If you’ve watched a few episodes of Shark Tank, you recognize three key indicators present when the sharks decide to invest and become partners: 1) Personal financial investment from the owner; 2) the ability to secure a broad base of investors; and 3) market differentiation. In the nonprofit sector, philanthropic support including government grants, foundation funding and individual and corporate contributions should not be considered “gifts”, but investments.
1. Personal Financial Investment
Business owners on the Shark Tank are often asked:
"How much money have you invested in your own business?”
"Skin in the game” is a measurable commitment made to support the success of the venture. Similarly, a foundation will want to know “How many of your board members have made financial contributions to your nonprofit this year?” Have you been able to successfully “pitch” the work and impact of your organization in a way that demonstrates commitment from board members and staff through financial giving?
2. A broad base of support
Another popular shark question:
"Have you raised money from outside sources?”
The ability to secure financial support from a variety of investors suggests broad appeal to those who regularly take these risks. In the nonprofit sector, potential funders will want to know the amount and source of outside donations and financial support you have been able to secure. Being able to report a diverse funding stream inclusive of individuals, companies, government agencies and foundations will strengthen your application for funding support.
3. Market Differentiation
When new products are featured on Shark Tank, the sharks ask:
“What is unique about your product?”
They want to know why someone would spend $5 for a new lipstick brand when hundreds are readily available in the marketplace. Market differentiation is the ability to distinguish a product or service from similar offerings of competitors. As the number of nonprofits continues to grow, a potential funder will want to know “How is the program or service that you’re offering different from other nonprofits in your community already doing this work?” If you are a mentoring organization, what services do you provide that are unique? Are you serving areas of the community that others aren’t?
Redefine and Refine your "Pitch"
When nonprofits view their organization through a business investment lens, they become better positioned to secure increased funding opportunities. Treat your informational meetings and site visits with prospective funders as an appearance on the Shark Tank. Have ready answers for questions regarding finance, governance and programming metrics. By performing frequent internal analysis of the organization, the nonprofit will achieve greater success in fundraising operations.