Toward a Sustainable Funding Model: A New Look at the Fundraising Stool

For decades, nonprofit leaders have relied on the familiar concept of the three-legged fundraising stool. In its most common form, the stool consists of Annual Giving, Major Gifts, and Planned Giving. The idea is straightforward: if one leg is weak, the organization becomes less stable. The model has been useful because it encouraged organizations to diversify fundraising efforts and avoid overreliance on a single source of support.

But fundraising and philanthropy have changed. Donor behavior has evolved. Revenue streams have become more complex. Many organizations now receive significant support from grants, corporate partnerships, and government funding. At the same time, donors increasingly expect a relationship-centered approach rather than a series of separate fundraising programs.

Interestingly, the fundraising stool has already been challenged by many practitioners. Some have argued that the real legs are donor acquisition, donor retention, and donor engagement. Others focus on leadership, programs, and resources. Still others have proposed four-legged models that incorporate campaigns or institutional support. The fact that so many variations exist suggests that the sector recognizes the limitations of the traditional framework.

The challenge is not that the traditional stool is wrong. The challenge is that it was designed primarily to organize fundraising functions. Today's nonprofit leaders need a framework that helps them think about organizational sustainability.

Weaknesses In The Traditional Fundraising Stool

One of the biggest weaknesses in the traditional model is the separation of major gifts and planned gifts. From an organizational standpoint, that distinction makes sense. Different staff members, different goals, and different reporting structures often support each discipline. But donors rarely think this way.

A donor who makes a major gift today and leaves a bequest tomorrow does not see themselves as participating in two different fundraising programs. They see themselves supporting a mission they care about. The relationship is one relationship. The philanthropy is one philanthropy. Only the timing differs.

This reality suggests a different way of thinking: Lifetime Philanthropy. Instead of separating current and future gifts, nonprofits can help donors think about the total impact they want to have during their lifetime and through their legacy. This creates deeper conversations, stronger relationships, and often larger cumulative support over time.

The second issue is the absence of institutional funding from many versions of the fundraising stool. For countless nonprofits, grants from foundations, corporations, and government agencies represent a substantial share of annual revenue. These funds help build infrastructure, launch programs, expand services, and respond to emerging needs. Excluding institutional funding from the model leaves out one of the most important components of nonprofit sustainability.

The Sustainable Model

This leads to a new framework: the Sustainable Funding Model. Rather than focusing on fundraising categories, the model focuses on the funding pillars that support long-term organizational health.

The first pillar is Annual Giving. Annual giving builds broad participation, recurring support, and donor engagement. It often serves as the entry point for future major donors, volunteers, board members, and legacy donors.

The second pillar is Lifetime Philanthropy. This combines major gifts and planned gifts into a unified donor-centered strategy. Organizations help donors answer two questions: What impact do you want to make now? What impact do you want to leave for the future?

The third pillar is Institutional Funding. Foundations, corporations, and government agencies provide strategic investments that allow organizations to expand capacity, strengthen programs, and achieve outcomes that individual giving alone may not support.

This framework has important implications for nonprofit leadership. Boards should think about funding sustainability rather than fundraising silos. Executive directors should ensure that development teams collaborate across disciplines. Development professionals should be encouraged to see major gifts and planned gifts as complementary rather than competing priorities.

The Sustainable Funding Model also provides a more realistic picture of how mature nonprofits actually thrive. Rarely does long-term success depend on a single revenue source. Strong organizations build broad community support, cultivate transformational donors, encourage legacy commitments, and pursue strategic institutional funding.

Ultimately, the goal is not to discard the traditional fundraising stool. It has served the nonprofit sector well. Instead, the goal is to evolve the conversation. The traditional fundraising stool helped nonprofits organize fundraising functions. The Sustainable Funding Model helps nonprofits think about long-term organizational sustainability.

Perhaps the fundraising stool does not need to be replaced. Perhaps it simply needs a new look.

I would be very interested in your thoughts.