Most non-profits rely on donations and fundraising campaigns to sustain their operations and provide them with the means to grow and expand programs and services. The job of fundraising and development staff is to translate the dedication of the organization’s mission to the donors and to encourage them to support the cause. It also provides an opportunity to build awareness about your organization and promote the activities your organization provides.
Fundraising is simply the process of soliciting and gathering contributions, money or resources from donors. There are many different ways to solicit these funds and many different audiences you can approach to obtain funding. Before you begin a targeted fundraising campaign, set goals and lay out a clear plan. Set a realistic timeline to accomplish the outlined tasks. While you are considering what type of fundraiser you should plan, keep your end goals and your target audience in mind.
Following the Rules
Before you begin fundraising, it is important to make sure you understand all of the rules and associated laws. The most basic rule is that donors must actually be donating to receive a tax exemption; they can not receive goods and services in return for their gifts. A small token of appreciation is sometimes appropriate, but not a monetary return. In order to solicit funds, there are laws that require charities to register with the states, describe their fundraising activities, file financial documents, and pay a fee that covers the administrative expenses of monitoring charities. In the past, non-profits may have gotten away with not registering in each state, but now both the IRS and states are taking actions against non-profits who try to break the rules. Non-profits who have to file a 990 or a 990-EZ are required to answer information about where they are registered to fundraise.
There is no single national registration application that works in all states. It is important to register in your home state, also known as your state of domicile. Each state has very different rules and you will need to register in every state where you fundraise. There is a Unified Registration form that is accepted in 38 states, but the documentation needed still varies, so customization is still necessary. Even if your fundraising activities are only conducted online, if you are targeting donors in a specific state, you must register in that state. Some states also make you renew annually, so make sure you follow up each year to stay up to date. Registration includes completing an application with the appropriate state agency, and in many states paying a registration fee, documentation such as your most recent Form 990 is often required. Some professionals suggest not sending postal mail or email in states where you receive less than $250 in donations, explaining that it is too expensive to register where you receive little value.
Some types of nonprofits may be exempt, but the list varies from state to state. It is important to fully understand each states laws. This entire process can be extremely confusing, and although you can register your non-profit yourself, you may want to consider hiring a law firm or registration specialist to help you. If you do the process yourself, be sure to do plenty of research into the different applicable laws.
Identifying Potential Donors
There are many different types of donors who are willing to give to your organization including, individuals, corporations, foundations, government sources, and endowments. It is best to start with individuals and sources that are most likely to support your cause. This includes family, friends, co-workers, relatives, neighbors, previous supporters and anyone else who your organization may interact with or know. Encourage your core supporters to share information about your organization with their friends and family, word of mouth will help your cause grow. Do not be afraid to ask anyone who may have a connection to your mission.
Beyond individuals, corporations and foundations represent a significant opportunity to establish a donor base. Corporations have giving policies to streamline their commitment to charities and accommodate their mission. Private, Community and Family Foundations are established to support specific areas of interest or to extend support to a promising charitable program. You can find guidelines of what type of support they are willing to give on their website or online philanthropy sites that specialize in trying to match organizations to donors. It is important for you to find the common thread to their mission. Receiving funding from these types of sources may take time and work. Spend your time trying to build contacts that may help prepare you for ‘an ask’. Be prepared that your first interactions with these donors may not result in a donation.
The key to finding donors is not being afraid to ask, many people don’t give simply because they were never asked to do so. It is important to leverage your existing connections to help create new ones. The most important element to interacting with donors is to thank them and thank them often!
Cultivating and Growing Your Donor Base
Everyone has their own reasons for making a charitable donation. Some people may have a connection to the cause whether it has impacted them or someone they know or if they are involved with the organization through volunteering. Other people simply admire the work that the charity provides or it makes them feel good to help improve the lives of others. Getting to know your donors and their motivations are incredibly important in making a one time donor a multiple donor supporter.
By making a connection you can personalize donor interactions and any associated benefits you may offer or communications you plan. One way to easily keep track of this information is by maintaining a donor database where you can keep personal and giving history of your donor. Your donor database can be the financial foundation of your organization, but be sure to respect your clients and their privacy. All donors want to be sure that their contribution is being well spent, so be sure to keep donors updated of your programs and activities.
