Hello friend,

Welcome to Theory of Change. This edition takes 3 minutes to read.

Each week, I break down a framework and show how you—as a journalist, social entrepreneur, changemaker, or nonprofit leader—can use it to build an organisation of purpose.

Today, we’re diving into a method to help you find more aligned funders with minimal effort—the Virtuous Circle technique. This approach is one I developed and it is my go-to strategy for building a funder or investor database that’s not only full of qualified leads but also pre-validated. You’ll discover how to use connections in your field to uncover folks with money who already support work like yours.

Let’s get into it.

😇 STAY IN THE LOOP 😇

What is it?

Finding the right funders can feel daunting—either you’re stuck with no leads or overwhelmed by too many unqualified options. I developed the Virtuous Circle to turn my network into a map of funders.

This method is built on a very simple yet very powerful idea: use the funders of organisations like yours to find more funders. You begin with one or two organisations similar to yours, trace their funders, and then follow those funders’ connections. It’s a network effect that quickly expands into a robust list of potential funders.

How it works.

1. Start with a similar organisation. Research one that aligns with your mission.

2. Find out who funds them. This often leads to organisations already invested in your space.

3. See who else those funders support. Make a list of all the grantees they support.

4. Investigate the funders of those grantees, leading you to new potential funders.

5. Repeat the process. Follow the funding trail to build your shortlist of potential funders.

Why it works. The Virtuous Circle method is effective because it discovers funders with proven interest in your field. You’re not starting from scratch but leveraging relationships and existing commitments. Plus, by analysing both funders and grantees, you map out the full landscape—who funds what and why—allowing you to approach funders with confidence.

This method also helps you understand your competitors. While "competition" may feel like a dirty word in the nonprofit sector, it’s important to recognise that you’re competing for funds. Knowing who else is vying for the same support, and how they position themselves, empowers you with strategic insight.

Take it to the next level.

• Choose an adjacent organisation. Researching adjacent grantees (in, for instance, the human rights or climate space) may yield totally different funding avenues.

• Look into their funders’ other grantees. Consider these folks as part of your network. what collaborations could you suggest to help raise your visibility amongst their funders?

• Use reports and directories. Some funders publish lists of grantees or include them in their annual reports—great places to dig for intel.

• Document your findings. Keep your database up to date as you research, so you don’t lose track (might I recommend Fundraising HQ perhaps?).

🔮 FUTUREPROOFING 🔮

Transparency in funding is growing. Tools like 360 Giving and Foundation Maps by Candid allow you to search open grant data to see who’s funding what and help you discover trends in your sector. Using these along with your Virtuous Circle technique will keep you ahead of the curve.

And, as we’ve mentioned in previous newsletters, AI is allowing tools like Impala to potential disrupt the fundraising sector entirely by accelerating search and making workflows more efficient.

🪁 PARALLEL PLAY 🪁

Three worthy distractions for you from the worlds of culture, technology, and art.

• Social Media Escape Club is a newsletter, community, and service that promises to help you spend less time on socials, make money, and grow an audience with your email list.

• Eno, a generative documentary about visionary musician and artist Brian Eno, is different every time it’s shown. I’m still waiting for it to come to my tiny German town. I’ll be waiting a while I think.

• Metaphor: ReFantazio is a new RPG from the creator of Persona, one of my favourite computer game series. It’s a unique game about tribalism and racial tension, about deposing a power-hungry leader, and about winning an election. Even if you’re not into games, I recommend this interview with its creator!

🌊 WAVE GOODBYE 🌊

My YouTube video last week was all about funding, so if you liked this newsletter, I reckon you’ll also like that. Growing a channel is hard, so every like and subscribe helps. Thanks!

Good luck as you start populating your funder database. Let me know how the Virtuous Circle technique works for you or if you hit any roadblocks—I’d love to help. I also have a course that tries to put the fun into fundraising. Tries. 🙃

Stay safe out there,

Adam

p.s. If you were forwarded this mail and like what you see, sign up to this newsletter here.