Developing a Diversified Fundraising Strategy
By: Sarah Pita and Mike Esposito, CFRE
Introduction
I suppose you could wing it for a while, managing fundraising for a nonprofit. Throw together a Giving Tuesday campaign, send out a nice letter over the holidays, apply for some grants, have a fundraising event or two, and you may raise enough money to float along in an established operation.
But is that the best way to do it? Of course not. At a minimum, you should have a fundraising plan—even if the plan is relatively simple and centered around a couple of areas that work well for you, and a few points in time during the year.
If you want more—if you’re seeking to build your organization’s programs and scale up your impact to better serve your community, you should really look at crafting a fundraising strategy. Or you might consider hiring a fundraising consultant to do a complete fundraising assessment (or fundraising audit) and make recommendations that will position your organization for success—now, and for many years to come.
In this article, we will answer the following questions:
What’s the difference between a fundraising strategy and a fundraising plan?
What are some common pitfalls when creating a fundraising strategy?
Can a fundraising coach work with you on developing a fundraising strategy?
Which key performance indicators (KPIs) matter most for a successful fundraising strategy?
What is a fundraising strategy?
A fundraising strategy is a document that guides how your nonprofit will secure the resources needed to fulfill its mission over the long term. It provides clear direction for all your fundraising efforts, aligning your approaches with your nonprofit's values, mission, and operational capacity to create a cohesive system for attracting and retaining support.
A fundraising strategy answers fundamental questions such as:
Which funding sources are most appropriate for our work?
How do we position ourselves to funders?
Which donor segments should we prioritize?
What resources will we need to execute our fundraising effectively?
An effective fundraising strategy ensures that your organization isn't just raising funds, but is building relationships and systems that will support your mission for years to come. It can make the difference between fundraising being something you worry about to something you do well.
What’s the difference between a fundraising strategy and a fundraising plan?
A fundraising strategy is a powerful tool for any fundraising operation, a big picture overview of how a nonprofit will achieve its fundraising goals over time. It is typically created through a systematic assessment of existing fundraising operations, including input from staff, board, and donors, as well a robust analysis of giving data and a study of the successes of peer organizations. A good fundraising strategy will outline:
Fundraising goals (big picture)
Core funding streams
Long-term vision
Key messaging and positioning
Target audiences (who are your donors?)
Technology use
Capacity considerations
Your strategy will help to identify your fundraising’s True North—an organizational compass that will keep fundraising efforts moving in the correct direction.
By contrast, a fundraising plan is more of a detailed roadmap. If your strategy identifies your “what” and your “why”, the plan explains “how” and “when.” A fundraising plan will typically include things like:
Fundraising goals (specific targets)
Activities (campaigns, grants, sponsorships, events, major gifts)
Timeline, explaining when the activities will take place
Roles and responsibilities
Budget
Metrics for success
You can probably see how beautifully these two work together. After all, at least for those of us who remember using paper maps, a map is much more helpful if you know which way is north. Similarly, taking the time to define an overarching fundraising strategy will ensure that your plan is moving you in the right direction.
In the absence of major disruptions (see section 4), a fundraising strategy should be written or updated every 3-5 years. A fundraising plan typically should be drafted every year.
Who needs a fundraising strategy?
Any nonprofit that relies on fundraising to keep the lights on stands to benefit from creating a fundraising strategy, because a strategy exists to make your fundraising more effective. Doing the work to identify needs and areas of strength—as well as identifying things that generally haven’t worked very well—will help your team to set priorities that match your goals, and to plan effectively from year to year. It will provide the space to consider important questions like “is a gala the right approach for us?”
Even for organizations that seem to have a solid financial foundation, it is still a good idea to define strategy. For example, even if your organization is fortunate enough to have a substantial endowment that funds operations from year to year, you may still benefit from additional fundraising to support specific programs—and the endowment can help to make you competitive by taking staff salaries and overhead out of your “asks”.
In recent history, organizations that relied by default on events and activities for much of their fundraising had to pivot quickly during the pandemic. And, as many organizations are learning in 2025, even multi-year government grants are not immune from disruptions; having a diversified strategy in place can provide some security in turbulent times.