Types of Fundraising
There are many different types of fundraising, but enacting a plan is integral for success. In addition to the traditional fundraising activities such as auctions, dinners, dances, walkathons, car washes, bake sales, and health fairs, there are other ways to cultivate contributions. Capital Campaigns are fundraising activities targeted for a particular purpose, such as building funds or research endowments. General contributions are likely to be collected through direct mail solicitations, memorial/ in honor gifts, end of year solicitations, or “just because” giving. In memorial/in honor gifts are a way to pay tribute to a loved one, you may want to acknowledge these gifts in a special way such as through personalized thank you notes, on your website, or in newsletters. Keep good records of any fundraising process so you can replicate the positive aspects and improve upon the negatives in the future. Use those records to help you evaluate the effectiveness of the fundraiser. Was this the appropriate type of fundraising activity for your organization or should you take a different approach next time?
Some organizations may choose to establish a membership programs and collect dues for participation. These programs can be targeted for individuals, families, professionals, or corporate contacts. Be sure if you decide to establish a membership program you are specific about the benefits and you carefully cultivate the relationships that are forged through the program, these individuals and organizations can become your core supporters and it is important to make them feel special.
Employer matching gift programs are another way to leverage relationships with your current donor and expand the total giving. Corporations will often match contributions their employees give to non-profit by a certain increments up to a certain amount. Workplace campaigns are another way to get involved with employees of companies. Companies normally give their employees choices on charities to support, organizations can either be part of the network of organizations pre-determined based on applications or can be written in as an employee’s choice.
Cultivating relationships with individual donors can lead to planned giving such as bequests, gifts of stocks, and advised funds. The gifts use legal documents and often a qualified professional advisor to complete. Read more about the specifics of the different types of donations.
It is also incredibly important to utilize technology both through your website, and other online sites that can help assist you in fundraising. This includes social media sites and online auctions and pledge sites that can assist organizations and help promote their cause. Make sure you research any groups you may work with before signing on with their website. Check with other non-profits about their experience and see how the Better Business Bureau or another review agency has reviewed them.
How to Ask and Grant Writing
With individuals, companies or foundations, it is important to do the necessary research and leg work before you try to approach them to donate. First make sure your organization is a good fit and that you meet any necessary eligibility requirements. You may want to call a representative and speak with them directly about requirements and to help introduce your organization to them. These relationships can be incredibly important, so if you have a relationship with a company already don’t take it for granted, people work years to establish positive working relationships that can often lead to fundraising opportunities. Try to differentiate yourself from other groups and show why your work is unique or can offer something different to the sponsor then any other group, show them why you are a worthy cause.
When you are submitting a request be specific and detailed, but be sure not to ramble. Utilize the research you conducted to submit the request for a realistic amount of funding and for the projects the company might be most interested in. If they require a grant follow the directions carefully and if you don’t believe you can complete the application yourself, hire a grant writer. There are also many resources available to assist you in not only compiling and submitting grants, but in helping you identify appropriate foundations to submit to.
While submitting a request do not compromise your organization’s ethics for the sake of a donation, there are always other funding sources it is never worth jeopardizing the integrity of your organization. If you do not receive the donation or grant, keep them on your mailing list and follow up in the future, continued communication is key. Raising awareness goes hand in hand with raising funds. Once people know what you do, they will be more willing to give. Keep in mind that companies have lean years just like non-profits, so understand of their decision. If you did receive the funds always follow up with an acknowledgment letter thanking them for the contribution.
- The Foundation Center www.foundationcenter.org
- The Grantmanship Center www.tgci.com
- Government Grants www.grants.gov
- Catalog of Federal Domestic Assistance (CFDA) www.cfda.gov
- Guidestar www.guidestar.org
- CD Publications www.cdpublications.com
- Chronicle of Philanthropy www.philanthropy.com
- BBB Wise Giving Alliance www.give.org
- Charity Navigator www.charitynavigator.org
- Planned Giving Today www.pgtoday.com
- Leave a Legacy Program offers valuable information on how to start a program www.leavealegacy.org
- Multi-State Filing Registration Project www.multistatefiling.org/