Transcript Fundraising for Nonprofit Organizations

Fundraising for Your
Nonprofit Organization
Thomas P. Holland, Ph.D.
Professor and Co-Director
Institute for Nonprofit Organizations
University of Georgia
Athens, Ga.
Total Income for All Nonprofits
• Fee for services
• Public (government)
50%
30%
– grants & contracts for restricted purposes
• Private Contributions
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20%
individuals give about
foundations give about
corporations give about
bequests, wills, trusts, endowments
70% of that
10%
10%
10%
Fundraising is Vital
• Nonprofit organizations live by donations from
supporters.
• The board is ultimately responsible for the life
and well being of the organization, including
income.
• Board may ask staff for assistance with
specific tasks, but not pass off to them all
responsibilities for financial health of the
organization.
Many Approaches to Fundraising
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Fees for users of services
Face to face solicitation
Telephone solicitation
Mail requests
Special events
Contracts (usually with public sources)
Grants (foundations, corporations)
Sales
In-kind solicitations
Sources of Individually
Contributed Income
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Annual giving (unrestricted)
Telephone and mail campaigns (unrestricted)
Special Events (unrestricted)
Capital funds (restricted)
Bequests, wills, trusts, endowments
In-kind contributions
Effort and Results Vary
• Face to face appeals to persons already well
acquainted with your organization are the
most productive. They require long
cultivation: friend-raising comes first.
• The less the personal relationship, the lower
the return--across all forms of fundraising
(including grants).
• There is no inexpensive, high likelihood
approach to fundraising. It takes time.
Organization Needs Friends
Survive
To
• Community points of view, needs & interests
are vital to our successes.
• Most staff are internally focused, concerned
with quality of projects and programs.
• The external environment is increasingly
competitive, demanding responsiveness.
• Other organizations that are more attentive
and responsive will successfully compete for
our constituencies and resources.
• So we must find out what potential friends
want, in what forms and ways of delivery.
Most Nonprofits Have TWO Key
Constituencies
• Clients or consumers for whom the organization
exists and to whom goods and services are
provided, and
• Donors and volunteers who provide the majority
of resources necessary for the organization’s
services to take place.
• Sometimes these overlap (membership
association) but more often they do not
(homeless shelter).
• Dual constituencies make operations complex, as
the needs and interests of both must be
addressed.
Friend-raising
• There must be some degree of current
interest in the topic for people to respond to
overtures from the organization
• Information presented must be compatible
with listeners’ prior values and attitudes for
them to be receptive
• People respond in differing ways to the same
material, and their response depends on their
beliefs and attitudes
• Seek to understand each one’s interests and
tailor your approaches to match them
Exchange
• Cultivating sponsors involves identifying how
to get the desired response from those
individuals and groups the organization wants
to engage
• People voluntarily give up something (time,
money) in exchange for benefits they see as
more valuable (recognition, involvement,
friendship, worthiness, satisfaction)
• There are costs and benefits on both sides.
They must be in balance to create satisfied
stakeholders and a successful organization.
Fundraising Involves
Adding Value for Sponsors
• Each party in the transaction should sense that
they are receiving more than they are giving up.
• The nonprofit must understand what target
constituencies want and how it truly provides
them their expected benefits.
• The nonprofit must satisfy efficiently and
effectively its half of the transaction
• Are we truly adding value for them?
• By building on its strengths, the organization can
better serve constituencies and strengthen their
loyalty.
Most Productive Method:
IN-PERSON SOLICITATION
• 70% of contributed funds for most nonprofits
come from individuals
• 90% of gifts come from 10% of donors
• Identify people with means through research
• Then find people who know them and who will
introduce you to them
• Invite them to get acquainted with your
organization, attend events, volunteer
• Listen to their interests and increase their
involvement accordingly
• Invite them to help sponsor activities
• Thank them
Over 80% of All Adults Give.
Reasons why they do:
1. I was asked to give by someone I trust for a cause I believe in.
2. I believe those with more resources should help those with less.
3. I get personal satisfaction from giving.
4. Because of my religious beliefs or commitments.
5. I feel that I benefit when I help others.
6. Sustaining a family tradition.
7. Giving sets a good example for others.
8. Giving helps my community.
9. Gift in remembrance of a loved one.
10. Gift is tax deductible.
11. Giving is encouraged by my employer.
Giving and Asking
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People give money because they want to.
