Fundraising – Case Study of a NGO

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Tim Weber (Mehr Demokratie, Bremen)
Series of Internacional Conferences
Civil Society Organizations
Transparency and Responsibility
3rd Conference "Fundraising: Ethics and Transparency"
Held at the Goeth Institut Lissabon
Organized by Humaneasy Consulting and Friedrich Ebert Stiftung Portugal
More at http://www.humaneasy.com/conf/

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Fundraising – Case Study of a NGO

  1. 1. 1 Lecture: Case study - fundraising of a German NGO by Tim Weber, 8th June 2009 structure 1.Introduction 2.Representation of More Democracy 3.Development of fundraising of More Democracy, steps of fundraising 4. Principles of fundraising and ethical reflexions 5.Conclusions Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  2. 2. 2 1.Introduction In June 1996 More Democracy went almost completely bankrupt. That was curious because in 1995 we had had our biggest political success but we were not able to use that situation for fundraising. Far from it! We had high running costs without making any income to make up for it. Round about 15.000 Euros expenses were compared with 500 Euros income per month. Our balance was zero. That time was a crucial situation. We voted to opt for fundraising. The most important rule for me is following: Fundraising is the principle of asking, asking again and asking for more. The most frequent answer you will get is: “No!” It is quite normal and believe me, that answer is much better than „maybe“ or „I donʻt know“. Therefore you have to ask enough people in order to get enough money for your work. I call this coherence the rule of amount. Normally people are not amused getting the answer „No“, but fundraisers really love it. Because I know I have to ask one hundred people and out of these it is likely that twenty percent are going to say „Yes“, I shall get eighty to say “No”. Getting the first “No” means consequently there are only seventy nine “No”s awaiting will say and still twenty “Yes”. And that is great. What do you think? What is the very reason, why people give money to our work? [waiting for answers...] All answers are right. In my eyes the most important reason is, what Ise Bosch, she is a donor and fundraiser, outlines in her book „How to donate better“: I quote the following sentence:“ Today fundraisers Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  3. 3. 3 know that the main reason why people give money is because somebody has asked them.“ So, if you are able to ask people for donations you are able to do fundraising. It is quite easy, isnʻt it? Of course there are a lot of things to know in order to make fundraising work perfectly. That is the know-how of fundraising. It helps you making things much easier, avoiding mistakes and so on. But the ability to fundraise consists of asking people for money. The ways of asking for money are basically the same principles as the basic principles of communication: by letter, by call, by email and homepage, by text message (=sms), and face to face ... Sometimes there are fairy tales of fundraising. A pastor in East Germany wanted to renovate his church. The total costs were, I donʻt know the exact sum, perhaps approximately five hundred thousand Euros. In East Germany there are not many members in any church parish. So it isnʻt easy to build relations with people, (and to ask them for money). The pastor looked in the church register who had been baptised and confirmed in the parish. Lo and behold! Mr. Otto, the owner of a catalogue company, had been confirmed in that church. The pastor wrote to Mr. Otto and he paid for entire renovation. I am not sure if the story is true, but anyway, it is a good story and thatʻs why I tell you. It does not reflect the reality. Fundraising is the result of work, of hard work and systematic planning. In spite of this it is fun and it is simpler and much easier than people believe. Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  4. 4. 4 2.Representation of More Democracy More Democracy is a political organization founded in 1988. We want to develop democracy on a local, regional, federal and even a European level, especially by the means of introduction and improvement of direct democracy and also a change of electoral law. We are convinced that people have the right and even the duty to influence and define their lives by themselves. We donʻt want abolish the parliamentary democracy but we want to amend it with referenda. In our eyes important questions include for example European integration, the German unification. Also, questions people consider as being important shall be decided by the people themselves. We advice initiatives who want to start a local referendum, we work scientifically and first of all politically by lobbying politicians and organizing referendums on a regional level. We have 5240 members and additional 2500 contributors. Our