As traditional funding models for nonprofits are changing, diversified funding has become critical for the sustainability of many organizations. These changes are being felt across the sector with a reduction in government funding, a decline in donations and a shift to goods and services making up 45.1 percent of the total income for the sector. Like many other nonprofits, Pillar was funded primarily by grants in our early days. We faced our first wake-up call when a significant grant with the federal government was almost signed off on and then an election was called that delayed the funding. This caused us to be unable to cover the costs of our core staff role of our Executive Director. As we recovered and learned from this failure and, our board turned their focus to our sustainability and diversified funding.
As we now support other nonprofits and social enterprises through our consulting and learning and development programs, we can talk first-hand to the dangers of having a single funder or funding source. Over the past decade, we have diversified our funding to include earned revenue, corporate sponsorship and multi-year municipal grants. For example, our earned revenue has increased from $300,000 in 2014 to $1.176 million in 2018. Bringing on new revenue streams has required us to build detailed business plans and evaluate risk, which has created better stability and organizational capacity. Further, we are walking the talk and have seen how revenue diversification gives options when the ground shifts beneath us. Throughout this process, staying focused on our mission, being adaptive to changing trends and pressures on communities, and ensuring the capacity of our team has been essential to our growth. If you’re looking for ways to expand your revenue approach, read on for an overview of our funding evolution at Pillar and what we learned in the process.
Core municipal funding
We presented for the first time at a public participation meeting in 2006 to ask for funding from our municipal government. While we were not successful the first time around, the experience did get us in front of city council and started the discussions about having the City of London provide operating funding. We then hired a past municipal staff member to put together a business case for support. In 2008, we were successful in securing $40,000 in one-time funding. From here, it took a few years to solidify our funding request and in 2011 we secured $50,000 of ongoing funding. Receiving this stable source of core funding was a game changer for us as we have been able to leverage these funds to focus on building the capacity of staff, volunteers, board members and social entrepreneurs. In 2017, the City of London introduced multi-year funding and this move provided the nonprofits the opportunity for longer term planning, as well as better evaluation and impact.
Pillar Community Innovation Awards
In 2006, Pillar launched the Pillar Community Innovation Awards with a vision of the nonprofit, business and government sectors coming together to share, inspire and recognize those making our community brighter and better. While we knew that our goals for the event included building stronger relationships with business and media, we did not have the foresight to see how just how much it would grow. Today, the annual event sees over 1000 attendees, more than 45 corporate sponsors, 156 finalists and has resulted in solid relationships and storytelling from our local media. While special events do not typically yield revenue, we have been able to cover the staff and event costs year over year, and the relationships we have built and the increased profile we have garnered has lead to other revenue sources.
Learning and development program
For several years, we ran our professional development program with contract employees who were part of the job creation partnership. While we were happy to provide this opportunity for these individuals to gain valuable skills while searching for employment, it was not a sustainable business model for us. In 2010, we embarked on an evaluation of our current program and developed a business plan to guide the future of the program. This approach has been highly successful allowing us to cover our development and implementation costs while maintaining a financially accessible program with bursaries for smaller nonprofit member organizations. While this was an earned revenue strategy that was aligned with our mission, it was only in more recent years that we adopted the language of calling our learning and development program a social enterprise. We are due to review our program and update our business plan and are now in the planning stages.
Sustaining members
In 2010, our board recommended that we start a new Sustaining Member program. For a $1,000 annually, individuals, organizations or enterprises can become Sustainers who support Pillar’s work in building a strong, connected and influential sector. The money from this fund gives us the financial flexibility to respond to emerging issues and opportunities and allows us to maintain accessible fee levels for all groups. We have had up to 23 Sustainers annually and we are looking to grow the program to 50 Sustainers in 2019.
Impact Consulting
In 2010, we were exploring our sustainability and recognized we were supporting others to consider social enterprise and we should walk the talk. We started the process of exploring social enterprise with a readiness assessment, discussion about values and impact, evaluation criteria, and completed idea generation sessions. We also conducted market research, evaluated and presented social enterprise ideas, held board information sessions, secured funding, hired a Manager of Consulting Services and completed a business plan.
