Foundations are private funds established by either community groups or, more commonly, private individuals, families, corporations and/or community groups. Foundations often start with a large sum of money called an “endowment”. The endowment acts as the seed capital for investments and grants mostly come from the interest on those investments.

Because of their controversial nature, harm reduction programs have historically had a hard time receiving foundation funds. Only a small number of foundations, most notably the Comer Family Foundation and Open Society Foundation, were initially interested in funding syringe access and harm reduction. In the beginning of the HIV epidemic, it was even difficult to get funding for any HIV related services. To join the fight against HIV by providing funding, several celebrities or groups formed their own foundations. Those that also provided funds for harm reduction included Broadway Cares, the Elton John AIDS Foundation, and the Liz Taylor fund. In the mid-2000s these foundations came together under the umbrella of AIDS United to form the Syringe Access Fund, which has been a major national supporter of SSPs.

Community, regional, and population-specific foundations have been an additional source of funding for harm reduction organizations.

Government contracts and grants use federal or state tax dollars to contract with an agency to provide services. The difference between government contracts and grants is that a contract is a legally binding document in which the parties make promises to deliver a product or service in exchange for funding; a grant is when one party grants funds to another party to do something, in reasonable hopes that the task can be accomplished. Contracts are usually made for services that have been tested and shown to work, while grants are usually reserved for research into what might work.

Government funding usually comes from one of four sources – federal direct, federal “pass-through”, state, and local. Historically, federal direct funding has been the most fruitful for syringe access programs. Due to the federal ban on direct funding for syringe access, those dollars have usually been for adjunct services or, in the case of federal grants, research. So-called “pass through” funding is federal funding that is first given to state agencies. This has often meant that even if pass-through dollars could have been used for harm reduction, states with legislatures hostile to harm reduction may have not allocated them to harm reduction.

Federal funding has primarily come to harm reduction through departments concerned with public or behavioral health. These departments include the Centers for Disease Control and Prevention (CDC), Substance Abuse and Mental Health Services Administration (SAMHSA), Health Resources and Services Administration (HRSA), and National Institute of Drug Abuse (NIDA).

State funding has come primarily through departments of public or behavioral health, particularly branches tied to infectious disease control.

Local government funding, especially in larger cities or those open to harm reduction, has also helped fund harm reduction organizations and SSPs.

• Start with a plan – your fundraising plan should be a part of your strategic planning process and should include SMART(IE) goals. Please see the section “Organizational Design and Planning Hacks for SSPs” for more information.
• Diversify – try to ensure that your organization has a diverse set of income streams in order to guard against catastrophe if you lose one.
• Seek partnerships – look for other agencies to partner with for larger fundraising projects or contracts.
• Keep asking – even if you have asked a particular donor and been rejected, don’t hesitate to ask again.
• Leverage rejection – if you have been rejected by a particular funder, ask them for feedback and pointers on how your proposal could have been stronger. Sometimes your rejection may have more to do with funding priorities, but you may get valuable information on how to improve your chances if you ask.
• Make it concrete – especially when you’re talking to individual donors, make it clear what they are paying for or could be paying for. This helps people relate better to why they need to donate.
• Learn to tell stories – learn to tell your participants’ and your organization’s stories in a relatable way that engages people emotionally.
• Develop spokespeople – Work on empowering your participants to help deliver their stories to show potential funders how much impact they can make.
• Leverage personal relationships – Ask your friends, family members, and other people you know to help with your fundraising efforts by donating money or time to your cause.
• Cultivate donors – Find places where you can meet potential donors and look for them.
• Research everything – Research every avenue for funding and try to think of novel ones.
• Talk to everyone – Don’t ignore funding sources you think might not be aligned with harm reduction, instead tailor your message to suit your audience.
• Engage your donors – After you’ve cultivated donors, regularly find ways to reach out and engage them so they feel like they too are a part of your community. This may include regular communications or events.
• Hire someone – Hire an outside consultant to help you, especially with larger grant proposals or those for which specific expertise is helpful, such as federal requests for proposals.
• Cold call – Don’t be intimidated to “cold call” potential funders and ask them for ideas.
• Host events – Hosting events allows people to get to know your agency and builds community.
• Offer tours – Offer regular tours of your service sites. Though organizations are discouraged from providing such tours during service provision hours (to protect the privacy of SSP participants) offering tours during down time builds community and demystifies services.
• Have a fundraising page – Have a page on your website entirely dedicated to fundraising. DO NOT put it as an afterthought on another page.
• Make monthly giving the default – Small monthly donations, called “sustained giving”, offer one of the most useful donation strategies and should be set up as the agency’s default form of donation.
• Develop your social media presence – The importance of social media in promoting an organization’s profile, brand, and appeal to potential donors cannot be overstated. Work on developing your social media presence by talking about what you’re doing, reposting content related to your work, offering harm reduction education, and so on.
• Leverage your board and volunteers – Your board and volunteers are the backbone of your community. Getting them involved in fundraising will dramatically increase your reach and your efficacy.
• Look to community businesses and corporations – Make sure to ask local community businesses to help support your work.