turnover averages to about 600.000 Euro, last year even one million Euros. We are organized in regional groups and we have eight offices around the country. We are successful on a regional level. For example in 2009 in Hamburg there was a successful petition for a referendum in order to improve the electoral law with over 70.000 signatures, and in Thuringia the parliament adopted a draft paper after we had collected over 250.000 signatures the year before. On the federal level there are no rules for referendums. However by now a majority of representatives is in favour of referendums but you need a two- thirds majority in both chambers. Even in the Lisbon Treaty there is an article ruling the citizen initiative, that means a million citizens have at least the right to make suggestions for European rules, and this article is based on our political work. Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  5. 5. 5 On the one hand we have to do a hard job. Round about three percent of donations are political and mainly the parties get these donations. Organizations like us have not the same opportunities to represent themselves in the public, media and so on. On the other hand More Democracy has really a unique selling proposition, namely the development of democracy. Whoever wants to work for democracy and does not like parties has the chance of joining us. The question is if he will find us or if we will find him. Actually our theme is more abstract than others and therefore less people have interest in such a theme. But political contributors often know our organization as the one they decided to give money to. They love it and stay with us for long time. One thing is absent in the representation and that is the mission statement. And here it is: „More Democracy is the motor of referenda and a better electoral law. Every vote is equal and every citizen has the right to participate. That is what we are working for.“ 3.Development of fundraising of More Democracy In 1995 we introduced the right of local referenda in Bavaria via regional referendum. It was a success and we attracted public interest. As a result the conservative party in Bavaria for the first time ever lost a political campaign. Nevertheless More Democracy counted round about 150 members. Today we have developed from a small to a medium organisation and you have to know to the biggest one in Europe. Also the turnover increased. From 250.000 in 1997 to one million Euros today. Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  6. 6. 6 Table 1: development of turnover year income expenses result 1997 259.730 EUR -279.408 EUR -19.678 EUR 1998 629.828 EUR -550.296 EUR -79.532 EUR 1999 585.494 EUR -633.614 EUR -48.120 EUR 2000 784.486 EUR -835.196 EUR -50.710 EUR 2001 586.517 EUR -592.057 EUR -5540 EUR 2002 621.533 EUR -493.938 EUR 127.595 EUR 2003 510.716 EUR -620.758 EUR -110.042 EUR 2004 527.772 EUR -536.841 EUR -9.069 EUR 2005 592.880 EUR -544.455 EUR 48.424 EUR 2006 658.746 EUR -660.557 EUR -1.812 EUR 2007 998.546 EUR -1.009.246 EUR -10.700 EUR Table 2: development of members of More Democracy since 1995 Date Numbers of Exits Entries Changes members autumn 1995 150 24.09.1996 670 520 15.10.1997 1337 667 16.10.1998 1759 422 16.10.1999 2163 404 16.10.2000 2724 561 16.11.2001 3575 851 23.09.2002 3563 277 265 -12 31.10.2003 3734 230 401 171 31.10.2004 3701 396 363 -33 31.12.2005 4493 (-167)* 551 1343 792 31.12.2006 4257 (-164)* 279 43 -236 31.12.2007 4656 (-175)* 363 762 +399 31.12.2008 5063 (- 204)* 336 743 + 407 30.04.2009 5182 (- 201)* 125 244 +119 * partnership members Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  7. 7. 7 In retrospect the crash of 1996 turned out to be a lucky incident. Because of the crash we began to realize that fundraising is a fundamental duty. Every member of staff and board has to do it and, what is more, a lot of them really do it. Almost twenty people see fundraising as one of their tasks. Each division, including the public relations division is accepting that fundraising is a central exercise. It was our executive secretary who managed the crisis of 1996 . If I tell him today, I have an idea of fundraising he will answer enthusiastically: „Great, letʻs do it! Or how can we do it?“ This is the kind of atmosphere it is really a pleasure to work in! There are many organizations that engage a fundraiser who is then the only person dealing with this task. However, experience has shown that this system of task division does not work well. In our history there are different steps of fundraising. a) Mailshot letters: From the beginning we collected addresses and fundraised money via mailings and kept these people informed about our aims. But at that time, there was no internet, it was very difficult to find the organization. I knew myself the organization by word of mouth from a friend. I wrote to the executive secretary and ask him if and how I could become a member. b) From 1993 to 1995 we financed via mailings the Bavarian campaign. We got also money from supporting organisations and parties, for example, from the Socialdemocratic Party we received 35.000 Euros. The relation between money fundraised from mailings and money fundraised from organizations was 10 to one. Because of the campaign we got a lot of new addresses and Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  8. 