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This chapter will present the basics of fundraising, including the annual campaign, direct mail, special events, major gifts, and planned gifts. The concept of moving donors from annual giving to major gifts and planned gifts will be presented. This chapter will also explore donor motivation and present a fundraising strategy based on the concept of providing donors with opportunities rather than approaching fundraising as a “begging” activity. Begging is not a strategy to raise funds. The alternative to begging for funds is to have a well-developed fundraising program. Even if the organization employs a professional fundraiser, the administrator is still the chief fundraising officer and, as such, will develop professional fundraising skills or risk becoming the chief beggar for the organization. Securing resources for the organization is ultimately the responsibility of the board of directors, but it is the administrator’s responsibility to develop and oversee a well-developed fundraising program. Effective fundraisers work from a strategic fundraising plan that is long term, has specific goals, and uses a variety of fundraising methods and techniques. The organization’s financial strength can be developed and maintained only through a fundraising strategy that is diversified by using many different fundraising approaches appropriate for their various categories of donors. Fundraising must be approached as any other major project in that it requires the administrator to develop a plan. The planning process for fundraising includes the same steps as any other planning process. As the administrator, you must set goals, allocate resources, develop action steps and timelines. and then evaluate the process. There are many “truisms” in fundraising, but the one most important to remember is that “people give to people, not to organizations.” This is another way to say that fundraising is really “friend-raising.” The people that will give money to your organization are those who share a passion for the mission of the organization and who trust that their money will be used wisely. It is the responsibility of the administrator to develop and nurture relationships that will financially sustain the organization. Another truism is that people will not give anything to meet your agency needs, but they will give when presented with the opportunity to invest in an organization that will make a difference in the lives of others. People will give when they think they can make a positive difference in something they care about. At whatever level of fundraising activity, your approach should be to present opportunities that will make a positive impact in the lives of the people your organization serves and not to present the “needs” of the agency.

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EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 12/5/2019 7:27 AM via RASMUSSEN COLLEGE AN: 972400 ; Watson, Larry D., Hoefer, Richard.; Developing Nonprofit and Human Service Leaders : Essential Knowledge and Skills

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Remember that people want to give to successful causes. You want to give the donor not only the opportunity to give but also a reason to contribute to a cause that will support success. Your appeal is not that your organization has great needs, but that it is successful in meeting the needs of your clients. Before we explore the many levels of activities in a fundraising program, we will look at the factors that motivate people to give.

DONOR MOTIVATION

Why do people give? Often, you will hear that most people give a donation because they will get a tax break. It is very seldom that tax donations are the major reason for making a donation.

You may need funds to hire a new counselor, but the fundraising approach should be to secure funds to serve more clients. You must tell the potential donor why the clients need this service and what difference it will make in their lives if the services are provided. The approach should NOT be that your organization needs a new counselor.

A new executive director was excited to learn that an elderly couple had decided to leave their 1,000-acre ranch to the organization in their will. The executive went to visit the couple and raised the possibility that they could use a planned giving vehicle to go ahead and make their gift to the agency and at the same time enjoy a tremendous tax advantage, plus increase their income for the rest of their lives. In fact, through this gift, the couple could be rich. After listening politely, the elderly woman said, “Young man, I don’t want to be rich. I want to go to our ranch and hunt birds!” It is important to know what motivates a donor. In this case, it was certainly not a tax break or more income.

So why do people give? In a review of over 500 articles on charitable giving, Bekkers and Wiepking (2011) found eight mechanisms as the most important forces that determine a person’s decision to give. These are (1) awareness of need, (2) solicitation, (3) costs and benefits, (4) altruism, (5) reputation, (6) psychological benefits, (7) values, and (8) efficacy. People will give only when they are interested and involved in your cause. Of course, there are different levels of giving. The new donor, responding to a direct mail piece, will be very different from a board member donor with years of experience with the organization. People will respond to different kinds of appeals because they have different reasons. So, why do they give? Giving behavior is just as complex as any other behavior. In his book Tested Ways to Successful Fund Raising, George A. Brakeley, Jr. (as cited in “8 Rules of Thumb,” 2012) wrote that virtually every fundraising campaign and development program depends on nine factors in motivating donors to support their organization:

1. The right person or persons ask them, at the right time, and in the right circumstances. 2. People have a sincere desire to help other people.

