Non-profits come in many different forms. From public charities and foundations to education and religion, the missions are quite diverse. What is common to all is the constant need to raise funds.
The difficulty that many organizations face, in particular small shops, is that fundraising is often an afterthought. It doesn’t get the attention,
structure, and strategic planning that it needs.
In this blog post, we’re going to break down the major forms of giving. This is geared toward smaller shops. Large institutions often have specialized development teams that are highly structured. We won’t cover every type of gift, but ideally, you’ll be able to form a strategic plan.
BUT FIRST, GRANT WRITING…
I’ve interviewed at non-profits that live off a few grants. That is what inspired this article.
The goal of this article is to show you how to diversify your NPO’s revenue so you’re not living off a grant or two. Another goal is to show you which forms of giving will yield the best ROI.
DISCLAIMER ON GRANT WRITING
You may disagree with some of the assertions you read here. This is not intended to be absolute. There are exceptions but if you’re exploring a more aggressive development plan, these suggestions need to be considered. Corporate and grants can be big parts of your development plan. But this blog will focus on individual giving which makes up the majority of giving.
1. ENGAGE YOUR CEO AND YOUR BOARD
Like a previous post on setting marketing budgets, the leadership has to…well…lead. Your development plan will be more effective if your CEO and board draft it. This for several reasons.
The simplest reason is that the board should be making donations. Board members should be donating because that’s leadership.
To set an example. Also, your board members could donate some serious money. If your board is large and has capacity (fundraising talk for financially well-off), those gifts can add up.
Another reason is that when time comes to cultivate major gifts, board members are critical. Here’s why.
2. MAJOR GIFTS USUALLY HAVE THE BEST RETURN
Major giving basically means a fundraiser met with a friend of your organization. Likely with the help of board members, a gift of considerable size was solicited (see why you need the board?). The giving cycle can take over a year, but the size of the gifts make them great.
Major gifts will likely provide the best return on your investment. For every dollar raised, it’s literally pennies in costs. Grants can achieve good ROI too but the point of this article is to raise funds from friends of your association. In other words, individual giving is powerful.
Major giving needs to be a part of your development plan. A good way to start is by establishing a development committee on your board. From there, they can make lists of people with affiliation to your NPO. Once you have a list, you can then work as a team on an outreach.
3. ANNUAL FUND IS RELIABLE
The majority of giving is from individuals. That’s what makes major gifts and the annual fund so critical. The annual fund is the mailing that goes out once per year. The ROI isn’t as great as major gifts. But once you’ve identified donors, you can boost the ROI.
Acquiring annual fund gifts costs more than renewing them. Take this into account. Those who donated to last year’s annual fund have greater inclination.
I highly recommend segmenting your mailing. Those who are prior year donors deserve a customized letter thanking them for last year’s support. If this seems like too much work, just remember that the cost of securing a renewed donation is less than finding a new one. The best donor is the one you already have.
Another note on annual fund:
This is perhaps your best pool of prospects for finding major givers. This where you and your development team can review your donors and find a list of potential of major gifts.
4. SPECIAL EVENTS CAN BE COSTLY
Some organizations value events more than others. The problem is that they can eat up about half of what you raise. Of all the forms of fundraising, this can be one of the most expensive. Give real thought to if and how you need to hold an event.
FINALLY, HERE ARE QUICK TIPS FOR YOUR DEVELOPMENT CAMPAIGNS
- Sign thank-you letters with personalized notes
- Have a giving club with different tiers and make it public
- Get a Charity Navigator Rating and keep it high
- Understand your IRS Form 990…prospects could ask questions
- Have a year-end giving strategy focused on December