8. 8 built up a database, a really important condition for the following measures of fundraising. c) In 1996 there was the crash and that incidence was the beginning of systematic fundraising. First of all we sent an emergency-mailing:” Help - we have no money!” We got 25.000 Euro in return. And whatʼs more the people knew about our sorrows and problems. We also started fundraising friends and relatives. And we started with telephone fundraising. We had approximately 2000 donors of the years 1995 and 1996. At that time I worked at a telephone company. I transferred my experiences of selling onto this new task of finding donors. And it worked. I spoke to nearly 500 donors and almost 25 percent opted for membership. Of course members of the board expressed criticism and concerns: Is it ethical to call people and ask them directly to give money? The critics said people would feel under pressure. Writing would be ok, but calling is to aggressive. Surely there were donors who did not like to be called. Furthermore the majority gave the most frequent answer: “No”. But almost 25 percent said “Yes”. And almost all donors, let their answer be “Yes” or “No”, were delighted to speak to us directly. Your donors love you and your organization, really. Some people were downright enthusiatic and reacted like: “Yes, of course. I shall become a member and my husband too!”. Imagine, we would not have called that person! Our organization learned a lot about fundraising, and so did I personally. For example you need 100 addresses with telephone numbers in order to speak to 80 donors. On average you reach four people per hour. I teach other members of staff at workshops. Until today we worked with telephone fundraising for example in order to reactivate ex-members or to gain donations. Before I come to the next step I want to tell the story of Silvia. She didnʻt like making a call and begged me leave the room. I did it but waited Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  9. 9. 9 outside the door in order to listen how the calling went. It was terrible. Silvia was very nervous and stammered. However the donor became a member. Remember what Ise Bosch says in her book: „The main reason why people give money is because somebody has asked them.“ d) The time between 2000 and 2003: Despite of our success we decided to stop with telephone fundraising because political duties were more urgent. At the German Fundraising Congress in 2000 a fundraising agency approached us suggesting we should test them. We decided to give them our best address list, the donors of 2000, since we wanted them to be motivated and successful from the start. The risk is manageable. You can stop the operation at any time. The agency called people with the same success rate like us, even better. Of course the distance between your organization and the donor increases. Some donors call back and want to know if it was really our organization giving the application. Sometimes they are disappointed. You have to react immediately and explain your action. In your database you must make a note if a donor doesnʻt want to be called again. Sometimes I work as consultant and organizations ask me to teach them telephone fundraising. Thatʼs a good job for me. But my experience is that you need to be highly committed and highly motivated to make such calls. Therefore, if in doubt, I advise working together with an agency. But I also advise learning about telephone fundraising because there are other duties to be seen to where such knowledge comes handy, like acquiring members or thanking donors. Or reactivating ex-members. Recently for example we received 1000 Euros. We called the donor and asked her why she gave us so much money all of a sudden. She answered that she inherited some money and she would like to give back some of the good she experienced in her life. And furthermore at a time when she was hard up with money and decided to leave our club we had Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  10. 10. 10 called her, had asked for her reasons and offered to keep her membership without paying the fee for one year and afterwards allowing her to pay a reduced fee. She said: „In times when I was hard up and felt bad you dealt very fairly with me and I am grateful for that.