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Whatever their other motivations, people will give only when they are interested and involved, and when they are asked. To determine how to ask for a gift, we must know where our donors fit on the “donor pyramid.”

THE DONOR PYRAMID

Fundraising professionals often use the donor pyramid as a way to conceptualize the fundraising program (see Figure 11.1). Each level in the pyramid builds on the level beneath it. For example, direct mail solicitation is appropriate to attract new donors to your organization, but once they have responded with even a small gift, your goal is to move them up to the next level of the pyramid. You want your new direct mail donors to become major givers. Of course, some donors will always be small givers or even stop giving to your organization, but most of your future major gift donors of tomorrow are your small gift givers today. Also, remember that all those small gifts add up and are very important to your overall fundraising plan. The Association of Fundraising Professionals (AFP) Fundraising Dictionary (2004) describes the donor pyramid as:

A diagrammatic description of the hierarchy of donors by size of gifts. The diagram reflects that: as the size of donations increases, the number of donations decreases; as the number of years a donor is asked to renew increases, the number of donors decreases; as campaign sophistication progresses from annual giving to planned giving, the number of donors decreases; as donor involvement increases, the size of the donor’s contribution increases and the response to campaign sophistication increases.

As you work through this chapter, refer back to the donor pyramid. In a sophisticated fundraising program, donors will be treated differently depending on where they are on the donor pyramid. Donors will move up the donor pyramid through involvement with the organization and through receiving personal attention from the board and staff of the organization. Notice that, as you move up in the pyramid, the fundraising techniques become increasingly more personalized. What seems to be a simple and obvious truism is, “No one gives at any level unless they are asked!” As uncomfortable as it may be at times, eventually someone has to ask for the gift, but, if you and your board believe in your mission and truly believe you are giving others the opportunity to participate in your important work, then the “ask” will be less difficult.

Annual Campaign

The annual campaign consists of the fundraising activities that are conducted for the purpose of supporting the organization’s annual operating budget. Even though these funds will be used for the organization’s operating budget, your approach will focus on the services to be provided, not on the need for things like staff raises or paying the electric bill. The operating expenses support the services your organization provides. Ask your donors to help serve your clients. Generally, the largest number of donors will be giving to the annual campaign. Some organizations may not think of their many and diverse fundraising activities as an “annual campaign,” but whether it is thought of in these terms or not, it is in effect the annual campaign for the organization. The approaches used in the annual campaign may include direct mail, phonathons, or special events such as golf tournaments or galas. The defining feature of annual fund activities is that they are activities intended to raise gift income, every year. It is expected that you will approach the same donors every year and, sometimes, several times within the same year. Funds donated to the annual campaign are intended to support operational costs such as salaries, supplies, utilities, and client needs. The purpose is to support any part of the organization’s operation that requires continuous and regular support. Most donors will come into your organization through the annual campaign. It is rare that a person’s first gift to the organization will be a major gift. More likely, those who become major donors are those who have been consistent annual campaign donors.

Direct Mail

You probably know about direct mail fundraising from your personal experience. Direct bulk mail is used to ask millions of people for money, and most people receive solicitations in their mail on a regular basis. What rate of return should you expect for your direct mail campaign? Typically, the response is somewhere in the range of 1%. Even though the return is small, it is an economical way to get your message before thousands of potential donors and a key strategy in bringing new people into the bottom of your pyramid. The typical direct mail package includes the carrier (outside), the letter, a reply device, and a return envelope. The carrier or outside envelope should be designed with one objective in mind: to get the recipient to open it. If the piece goes into the trash, your chance of getting a donation is zero. The goal is to make the pieces look as much as possible like a personal letter and to make it look different from other solicitations in the mail box that day. Ideally, the envelope could be hand addressed, but since direct mail is a strategy of large numbers, this is rarely possible. Pre-cancelled bulk mail stamps give a more personal look than the standard postal indicia used on most bulk mail. The other strategy is to use an envelope other than the standard “number 10” business envelope that many fundraisers refer to as “the number 10 ugly.” Choose an envelope that is smaller, larger, or a different shape. You may also want to consider using color or a see-through window to peak your potential donor’s interest. Once you get the potential donors to open the letter, your task is to capture their attention long enough to consider making a gift to your cause. The task here is not to write a scholarly piece or to impress anyone with your vocabulary. The letter should strike an informal tone and be easy to read and understand. Kim Klein (2000) proposes a set of principles to remember as you develop your letter:

1. People have a very short attention span. Sentences should be short and take no more than six to fifteen seconds to read.

