What is a Fundraising Strategy?
A fundraising strategy evaluates potential funding sources against funding needs for a Water Fund, and develops plans for securing funding that will help meet both short-term and long-term needs. As well as outlining the funding that will be required, a fundraising strategy defines how the Water Fund staff will go about raising those funds through the development of appropriate tools, which may include a business case, company or agency-specific financial models, and philanthropic arguments.
How is a fundraising strategy different from financial planning?A fundraising strategy has several key distinctions that set it apart from the financial strategy. While a financial strategy determines the costs and benefits of the proposed financial model and how much funding is needed to achieve the water fund’s goals, a fundraising strategy specifies how funding will be secured to meet those identified needs.
What is the scope of a fundraising strategy?A fundraising strategy requires that several key analyses be undertaken to address the questions outlined above, including the types of funding that have already been secured (e.g. seed funding, match funding, etc.), who potential funders are (e.g. public, private, etc.), and if there are any conflicts of interest that would result from working with the identified funders (e.g. impassable conflicts between funders, reputational risks for TNC or stakeholders, etc.). This strategy should consider and develop plans for both short-term (e.g. seed funding) and long-term needs (e.g. costs associated with implementation). For instance, short-term funding agreements may help to complete important studies or hold critical events and will typically be transferred in the form of grants or time-bound contributions, while long-term funding agreements such as water-user fees, watershed committee regulation, tariffs, or commitments from companies may help to sustain the ongoing operation of a Water Fund or implementation of interventions. Long-term funding agreements will always require legal consultation and involvement in the definition of conditions and requirements.
Where should the outcomes of a fundraising strategy be documented?The results of the work completed under the fundraising strategy should be directly linked and incorporated into the Water Fund Strategic Plan.
A fundraising strategy requires a clear definition of the following project elements as early as possible. These elements should be clearly identified in the Water Fund Strategic Plan:
- ecosystem services that are being targeted.
- goals that a water funds will be seeking to achieve, including quantifiable targets that can be easily measured (e.g. hectares required of restoration).
- the funding required to achieve this target (e.g. 200,000 hectares of forest must be restored to meet the municipal drinking water quality).
With these elements clearly defined, a fundraising strategy should then proceed to address the following questions:
- Which types of funding have already been secured? (e.g. seed funding, long-term, match funds, etc.)
- Who are potential funders and potential funding types available?
- What tools are needed in order to present the water fund to potential funders?
- Are there any implications or conflicts of interest that would result from working with identified funders?
- How will funders share the costs? (e.g. proportional to water benefits they receive, or based on ability to contribute)?
Once these core requirements have been defined, a fundraising strategy can be developed. This development process typically includes consideration of a range of funding sources to help meet short-term and long-term needs, including seed funding (short-term) and implementation funding (long-term). Each type of funding may be a mix of public and private funding sources.
Implementation funding is typically associated with funds required to implement the work on the ground and may be secured via a temporary source (e.g. grant) or a long-term funding mechanism (e.g. tariff that will be implemented over a renewable 20 year period).