“ Now, that is building up a relationship! In 2002 we started tests with using direct canvassing on the street. We instructed an agency. Organizations like Greenpeace, animal protection or humanitarian organizations work successfully with that instrument. However in our case it didnʼt work. We need up to two and half or three years until an acquired member is refinanced. I think, that is too long. A member can expect hat his or her fees is used to serve the purpose for which the organization stands. Surely the organization needs to invest money for fundraising, but this investment should be refinanced within two years. For this reason, we stopped fundraising on the street. But still we hired coaches who teach us the form of fundraising. And from time to time we use canvassing. We all dream of a really big donation. If I know a millionaire I will ask him and we will be fine. Sometimes people ask me how you get to know rich people. My reply to this question is that you probably already know a person who is a millionaire, but you donʻt know, that he or she is one. Forget about targeting famous people. Too many people are requesting money from them. Targeting famous people is also against an important rule: You first need to build up a relation with a person and then you can ask him or her to donate money. In your database or in your address list there are probably donors who give more than others. For example, there may be a donor who donates, say, 500 Euro per year for five years or a donor who donates 500 Euro as his or her first donation. Then you should call this Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  11. 11. 11 person and thank for the donation. This may give you a chance to learn more about him or her, and one day you will decide to ask for more. Fundraising is also the principle of asking for more. And it is through this strategy that you will eventually identify “your” millionaires among your donors. In 2002 we knew somebody who became member via internet with a major fee. One year later another person donated a bus that we wanted to use for campaigning. The mentioned major donor then gave us 50.000 Euro for renovating the bus. A very welcome development! But be careful! More money from one donor means more responsibility on your side regarding that donor. It wasnʻt easy managing a bus, and after four years the costs rose above the incomes. Eventually, we had to stop the project. How should I say - we felt quite a bit uncomfortable having to explain this to the major donor. But you have to explain, and if you are honest, there is hope that the donor will accept that fact and remain a donor in the future. e) Between 2004 to 2008 we approached the major donor fundraising. This included identifying donors above a certain value, contacting them, finding out about their motivation and their favourite concerns - and asking them for donations. One donor said at the beginning of a call that he had no intention to donate any money for our general purpose. But he added, that he would maybe give money if I offered him a special project. I answered that I do have a special project, namely the introduction of Linux – that is the famous open source software - in our organization. As a supporter of the open source community he was very interested, and at the end of our conversation he said that money doesnʻt matter. A fundraiser once said to me, you have to offer adventures to your donor. Therefore we invited them to journeys to Switzerland or Berlin. You have to Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  12. 12. 12 involve them in your activities and your mission. Of course major donor fundraising takes time. Table 3: Results of major donor fundraising from 2002 till 2007 Year Numbers of donations over Amount in Euro 2500 Euro 2002 2 16881 2003 5 16713 2004 4 16713 2005 8 70666 2006 8 103181 2007 11 136930 2008 7 173068 Starting in 2007 we have been sending e-mailings three or four times a year. This is both cheap and easy. A response rate of about one percent is realistic and already worth the effort. But be careful! The credibility of your appeal is very important. The user decides within few seconds whether to donate or not. If the user only once has the feeling that you only want money of him or her without making an honest offer as to what you intend to do with that money, the donor will not read your next email. This rule applies throughout, but the effect is particularly strong in e-fundraising. In the first year we sent four e-mailings, and the response decreased. Hence we changed our strategy. Last year we sent five e-mailings, but in three of them we first of all asked the user for action and only in two mailings did we ask for money. As a result of this “mixed strategy” both the overall response rate and the average donation increased. The lesson is that first you have to get your donors involved and only then you have the chance to get a donation. By the way: this lecture has been proofread by one of our major donors. My Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  13. 13. 