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2. People love to read about themselves. The letter should refer to the reader at least twice as often and up to four times as often as it refers to the organization sending it. For example, “You may have read . . . ” or “If you are like me, you care deeply about . . . ” 3. People must find the letter easy to look at. The page should contain a lot of white space and wide margins, and be in a clear and simple font. Paragraphs should be short, no more than two or three sentences. You should feel free to use contractions (won’t, you’re, can’t, we’re) as this will add a more informal tone to your letter. 4. People read the letter in a certain order. First, they read the salutation and the opening paragraph, but then, no matter how long the letter is, they read the closing paragraph and then the postscript. Only a small number of people will read the entire letter.

The opening paragraph of your letter is critical. It must capture the attention of your readers and make them want to read on. Remember the truism that people will not give anything to meet your agency needs, but they will give when they have an opportunity to invest in a service that is of interest to them. Your letter must be about the people you serve, not the needs of your organization. Also, people do not relate well when you talk about the thousands of people you serve. Your letter should tell the story of one person helped by your organization and how this potential donor can make a difference in the life of someone else. How long the letter should be is always a debate. Our natural instincts tell us that the letter should be short and to the point, but many fundraising consultants counsel that long letters are better and claim that a two-page letter will get a better response than a one-page letter, and that even three- and four-page letters will often outperform a shorter letter. There are many theories about why you should consider writing a longer letter. Some will say that it gives the impression that your organization has a lot to say, while others believe that more pieces of paper and longer letters give an opportunity for the potential donor to feel more involved with your organization. In the closing paragraph, you ask for the money. Tell the reader what you want them to do. They have read your letter, now what do you want them to do about it? For example, say, “Send your gift of $25, $50 or $100 today.” It needs to be direct and specific. No one gives unless they are asked. The postscript is that small P.S. at the end of the letter. The reader will read the P.S. if they do not read anything else in the letter. This is your final opportunity to ask for the gift. Examples are, “ Send your check today” or “Johnny needs your help.” Finally, the reply device is a small card that gives the potential donor the opportunity to respond. It will typically have a box to check that says something like, “Yes! I’ll help” and then gives several options of giving—$10, $25, $50, $100, or more. The donor completes the card, encloses the check, and returns it in the enclosed return envelope. With that, your campaign is a success—at least with this donor. Special events are limited only by your imagination. The events may be galas, golf tournaments, walk-a-thons, performances—the possibilities are endless. Many times, special events do not raise large sums of money for the first few years but, over time, grow into major events that raise large amounts of money. When planning a special event, there are considerations other than the amount of money to be raised. The special event may be the activity that will raise the visibility of your organization in the community and an opportunity to involve more volunteers in your work. Special events are by their nature very labor intensive and can take a great deal of your time and staff time. Before deciding on a special event, it is important to consider the volunteer and staff resources necessary for a successful event. Any special event will require a major investment of time in planning, marketing, and execution.

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Major Gifts

Major gifts are the larger gifts that you will solicit for your cause. These gifts will typically come from those individuals, foundations, and corporations with whom you have developed a long-term ongoing relationship. Many times, major gifts are solicited within the framework of a “capital campaign” for the purpose of capital improvement, such as building a new building or, in some cases, to develop or strengthen the endowment of an organization. An organization will often contract with a consulting firm to conduct a capital campaign. You, your board, and your staff will still have to solicit the gifts, but a good consultant can help structure and focus a successful campaign. Major gifts require personal solicitation and the preparation of a proposal. A foundation may require a fully developed proposal, but an individual donor may prefer a short, well-developed statement of the purpose of the proposed donation. These donors are higher on the “pyramid” and, in most cases, know about your organization, believe in your work, and are willing to make a major contribution. When seeking a foundation or corporate gift, it is important to research the previous gifts and areas of interest of the foundation or corporation. As in all fundraising, finding a personal connection between your organization and the foundation or corporation is a great asset in your attempt to secure a gift.