Over the years, harm reductionists have used a variety of strategies to fund their services. Because of the stigma related to people who use drugs and the mythologies that have arisen around drug use, harm reduction was seen as “enabling” problematic behavior at a time when much of the world was still trying to fix problematic drug use by criminalizing it.

As a result, in the beginning, harm reduction was so controversial that only a small handful of foundations or other funders would consider funding harm reduction services – and almost no one would give direct funds for purchasing syringes or other injection supplies. Instead, harm reduction programs received funding for adjunct services, research, HIV and HCV testing, or other services and then funneled as many unrestricted dollars as possible into supply budgets. Another strategy was to enter into mutual aid relationships with clinics, hospitals, or other health care providers who shared syringes and supplies, sometimes clandestinely.

This history has meant that harm reduction programs usually focus their fundraising efforts on just two major sources: foundation grants and government contracts. This is not the norm in the nonprofit sector. On average, nonprofits generally receive about 53% of their income in revenue from goods and services they provide to private entities, and slightly over 70% of all donations to nonprofits are from individuals. By contrast, harm reduction organizations normally report only a fraction of their income from these two sources.

Though organizations can do their own bookkeeping and tax filings, it is often both easier and more transparent to hire a professional. The four primary types of fiscal professionals that might be useful to an SSP, from least to most expensive, are:

• Bookkeeper – bookkeepers are hired to keep accounting records for the organization. They usually have a certificate that is the equivalent of an AA degree.
• Enrolled Agent (EA) – an EA has passed a test and earned a certificate from the federal government to file federal taxes. EAs who are not CPAs are often bookkeepers.
• Certified public accountant (CPA) – CPAs can do everything that a bookkeeper or EA can do, and also provide independent audit reports and financial advice. They have the equivalent of a bachelor’s degree and are, by default, enrolled agents.
• Tax attorneys – tax attorneys are licensed attorneys and have all of the training of both a CPA and a lawyer. They can provide legal advice, practice law, and represent clients in litigation.

When deciding what kind of professional help to get, keep in mind your needs and budget and look for professionals familiar with non-profit accounting. To find a competent professional:

• Consult the Hacks vendor list.
• Ask around! Friends, board members, leaders of other organizations etc.
• Don’t be bashful about vetting! The person you hire needs the correct credentials, and they need to understand nonprofits generally and your organization specifically.
• Check references and testimonials.
• Don’t be afraid to ask for a discount, sliding scale, or pro bono assistance.
• If you speak with a professional who sounds good but can’t help you, ask them for referrals! Professionals of all kinds often have a robust network and are happy to help.

An audit is an official inspection of an organization’s accounts that is undertaken by an outside party – either a CPA or a tax attorney.

Many people associate audits with being in trouble with the IRS, but charitable organizations, especially those who receive federal funds (even “pass through” ones) of more than $750,000, must undergo yearly audits. Even organizations who are not required by the IRS to have regular audits may want to have them because many funders and some state tax authorities require audited financial statements.

