Fundraising for Your Nonprofit Organization

1. Fundraising for YourNonprofit Organization Thomas P. Holland, Ph.D. Professor and Co-Director Institute for Nonprofit Organizations University of Georgia Athens, Ga.

2. Total Income for All Nonprofits • Fee for services 50% • Public (government) 30% • grants & contracts for restricted purposes • Private Contributions 20% • individuals give about 70% of that • foundations give about 10% • corporations give about 10% • bequests, wills, trusts, endowments 10%

3. 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.

4. Many Approaches to Fundraising • 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

5. Sources of Individually Contributed Income • Annual giving (unrestricted) • Telephone and mail campaigns (unrestricted) • Special Events (unrestricted) • Capital funds (restricted) • Bequests, wills, trusts, endowments • In-kind contributions

6. 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.

7. Organization Needs Friends To Survive • 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.

8. 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.

9. 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

10. 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.

11. 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.

12. 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

13. 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.

14. Giving and Asking • 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.

15. Motivations Differ • 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

16. 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.

17. 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.

18. 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

19. 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

20. 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

21. Three Basic Principles • Emotions attract prospects • Accountability sells them • Personal involvement retains them

22. 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.

23. 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.

24. 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)

25. 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.

26. Apply Basic Rules of Personal Finance • 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.

27. Board Applications • The board is responsible for the future well-being 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

28. 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

29. 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

30. Set Clear Expectations for Board • Write board job description • 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

31. 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

32. 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

33. Basic Steps in a Campaign • 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

34. 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

35. 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?

36. 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.

37. 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.

38. The Asking Scenario • 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

39. Benefactor Patron Sponsor Donor Contributor Friend Senior Associate Associate Sponsoring Member Sustaining Member Contributing Member Member Don’t Be Afraid to Ask for a Large Gift Giving Levels: Two Examples

40. 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

41. Key Steps in Any Approach • Plan • Learn • Meet • Listen • Engage • Ask • Thank

42. 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

43. 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

44. 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

45. Sources of Grants • Government (federal and state) • look for RFPs (Requests for Proposals) • search government web sites • Foundations (http://fdncenter.org) • Charitable foundations • Family foundations • Corporate foundations • Operating foundations

46. 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

47. Summary:Seven I’s of Cultivating Donors • 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

48. 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?

49. 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)

50. 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