Have you recently found yourself in charge of running or developing your organization’s annual fund campaign? Are you looking at ways to bolster your annual support? Do you ever wonder if your organization is pursuing the most effective path to securing annual gifts?
No matter which stage or circumstance you find yourself in, taking a critical look at your organization’s current practices and possible steps should be an ongoing ritual.
The focus of this article is to present a comprehensive approach to raising annual support. To accommodate readers of varying experience, each activity will be defined and followed by descriptions and suggestions.
What is Annual Giving?
Although almost everyone has been solicited by their favorite organizations, there are greatly varying understandings of the approaches to raising annual support. Commonly referred to as the “bread and butter” of any development operation, effective implementation of annual giving programs requires an understanding of their role and nature.
Annual gifts are contributions made for operating support during a fiscal year and must be renewable. A renewable gift is one that can be easily replaced by another donor.
Some organizations have or will count grants and significant gifts as annual contributions to help balance a budget deficit. This can lead to a huge operational shortfall (when the gift is not repeated) and distort future planning unless the organization can find another donor at the same level to replace the gift. If you can’t easily replace it, chances are it is not an annual gift.
To avoid future complications, define your range of renewable giving. For many organizations the range is $1 to $10,000. Unless you work for a large non-profit with a huge development program, your range will probably be the same or less.
In this case, any gift over $10,000 would be considered a major gift. Major gifts are one-time or period gifts designated for a specific purpose. If the contributions were undesignated, they would still be defined as a major gift if they are non-renewable and exceed the annual giving range. A clear division must always exist between your annual and major gifts.
What Are the Basic Components of Comprehensive Annual Campaigns?
There are three basic components to an annual campaign: direct mail, special events, and personal solicitations. Many organizations miss funding opportunities because they do not embrace all three approaches in a balanced manner. Look at it this way, an annual campaign is a three-legged stool—if any leg is missing or out of proportion with the others, you will have an unstable seat.
With a response rate of only 2-5%, are direct mail appeals a cost-effective use of time and materials? Absolutely, but keep in mind the primary purpose of a direct mail appeal is to educate the public as to your mission and successes, establish your organizational identity, and create awareness of giving opportunities among people who may or may not have a connection to your organization. Of course, you are seeking to raise money. But remember the three-legged stool metaphor. All of the annual giving components serve a greater function and work best in conjunction with each other.
Keep the following suggestions in mind when developing your direct mail campaign:
- Appeals are made with a solicitation letter (stronger appeals are accompanied by supporting materials such as a brochure, a case study, or a fact sheet).
- Issue direct mail appeals 3 to 4 times a fiscal year. The first letter aims high, affirms the organizational vision and mission, and announces the annual campaign, chair, and committee. The second letter is often more detailed and may profile a beneficiary of your programs or lists specific cost items (what $25 would purchase, etc.). The third letter may be focused on programs, etc. The final mailing is often an end of the year postcard or letter urging support.
- Only send personalized letters. You are wasting postage and opportunities when you send Dear Friend letters. Have the letter signed by the annual campaign chair, the executive director, or key volunteers whenever possible.
- Segment your appeals to address the interests of your various constituencies.
- Use letters to announce new developments, successes, and upcoming events.
- Remember, the perception of your non-profit’s image and organization will be established by your mailings. Errors, cheap materials, generic appeals can cause harm to your organization’s image. Present materials in keeping with who you are and where you wish to go (not where you’ve been).
- Letters should be no more than one page. As important as your organization may be, most people will scan your letter if they read it at all. Keep it brief, to the point, and include many breaks.
- Always request a specific amount. How else will they know what you desire?
- Consider the use of giving clubs to engage new donors and elevate giving levels of regular donors.
- Answer the following questions in your appeal: Why should they be interested? Why should they invest? What will their investment bring (present examples)?
Easily the most misunderstood of all fundraising activities is the special event. As the most conspicuous of all development operations, the public generally regards special events as the primary means to raise money. This misguided correlation is so strong in the public perception that special events are commonly called “fundraisers.” This is fundamentally wrong. As a fundraising professional, you know multi-million dollar hospital buildings are not built with money raised from bake sales and black tie events alone.