The cost of audits varies based on the amount of time needed to complete them. Generally, expect to budget a few thousand dollars for this expense. The good news is that audits are considered a normal business expense and can come out of “direct” or “overhead” costs.

One of the things that many leaders said they had heard from financial professionals was that three categories of expenses are especially scrutinized by the IRS: reimbursements, petty cash, and employee mileage.

Because of this, it is especially important to create transparent processes for tracking these expenses. For both petty cash and reimbursement requests this should include forms (either electronic or hard copy) and physical or digital locations for storing the forms along with receipts.

Mileage can be tracked exactly and reimbursed at a rate set by the federal government. An alternative for organizations that reimburse staff for recurring trips, like outreach routes, is to reimburse by the trip – basically each trip’s mileage has already been calculated. For instance, if you know your normal outreach route is 12 miles and the federal rate is $.56 per mile, the staff member can simply bill $7 for each time they travel that route.

The rules and common parlance of nonprofit finance are mostly the same as any other business, but nonprofits have some specialized language and practices, including:

Restricted vs. Unrestricted Funds – Dollars raised for nonprofit work generally fall into two categories: restricted and unrestricted. Restricted funds are those from individual, foundation, or government entities that are tied to specific activities, so they can only be spent on those activities. Unrestricted funds, on the other hand, can be used for anything the program needs – from salaries to supplies to rent. Not surprisingly, unrestricted money is often the most desirable type of funding organizations receive because there are fewer obstacles to spending it.

Indirect Costs – Please note that even with restricted funds, a percentage of total indirect costs (that is the money necessary to pay administrative costs like the rent on an office, insurance, fundraising costs, bookkeeper’s salary, office supplies, business fees and so on – sometimes called “overhead”) can usually be charged as a percentage of any grant or contract. There is no set ratio for indirect costs, but the Office of Management and Budget (OMB) offers guidance for percentages paid through government contracts and grant applications will often offer an acceptable percentage. Organizations are also strongly encouraged to ask potential funders what they expect the indirect rate to be if the grant materials do not specify it.

Fringe – The cost of having employees obviously includes their wages and other direct compensation but employees incur other expenses including benefits, payroll taxes and fees associated with things like payroll services. Fringe is normally calculated as a percentage of salary or payroll. This rate ranges depending on a number of variables but the Bureau of Labor Statistics calculated the average fringe rate was 30%. Funders expect that this and your indirect cost rate will be calculated in to any proposals you prepare.

Creating a budget is an essential part of strategic planning for your organization. Budgeting can be challenging for harm reduction organizations because funding is often so dependent on foundation and government grants and contracts, which can radically transform the budget and what an organization is able to do in any given year. At the same time, budgets are essential because they allow programs to:

• Set goals
• Plan for emergencies
• Attract funders
• Scale operations
• Prepare taxes
• See and control expenses

Because of the challenges inherent to budgeting for SSPs, harm reduction leaders encourage their peers to create “if/than” budgets, which offer budgeting options that include potential funding streams and their impacts on services.

An example of a sample “if/than” budget looks like this:

*a working Excel version of this budget can be found in the Google Docs resources folder for this section.

AKA “Charts of Accounts”. One of the next decisions organizations will need to make when setting up their accounting system is their expense categories or “chart of accounts”. These are broad categories for accounting that help track income and expenses – they are the basis of accounting. These can include categories such as:

• Checking (Bank Account)
• Savings (Bank Account)
• Accounts Receivable
• Supplies
• Prepaid Expenses
• Property
• Equipment
• Accumulated Depreciation
• Accumulated Amortization
• Accounts Payable
• Salaries/Wages
• Payroll Taxes
• Employee Benefits

One thing SSPs should keep in mind when planning their expense categories is how they may be impacted by funding. For example, an expense category such as “supplies” is probably far too broad for many SSPs who may be receiving funding from separate funders and need to account separately for different supplies like injection health related supplies, naloxone, and safer sex supplies for reporting or other funder requirements.