Planned Gifts

Planned giving is a complex area. The bequest is the simplest form of planned giving. This means that someone has named your organization in a will and that, on passing away, a portion or sometimes all of that person’s estate will come to your organization. As the administrator, you have an awesome responsibility to see that a person’s life work is used for the intended purposes. Other planned giving arrangements include charitable gift annuities, revocable and non-revocable trusts, and other financial vehicles to transfer funds from the donor to the organization. These gifts have tax implications for the donor and are in many cases a part of the estate planning process. Any gift of this type will involve an attorney or certified public accountant. The role of the administrator is to see that the organization has the structure and the advisors necessary to accept gifts of this nature.

Say Thank You!

It is impossible to say thank you too much to your donors. The acknowledgement or “thank you” is a vital part of your fundraising system. Donors should be thanked in writing as quickly as possible for their gift, and, whenever possible, donors should be thanked with a telephone call. For large donations, you as the administrator or your board chairman should make a phone call or a visit to thank donors for their gifts. Since successful fundraising is based on relationships, it is important to nurture and sustain relationships by showing gratitude to those who invest in the mission of your organization.

SUMMARY

Effective fundraisers work from a strategic fundraising plan that is long term, has specific goals, and uses a variety of fundraising methods and techniques. The organization’s financial strength can be developed and maintained only through a fundraising strategy that is diversified by using many different fundraising approaches appropriate for their various categories of donors. Fundraising must be approached as any other major project in that it requires the

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Administrator to set goals, allocate resources, develop action steps and timelines, and then evaluate the process.

Helpful Terms:

Annual campaign—the fundraising activities that are conducted for the purpose of supporting the organization’s annual operating budget.

Direct mail—a fundraising approach using bulk mail to reach potential donors. The typical direct mail package includes the carrier (outside), the letter, a reply device, and a return envelope.

Donor pyramid—a diagrammatic description of the hierarchy of donors by size of gifts. The diagram reflects that: as the size of donations increases, the number of donations decreases; as the number of years a donor is asked to renew increases, the number of donors decreases; as campaign sophistication progresses from annual giving to planned giving, the number of donors decreases; as donor involvement increases, the size of the donor’s contribution increases, and the response to campaign sophistication increases.

Major gifts—the larger gifts that typically come from individuals, foundations, and corporations with whom the organization has developed a long-term, ongoing relationship. Some major gifts are solicited within the framework of a “capital campaign” for the purpose of capital improvement, such as building a new building or, in some cases, to develop or strengthen the endowment of an organization.

Planned gifts—The bequest is the simplest form of planned giving. Other planned giving arrangements include charitable gift annuities, revocable and non-revocable trusts, and other financial vehicles to transfer funds from the donor to the organization. These gifts have tax implications for the donor and are, in many cases, a part of their estate planning process.

Special events—events such as galas, golf tournaments, walk-a-thons, performances, and so on; very labor-intensive activities that have the advantage of increased volunteer participation and the opportunity to increase the visibility of the sponsoring organization.

REFERENCES

Bekkers, R., & Wiepking, P. (2011). A literature review of empirical studies of philanthropy: Eight mechanisms that drive charitable giving. Nonprofit and Voluntary Sector Quarterly, 40(5), 924–973. 8 rules of thumb when soliciting prospects. (2012, May 23). The NonProfit Times. Retrieved from http://www.thenonprofittimes.com/management-tips/8-rules-of-thumb-when-soliciting-prospects Hoffman, M. (2011). Americans give $241 billion to charity in 2003. Foundation for the Carolinas. Retrieved from http://fftc.pgdc.com/pgdc/americans-give-241-billion-charity-2003 Klein, K. (2000) Fundraising for social change (4th ed.). Oakland, CA: Chardon Press.