The Chronicle of Philanthropy recently reported:
I know you’re focused on the end of the year and all that needs to be done through December. But let me ask you to think about planning for 2015.
Your budget defines your priorities. What areas will get the most attention? Where has your funding come from in the past? Where is there room for growth?
I believe you should spend a good part of your time, money and energy on your annual giving program. By that I mean gifts from individuals, most intended to fund your general operations. You usually ask for these through the mail, personally or via email. (Social media is still more effective for relationship building than for gifts).
An annual fund is NOT a once-yearly appeal. Sending one general appeal a year is, well, stupid. Neglecting your donors throughout the year is simply asking them to find someplace better.
If you currently have a robust giving program, congratulations! You already understand people drive philanthropy. But if you depend on grants and a few major gifts, I urge you to think again.
Individuals make up almost ¾ of all giving in the U.S. Where do you think you should be focusing your investment?
A wide base of support
It’s easy to depend on a a few large grants and gifts. But what happens when you lose one? That huge hole in your budget is hard to recover from.
A thriving annual giving program will create a wide base of support for your organization. While you should work to keep every one of the donors you attract, a wide base leaves room for some attrition. (Unfortunately, even the best program will lose donors every year – people move or die).
The welcome mat
Your annual giving program is where donors begin their journey with you. A good program gives them reasons to love giving to you. That means loyalty and increased giving over time. Bloomerang reports the Fundraising Effectiveness Project’s 2013 survey found only 22.9% of first-time donors made a second gift. That’s awful! Make retention your priority. You’ll watch your base grow.
Where major donors come from
Major donors don’t arrive at your door with a big check. Most begin as annual fund donors. Major donors grow from happy average donors. Give all your donors a wonderful experience. You’ll build relationships and learn about them. Then you’ll know who’s ready for more personal cultivation and solicitation.
That’s also true for legacy donors. Loyalty is what you’re looking for here more than gift size. Give your annual donors a reason to be loyal. When you do, you seed your legacy program. That $100 a year donor may become a bequest donor – because you’ve taken the time to make her a priority.
Institutional givers are also people
Foundation and corporate giving decisions are not only based on your proposal. People staff those institutions. If decision makers know your organization as donors – or friends of donors – you’re in a better position to receive the grant.
Lifetime value not short-term thinking
Do you have to persuade someone at your organization that your annual giving program is important? Talk to them about donors’ lifetime value, not one year’s return on investment. More donor databases are building retention measurements into their reports. But if yours does not, here’s some detailed information on how to measure lifetime value.
Your annual fund is the foundation of your giving program. Smart fundraisers will make it – and their donors – a priority.
How a professional can help
We often turn to consultants for a big capital or endowment campaign. But consider the value in optimizing your annual giving program. Get that right and you’ll start in a good position for that next big campaign.
If your program isn’t at its best, here’s how a consultant could help:
• Fundraising program planning
• Copywriting and donor communications planning
• Segmentation and list analysis
Your consultant’s role should be to train you and your staff to succeed on your own. Training your staff and your board is a good investment. When they have the skills they need, they’ll be happier and more productive. And you can look forward to a more secure future for your organization!
Mary, all I can say is AMEN! Annual funding is a year round effort, not just an effort saved for the end of the year. Great piece again, my friend.
Thanks, Richard!
Mary, you’re right. Many nonprofit organizations ignore their annual fund. Others that don’t exactly “ignore” their annual fund, operate it on auto-pilot and, therefore, are failing to maximize its potential. If there’s a silver lining in your post, I guess it would have to be that the organizations that have their act together have a real advantage over the organizations that are letting donors slip through their fingers.
I’d like to clarify one point you made. While you’re correct in stating that individual donors make up nearly three-quarters of current giving, they actually make up over 80 percent when you include bequest giving in the calculation. As bequests come from individuals, it’s just further evidence of why we should be paying attention to relationships with individuals and the importance of the annual fund.
Great point, Michael! Thank you for adding it.
Brilliant post Mary!
Diana
Thanks, Diana!