major donor campaign
I wrote last month about the crippling nonprofit fear of investment. Related to that, nonprofits need to understand and embrace the concept of Return on Investment. Nonprofit leaders often exist in such a world of scarcity that they don’t recognize that an investment today can have a huge payoff down the road. And not recognizing the value of a return on investment, particularly when it comes to a nonprofit’s fundraising function, can keep nonprofits in starvation mode.
One of the ways I consult with nonprofits is coaching a development director or executive director to increase money flowing to the organization. We work on getting board members to bring money in the door, identifying new donors, crafting a compelling message, launching new revenue streams, developing an overall financing plan.
This work could have a huge future payout:
- Board members no longer sit on their hands but actively recruit new donors to the organization.
- New donors are acquired through a thoughtful, strategic major donor campaign.
- A compelling case for investment convinces foundations and major donors to invest at higher levels and for longer periods.
- A new earned income stream brings in unrestricted revenue.
- An effective financing plan puts scarce resources to their highest and best use.
If you think of this in terms of return on investment it’s a no-brainer. You have two options:
- Continue to struggle day-to-day for the foreseeable future, or
- Make an investment today in order to dramatically increase funding and sustainability tomorrow
Let’s do the math. If a nonprofit with a budget of $1 million were to spend, say $5,000 on hands-on coaching to develop a financing plan, create a compelling case for investment, get their board engaged in fundraising, and launch a major donor campaign those elements could translate into well over $100,000 of new money annually for the nonprofit.
- A financing plan clarifies and marshals resources so staff and board know exactly where the money flows and who will do what to make it happen. The very act of creating and monitoring a financing plan could increase funding by 5%, or $50,000.
- A case for investment, when done well, becomes the backbone of any and all money-raising efforts. It can be integrated into your website, your social media efforts, your donor letters, your presentations. Telling a concise, compelling story makes donors sit up and take notice and adds perhaps another 2% increase, or $20,000.
- If your entire board starts (in their own unique ways) bringing money in the door that could increase your bottomline as well. If each member of a 15-person board starts to increase their own giving and/or the giving of those in their network by $1,000 each, that’s another $15,000.
- A major donor campaign charts a logical, strategic way for you to identify and acquire new donors. Getting strategic about how you find and recruit those donors will ensure much greater success, perhaps a 5% increase, or $50,000.
So with very conservative estimates the original $5,000 investment in coaching translates to $135,000 in new money every year thereafter.
My favorite example of this is when I helped KLRU, Austin’s PBS station use $350,000 in capacity capital to do many of the above things. After 3 years of implementing a new financing plan, using a new case for investment, and more, they were raising $1.6 million in NEW REVENUE each year. That’s a huge return on investment.
If you make a smart investment in improving the money engine of your nonprofit, that investment will pay off many times over, creating a more secure financial future for your organization.
Photo Credit: MeckiMac
Amid increasing competition for dollars, it is more critical than ever that nonprofits explore new opportunities for money. To help in this effort, I am delighted today to announce our newest step-by-step guide “Creating a Major Donor Campaign,” which joins our growing list of tools to help nonprofits grow and become more financially sustainable.
This guide helps small and mid-sized nonprofits create a strategy for securing major donors–those wealthy individuals, corporate leaders or foundation officers who you get to know on an individual basis in order to convince them to invest in your organization.
What constitutes a major gift varies by nonprofit organization and depends on the size of the organization and the depth of their donor base. It could be as little as $100 for a small, grassroots organization and as large as $1,000,000 or more for a large, established organization. But this guide will help you determine that and much more.
Typically major donor campaigns are undertaken by larger, older nonprofit organizations. But I believe that any nonprofit organization can turn their board and staff into an army that can secure larger gifts.
Which is why I created this guide. The guide gives you concrete strategies for how to:
- Get your board involved
- Organize your staff
- Find prospects
- Establish a major donor fundraising goal
- Ask prospects for gifts
- Thank donors
- And much more
At the end of each section of the guide, the “Your Major Donor Plan” part walks you through a series of questions or tasks. Your answers there become the basis for your final Major Donor Plan. Your plan will organize your staff and board to raise major dollars for your nonprofit.
This 15-page guide is broken into the following 6 sections:
Section 1: Major Donor Goal
Section 2: Finding Prospects
Section 3: Moving Prospects to Donors
Section 4: Staff and Board Roles
Section 5: Building Fundraising Infrastructure
Section 6: Operational Plan
My hope is that this guide shows small and medium sized nonprofits that major gifts are not out of the realm of possibility for them. To the contrary, major gifts could be the missing link to a bigger, better, more effective organization.