The primary purpose of a special event is to raise awareness and engage people who otherwise may not have a connection to your organization. They are friend raisers and educational opportunities. This is not to say special events do not bring in needed funding—remember the three-legged stool metaphor! A few things to keep in mind in regards to special events:
- Special events raise awareness and engage people who otherwise may not have a meaningful connection.
- Most effective when used in conjunction with direct mail and personal appeals.
- Can be used to build stronger relationships with the corporate and business community.
- Can cultivate relationships with annual and major gift prospects.
- Should be no more than 2 major events a year. More will exhaust staff and volunteers, “nickel and dime” local supporters, and provide diminishing financial returns.
- Focus on a few events and do them exceedingly well. Concentrate your energy on making your event a major occasion each year.
- Coordinate your direct mail appeal with your special events to maximize exposure and impact.
Where direct mail educates and special events engage and create awareness, personal solicitations are the most direct and effective method to raise money. Personal solicitations significantly increase contribution size and number, build relationships with current and potential donors, cultivate donors for greater annual, and possibly, major gifts. When preparing to solicit annual campaign prospects keep the following suggestions and observations in mind:
- Solicitations are conducted by development officers, executive directors, trustees, staff, and key volunteers.
- Recruit a chair and committee to lead and implement your annual campaign.
- Always request a specific amount or ask them to join the next higher level of your giving societies.
- Ask the donor to identify other prospects. Will they help you set up and solicit the prospects?
- Establish a minimum gift level for your trustees—typically $1,000. Your trustees will set the tone and provide the starting point for your campaign. If they are going to be effective board members they must be donors and volunteer solicitors.
- Consider holding phonathons to reach out to donors and prospects whom you will not be able to see face to face.
- Carefully match solicitors to prospects.
- Insist that each solicitor commit their own gift before soliciting any prospects. You can’t ask someone to do what you are not willing to do. Your solicitor’s pledge (or giving club association) may set the tone for the donor’s response.
- Carefully prepare a personalized proposal and train volunteers to be knowledgeable, prepared, and focused ambassadors and solicitors.
Remember, the whole of the three components (direct mail, special events, and personal solicitations) is greater than the sum of its parts. Employ each one thoughtfully by coordinating your activities and allocating the appropriate financial and volunteer resources. Some other general tips to consider include:
- Multi-year commitments. A multi-year commitment ensures funding will be in place, freeing you to pursue new sources of support each year.
- Employ giving clubs. Giving clubs are an effective tool to increasing levels of annual support. Consider a special luncheon, tours, or newsletter for your top giving society. Make the clubs appealing.
- Consider challenge gifts. With a willing major donor you can use a significant gift to challenge prospects to make their first gift or to increase their giving. For example, Ann Smith will give $25,000 and has agreed to use it as challenge gift to encourage first time donors. Her gift will match one dollar for every three new dollars raised up to $25,000. Arrange the challenge to suit your situation and needs.
- Categorize donor prospects according to giving behavior. Some use the labels LYBUNTS (last year but unfortunately not this year), SYBUNTS (some years, but not…), or Not Yet Donors (better than NEVERS!), to describe giving behaviors.
- Consider and employ the appropriate use of recognition tools (plaques, publications, recognition at special events, press releases, etc.)
- Have a theme and chair for each annual campaign.
- Plan according to your resources. Make a sober assessment of what financial and volunteer resources you will have to implement your annual campaign. Plan accordingly. Focus on doing a good job and gradually increasing the scope of activities each year ahead.
- Have fun telling your story and asking for help.
Custom Development Solutions, Inc. (CDS) is among the most sought after fundraising consulting firms specializing in the strategic planning and tactical execution of capital campaigns for non-profits throughout the United States and Canada. If you have a fundraising question, please call CDS at 800-761-3833 or send an email to firstname.lastname@example.org.