You’ve probably heard it before, but it bears repeating: 83 percent of all non-governmental dollars raised in the nonprofit sector come from individuals. Foundations and corporations do not provide the majority of support for the work of the social sector, individual donors do.
Each year, the Giving USA Foundation publishes it’s excellent analysis of charitable giving to nonprofits by corporations, foundations, individuals and estates. For years now, the percent of dollars raised from individuals plus the percent of dollars raised from estates (which were, of course, accumulated by individuals) has hovered between 82 and 83 percent.
Here are the figures for 2009 :
In spite of these numbers, many nonprofits continue to generate 60 to 90 percent of their revenue from government, foundation and corporate support. This is especially true of small and mid-size nonprofits, defined here as organizations with budgets of less than $10 million.
The current economic crisis has resulted in deep cuts in government funding. Giving USA 2010 reports that foundation grantmaking fell by 8.9% in 2010. Corporate giving rose by 5.5% while individual giving remained flat.
Nonetheless, many of my nonprofit clients continue to focus the majority of their fundraising time and budget on securing foundation and government support.
With a new fiscal year starting, I have a modest proposal. Let’s focus most of our fundraising attention on increasing and sustaining our individual donor bases. Don’t give up your efforts to pursue government and foundation funding, but move individual donor work to the front burner.
The research continues to “show us the money.” Nonprofits that want to sustain their work and survive the economic downturn need to pay attention to this research and craft revenue plans that prioritize developing strong individual donor systems and strategies. Make sure your fundraising plans include strategies for each of the stages of individual donor development:
Whatever you do, don’t skip the first and critical step: planning. Nonprofits with limited development staff often put individual donor work last because this work seems to come with few externally imposed deadlines and requirements. There are no proposal or reporting deadlines. But there are deadlines that need to be set internally:
When will you send a direct mail piece?
When will you send an e-mail solicitation?
When will you write each of these pieces?
When will you send donors an update of the impact their contributions are making?
If you put each of these deadlines on your work-plan, you will begin to see the need to plan time for individual donor work instead of rushing to write that solicitation at the eleventh hour.
In drafting your annual work-plan, put aside staff time regularly — once a week, twice a month — to gather names of prospective donors and conduct research into the giving habits and interest of existing donors.
Schedule time to plan for your next moves with different segments of your donor base. For example, how will you keep in contact with new supporters who attended an event? When will you ask them for a gift beyond the price of attending the event? If you have a group of donors who have been giving larger gifts via your direct mail campaign(s), research their potential for major giving and create strategies to cultivate and then ask them for a major gift.
See this earlier post for more about development planning.
And come back and visit over the next few weeks as I’ll be posting pieces regarding research, cultivation, and stewardship of individual donors and a piece on staffing your individual donor program.
Does your nonprofit put individual donors first? Please share how you do below.
With this post, I am pleased to welcome my first guest blogger, Laura Rhodes the founder of Third Sector Consulting Group, which offers services to charities and charitable givers.
It seems absolutely appropriate that Laura provide my first guest post. Laura has 15 years experience working with nonprofits, foundations and corporate social responsibility programs. In addition to Laura’s willingness to share her deep experience with my readers, I am excited to introduce you to her because we began our networking online. Laura and I met via Twitter and continued the conversation offline. Our story demonstrates yet again what powerful tools online channels provide for finding others with similar interests and focus. Nonprofits take note: Are you using social media to make connections with interested potential supporters?
Laura’s post below challenges donors to think of the many different ways their generosity can have an impact. Enjoy, and be sure to leave us your thoughts in the comments.
Last week, three schools announced major gifts: $35 million to Dartmouth College, $40 million to St. Joseph’s College and $60 million to Washington University. The gifts to St. Joseph’s and Washington are the largest gifts in the schools’ histories.
Just two months ago, Baylor University announced a $200 million bequest from a Baylor graduate. Not only is the gift the largest in the university’s history, it ranks among the top 20 private gifts ever made to higher education in the U.S.
These donors are all to be commended for such extreme generosity and for supporting higher education. At the same time, one can’t help but imagine the impact of these gifts if they were allocated differently.