There was a great post in the Nonprofit Finance Fund’s Money and Mission blog last month debunking the myths around nonprofit endowments. An endowment is a corpus of money set aside by a nonprofit to generate long-term income for the organization’s operations. I can’t tell you how many times I hear nonprofits say that their money woes would be solved if they could just raise an endowment. Some even forgo easier, more reasonable forms of revenue generating activities in order to pursue pie in the sky endowment campaigns. That is crazy.
Today in this month’s post in the on-going Financing Not Fundraising blog series, I’m explaining why most nonprofits should kiss their endowment dreams goodbye and focus instead on finding a more realistic path to financial sustainability.
In case you are new to the series, it discusses how nonprofits must break out of the FUNDRAISING (individual donor appeals, events, foundation grants) box and instead create a broader, more strategic approach to securing the overall FINANCING necessary to create social change. You can read the entire series here.
I’m not suggesting that endowment campaigns are wrong for all nonprofits. But here’s why they don’t make sense for most:
- Endowment money is extremely difficult to raise. The majority of donors want their dollars to go directly to the day-to-day work of a nonprofit. It is hard enough to convince a donor to fund growth or capacity capital campaigns that strengthen the organization. But to convince a donor to give a nonprofit money to put in the bank so that the organization can be relieved of some of the burden of otherwise finding a sustainable revenue engine is a really hard sell.
- Endowments are an inefficient use of money. Let’s say a nonprofit was able to raise an endowment of $1 million and then enjoy an annual 5% return. This would give them $50,000 of operating revenue each year. Sounds great, right? Wrong. If instead the nonprofit could use ALL of that $1 million as capacity capital to build their infrastructure, staffing, technology, or systems, those transformations to the organizational structure could yield many times more than $50,000 per year in financial sustainability and/or social impact.
- Endowment campaigns require a major donor base. Most nonprofits have not yet figured out how to attract and retain major individual donors. Thinking that you can leap frog the donor cultivation process by going from a few small individual donors to large, endowment donors is crazy. It takes years of on-going cultivation of high capacity donors to secure endowment gifts. Nonprofits would be far better served by using their time and resources to create a solid annual individual donor campaign based on pull marketing efforts for smaller donors and one-on-one cultivation of larger major donors.
- There is no magic bullet for financial sustainability. When I hear nonprofits talking longingly of endowments it is with an unspoken assumption that once secured an endowment would solve all of their money problems. But the truth is that there is no magic bullet for sustainable nonprofit funding. The only way to create a sustainable funding engine for your nonprofit is to create a financial model that fully integrates with your mission and core competencies. I’ve found that the nonprofit leaders who are most interested in the endowment magic bullet theory are those who are most uncomfortable with money. Instead of fearing money, you must embrace it and learn how wield it to your advantage.
Instead of wasting time, effort, and resources on endowment campaign planning, move your nonprofit to true long-term sustainability by creating a financing plan for your organization. Stop trying to “solve” your money problems and instead embrace money as an incredibly useful tool for creating lasting social change.
If you want to learn more about applying the concepts of Financing Not Fundraising to your nonprofit, check out our Financing Not Fundraising Webinar Series, or download the 27-page Financing Not Fundraising e-book.
Photo Credit: Library of Congress Archive
For most small and medium sized nonprofit organizations there is a huge untapped revenue potential in individual donors. But, as this month’s Reader Question pointed out, many nonprofit leaders don’t know how to find those donors.
And many others don’t realize that individual donor dollars are a much bigger opportunity than foundation grant dollars are. When I speak to groups of nonprofit boards and staff, they are often shocked when I reveal how money flows to the nonprofit sector. Thinking that foundation grants are the holy grail of funding, many nonprofits hire a grant writer and spend countless hours and resources chasing highly competitive grants. But the fact is that barely 2% of the money flowing to the nonprofit sector comes from foundations. A much larger portion, over 11%, comes from individuals.
Individual donor fundraising can help diversify a nonprofit’s funding picture, and major donor fundraising in particular, which requires a one-on-one relationship building model, can be a great way to systematically expand a nonprofit’s network and funding. It is also the highest and best use of a board member’s fundraising time.
To help nonprofits understand individual donor fundraising and how to get their board and staff moving in that direction, the next webinar in our ongoing Financing Not Fundraising webinar series focuses on how to bring individual donors in the door.
The “Finding Individual Donors” webinar will give you tools and strategies to:
- Define a major gift for your organization
- Use social media to connect with individual supporters
- Create events that resonate with individual donors
- Identify prospects
- Engage your board in individual donor fundraising
- Create a system for engaging individual donors
- Launch a major donor campaign
- Break an individual donor dollar goal into pieces to make the goal achievable
If you want to attract individual contributors to your nonprofit, but don’t know how to get started, or if you would like to expand the individual donors you already have, this webinar will show you how.
