Fundraising Fundamentals
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Fundraising Fundamentals

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Fundraising Crash Course by Jeanne Minnicks surveys the strategies, goals, and relationships necessary for a successful development department. ...

Fundraising Crash Course by Jeanne Minnicks surveys the strategies, goals, and relationships necessary for a successful development department.

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  • The rich aren’t the most generous. <br /> <br /> $50,000 to $75,000 - giving average - 7.6% of discretionary income <br /> $100,000+ - giving average - 4.2% <br /> <br /> Rich people who live in neighborhoods with many other wealthy people give a smaller <br /> share of their incomes to charity than rich people who live in more economically diverse <br /> communities. <br /> <br /> Red states are more generous than blue states. <br /> <br /> In 2008 election 8 states where residents gave the highest share of income to charity went <br /> for McCain. 7 lowest ranking states supported Obama.  <br /> <br /> Tax incentives matter. <br /> <br /> State policies are rooted partly by political philosophy about the role of government vs. At <br /> least 13 states offer special tax benefits to charity donors, often in hopes of stimulating <br /> giving at the same time that big cuts in government services are occurring. While not every <br /> donor may admit it, it’s not just a pull at the heartstrings that encourages giving but the tug <br /> of the taxman. <br /> <br /> Regions of the country that are deeply religious are more generous than those that are not. <br /> <br /> 2 of the top 9 states—Utah and Idaho—have high #s of Mormons who have a tradition of <br /> tithing ~ 10% of income to the church. The remaining 7 states are all in the Bible Belt. <br /> But some nonprofit experts question whether religious donations should even factor into <br /> generosity rankings. “Giving to a church is a different kind of giving than giving to other <br /> charities because it’s‘ inward-centered’, i.e. you get a personal benefit from it. (vs. giving <br /> to an antipoverty program which is “other-centered’”. New Hampshire gives next to <br /> nothing to religious organizations,” “but their secular giving is identical to the rest of <br /> country. <br />   <br /> When religious giving isn’t counted, the geography of giving is very different. Some states in <br /> the Northeast jump into the top 10 when secular gifts alone are counted. New York would <br /> vault from No. 18 to 2, and Pennsylvania would climb from No. 40 to. 4. <br /> <br /> Gipple, Emily and Gose, Ben; How America Gives - America’s Generosity Divide; Chronicle of Philanthropy; August 19, 2012 <br /> <br /> <br />
  • Back in the day development work didn’t get much respect. Colleges offer courses in marketing, advertising, public relations, and companies invest heavily in professional selling skills and customer relationship management classes. Historically there have been few degree programs in the development field but that’s changing. <br /> <br /> Today, the market is awash in seminars, self-help books, classes and webinars. Professional associations support their members with continuing education and have established accreditation standards which have increased awareness and respect for development as a profession. The CFRE credential designates an individual who has invested in course work, has demonstrable results across a range of performance categories, and has passes a difficult qualifying exam. For small and medium size nonprofits, professional associations have been particularly instrumental in elevating the professionalism of development staff by offering affordable education programs and networking opportunities. Unlike leading universities, hospitals, and other large organizations which have staffs of 24-150 people and sizable budgets, the typical development department in a small nonprofit is a one person shop. These people do the grant research, write the proposals, conduct site visits and funder meetings, administer the grant, write acknowledgement letters and required reports.