Imagine, for instance, the impact of 200 $1-million endowments. A $1-million endowment should conservatively produce a 4% annual return. How many direct appeals, campaign letters and fundraising events does it take for a small organization to net $40,000 each year?
This is not to suggest that the Baylor donor should have made 200 million-dollar gifts instead of a single one. In fact, philanthropic advisors will tell you that donors should focus their giving and not dilute their impact by giving to too many causes and organizations.
However, if a donor has the capacity to make one or more large contributions, establishing an endowment would be a great way to provide a lasting gift to one or more small nonprofits.
Another giving method that is gaining momentum is what the New York Times simply called a “fat cash prize.” The concept is that a philanthropist can bring attention to ‘their’ cause by offering large cash awards, either for past achievement or to encourage others to work on causes that are important to the donor. According to McKinsey & Company, prize money from philanthropists has increased over the last decade from $100,000 to $375 million per year.
There are many approaches to philanthropy. Professional advisors will call it by different names: thoughtful giving, inspired charity, informed giving.
Personally, I like “strategic giving.” I think charity should be more than simply writing a check.
I also think all giving is good, regardless of the amount you have to give or your method of giving. My hope is that all donors will become strategic givers and always ask themselves, “Can I ‘do good’ even better?”
With the economic downturn, raising money from foundations has gotten even more difficult and nonprofits need every competitive advantage to succeed.
So, what is the key to successful foundation fundraising? The same element that is central to all winning fundraising: building effective relationships with your donors.
Here is a list of 5 tips for building effective relationships with grantmakers:
1) Program Officers are people too. You may think Program Officers are merely gatekeepers deciding whether your proposal ever sees the light of day beyond their desk. It seems obvious, but still bears saying. Program Officers are people, and like any group of people, some will be helpful, others unapproachable.
Some other elements of the grantmakers’ perspective to consider:
- They have their own set of internal stakeholders to whom they are responsible.
- They have only so much leeway in stretching foundation guidelines & requirements.
- They may feel like they are constantly being pitched and are only liked because they have access to money.
- They are routinely swamped with e-mails, voice mails, piles of reading and many meetings.
2) Seek mission compatability: When approaching individual donors you target those who will find your nonprofit’s work most compelling. The same strategy should be applied to your foundation prospects. Do not simply chase money because it is being granted. Plan your foundation strategy and target those grantmakers whose funding priorities match best with your programs and services.
3) Plan your foundation fund raising. Create a Foundation Funding Calendar and submit proposals based on when funding is awarded and when you need it for your program. If a proposal is funded, add its reporting deadlines to your foundation calendar. Regularly set aside time ( several hours each week or every other week) to research and add new foundation prospects. For more about fundraising planning, see this earlier post.
4) Write a strong proposal:
- Follow Directions.
- Use the active voice.
- Write clearly & simply.
- Be specific, but brief.
- Do not use jargon.
- Include all information requested by the funder.
- Proofread. No spelling/grammar errors.
- Format it so it is easy to read. Break up text with headings and bullets. Use short paragraphs.
- Remember, you are telling the “story” of your nonprofit. Show why your work matters and clearly demonstrate the need for your organization.
- Submit a budget that makes sense and is mathematically correct.
- Present a clear program plan that is realistic and appropriate for the issue being addressed.
5) Work to build long term relationships with grantmakers. Use the same practices of stewardship that you use with your individual donors:
- Give grantmakers the recognition they prefer. Some want to be anonymous, some want to be mentioned in publicity.
- When a grant is awarded, call or e-mail the funder to say “thank you” and then immediately follow-up with a formal, written thank you letter.
- Make sure to file needed grant paperwork and reports on time.
- Keep funders informed about the progress of the project.
- Work to cultivate receptive grantmakers as advocates of your nonprofit’s work.
- “No” may just be the first step to “yes.” If a proposal is rejected, speak with the Program Officer and ask if you should re-submit the next time. Sometimes it takes two or three attempts before securing funds.
For a list of resources related to grantmaking, see Partners in Effective Philantropy.
What other tips would you share with nonprofit grantseekers?