This comprehensive process engaged both our board and staff and ensured we were all on the same page about the value and impact of social enterprise. Our primary goal for the consulting program was to be dynamic and flexible so that we could respond to the needs of the nonprofit sector. Through the program, we wanted to both dig deeper to respond to the needs of nonprofit organizations and generate unrestricted funds to become more sustainable. We now offer service in areas including social innovation, social enterprise, social finance, board governance and diversity training.
As traditional funding models for nonprofits are changing, diversified funding has become critical for the sustainability of many organizations. These changes are being felt across the sector with a reduction in government funding, a decline in donations and a shift to goods and services making up 45.1 percent of the total income for the sector.
We have had many variations in our model for consulting services including a single consultant, an associate model, and a principal associate model. Today we have a staff team approach with associates. Through testing various models, we have found that leveraging the skills and expertise of our staff team in areas that are not overlapping with the existing consultants in our network best serves nonprofits, social enterprises and collaboratives. In 2015, Ivey Connects had a group of students work with our team on a next phase business and marketing plan. We also rebranded to Impact Consulting to better represent our goal to provide cutting edge consulting to amplify impact. Over the years, we have had significant growth in our consulting including broadening our work nationally. Recently, we have had a shift in our staffing and we are in a reset period of re-establishing our partnerships with associates and planning for our next stage of growth for Impact Consulting.
Innovation Works co-working space
Pillar was involved with the creation of Innovation Works from the very beginning when it was just a dream born in a living room gathering. During the development phase, all the partners had a focus on ensuring that this new social innovation shared space for London was backed by a sustainable business plan. Pillar stepped up to become the backbone organization, and after we had gathered a commitment of $1.2 million in social finance investments, we took on the role of purchasing a building. Pillar’s board boldly took on the role of financial steward while other the partners continued to hold the full vision, engage the community, and initiate the start-up phase collaboratively.
Today, Innovation Works is a social enterprise that has generated $1 million in revenue from co-tenants and event bookings and, after three years, is on a solid path to sustainability. As a nonprofit and charity, the assets from purchasing a building and the revenues are invested back into the mission of Pillar.
VERGE Capital social finance program
The launch of VERGE Capital, a local investment for local impact intermediary, along with our own social finance journey with Innovation Works, has opened up new capital for Pillar. VERGE Capital catalyzes an ecosystem of impact investing that redirects wealth to help tackle our region’s most challenging social and environmental issues. The model for VERGE is a social enterprise where interest from the loans and investment management fees are reinvested back into the work. With the leadership of the VERGE team, we have secured $1.2 million in social finance investments and $1 million in a community bond for Pillar and Innovation Works.
Finance and audit committee
With the growth at Pillar with Innovation Works and VERGE Capital, we created a Finance and Audit Committee to better monitor and support our more complex financials with a mortgage, social finance loans, community bond and social finance impact investment portfolio. Additionally, the responsibility for generating revenue is dispersed across each of our team clusters with targets for each group. Our audited financials have become more in-depth with these diverse funding streams and can be seen here.
Key lessons and failures
Pillar’s growth in earned revenue and undesignated funding has provided us with the flexibility to fund new programs and adapt to the needs of our network. Many of the funding strategies outlined above, including consulting and Sustainers, have required us to experiment and redesign the models as we learned from our failures. Throughout this process, we have been fortunate to have a board and staff team who are bold in their ideas and open to innovation.
While we have seen growth in our revenue there have been times where some revenue strategies have had more attention than others because we have more staff resources to dedicate to them. For example, we still have challenges in securing ongoing funding for our volunteerism and board diversity programs. We have had 11 grants to support our board diversity program over the years which illustrates the challenge for nonprofits to secure ongoing core operational funding and decide what new projects to fund. Now, we are at a time when we can reflect on our capacity to maintain the social enterprise and revenue strategies we have today and ensure we continue to nurture each of these to build a sustainable future to deliver on our mission.