People don’t give unless they are asked.
People give money to people, not programs.
People give money to opportunities, not deficits.
People give to successful organizations, not to
distressed ones.
• People give money to make a change for the
good.
Motivations Differ
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Learn potential donor’s interests
Engage them with program
Demonstrate accountability
Build involvement and trust
Offer opportunities to provide input
and support
• Ask what form of recognition is best
Key Principles of Fundraising
• The board takes leadership, with staff support.
• Begin with goals for the organization, not with
whatever source seems available.
• Search for sources and people who are interested
in and share your goals.
• Develop relationships with them.
• Find ways to engage them with your organization
before asking for anything.
• Results are directly correlated with the extent of
engagement. No shortcuts.
Relationships are Primary
for Any Approach
• Begin with friends, volunteers, former users of
services, alumni, and any others with history of
engagement with your organization.
• Do not waste time or money buying lists from
vendors. You won’t raise money by calling or
writing to people who don’t already know you
or the organization.
• There is no substitute for relationships.
• Share your excitement and satisfaction with
others.
• Invite them to participate in ways that interest
them, and listen to their responses.
The Ladder of Effective
Communication
• Two-way communication is most effective.
In order of effectiveness:
1. Face to face conversation
2. Small group discussions
3. Telephone conversations
4. Handwritten letter, inviting response
5. Large group discussion
The Ladder of Effective
Communication
• One-way methods are far less effective.
In order of effectiveness:
6. Videotape
7. Mass-produced letter
8. Newsletter
9. Brochure
10. News item
11. Advertisements
Ineffective Approaches
• Failure to demonstrate accountable use
of gifts.
• Playing on guilt
• Flashy campaign, expensive materials
• Asking people to bail out deficits
• Failure to build trust before asking
• Failure to connect person with mission
• Pestering
• Hoping somebody else will do it
Three Basic Principles
• Emotions attract prospects
• Accountability sells them
• Personal involvement retains them
The Board and Senior Staff
Develop Friends into Sponsors
• Board identifies priorities for new funding.
• It demonstrates commitment by 100% giving.
• Members and staff share enthusiasm with
friends.
• Invite them to get acquainted with organization.
• Host special events to showcase projects.
• Ask friend for support for aspect of interest or
introduce to Executive or Chairperson for the ask.
• Follow up with appropriate thanks.
• Staff supports board in these efforts, rather than
doing it for them.
PREREQUISITE
• If your board is not taking leadership in
fundraising, the FIRST task is to solve that
problem.
• Willingness to learn and try are the beginning
steps. Skill comes with practice.
• Everything else depends on this foundation.
• Everybody must be involved in some way.
• No excuses allowed.
Common Excuses:
• I’ll do anything but raise money.
• Nobody ever said raising money was part of
being on this board. (problem with nominating
committee)
• We deal with substantive issues, not with raising
money. (what is more vital to organization’s
survival?)
• I’m too busy. (commitment?)
• I don’t want to ask my friends for money.
• I can’t stand being turned down.
• I’m just not good at that sort of thing.
• I’ll get around to that later (procrastination)
Such Denials of Responsibility
Must be Faced and Dealt With
• The board is ultimately responsible for the
well being of the organization in every area.
• Other competitors are moving ahead with
raising money, taking your potential donors.
• Board members have various talents, all of
which are needed.
• Fundraising can be learned, practiced, and
refined.
• It can be fun and satisfying.
Apply Basic Rules of
Personal Finance
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Set goals for future (house, retirement)
Open a savings account
Live on less than your full income
Save rest to pay debt and grow savings
Add savings from every paycheck
Each working adult in family contributes
proportionate to means
• Put at least half of unexpected income into
savings (gifts, bonuses, winnings, inheritance)
• Begin now, as time is your best ally.
