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Meeting #4 – Designing an effective fundraising model

This meeting discusses the fundraising process, including research, goal-setting, cultivation, solicitation, and stewardship. It also explores the dynamics of funding, giving circles, and crowdfunding as alternative fundraising methods.

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Meeting #4 – Designing an effective fundraising model

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  1. Meeting #4 – Designing an effective fundraising model • O&D, Chapter 10 (Lindahl): • The Fundraising Process • Chapter emphasizes research on process, prospects, etc. • Also, fully understanding one’s own organization, so its goals, etc. can be explained to potential donors • Lindahl, Page 119 – goal-setting • Facilities, Endowment and Operating • Some donors may be much more responsive to one type of donation (e.g. some may only give to facilities improvement) • Steps: • Cultivation • Fairfield example • Solicitation

  2. Types of solicitations: • Planned giving • Major gift solicitations • Role of Stewardship: • Possible alternative goals of managers • Self-interest, social status • Good stewardship requires goals of nonprofit are paramount • Lindahl (page 124) note that a ex post evaluation of how well the fundraising worked is critical

  3. O&D, Chapter 11 (Pratt) – Analyzing the Dynamics of Funding • Key focus of chapter is on the reliability of fund-raising and the degree to which the funding binds the hand of the nonprofit • Reliability: • High: Individual donors, endowments, memberships, rental income, advertising • Medium: fees for services, continuing government contracts, corporate charitable contributions • Low: Government grants that are project-driven, foundation grants, corporate sponsorships

  4. Autonomy: • High: small- to medium-sized individual contributions, foundations, fees for service, endowments, memberships • Medium: large individual contributions, corporate contributions • Low: project grants, government contracts, United Way support • Pages 130-31 – Eight forms of funding and resulting reliability and autonomy • Discussion – particularly the issue of government-funded nonprofits

  5. Giving Circles and “crowdfunding” • What happens when charity becomes a social act? • Chapter12 focuses on giving circles: • Groups that pool resources to leverage donations • Eikenberry notes that these groups are educational in nature, and that giving becomes part a member’s social life • Giving can be more informed and members can find new ways to engage with issues they are interested in • Forms: • Page 136 – Organizational form • Most operate on a “fee” basis (which funds donations) • Large donation groups typically have a more formalized grant-making procedure • Some are formal groups that meet, some are loose networks

  6. Eikenberry Provide 2 case studies • Shared Giving: Small (16 members) group that focuses on leveraging individual donations • Started by couple that realized they were giving away a lot of money, but randomly and in small amounts • Decided to increase the impact of giving by organizing and targeting contributions • Womenade: 38 giving circles under this name. Join for a small fee ($35) – Money used to provide small donations to women (families) experiencing financial stress • Such as paying an over-due utility bill • http://www.givingcircles.org/

  7. Benefits of giving circles • Charity as a way of life • Giving is consistent and targeted • More informed! • Social aspect encourages participation • List of Giving Circles can be found at: http://www.givingcircles.org/

  8. Crowdfunding • Means by which to draw in many donors at a very small price per donor. • Cause and monetary goal posted on the web • Rely upon social contacts to encourage participation • Top ten sites can be found at: http://www.crowdfunding.com/ Example: Kickstarter – seeks individual donations to fund creative work that otherwise would not be funded (e.g. cinema)

  9. Crowdfunding also used to fund medical treatment for those with serious long-term illnesses who are in financial stress • Avoids costs of approaching donors, but visibility is an issue

  10. Literature for Next Time • 9. Heutel, Garth (2014). “Crowding Out and Crowding In of Private Donations and Government Grants,” Public Finance Review 42, 143-75. • 10. Brokaw, L. (2012, November 28). “The ‘Benefit Corporation’ Movement,” MIT Sloan Management Review. Retrieved from http://sloanreview.mot.edu/artucle/the-benefit-corporation-movement/

  11. Class Exercise • Donation effectiveness • Design a website that: • Promotes Cause • Will be easily found by those searching • Details finances of nonprofit • Provides searchable statistics (why?) • Stories of assistance • Mission statement • History • Media resources • Major Donors (why might you want to omit this?)

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