Building a Discretionary Fund

Paying Fundraisers and Grant Writers

How can you pay a freelance fundraiser and grant writer?

The fastest and easiest way is through discretionary funds, not through grants themselves. Save yourself time and headache by avoiding any consideration or discussion around paying a percentage of a grant.

A top professional association of grant writers – Grant Professionals Association (GPA) – asks its members to “just say no” to commissions or any form of percentage compensation. Stay away from commissions or individuals who say they will write a grant for a commission.

You are better off paying a freelance grant writer a flat fee or hourly fee up front. From what source?

Pay your fundraiser and grant writer from your discretionary fund. A discretionary fund is money you can use for whatever purpose you choose in meeting your agency’s mission. The most common source of discretionary funds is Individual Donors.

By contrast, grants are not discretionary funds. They have “strings attached.” They limit how your money is spent. Since you cannot pay a grant writer from your grant, it’s best to build up your discretionary fund to pay for help with fundraising, grant leads and grant writing.

4 Fast Ways to Build Your Discretionary Fund

Here are 4 of the fastest ways to build your discretionary fund…

  1. Hold an annual fundraising event, like a raffle, golf tournament, concert, dinner. Brainstorm with your board fundraising events that fit your mission. Explore events that tap your board’s expertise and that your board can get behind. For example, one start up nonprofit raised $45,000 in its very first fundraising dinner by roasting top state male and female senators and representatives.
  2. Create a Founder’s Circle. This is ideal for startups, but can be used by any nonprofit at any time. People like to be the first ones involved in a project. Lead off the campaign yourself or ask a board member to lead off. For example, I led off by stating that I would donate $500 to a new nonprofit. Then, I challenged others, “Who will join me in being part of a Founder’s Circle?” 40 people joined me. We raised $20,000 in less than 2 months. Here’s a bonus tip: Generate $100,000 fast ($20,000 a year for 5 years) by asking your Founder’s Circle to commit to paying a certain amount – say $500 – each year for five consecutive years. I wish I would have thought of this in the example in the previous paragraph.
  3. Find a corporate sponsor. Ask a local corporation to help subsidize (underwrite or sponsor) the cost of a fundraiser or grant writer for your nonprofit. Then, recognize corporate sponsors in your newsletter and annual report.
  4. Find a small group of individual sponsors. Ask each to pay a certain amount each – say $1,000 – to help subsidize (underwrite or sponsor) the cost of a fundraiser or grant writer for your nonprofit. Give them a special designation like “Platinum Sponsor.”

Here are 2 reminders…

  1. Tap into the expertise of your board of directors. Ask them to lead the way in creating and promoting fundraising events, leading your Founder’s Circle, and contacting corporate and individual sponsors.
  2. Build your discretionary fund, first. Then, you’ll be in the perfect position to leverage these funds for fundraising, grant leads and grant writing.

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