Fundraising and Resource Development

8/14/2019 Fundraising and Resource Development

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Fundraising and resource

developmenthttp://www.managementhelp.org/fndrsng/n
http://www.managementhelp.org/fndrsng/np_raise/fndraise.htmhttp://www.managementhelp.org/fndrsng/np_raise/fndraise.htm


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ORIENTATION TO THE FUND

DEVELOPMENT FUNCTION

In too many nonprofit organizations, thefund development function has been cutoff from the program power of theorganization. For example, an agencywill plan program activities, draft a budgetand then, as if by an after thought, tell

someone in charge of fundraising what isthe financial "gap" that will have to broughtin through fundraising.


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ORIENTATION TO THE FUNDDEVELOPMENT FUNCTION

Or, in another frequent example, certainboard members, brought on the boardbecause of their knowledge of or closeness

to wealth, are assigned to a "fundraisingcommittee", with no connection to program,and are expected to solicit funds from other

persons of means.


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fund development is a dimension

of marketing

Our recommended approach here is toground the fund development functionfirmly in the strategic base of theorganization. It is, first of all, tied to themission, vision, values and overall goals ofthe organization. In this view, fund

development is a dimension ofmarketing.


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of marketing

It begins with the market analysis. Thecustomer analysis in marketing includesnot only the exploration of the potentialconsumer marketplace, but also thepotential contributor marketplace.


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of marketing

From the first stages of planning, theorganization should estimate the revenuepotential from consumers and the revenue

potential from the contributor and investorgroups interested in being a secondarymarket for this particular mission and type

of services.


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how it is built into the

organization

What this function is called and how it isbuilt into the organization varies. Inlargerorganizations, like universities and

hospitals, there is a frequently a division ordepartment of "institutional advancement",under the guidance of a vice-president or

senior executive.


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organization

This department is frequently responsiblefor strategic planning, marketing and funddevelopment.


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organization

Within this department or in a mid-sizedorganizations, there typically is a "directorof development" and under that director,

individual positions or responsibilities like"corporate and foundation grants," "annualfund", "alumni" or "membership relations",

"major gifts" or "planned giving."


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organization

In the small or developing organization, itis usually the executive director andseveral board members that are

responsible for "fundraising".


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The term "fundraising"

The term "fundraising" may be used todenote the entire function, but moretypically means the particular activities of

fund development, like holding an event,telephone solicitations, or making apersonal visit.


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The term "fundraising"

"Resource development" is a widerterm, including non-cash resources andpersonnel, like volunteers. "Funddevelopment" denotes obtaining financialresources from secondary customers, i.e.,the contributors and investors.


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seven categories of potential

contributors, grantors or investors

Individuals - They might be boardmembers, staff, volunteers, organizationmembers, persons of great wealth or little

wealth. Individuals are the largestcategory of contributors nationally, roughlythree-fourths (Smith, p 99. The relative

percentage has been fairly constant fordecades.


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The 2004 figure was 74.5%). Asubstantial part of that individual givinggoes to religious organizations. Individuals

contribute from a wide variety of motives,e.g. "give back", civic duty, personalconcern for a person or institution, social

recognition, and so on.


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Foundations - We need todistinguish several types (Smith, pp 112-14 to which might be added today, donor

advised funds). Each type is likely to makea grant from a slightly different vantagepoint.


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An independent foundation may be verycommunity or topic oriented. A foundationfunded by current profits from the

corporation may be almost the same as astraight corporate gift, e.g. closelyconnected to the corporation's self interest

strategies.


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Family foundations usually mirror theinterests of the founders or current familymembers. Community foundations exist

to benefit the community in which theyoperate.


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Donor advised funds are lodged with afinancial trustee (a community foundation,or even a for-profit financial management

company) and are distributed on therecommendation of the individual donor.


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Corporations - They may make a in-kindcontribution from their product resources, ormake a financial contribution out of earnings, or

co-venture an activity out of their marketingbudget, or may have a company sponsoredfoundation (above). They are unlikely to make"disinterested" contributions, and are more likely

to make grants that, at least indirectly, matchoverall goals and interests of the corporation.


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Government - We need to distinguish federal,state, local or quasi-governmental levels ofgovernment. At the federal and state level,government "grants" are most likely in the form of

competitive contracts for specific services to bedelivered. Local grants may be to promote a specialcause in the community, or the interests of a currentadministration or even a particular elected official.


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Federated campaigns andorganizations - Examples of these arethe United Ways, environmental funds,

women's or minority interest funds. UnitedWays generally have selected a broadbase of health and welfare organizations,

and funded them consistently overmultiple years.


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Currently United Ways are being impactedsignificantly by individual "donor choice"options that cut into the regular, on-going

funding received by organizations like RedCross, Salvation Army, Boy Scouts or GirlScouts.