  • Relationship intensive – the fact that majority of donors prefer electronic communications doesn’t make it any less so. Appeal to those who give for tax benefits as well to those who give because of a personal interest in your mission. <br />
  • Communications intensive – Variety of modalities – person-to-person, phone, e-mail, direct mail, brochures . <br />
  • Highly competitive - It wasn’t so long ago that universities, hospitals and other large nonprofits had an elitist attitude about promoting themselves. It was considered demeaning to sell their institutions to prospective donors and users of their services. Museums felt their collections spoke for themselves and charitable giving campaigns focused on building expansion projects culminating in grand openings and special exhibits attended by wealthy patrons. <br />   <br /> Hospitals too tended to concentrate on major capital needs or research efforts, and used their ladies auxiliaries to organize and lead fundraising campaigns. <br />   <br /> The net effect - an approach to fundraising that was sporadic with major gift efforts conducted with the assistance of outside help. Annual giving, planned giving and other techniques were ignored. <br />   <br /> However, as competition for donors intensified due to changes in economic conditions, social priorities, and emerging technologies which made it possible for even the tiniest nonprofits to promote themselves and reach potential donors , nonprofit leaders had to adopt new ways of doing business. They realized that a well-managed, ongoing process for raising funds was needed. They also recognized that they needed a base of donors who were continuously cultivated, involved and informed. <br /> <br /> <br /> Berendt , Robert J. and Taft, Richard; How to Rate Your Development Office; The Taft Group; Washington, DC; 1983 <br />
  • Many nonprofit executives have backgrounds other than development so there’s often a disconnect in their abilities to understand and analyze how development programs are working to provide proper leadership. <br />   <br />  
  • No such animal. Fundraising is a process that is better defined as delopment. Fundraising may also be called institutional advancement. Because of the narrow perception that people often have about the word “fundraiser” many people prefer to be called development officers. <br /> <br />   <br /> <br />  
  •   <br /> It’s no secret there’s enormous turnover among those who raise money for nonprofit organizations. The latest estimate of the average tenure of a director of development was less than 2 years. <br />   <br /> There are many factors at play regarding the turnover issue. Development work is complex and staff turnover is often a result of unrealistic expectations and minimal understanding of development’s complexity. <br />   <br /> <br /> <br /> <br /> Bell, Jeanne and Cornelius, Marla; Underdeveloped, A National Study of Challenges Facing Nonprofit Fundraising; A Joint Project of CompassPoint and the Evelyn and Walter Haas, Jr. Fund; Compass Point; 2013 <br />
  • New iterations of individual giving programs include foundation and corporate sponsored events such as Giving Tuesdays and Day of Giving which are intended to raise the profile of the nonprofit community and encourage giving to favorite charities. These events are very popular with the nonprofit community since many have brought in a nice amount of money with minimal effort. The event sponsors bear the cost of the technology, infrastructure, and gift administration. All the nonprofits have to do is create a profile on the sponsor’s website, promote the event to prospective donors, and send thank you letters afterwards. <br />
  • Requires artistic talent to design the appeal package, list generation, print and mailing costs, gift recording in the donor database, and personal gift acknowledgement. <br />
  • The conversation often involves a discussion of voluntary vs. involuntary philanthropy. In the voluntary scenario, you’re holding funds to be preserved and applied to specific charitable causes of your choosing. The involuntary scenario is where government spends your dollars, which through lack of advance planning you wind up paying in taxes. The dollars you’ve worked hard for over a lifetime could be used for programs you don’t support or worse, squandered through government waste. <br />   <br />
  • Most development people are not qualified financial planners and could get themselves in hot water by giving bad tax advice so it’s best course to refer a potential donor to an expert. There are lots of options to chose from – wills, insurance programs, trusts, and the use of a good financial planner is recommended. A good development officer is knowledgeable enough to initiate the discussion, but also knows when it’s time to call in an expert. <br />   <br /> A planned giving program involves a considerable expenditure of time and possibly expense but is necessary to achieve a return in this area. Approaching the topic takes great interpersonal skills and sensitivity in discussing delicate matters. Negotiating a will, bequest, life income gift, annuity or trust arrangement requires specialized knowledge, and possibly many meetings with lawyers, accounts and donors, but returns could be substantial. <br />   <br />