A strategy will help you to be ready for those moments before they come.
How often do you need to update your fundraising strategy?
A fundraising plan really should be drafted annually, with additional plans nesting within the organization-wide plan that provide guidance on specific activities (like a campaign or appeal) that will occur during the year. By contrast, in the absence of disruptions, a fundraising strategy only needs to be revised or replaced every 3-5 years.
This does not mean that, having gone to the effort of creating a fundraising strategy, you should stick it in a drawer and forget about it. It’s your compass; you should take it out and look at it from time to time—at a minimum, each year when you are crafting your annual fundraising plan.
There are situations that will call for revising or even rewriting the strategy altogether. Departure of a longtime executive director, for example, could lead to a major shift in priorities. If you lose a major donor, or if you gain a significant new source of support, that could change your picture enough to warrant revisions, if not a complete rewrite.
Likewise, global events could cause a major change. For many organizations, the COVID-19 pandemic demanded a shift in programmatic strategy—and also in fundraising strategy. Today, disruptions in government agencies that provide funding are surely causing many organizations to revise their strategies to accommodate a new reality.
How do you create your own fundraising strategy?
So, how do you go about crafting a fundraising strategy for your nonprofit? Keep in mind, this is different from drafting a plan, which identifies your goals for a specific period of time and then lays out the activities you are going to undertake to get there.
This is not an activity you can do by yourself, in an afternoon. It is tied to the very identity of your organization, and you will want to review existing materials such as annual reports, strategic plans, past appeals, and old grant applications, as well as talking to people throughout the organization and among your stakeholders as you answer these questions.
These are some core elements of a fundraising strategy:
Fundraising goals (big picture). What does your nonprofit need to raise in order to achieve its programmatic goals?
Core funding streams. How will your nonprofit raise that money? Where does funding currently come from? Analyze what percentage of your revenues come from different types of fundraising. Do you have a good digital fundraising strategy? What is missing from the current picture, and does that represent an opportunity for the future?
Long-term vision. Where does your organization see itself in 5 years? In 10? If your organization has a current strategic plan, that can be a good place to start.
Key messaging and positioning. How do you talk about your work? On your team, to your community, and to your funders and supporters? Does your online presence support your work? A team that is intentional about the message, and uses consistent, effective storytelling, is more successful in their appeals.
Target audiences (who are your donors?). This is more than just a list of names, getting at the “why” behind your most loyal, most consistent, and most generous supporters, and shedding light, as well, on the types of audiences your nonprofit has been most successful at reaching.
Technology choices. Is your fundraising technology supporting your strategic goals? For example, is your CRM providing you with all the functionality you need for effective donor management? Are you using a CRM? How are you processing your payments, and is it limiting your options? Could automation make your team more effective? These can be significant investments and need to be aligned with your overall strategy.
Capacity considerations. This can encompass both what your existing staff and volunteers can realistically do, and what your existing and potential donors are realistically capable of. We have found, for example, that unless you know Mackenzie Scott, it’s best not to plan on a multimillion-dollar gift from her.
Common Pitfalls in Fundraising Strategy Development
Faced with the challenge of setting a strategy that reaches into the medium-term future, organizations make a number of common mistakes as they strive to reach their goals.
Over-reliance on a single funding source - Many nonprofits become dependent on one major donor or grant, creating vulnerability if that source disappears. Your strategy should emphasize diversification across multiple channels.
Unrealistic expectations about capacity - Small nonprofits often create strategies requiring resources they don't have. Strategies should account for actual staff capacity and realistic growth projections.
Board disconnection from the strategy - When boards aren't involved in strategy development, they're less likely to fulfill their fundraising responsibilities. The strategy should include board engagement mechanisms.
Misalignment with organizational identity - Some nonprofits pursue funding streams that require them to stretch their mission or compromise their values. A good strategy aligns with who the organization truly is.
Chasing funding trends without due diligence - Organizations sometimes pursue new fundraising channels (like cryptocurrency or NFTs) without properly assessing if their donor base would respond. Strategy should be evidence-based.
