Relationships are key and this is especially true when we ask people and organizations for time and money. Like almost everything else in life, forward thinking and creating an action plan are critical for a successful outcome. Nowhere is this more important than in nonprofit fundraising.
One big mistake that many nonprofits make is failing to analyze their return on investment (ROI) from a fundraising strategy. So, before starting to plan a BIG EVENT or do a direct mail solicitation, it’s important to create a plan based on your current and future donor pool; think about strategies and for each strategy, figure out “What’s my cost to raise a dollar?” or my ROI? In short, is this strategy “fundraising” or “friend-raising” – both of which are important in non-profit fund development – but based on how much it costs to raise a dollar, your favorite strategy might just be more “friend-raising” than “fundraising”!!
Chapter 6 of Starting and Building a Nonprofit, a Practical Guide as well as, Effective Fundraising for Nonprofits (publications of NOLO, a producer of do-it-yourself legal books and software that reduce the need for people to hire lawyers) emphasize five over-riding strategies for successful fundraising.
- Ongoing relationships, the stewardship of donors, is central for organizational capacity building. “The fundamental goal is always the same, to nurture a strong positive relationship with supporters so they find it a pleasure to support your nonprofit”, both financially, and as organizational ambassadors. (See page 105 in Starting and Building a Nonprofit.)
- Target the best possible donors – thinking about what is most likely to appeal to those closest to your organization and how you can reach out to new donors.
- Build a Compelling and Detailed Case. Convey more than your overall mission to possible donors; be specific and business savvy.
- Put Your Board of Directors to Work. Board members’ relationship to the community is a central part of their role and if some are uncomfortable asking others for money, there are roles for them behind the scenes.
- Focus on the Big Picture: This is a balance of staying focused on your nonprofit’s core mission while conveying a pressing, specific need for support to contribute to that mission.
A fundraising plan should focus on fund development around your core mission. As described in Starting and Building a Nonprofit, the outcome of the planning process is a prioritized list of tasks you need to accomplish to successfully fund your organization’s activities. However, before deciding how to raise funds, consider the following issues.
- What are your organization’s needs and how much are you willing and able to spend on fundraising? Starting with your current budget, identify your current and projected sources of revenue ( i.e., grants, dues, special events) and the strategies which have been most successful with your current donor pool. Based on this needs analysis, create some fundraising targets, dedicated to your core mission and then to lesser priorities in your work plan.
- Who is your donor pool? And, how can it be expanded? A word of caution here: Be sensitive to our community. In a small community, many of our philanthropic donors are approached by multiple organizations, so be sensitive to both other nonprofits as well as your targeted donor pool. A detailed list of prospective donors should begin with those “closest to home”, perhaps those who helped you get started in the first place. Relationships are key: talk with your CNL Liaison about how they cultivate long-time donors by giving them a role in the organization while being mindful of their other priorities (kids in college, another NPO in town with a similar mission) and to avoid “Kickstarter” fatigue. Thinking about your overall mission, what other individuals, businesses, foundations, and government agencies might you reach out to for funding?
- Define your overall campaign. An analysis of your organization’s needs and projected budget, (including how much you can afford to spend on fundraising) combined with an analysis of your current donor pool and a detailed list of prospects should help define how you will raise money on an annual basis. This will likely include an array of strategies – membership drives, grant applications, local fundraising events and issue-oriented special appeals. An end of year fundraising campaign is frequently a key part of an NPO’s overall funding strategy.
- Choose fundraising tactics carefully, remembering to cost out each approach (your ROI), before committing to its implementation. Based upon your organization’s mission and community appeal, direct mail may be more appropriate than crowdfunding and use of social media. On the other hand, it may not. Special events, combined with in-person appeals and Facebook posts may work better for your population. It’s key to talk with others about choosing the right strategies to make sure that you know what your return on investment will be for any strategy. See the worksheets in Effective Fundraising for Nonprofits: Real-World Strategies that Work.
- Keep careful track of all people and organizations in your donor appeals. Database management, although sometimes tedious, can help you identify who you communicated within the past year or so, who gave (either time or money) during your End of Year campaign last year, and the best approach now to appealing to specific individuals and organizations. As noted in our last newsletter, investing in donor management software is important. A tip from Starting and Building a Nonprofit recommends looking into hosted versions of donor management software, rather than buying your own. Technical support is often available for subscription donor management software, especially for small nonprofits with few or no tech-savvy people. Nonprofits can find some recommendations for fundraising and donor management software HERE.