  • The person in this role does much more than write grants. <br /> <br /> In some cases, it’s possible to use boilerplate but often times not since many funding requests are unique and require that we use a funder’s preferred format. <br /> <br /> Writing versatility is very important. At times it must reflect creativity (as in the case of annual appeals and cases for support). Letters should be personalized to convey gratitude and details about how the gift will be used. Grant proposals are structured, must satisfy all application criteria or may be declined. Scientific or research organizations need someone with technical writing skills. <br />
  • Not long ago, donor information was kept on 3x5 record cards. Today, highly sophisticated yet affordable and easy to use software is available. <br /> <br /> This person’s role revolves around donor information management and analysis. This person needs to be proficient with computers, capable of generating and interpreting information for use in development planning. <br />
  • Nonprofit board members are volunteers which means there’s only so much that can be expected of them. They join boards for various reasons: community responsibility, commitment to the mission, business or social exposure, ego. Few join because they enjoy fundraising which ranks as their least favorite responsibility. <br />   <br /> When recruiting board members, expectations for personal giving and fundraising support need to be clear. <br /> <br /> As for fundraising, board members are crucial to fundraising success. Even is they’re not comfortable making an “ask”, they can still support the fundraising process by being involved in planning, case statement development, review of financial needs, prospect identification and review, and solicitation when possible. Personal giving provides a board member with “moral authority” to ask others for donations. <br />
  • Corporations are primarily interested in brand visibility and are careful with whom they associate. If an organization has just gone through a public scandal, it will be very difficult to get support until the incident is long forgotten, if then. Also, decision makers pay attention to how well and often your organization is in the news. <br />   <br /> <br />
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Transcript

  • 1. Jeanne Minnicks January 31, 2014
  • 2. To broaden awareness of the fundraising/development profession by familiarizing you with the culture of philanthropy, common terminology, key staff members and their functions, and best practices.
  • 3. I. Overview A. The Importance of Philanthropy B. Why People Give, What They Expect & Don’t Want, Other Findings C. The Fundraising Environment II. Fundraising’s Basic Elements A. The Development Team B. Primary Sources of Contributions C. The Integrated Development Plan D. Ethics III. Friend a Fundraiser
  • 4. Philanthropy means "love of humanity" in the sense of caring, nourishing, developing and enhancing what it is to be human. It is experienced by both the benefactor and the beneficiary but in different ways. The former exercises his or her values by giving (time, resources) and the latter by receiving. Philanthropy and charity are related but are not the same thing.  Charity relieves the pains of social problems.  Philanthropy attempts to solve those problems at their root causes. Wikipedia
  • 5. Altruistic behavior: Acts that intentionally benefit another organism, incur no direct personal benefit, and sometimes bear personal cost.  Meet critical needs of an organization  Give back to society  Help those who are less fortunate  Advance a cause they believe in Altruistic ? . . . not so much  Feel good  Recognition  Because they were asked Advice: Don’t guess . . . ask questions! *Howard , Anne W.; New Brain Study Hints at Why People Are Altruistic; Chronicle of Philanthropy; February 22, 2007
  • 6.  Prompt thank-you letters and calls  Opportunities to be engaged other than just monetary donations  Information on results achieved with their gift  Communications with staff whose programs they supported  Compliance with terms of the gift
  • 7. Gifts High fundraising costs Over-solicitation
  • 8.  The rich aren’t the most generous.  Insulated rich give less than those in economically diverse neighborhoods  Red states are more generous than blue states.  Conservatives give more than liberals, yet liberals sit on more non-profit boards  Tax incentives matter.  Regions of the country that are deeply religious are more generous than those that are not. Gipple, Emily and Gose, Ben; How America Gives - America’s Generosity Divide; Chronicle of Philanthropy; August 19, 2012