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Religious organizations - Religiousorganizations (whether denominations,local congregations, churches, synagogues

or mosques) are most likely to support aprogram with a religious dimension, orcertain kinds of arts, health, housing orsocial services, Religious organizations,

particularly local congregations, are afrequent source of volunteers.


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Professional and Trade Associations -They are most likely to support venturesclosely aligned with the mission of the

association. Sometimes they may beseeking opportunities for communityservice, and they may be a possible

source of volunteers.


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to determine, as nearly aspossible, their interest

A very important part of the funddevelopment process is to research thesepotential sources and to determine, as

nearly as possible, their interest in anorganization like the one seeking support.Researchers determine if they have any

stated guidelines or policies about makingcontributions or grants.


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to determine, as nearly aspossible, their interest

They determine who is the appropriateperson to contact, or in the case ofindividuals, who is the most appropriate

person to contact the prospect. Thisresearch, or qualification process, movesfrom "suspects" to "prospects" to

"qualified, capable, good prospects."


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case for support

Prior to contacting such possible sources,it is best practice to prepare theorganization's "case for support." What

is the organization capable of doing ifsupported? What will be the benefit to thecontributor or investor? The community?

How will such activities be supported inthe future after this perhaps one-timesupport?


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"Fundraising is friend raising."

A case statement is first used internally inthe organization to get everyone in theorganization--board, staff and volunteers--

on the same page, singing the samemessages. Then the case is adapted to aformat that will effective for external use.


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"Fundraising is friend raising."

The goal of contacting potential supportersor investors (and volunteers) is a two-wayrelationship building and maintaining

process. "Fundraising is friendraising." These relations start withresearch and listening, not "telling and

selling."


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METHODS AND OPTIONS FOR FUNDDEVELOPMENT

The organization may develop--

Grant proposals, as a stand aloneactivity for a start up organization or a newprogram, or as a regular part of an annualcampaign of an established organization.


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Special events, which can be used as publicrelations events or fundraising events or both.Special events are time and personnel

intensive, but important as a way to attract newpersons to the cause. How money is raised inconnection with the event has to be carefullyplanned, as well as how information about

participants is captured.


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Requests for in-kind (non-cash) contributions,where a company or donor may provide neededmaterials or services.

A direct mail campaign, where the initial criticalissue is the quality of the list, then whether themailing is likely to stand out from the clutter of

unsolicited mail and other advertisements to thepoint it will move a recipient to action.


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A telemarketing campaign, where the criticalissue is again the quality of the list, then thelikelihood callers will be able to elicit positiveresponses. Think of various scenarios: studentscalling alumni, professional fund raisers callingfor an organization, poorly trained volunteersworking off a list of persons they never met, welltrained volunteers calling persons they know as

peers.


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A door to door canvass, where the issueis the familiarity and credibility of theperson making the call, and the availability

and receptivity of the dwelling occupant.


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Sample typical users includes churches;some environmental agencies, homelessshelters sending out longer time residents,

and familiar campaigns like Girl Scoutswith cookie orders, or a local organizationworking the neighborhood.


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An online e-mail Internet campaign,using email lists and a regular lettercombined with a fundraising appeal;

perhaps using combined with a method formaking online e-campaign deposits, on aone time or regularly recurring basis


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Negotiating for a place in a federated campaign,e.g., being one of the designated United Wayagency campaign recipients, either by United Wayselection procedures, or by donor choice; being adesignated agency of the Federal Campaign, of acombined health appeal, or combinedenvironmental agency fund.


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An annual fund campaign, where theagency makes one or more solicitations tomultiple contributor/investor groups and

individuals, for funds to support operationsin the current year.


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Such a campaign may involved mail,telemarketing and personal calls, alongwith a number of proposals specifically

targeted to foundations and corporations.


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A major gifts campaign, to meet special orlong range needs; e.g. the organization may

solicit sums considerably larger than annualcontributions to finance a new facility, buynew equipment or bolster an endowment.


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Planned gifts, not of current cash or savings,but of various assets, such as property,insurance policy proceeds, and various kinds of

trusts. Planned gifts that are incorporated into awill, payable at death, are known as bequests.

Venture income, where the organizations usescurrent capabilities to create new services or

programs that have a profitable dimension


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THESE FUND DEVELOPMENT ACTIVITIES AS A

MANAGEMENT FUNCTION

How does the creation of the funddevelopment mix get implemented as amanagement process or processes ?