Not accounting for donor demographics and preferences - Failing to consider the communication preferences and giving habits of different donor generations can limit effectiveness.
Ignoring the full cost of fundraising activities - Many strategies underestimate staff time, technology needs, and other resource requirements for new initiatives. Galas, in particular, are notorious for this.
Focusing solely on acquisition at the expense of retention - Research consistently shows it's more cost-effective to retain donors than acquire new ones, yet many strategies emphasize growth without sufficient attention to stewardship.
Using outdated donor data for decision-making - Strategies built on aging information about donors often miss emerging opportunities or threats.
What are the benefits of hiring a fundraising consultant to create a diversified fundraising strategy for your nonprofit?
In his famous 2005 commencement speech at Kenyon College, the late author David Foster Wallace started out with a little story: “There are these two young fish swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, "Morning, boys, how's the water?" And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes, "What the hell is water?"”
We humans have a tendency to adapt to the reality around us, and to lose sight of things because we see them every day. That’s our water. A skilled fundraising consultant coming in from the outside can be your wise older fish who is aware of the water, and takes that into account in their analysis.
Put more simply, an outside fundraising consultant brings a broader perspective on your work.
Additionally, as a practical matter, crafting an effective, diversified fundraising strategy for your nonprofit is not a small project. Depending on the size of your organization, it might involve dozens of interviews and many hours of research and data analysis. In choosing to undertake this work in-house, it’s wise to be aware of the opportunity cost. Be realistic about workloads on your team! Hiring an outside fundraising consultant will ensure that the work gets done when you need it.
In seeking a fundraising consultant, look for:
Experience doing fundraising strategy (check their references!)
Knowledge of your particular part of the sector
Familiarity with current best practices in fundraising assessments and fundraising strategies (certifications like CFRE require continuing education each year)
Current expertise in different technology options for nonprofits of your size
Good listening skills
This is probably obvious, but clear written deliverables with a clear timeline in any contract
Can a fundraising coach work with you on developing a fundraising strategy?
A fundraising coach can help you to create your own fundraising strategy. This can be a good way to go if you want to create your own strategy, but have never done one yourself before. A coach can help you think through the steps you need to take, and give you guidance on how to do them. They’ll also teach you how to do things like analyze data on your donors and conduct effective interviews for the purpose of a fundraising assessment. They can also serve as a valuable thought partner in moving from data gathering to making recommendations.
A benefit of working with a fundraising coach, rather than hiring a fundraising consultant, is that you will learn how to create a fundraising strategy! And the end product will have the benefit of being crafted internally, which can lead to greater feelings of ownership and, potentially, a greater likelihood of the thing being used.
In seeking a fundraising coach, look for:
Experience creating fundraising strategy (check their references!)
Knowledge of your particular part of the sector
Familiarity with current best practices in fundraising assessments and fundraising strategies (certifications like CFRE require continuing education each year)
Current knowledge of fundraising technology
Good listening skills
Good collaborative chemistry. You will be working closely with this person; look for a dynamic that inspires you and boosts your productivity. If you interview them and all they do is talk at you, chances are that is what you’re going to get in coaching.
What is a fundraising assessment (otherwise known as a fundraising audit) and how does it help with strategy development?
Think of a fundraising assessment, or fundraising audit, as the research that informs the fundraising strategy, and particularly when working with an outside fundraising consultant who is seeking to uncover the unexamined fundamentals of your organization’s fundraising picture. Following are components that may be included in a thorough fundraising assessment:
Staff interviews: Engage with those who are closest to the donors and programs, such as development and programs staff, to gather insights on current challenges, opportunities, and internal perspectives on fundraising and programmatic success.
Board interviews: Tap into the unique experiences and expertise of board members, who may offer invaluable perspectives on the organization's fundraising strategy, donor relationships, and overall goals.
Donor data analysis: Conduct a detailed analysis of donor data to identify patterns and trends, highlighting areas where there are opportunities for growth, such as re-engaging lapsed donors or expanding giving from existing ones.