  • 9. Marketing – employed by commercial enterprises to influence prospective customers to purchase products. Development – process by which nonprofits influence prospective donors to support their needs through gifts and grants Berendt , Robert J. and Taft, Richard; How to Rate Your Development Office; The Taft Group; Washington, DC; 1983
  • 10. Marketing Development  Research identifies and defines customers and their needs  Positions products to correspond to customer characteristics  Dedicates a significant portion of budget to builds awareness through advertising & PR support  Trains employees to sell  Research identifies prospects, giving potential & interests  Creates institutional case for support and giving opportunities that match donors’ interests  Communicates in a variety of ways to build awareness  Trains volunteers (board members & others) to solicit Berendt , Robert J. and Taft, Richard; How to Rate Your Development Office; The Taft Group; Washington, DC; 1983
  • 11.  Highly diverse and ubiquitous
  • 12.  Goal and numbers oriented
  • 13.  Relationship intensive
  • 14.  Communications intensive
  • 15.  Highly competitive
  • 16.  Creative
  • 17.  Slow to change
  • 18.  Executive Director  Director of Development  Director of Annual Fund/Annual Giving  Major Gifts Officer  Planned Giving Officer  Grant writer  Database Administrator  Board of Directors Development Associate/Assistant Membership Coordinator Special Events Coordinator Volunteers
  • 19.  Key spokesperson & lead fundraiser for the organization  Possess real working knowledge of the development profession o Different constituencies, giving cycles, forms of giving, donor cultivation and engagement, gift management and record-keeping, functions performed by various development department staff  Makes vital decisions about the place development holds within the organization’s operations  Measures effectiveness of existing and new programs in terms of short and long term goals for raising money  Evaluates effectiveness of development staff  Understands the role of board members in fundraising and engages them appropriately Berendt , Robert J. and Taft, Richard; How to Rate Your Development Office; The Taft Group; Washington, DC; 1983
  • 20. The mythological “Fundraiser” . . . What’s in a name? Peer relationship with trustees and often deals with corporate and foundation officers. The title accords respect and should reflect the importance and impact of the role.
  • 21.  Primary role: to create a process of outreach to donors by organizing & using others to seek funds  Involved in the institutional planning process.  Multi-talented: Strategist Tactician Financial planner Marketer Party planner Market researcher Networker Competitor Trainer Cheerleader Diplomat Psychologist News Junkie Communicator
  • 22.  Prospects for & stewards individuals  Manages the Annual Fund and other individual-giving oriented initiatives, i.e. Giving Tuesdays, Day of Giving
  • 23. Annual Fund – a program that annually solicits a body of constituents for unrestricted contributions  Time consuming and expensive with relatively low return  Goal is to establish a giving habit and provide a basis for planned giving  Funds are in the form of cash and used primarily for ongoing programs  Typically directed towards individuals who receive multiple contacts during the fund period using a variety of methods  Most begin in the fall, conclude end of the tax year The Center on Philanthropy at Indiana University – The Fund Raising School in partnership with the Bayer Center for Nonprofit Leadership and support of The Forbes Funds; Developing Donors; Indianapolis, IN; 2004
  • 24.  Solicits funds for special needs o Programs and projects o Limited capital improvements o Equipment o To build or add to an endowment fund  Higher $ value “asks”
  • 25. Planned Gift  A legal vehicle to carry on the charitable values of an individual/family converting property into a program of good works which continue after his death.  Created during the donor’s lifetime but benefits do not accrue to the institution until some future time, usually at the donor’s death Voluntary vs. involuntary philanthropy discussion Englund, Gregory J.; Beyond Death and Taxes, Old Questions, New Answers; Estate Planning Press; Boston, MA; 1993
  • 26.  Requires specialized knowledge - financial concepts, financial products, & charitable giving strategies to take best advantage of existing tax laws  Defer to an expert  Great interpersonal skills and sensitivity in discussing delicate matters  Considerable expenditure of time & possibly expense  Process can’t be rushed  Timing of gift can’t be predicted
  • 27.  Misleading title  Development - writing-intensive  Paper & on-line submissions - applications, proposals, letters, reports, and agreements  Variation among funders’ preferred formats  Standardization vs. customization  Versatile writing skills – creative, personalized, formal, structured, technical  Very different skill set from marketing & PR