Board Applications
• The board is responsible for the future wellbeing of the organization
• It sets strategic goals for the future
– identify needed enhancements of organization
and programs
– become knowledgeable and experienced about
fundraising
– budget for staff to help board and CEO with
marketing, communications, fundraising,
advocacy, partnerships, volunteer recruitment
and retention
Board Applications (cont’d)
• Set up savings account or endowment fund
• Put 5-10% of every year’s budget there and
any cash beyond 2 months’ expenses
• Put 50%+ of board campaign nets there
• Allow organization to spend no more than
half of annual interest earned by fund
• Begin right now as time is your best ally
• Move to more extensive fundraising and
investment approaches in the future
Start Small, Build Pyramids
• Every board member gives according to
means
• Each invites friends to a party and asks them
to bring some amount for this organization
• Maintain database on all givers
• Identify those who give larger gifts
• Take them to lunch, explore their interests
• Match their interests to organization’s needs
via volunteer roles
• Ask them to invite their friends to party next
year
• Try creative, alternative events
Set Clear Expectations for Board
• Write board job description
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commitment to values and mission
attendance and active participation
100% giving
public representation and advocacy for organization
• Fill gaps in group’s skills by
– targeted recruitment
– board education on fundraising, communications,
volunteering
• Engage volunteers in special projects
– bring in needed skills
– watch for potential nominees
• Conduct regular evaluations to learn and grow
• Demonstrate accountability to sponsors
– via financial reports and individual communications
The Board’s
Fundraising Committee
• Oversees the preparation of a comprehensive
plan for review by full board
• Ensures a realistic appraisal is made of potential
support and reasonable goals are set
• Develops consistent message for all to use
• Participates actively in identifying prospects,
cultivation, asking
• Enlists every other board member in specific
tasks, events, recognition of donors
• Reminds every member to give and to complete
assigned tasks
• Evaluates efforts for future improvement
Support Roles
for Board Members
• Work with staff to develop volunteer opportunities
• Host reception or event where CEO or Board Chair
gives brief presentation
• Introduce friends to CEO or Board Chair
• Identify and do background research on potential
donors and doorways
• Offer to be a speaker at civic organizations
• Work with staff to draft case statements, press
releases, other approaches to public awareness
• Develop donor appreciation and recognition plans
• Search for ideas and people with expertise and
bring to board education sessions
Basic Steps in a Campaign
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Set goals based on organizational strategies
Select steering committee
Set up record system and recognition system
Identify roles and responsibilities for each
Develop case statements (why should anyone give?)
Carry out research on potential donors
Find ways to meet them
Engage them with organization
Invite them to help support specific activities that
interest them
• Recognize and thank them, keep them involved
• Repeat and refine this cycle every year
The Fundraising Process:
R.O.P.E.S.
• 1. Research: understand the opportunities to
be offered donors and their congruence
with donors’ interests
• 2. Objectives: set fundraising objectives that
support the organization’s goals
• 3. Programming: plan and implement steps
to attain those objectives (cultivation)
• 4. Evaluation: monitor results and adjust
steps to improve effectiveness
• 5. Stewardship: ensure reciprocity,
responsible use of gifts, report regularly
to donors, nurture relationships
Developing the Case
• Begin with the why: what is our mission?
• Then state the what: what do we want to achieve?
• Then state the how: how will this new project
meet a need and fulfill mission?
• Then who: who we are and how well we have
been serving our constituencies.
• Finally, what specific action do you want the
reader or listener to take?
The ASK is Essential
• You are offering them opportunities to do good.
• Not everyone has to do every aspect of the campaign, but
someone must be ready and willing to do the ask.
Guarantee: It won’t hurt if you try.
• Time it to come after you already are well acquainted with
the person and s/he with you and your organization.
• Match ask to their interests and their resources.
• Ask for two things: money and help with a task
• Ask and then shut up. (Don’t fill the space with nervous
chatter.)
• Respond to questions and offer alternatives.
• Thank them several ways, regardless of results, building
relationship for the future.
Prerequisites to the ASK
• You have the right prospect.
• You have cultivated a good relationship with
the person, and s/he is familiar with your
organization.
• You know the person’s interests well.
• You have an appointment to discuss the
specific opportunity and make the ask.
• You know the amount to ask for and the right
task needing their expertise.
• You are prepared with ways to recognize the
gift and to make use of their help.
