more flexibility to be tailored to specific regional needs. Before applying to state grants, try to make a connection and build a relationship with the granting department or agency.

8. Local Grants/Contracts

Your CBO can also look to secure grants from city governments, or to enter into special contracts with local governments to deliver certain services. In this way, CBOs play an important role in complementing cities’ efforts to implement their climate action plans. For instance, as a city decarbonizes its municipal buildings, it may also contract with a CBO and provide funding and resources for the CBO to help decarbonize residential buildings.

As with many other funding sources, building a relationship with the key stakeholders within the city is key. These stakeholders could be the mayor, the sustainability department, city councilors, the planning committee, etc.

9. Community Foundations

Community Foundations are “grantmaking public charities that are dedicated to improving the lives of people in a defined local geographic area.” They pool together a community’s resources to specifically support local nonprofits.

Community Foundations in different geographic regions often have different grant programs based on the community’s needs and specific focus areas, so it is worth checking out what your local Community Foundation offers. If they do offer grants that align with your needs, talk to them about your needs and build a relationship before applying.

10. Corporate grants

Finally, your organization can also look to secure grants from national or international businesses (i.e., Cisco, Amazon, State Farm, etc). Many large corporations have charitable foundations that host grant programs, which provide funding for communities across various focus areas. Using a grant platform like Instrumentl is key to finding these corporate grant opportunities. Like federal grants, however, these opportunities tend to be extremely competitive and the chance of your CBO winning them can be slim.

What are Grantors looking for?

Grantors are often looking at a CBO’s capacity in order to ensure that the organization will make good use of the grant. For this reason, it can be difficult for a small CBO to pursue a larger grant by itself, and instead it should look to partner with other organizations when appropriate. For example, a partnership with a food pantry, an affordable housing organization, a trade school, or even the local municipality could significantly enhance your grant proposal.

Grantmakers evaluate capacity through metrics like an organization’s financial health and history, its team, complementary partners, etc. A grant writer's ability to clearly articulate a CBO’s strengths in these areas is essential.

Recurring Revenue:

The final category of revenue streams that your organization may rely on is what’s known as recurring revenue. This is funding that often comes in smaller amounts, but ideally in higher volumes and on a recurring basis.

11. Sale of a Product or Service related to the CBO’s mission

This is exactly what it sounds like: For instance, a CBO might operate a thrift store to achieve dual goals of keeping clothing out of the waste-stream and raising revenue to support its operations. This also includes initiatives like running a community electricity service, selling pollinator kits, etc.

12. Membership

Membership in a climate-oriented CBO looks different from what we often think of when we think of a membership in an organization. In this case, people who purchase memberships are ‘sustaining’ members — they are not necessarily getting a direct benefit from the membership (like you might with something like a gym membership), but their membership dues support the CBO’s ongoing programming and projects.

13. Endowment

Finally, once your organization reaches a certain size, it should look into establishing an endowment. The interest or returns on investment that the endowment accrues is a form of recurring revenue that can constitute a useful source of funding as well. Most often, the initial creation of an endowment is the result of a larger donation from an individual donor, so keep your eyes and ears open to this type of opportunity as you are building relationships with your larger donors from day one.

What are Recurring Revenue Funders looking for?

At a high level, people who provide recurring funding want to see that their money is being put to good use, and that ideally both they and the CBO are getting something out of that money. For instance, in the context of selling a product or service, someone may be looking for the CBO to have a product or service that is comparable to a competitor’s, and that they are willing to spend their money on to support the CBO’s cause.

Similarly, people who purchase memberships in CBOs want to see that the membership dues go towards making an impact, and that their membership may offer them additional perks like being able to provide input into a CBO’s activities or be part of feedback sessions.

When it comes to endowments, in addition to ensuring that the CBO is using the money wisely, people who contribute to an endowment also want to ensure that the CBO is financially sound and has longevity: Do they have strong processes and systems (bookkeeping, CRM, payroll, etc.) in place? Do they have good financial practices and governance from their board of directors?

The importance of a well defined non-profit business model

Political changes and the state of the economy can cause the strength and viability of funding sources to shift from year-to-year, underscoring the need to diversify revenue streams in order to insulate your CBO against external shocks. Securing steady streams of funding from so many different sources, however, means that there’s a lot that your CBO is being judged on when potential funders are deciding whether or not to support your CBO.

Securing robust funding requires that your organization has necessary supporting components like a clearly defined mission, strong operational practices, and robust partnerships in place (i.e., a well defined business model). When your CBO has sufficient funding, it can then further strengthen these components. All of this underscores the need for robust, systems-based organizations. 

Have Questions?

Reach out. Green Community Catalysts can help with funding strategies as well as reviewing your organization’s structure for attracting funders. We have resources and courses (both free and paid) to help. This post may also be of interest, “What it Takes for Climate Organizations to Motivate People to Act.”