Revenue stream review: Assess your current revenue streams- both restricted and unrestricted- and identify ways to optimize existing funding sources. This could involve diversifying income across individuals, foundations, corporations, and government funding sources.
Peer comparative analysis: Identify similar organizations in your sector to understand best practices, find potential growth areas, and learn from the fundraising successes and challenges they’ve experienced.
Risk assessment: Identify potential risks to the financial stability of your organization, such as over-reliance on a single funding source, and recommend strategies to mitigate these risks by diversifying your revenue streams.
Stewardship planning: Evaluate your current donor engagement strategies and determine ways to strengthen relationships with your donors. Ensuring that donors feel appreciated, informed, and engaged is key to fostering long-term loyalty.
Creativity opportunities: Explore innovative fundraising approaches that may better engage your supporters, enhance donor experience, and align with emerging trends in the nonprofit sector, such as influencer marketing or peer-to-peer fundraising.
What are some advanced tactics you can add to a fundraising strategy to build fundraising success into your fundraising plan?
Here are some things you may not have thought of that will strengthen your fundraising strategy, and help your fundraising plan to succeed.
Screen your donors. Don’t stop at what you think you know about your loyal supporters. Tools like Hatch and DonorSearch use publicly available information and AI to tell you more about your donors’ philanthropic capability.
Learn how to ask. If your organization has supporters who have the potential for a major gift, consider coaching for the people in your organization who are most likely to be making major gift asks. An experienced fundraising coach can help avoid common pitfalls in the type of conversation many of us find uncomfortable.
Review the larger grants landscape. Look at databases like Candid or Instrumentl to identify other potential supporters of your work.
Identify peer organizations. Do you know who else is doing work like yours? Peers can be valuable collaborators, and can also provide introductions to new funders.
Which key performance indicators (KPIs) matter most for a successful fundraising strategy?
How do you know if your fundraising strategy is working from year to year? For some, reaching your financial goals (and hopefully surpassing them) is enough. But an effective fundraising strategy needs clear metrics to evaluate its success. Here are some key performance indicators (KPIs) you could consider to evaluate the success of your strategy:
Fundraising Return on Investment (ROI): Track the ratio of funds raised to resources invested, both overall and by funding stream. This can suggest which strategies deliver the most value.
Funding Diversity Ratio: Measure the percentage of total revenue coming from each major funding source. This can help uncover overreliance on a particular funding stream.
Donor Retention Rate: The percentage of donors who give again within a year. Increasing this by just 10% can dramatically improve long-term sustainability.
Donor Lifetime Value: Calculate the total contribution a donor makes during their relationship with your organization. This helps prioritize relationship-building efforts.
Board Giving Participation: Track the percentage of board members who contribute financially, with a target of 100%. Some grant funders require 100% board participation.
When reviewing your strategy annually, assess these metrics to determine if your strategic direction remains sound or requires adjustment. Remember that metrics should align with your organization's specific goals—what works for a grassroots advocacy group might differ from what's important to a large cultural institution.
This kind of measurement goes beyond simple campaign tracking to evaluate whether your overall approach to fundraising is building the sustainable support you need in the long term.
About the Authors:
Sarah Pita
Sarah Pita is Director of Development at the Center for Independence of the Disabled, New York, where she leverages AI tools daily to maximize impact as a department of one. With over 25 years of experience in the nonprofit sector, she brings a comprehensive understanding of organizational needs to her fundraising strategy and communications work across multiple sectors. Her presentations on practical applications of AI consistently receive praise for making complex technology approachable and immediately useful for nonprofit professionals.
Mike is the Founder and Lead Fundraising Strategist of Mike Esposito Fundraising, a New York City-based consultancy dedicated to helping small to midsize nonprofits strengthen donor relationships and achieve long-term fundraising success. A CFRE-certified strategist, mentor, and coach, Mike partners with organizations to develop tailored solutions that align with their mission and goals. His expertise spans fundraising strategy development, major gifts, donor stewardship, campaigns, and board and staff coaching- offering nonprofits the tools and guidance they need to build sustainable, high-impact fundraising programs.