The Asking Scenario
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Open with pleasantries
Get to the subject
Get to the asking
Suggest a specific figure (then be quiet)
Be ready for various negative responses
– don’t push or argue (you can’t win ‘em all)
– leave the request on the table
– be prepared with alternatives if asked
• Leave on a positive note
• Follow up with a note of appreciation
Don’t Be Afraid to
Ask for a Large Gift
Giving Levels: Two Examples
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Benefactor
Patron
Sponsor
Donor
Contributor
Friend
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Senior Associate
Associate
Sponsoring Member
Sustaining Member
Contributing Member
Member
Stewardship of Gifts
• Thank the donor
• Find appropriate ways to recognize and
publicize the gift. Ask their preferences.
• Use the money as the donor intended
• Report to donor periodically
• Continue to engage him/her with organization
• Build long-term relationship of trust
Key Steps in Any Approach
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Plan
Learn
Meet
Listen
Engage
Ask
Thank
Special Events
• All types of special events require extensive
input from board and staff, often with modest
returns
• Use for public awareness more than fundraising
• Think creatively. Banquets, golf tournaments,
marathons have been overdone and lack
appeal.
• Invite local companies to co-sponsor events in
exchange for publicity.
• Plan to build on early events and grow to larger
attendance and income later
• Maintain data base on all givers
Sales and User Fees
• People expect to pay for useful services
• Sliding scale for service fees, with top end
offsetting losses at bottom end
• Builds income over time
• Add direct sales of goods or services
• For-profit subsidiaries (museum gift shop)
• May also be used for leadership development
Planned Giving
• Come from the donor’s capital holdings
• Bequests, insurance, gifts or property or
income, trusts, endowments
• They may be deferred gifts (pledge in a
will of life insurance) or current (interest
from a trust)
• Donors may gain by tax benefits
• Usually require specialized staff skills
Sources of Grants
• Government (federal and state)
– look for RFPs (Requests for Proposals)
– search government web sites
• Foundations (http://fdncenter.org)
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Charitable foundations
Family foundations
Corporate foundations
Operating foundations
Grants and Contracts
• High competition, low yield for effort
• Require specialized writing skills
• Directed at special programs, not ongoing
operations (leaves you hanging when $ runs out!)
• Ask public officials about community block
grants that might match your programs
• Search foundation directories
(http://fdncenter.org) for those interested in your
programs and goals
• Spend time with grant officer
• Follow their guidelines for proposal
Summary:
Seven I’s of Cultivating Donors
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Initiative: set goals and get started
Identification of potential sources
Information about them through research
Interest: what are they interested in?
Involvement in your organization
Investment: ask for a specific gift
Integrity in everything you do and say
A Board Members’
Fundraising Checklist
• Do I have a clear picture of the mission, priorities
and needs of the organization?
• Do I really understand and support the case, why
someone should support this organization?
• Do I contribute to the extent of my means?
• Do I offer additions to the list of prospects?
• Do I share in cultivating prospects?
• Do I make introductions for others to make solicitations?
• Do I accompany others on solicitations?
• Do I write follow up and thank you letters?
• Am I prepared to make solicitations myself?
• Do I do what I say I will do?
Build Board Capacity and Skill
• Talk with people on other boards that have success
with fundraising.
• Visit the Foundation Center Library (Hurt Building,
Main floor, 5 Points, Atlanta) for more other materials
and resources (http://fdncenter.org)
• Use prepared learning resources
– Ga. Center for Nonprofits offers short workshops
(www.nonprofitgeorgia.org)
– BoardSource has several good booklets and
educational resources such as “Fearless
Fundraising: The Video Workshop”
(www.boardsource.org)
Recommended Reading
• K.S. Kelly, Effective Fund-Raising
Management. Erlbaum, 1998.
• J.M. Greenfield, Fundraising Fundamentals.
Wiley, 1994.
• F. Howe, The Board Member’s Guide to
Fundraising. Boardsource, 2000.
• Other materials on many web sites
For Further Information
• UGA Institute for Nonprofit Organizations
– www.uga.edu/nonprofit
– (706) 542-5463
• Holland, Blackmon and Associates
– www.hollandblackmon.com
– (706) 548-4115