WHY THE ANNUAL FUND STILL MATTERS
Language is important in fundraising. How you think about and speak with prospects is key. Board members in particular—but I’ve run into more professional staff than I care to think about who feel the same way—find fundraising scary, embarrassing, uncomfortable. They think they are hitting on someone or begging for support. We over worry about donor fatigue—which I have to tell you really doesn’t exist. What does exist and can cause donors to shrink away is lousy fundraising.
I truly believe that when I fundraise I am giving my prospect a gift—the opportunity to support something I believe—and hope they believe—is important. My job is to open a door and invite them to walk through. And because I think I am offering something terrific, I am always very clear about my purpose. Board members, in particular, are afraid of asking their friends and contacts for a gift. Oh, they’ll give you a lot of reasons—but the biggest one is that when that friend or contact says yes, they have left themselves open for a quid quo pro—in a few weeks or months that friend or contact will come back and say “Remember that money that I gave you? Now my organization….”
Avoid that by being up front at the start. “My Friend, I’m calling with my fundraising hat on….” And don’t ever conflate your friendship with your philanthropy. An almost former friend of mine once called and invited my husband and I over for dinner the following Saturday night. And I felt good about that. Then she said, “And while I have you on the phone, I think you know I’m on the board of….and tonight we are dialing for dollars and I’m hoping that you will give us $100.”
I could have easily granted her hope. But honestly, I was furious. Did she really invite us to dinner so we would give $100 to her organization, which by the way, I knew nothing about about! As a friend who did this stuff for a living should, I not-so-gently told her why her technique was so awful. And she confided that ALL of her friends were angry—not, I am sure, about the fundraising but the fact that she hid something that is fine to do under the guise of something else.
In short, ask for support proudly. Make sure your prospects know about your organization and how it enhances, improves, supports your community.
You’ve probably all seen the chart that shows where charitable comes from. And it clearly shows that individuals are still the key. If your organization raises most of its money from private foundations or corporate sponsors for your charitable event, you are leaving a lot of money on the table—money that could be used to enhance what you do for your clients and what you can do—via salaries and benefits, and having enough Human Resources—for your staff.
When I talk about individual giving, however, I am not talking about the revenue you get via events.
Events are perfectly lovely things that can bring in some support for your organization—but they also take a terrible toll. Events take an enormous amount of staff time; cost a great deal to produce; and the cost to raise a dollar makes events the worst possible way to raise funds.
Oh sure, there are reasons to have an event—but don’t substitute that for the types of fundraising that will bring in more and are far more effective. And I do understand that for many of you, the money you make from events is heavily skewed to sponsorships, mainly from corporations. In most cases, this is cheap advertising for them, and they give you a mere drop in the bucket so that they can keep you from actually building a partnership that could bring you a lot more dollars.
So I am going to put events in its box over there, and get back to where the sustainable dollars are..with individuals. And to get individuals in the door; to reach the largest number of prospects, to fundraise from your community and not just the wealthy 1%, you must spend time on annual giving.
These are the gifts you can rely on year after year after year. They are what you use for budgeting, and annual giving is the gateway for donors to make larger, more transformational gifts.
Loyal annual donors are those most likely to occasionally make a major gift—these are gifts that are larger than some amount—and each of you will have a different threshold for a major gift—and are typically gifts that are much much larger than your donor’s typical annual gift. Few people make a major gift without first becoming a loyal annual donor. Major gifts, unlike annual gifts, are typically restricted and are often given over a number of years. If you have a donor who gives you an annual gift that is at or larger the number your organization calls a major gift, understand that while this is a a major gift for you, it is most likely not a major gift for your donor. Through cultivation and building a strong relationship with this donor, you can receive a major gift that will be on the order to 20 times your donor’s annual gift.
The pinnacle of giving is bequests, which account for around 9% of all charitable giving—far more than corporate support. And while we can certainly talk more about this in another post, I will at this point simply encourage all of you to consider a bequest program where you remind donors and supporters that they can leave a legacy by remembering your organization in their will.
The place where I want to focus in here is annual giving. One thing I’ve learned over my 14 years in consulting is that while we all dream about finding those wealthy individuals who will give us big gifts, most of our fundraising time is spent on asking for much smaller amounts. In most nonprofits, there are a few larger supporters, often private foundations whose grants comprise the larger revenue streams, then a few at what I’d call a mid level, and most gifts coming in at the $250 and below range. And there is nothing wrong in that: In 2020, despite fears to the contrary, individual giving grew by over 10%—and most of those gifts were $250 or less.
Success in fundraising relies on a number of things, but most importantly, on consistency. Annual giving, by its nature, should be the most consistent fundraising you do. It is also a good way to engage volunteers and your board. While ideally your board will be introducing you to major donors and working with you on the cultivation and solicitation of those large gifts, many of them will feel they don’t know anyone of affluence, or if they do, they are uncomfortable asking for gifts of $10,000 or more. Start them on the annual fund and get them comfortable asking for a gift, period.
Every year you should have an annual plan that considers how you are going to raise those all important unrestricted gifts. And in that plan there must be another plan that talks about how you are going to retain those donors so they make another gift next year, and another one the year after that. In fact, I said a moment ago to start your board members on annual giving. I actually recommend starting them on saying thank you to existing donors. This will not only make your donors feel great—wow! My gift must be meaningful if a board member is saying thank you—it will get your board members used to participating in fund development.