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a consistent development cycle that creates and

maintains the mutual relationship

Determining and validating the organizationalneed and translating this as a benefit to thecontributor, constituency or community;

Identifying and developing prospects andtarget segments of potential contributors andinvestors; qualifying the prospects;

Selecting the appropriate approach andcommunication options;


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a consistent development cycle that creates andmaintains the mutual relationship

Relating the need/benefit to theorganization's capacity and credibility: isthe organization known to the prospect and

respected; Analyzing the competition: who else is

competing for the prospect's interest,

involvement and investment; what is theagency's competitive advantage;


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Selecting the appropriate approach andcommunication options;

Relating the need/benefit to the organization's

capacity and credibility: is the organizationknown to the prospect and respected;

Analyzing the competition: who else is competingfor the prospect's interest, involvement and

investment; what is the agency's competitiveadvantage;


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Involving volunteers; they are wonderfulwitnesses to the organization's credibilityand community benefit;

Communicating with the prospects: theright person taking the right message tothe right prospect to request the right

amount, at the right time;


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Listening, providing information; gettingand maintaining the interest of theprospect;

Involving the prospect if possible, byhaving the prospect give advice, providefeedback, take on a role, and state what

may be the benefit to the prospect.


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Making a specific request; clarifying concerns, restatingthe request from another angle, if helpful;

Obtaining a commitment;

Following through with whatever steps have been agreed

upon; Following up with appreciation, and in many cases alegally required receipt of the gift and its amount;

Giving public recognition;

Recycling to further involvement and further investment.


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Identification, Information, Interest,Involvement, Investment are the core ofthe development process of cultivating

positive relationships. But, at the sametime it is not about "I", me, myorganization; it is about the benefit that the

organization can create with thecontribution. It is about the "Investor andthe Investment."

S SS CO


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BUSINESS VENTURE INCOME AND

SOCIAL ENTREPRENEURISM

With the increasing trends throughthe 90s into the new millennium ofthe "marketization" and

"commercialization" of the nonprofitsector, caused by a variety of factors,there has been a correspondingimpact on the way nonprofit

organizations are regarding resourceand financial development.


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BUSINESS VENTURE INCOME ANDSOCIAL ENTREPRENEURISM

Market forces like the rapidly increasing number ofnonprofit organizations, the federal budget deficitand many state budget shortfalls, followed by largescale cutbacks in social services and contractingwith nonprofits, the increasing competitionbetween for-profit businesses and nonprofits,changes in policies with foundations, changes ofstrategies at corporations, multiple mergers amongcorporations with the resulting drop out in

corporate philanthropy--these and other factorshave put enormous pressures on nonprofitphilanthropy.


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Of that $241 billion contributed in 03, thebreakout by source was like this (fromthe Chronicle of Philanthropy, June 24, 2004,

pp 27 ff) : Corporations - 5.6 $

Bequests - 9%

Foundations - 10.9% Individuals - 74.5%


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Nonprofit leaders and managers have alwaysexperienced special tensions by the nature oftheir work (e.g. voluntary boards and

professional managers; multiple markets). Thiscurrent double focus on increasing earnedrevenues along with continuing philanthropicinvolvement is the newest and perhaps most

daunting challenge in recent years.


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General Guidelines for Fundraising

Ensure the board is strongly involved infundraising planning and implementation

Develop fundraising goals to be theresources needed to reach the strategicgoals identified during strategic planning


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General Guidelines for Fundraising

Identify a variety of funding sources for each goaland the particular fundraising strategies preferredby each of the sources (the above-mentioned Webpage provides a good overview of variousstrategies and where they should be used) Ensure your plans specify who will be doing whatfundraising, so you don't have sources whobecome overwhelmed or irritated by repeatedsolicitations from different people in your

organization

Establish an organizational structure to


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Establish an organizational structure toimplement the fundraising plan, including:

Board Executive Committee - Establishes prioritiesand goals and approves the plan

Outreach/Marketing Committee - Identifies potential

donors and coordinates efforts to promotefundraising

Fundraising Committee - Leads development andimplementation of the plan, and approaches donors

Establish an organizational structure to


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Establish an organizational structure toimplement the fundraising plan, including:

Volunteer Coordinator - Coordinates volunteer efforts,including identifying where volunteers might help,recruiting volunteers, ensuring they are effective and thatthey are recognized

Information processing - Assign staff to develop andmaintain the fundraising database

Accounting - Be sure to include moneys raised in youraccounting system

Donation processing - Have staff available to process

donations (cashing checks, sending notes ofappreciation, updating the fundraising database, etc.)


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Important to remember

Most fundraising is done in the fall of the yearwhen corporations are doing their planning forthe following year

Corporations typically require a writtenproposal Foundations rarely fund operating costs, that is,costs to support central administration of an

organization, rather than specific programswhich directly deliver services


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Important to remember

Consider approaching a local advertising, marketingor public relations firm for pro bono advice. Regularlysend these companies evidence of the successes ofyour organization to keep them up to date on your

organization. Consider using third-class mailing, which is cheaper

than first-class, but sometimes takes as much as twoweeks longer to arrive. Expedite arrival of third-classmail by using bar codes and nine-digit zip codes.

Fundraising and Resource Development

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