Financing Not Fundraising: Finding Individual Donors
The registration fee will get you:
- A link to a recording of the webinar, which you can watch as many times as you like
- The PowerPoint slides from the webinar
- The ability to ask additional follow-up questions after the webinar
Photo Credit: HikingArtist.com
Convincing a donor to give to your nonprofit is a tricky business, and it’s getting harder all the time. Now more than ever nonprofits are struggling for funding amid growing competition and decreasing available dollars. It has become harder and harder to stand out and recruit donors. These days, donors, especially major ones, are less likely to give because an organization “does good work” and more likely to give because an organization provides a solution to a social problem the donor cares about.
Which is why every nonprofit needs a compelling Case for Support. Our newest Social Velocity Step-by-Step Guide, helps you create your nonprofit’s Case for Support.
This new environment requires those nonprofits that want to continue to attract and grow philanthropic support create a compelling argument for why a donor should give to them. Driven by a thoughtful combination of data and emotion, a good Case for Support can help you communicate and connect with your target donors much more effectively.
Our Case for Support Guide is organized into the 8 sections of a Case for Support:
1. The Community Need
2. Our Solution
3. Why Us
4. Our Impact
5. Financial Model
6. Strategic Direction
7. Resources Required
8. Social Return on Investment
In each section of the guide there is a series of questions. Your answers to these questions become the basis of your final Case for Support. But your Case for Support cannot be written in just a day, by one or two people. You will need to get feedback and insight from staff and board. And you’ll need to gather data to make your Case for Support stronger. This work will take time, so it may be a few weeks or months before you have a final Case for Support that is compelling, convincing and agreed upon by the organization as a whole.
A good Case for Support is an increasingly critical part of any fundraising campaign. You must be clear about why someone should give to your organization. Because if you don’t know, how will they?
Photo Credit: puzzledmonkey
There is a holy grail in the world of nonprofit fundraising that eludes most organizations. And that is, how to attract individual major donors. Everyone wants them, but few organizations know how to actually find them. However, if you are strategic and systematic, it doesn’t have to be that hard.
Here are the steps to an major individual donor campaign:
- Define a major gift. A major gift is not the same for every nonprofit. A major gift for your organization is a level at which you have a few donors already, but below which the vast majority of your donors are. For some organizations this is $50, for others this is $1 million. It completely depends on the size of your organization and the level of your donor base.
- Create a goal. If you don’t have a dollar goal for how much you would like to bring in this year in major gifts, chances are you probably aren’t going to bring in much. Set a stretch goal for the organization that everyone (board, staff, volunteers) can believe in and contribute to.
- Break the goal into pieces. It’s not enough to say you want to raise $50,000 from major donors this year. You need to break that goal into achievable pieces. Think about what levels make sense for where your current donor base is. Typically you start with one lead gift that is 10-20% of the total goal. Then go down from there, increasing the number of donors you need at each level.
- Develop a prospect list. Be strategic about who could actually be a hot prospective donor to your organization. They have to possess more characteristics than simply having money. Anyone who has money is probably a prospect for every other nonprofit in town. Instead analyze each prospect along three dimensions: 1) Do they have a passion for the cause your organization is about? 2)Do they have some connection to the organization or someone within the organization already? If they have absolutely no connection to your organization, they are a waste of time. 3)Finally, do they have the capacity to give at your major donor level? Have they given similar amounts to other nonprofits? Do they have some disposable income? It’s amazing what you can find out about people through a quick Google search.
- Create a tracking system. A major donor campaign is much like the sales cycle in a for-profit business. You find potential customers (prospects), qualify them (along the three criteria in #4 above), get to know their interests and values through one-on-one meetings, make the ask, and finally thank them and demonstrate what their investment has allowed you to do in the community. This process is called the moves management system, and it is simply a way to track how your organization moves people from prospects to donors in a systematic and strategic way.
- Launch the campaign. The rest is easy. Just get out there with your board and staff and start meeting with people, getting to know them and making the ask.
And remember, this is not just the work of the Executive Director and Development Director. You will not find individual major donors without the help of your board. Each board member must have a role in the campaign. And there is plenty for those who hate to ask for money to do.
It is possible for any nonprofit organization to have major donors. It’s just a question of being strategic and systematic.
If you want to learn more about finding major donors, watch our Finding Individual Donors webinar or download our Creating a Major Donor Campaign step-by-step guide.
Photo Credit: lostintheredwoods
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