  • 28.  Donor information management and analysis
  • 29.  Fiscal stewardship & strategic advice about investments & financial direction  Input on specific management problems  Member recruitment  Expertise – law, finance, marketing, etc.  Personal gift  Fundraising support – gift solicitations, attendance at events  Advocacy
  • 30.  Individuals  Foundations  Corporations  Government Entities  Capital Campaign
  • 31.  In 2012, largest single source of charitable contributions – 72% of $316.23 Billion  Sources of major and planned gifts  A strong individual base hedges risk  Many ways to engage – mass marketing, group, or one-one- one  Larger base provides the basis for specialized appeals & avoidance of donor fatigue The Giving Institute & Indiana University Lilly Family School of Philanthropy
  • 32.  Instrumental in pressuring nonprofits to define with greater clarity their missions, goals, outcomes  Divorced from the emotion of giving  Arms-length relationship with grantees and applicants  Focus - goals & outcomes, sustainability, board participation  Primary contacts - executive and/or program officer  Structured application process
  • 33. Corporate Relations or Community Affairs  Relationship-oriented; board contacts are key  Focus - brand visibility (event sponsorships, naming rights)  Selective  Contractual  Quid pro quo Corporate Foundations – similar to private foundations  Focus - programs tied to corporate initiatives  Primary contact – mid-level manager  Structured application process
  • 34.  Funding availability fluctuates widely depending upon budgets and political climate  Contact with elected representatives is important; lobbyists helpful but expensive  Application process – similar to foundation process, but more cumbersome and less transparent
  • 35. Intensive program designed to raise a specified and large sum of money over a specified time period to meet capital needs (building construction, remodeling, expansion, equipment) Elements:  External consultant often hired to steer  Usually multi-year  Feasibility study  Creation of the case for support  Giving charts  Prospect review to identify sources of funds  Prominent leadership  Volunteer committees  Quiet & public phases  “Pledge” system of giving
  • 36.  A comprehensive plan to raise funds needed to support the organization’s mission  Identical to a business plan used in the for-profit world: o Mission & vision statement o Organizational description o Plan goals o Market opportunity analysis o SWOT analysis o Strategies and tactics to be used in pursuing opportunities o Resource needs o Budget & detailed forecast o Measurement and evaluation
  • 37. Development professionals serves the public trust by promoting ethical and effective fundraising practices by demonstrating values in all aspects of our personal, professional, organizational and public lives. These values require that we:  Observe and adhere to all relevant laws and regulations  Build personal confidence and public support by being trustworthy in all circumstances  Demonstrate honesty in relationships  Remain accountable for professional, organizational and public behavior  Are transparent and forthcoming in all dealings Association of Fundraising Professionals
  • 38.  Understand that our focus is not on technology but on our mission  Recognize constraints of our limited resources  Add value to your nonprofit clients by understanding the functions of the individuals with whom you may deal  Remind us of the resources at your disposal – partnerships, training, etc.  Be an agent of change  Broaden your knowledge of the nonprofit sector  Create a culture of philanthropy in your workplace
  • 39.  Association of Fundraising Professionals  Pittsburgh Planned Giving Council  The Bayer Center for Non Profit Management  The Forbes Funds  Greater Pittsburgh Nonprofit Partnership  PANO  Chronicle of Philanthropy
  • 40. Thank You!
  • 41. Bibliography Bell, Jeanne and Cornelius, Marla; Underdeveloped, A National Study of Challenges Facing Nonprofit Fundraising; A Joint Project of CompassPoint and the Evelyn and Walter Haas, Jr. Fund; Compass Point; 2013 Berendt , Robert J. and Taft, Richard; How to Rate Your Development Office; The Taft Group; Washington, DC; 1983 Englund, Gregory J.; Beyond Death and Taxes, Old Questions, New Answers; Estate Planning Press; Boston, MA; 1993 Gipple, Emily and Gose, Ben; How America Gives - America’s Generosity Divide; Chronicle of Philanthropy; August 19, 2012 Hall, Holly; Fiscal Crisis Reshaped How Donors Give; Chronicle of Philanthropy; September 22, 2013 Howard , Anne W.; New Brain Study Hints at Why People Are Altruistic; Chronicle of Philanthropy; February 22, 2007 Lewis, Nicole; Half of Affluent Americans Say Tax Policy Doesn't Affect Their Giving; Chronicle of Philanthropy; November 9, 2006 The Center on Philanthropy at Indiana University – The Fund Raising School in partnership with the Bayer Center for Nonprofit Leadership and support of The Forbes Funds; Developing Donors; Indianapolis, IN; 2004