13 hope is that this not only helped to increase the quality of this lecture, but that this involvement of him will make him more likely to donate more in the future. In 2005 and 2008 we started fundraising campaigns canvassing memberships. These campaigns describe a new quality of fundraising because we communicated with our donors about organizational targets. The campaigns achieved the SMART criteria: Specific, Measurable, Achievable, Relevant, Time related. f) This year we are confronted with the financial and economical crisis. In response to our first mailing we received less than two-thirds of the normal amount. Nevertheless we connected our political target, namely referendum in the constitution, with an organizational target, gaining the addresses of 20.000 new interested persons. To compare: the years before we had gained only between 5.000 and 10.000 addresses. Furthermore we plan to start acquiring civil penalties of courts. In Germany judges and attorneys are entitled to donate civil penalties of convicts to organizations of public utility. This is a new field of work and it was made possible only by employing a new member of staff whose first two years were financed by means of a larger donation. 4.Principles of fundraising and ethical reflexions What about ethics at More Democracy? Of course, there are some rules! 1.You have to accept that there are questions of ethics. Whenever you do something you can do it in an ethical matter or cannot. 2. Before we start a new measure we discuss that measure and possible consequences in the organization, with the board or with members. Democracy is sometimes exhausting but it assures or at least favors ethics. 3.Transparency: In our annual report we give an account of the use of the donations. Also we answer questions of donors and interested people Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  14. 14. 14 immediately. Our mistake is that we donʻt report about the use of concrete projects. We ask for donations, we put the money in the promoted projects, but we donʻt report about the organized projects, at least not about every project. That is sometimes disappointing for some donators. And therefore we must improve our praxis regarding our reporting. 4. We talk about our fundraising and every measure is explained to everybody who wants to know it. 5. Data privacy protection: collected data are not passed on others parties. We donʻt trade addresses with other organizations. 6. I have told you. Maximal two membership fees are permitted to invest in fundraising. Otherwise we stop the measure. 7. We believe in freedom of every citizen. Hence every members can leave our organization whenever he or she wants. There are no deadlines or special conditions for canceling membership. On the one hand fundraising is an easy job, as I have told you: just do it. On the other hand there is potential for conflict because you want something from others and you also need it so that your organization can work, or even survive. In some situations, the people you ask may feel under pressure in face of aggressive propaganda or simply find themselves unable to say no. If you are a fundraiser you must have a strong will, you must be a hunter. Sometimes during fundraising talks I find myself thinking “I am going to get you!”. For example if a good friend whom you have asked for membership says „Sounds like a good purpose, I will think about it, “, you might choose to answer „Come on, get down to it now! Here is the membership application form and here is a pen. Donʻt hesitate.“ But as fundraiser you will often have to be sensitive. Perhaps your friend does say “Yes!”, but he doesnʻt really mean it. Possibly he has other interests. Then you have to accept this and Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70
  15. 15. 15 help him find the right organization. Another more lyric definition of fundraising is: Fundraising is the art of teaching people to give with happiness. 5. Conclusions Sometimes colleagues of other organisations are wondering if fundraising is possible in the case of direct democracy. I hope to have shown here that it is possible. In 2002 I visited the German Fundraising Congress the first time. There I spoke to Barbara Crole, a very successful fundraiser, and she said to me: „One thing you must not forget is that even Greenpeace was once started off as a small organisation.“ At the evening of the same day I saw a movie, and in that movie Gerd Wallmeyer, chief fundraiser of Greenpeace Germany, said, everybody has a chance to spread his mission and to fundraise money for that. In Germany there is the saying: „The money is laying on the street” That is right, but you have to bend down in order to pick it up. This can sometimes be exhausting. So you could say: Fundraising is the result of hard work. But it is also fun and it is simpler than people believe. Mehr Demokratie e.V., Tim Weber, Schildstr. 12-19, 28203 Bremen, Germany, tim.weber@mehr-demokratie.de, tel: 0049 421 794 63 70

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