Non-Profit Chas

Having taken up the fundraising reins about a year ago, I got my start by reading a lot of books and blogs. I met with fundraisers, consultants, non-profit managers, and volunteers. I heard many different tactics, strategies, and advice.

I looked at the fundraising activities that we had been doing. I knew right away that they weren’t all effective or efficient. Weeks would be spent planning for a $350 payoff. Meanwhile, a quick phone call could return a $500 donation.

Something clicked.

Planning is not doing

Smart fundraisers focus on the activities with the greatest return. They minimize their time and costs while maximizing donations. They start with strategy and decide on tactics. Then they do stuff.

In trying to evaluate our activities, I spent a lot of time on planning and deciding on tactics. Too long, actually. I didn’t really do any fundraising. I just pored over my communications strategy, held meetings, and did research. Income received from my strategy, meetings, planning, and research: $0.00.

Don’t get me wrong…good strategy and planning can increase your gift levels considerably. Well planned and executed campaigns are far more effective than haphazard desperation. But the most important half of the that campaign is the “executed.” Without execution, you don’t get anything.

All Activities Are Not Equal

Here’s a “sample” of some fundraising activities that an organization might do.

As you can see, certain activities return more than others. Some of this is the approach, and some of it is the nature of the activity. A well-planned and executed event is going to be much more effective than a last-second silent auction tacked onto a party.

Individuals make up the vast majority of giving in the United States. Not through events, candy sales, or car washes. They give to individual appeals.

Let’s look at that chart again

The best way to raise money is to give an individual a chance to make a difference. Even at events, the most effective are actually just opportunities for you to reach out to more individuals at once. And then appeal to them individually.

What about __?

Organizations try all kinds of gimmicks to get people to donate. They resort to shock advertising or strange events.

Social media is great for engagement. It’s great for reaching certain audiences in a way that connects with them. But it isn’t the end. Social media isn’t the same as an ask, and it won’t produce the results of a properly cultivated, engaged, and informed donor.

Events are a great piece of the puzzle

Diversifying your fundraising plan is a good idea, but organizations often have too many events and spend all of their time planning and running small events.

Planning a fundraising event takes a lot of time and consideration. The best events produce great results. But there are some rules:

• Stick to one or two signature events each year – small events aren’t that much easier to put on than big events
• Invite the right people
• Let donors identify themselves to you – use the chance to find new donors to cultivate and grow

One women’s care organization holds one signature event each year, raising nearly all of their operating budget in a single night. They spend a nearly year planning and preparing for it. Last year, they nearly doubled their donations with a couple of major gifts in the following days.

Fear Itself

Fear is the biggest reason keeping fundraisers from doing real fundraising. There’s a lot on this topic. People fear rejection. Or they hate begging. Or they’re just not that outgoing, and they are uncomfortable talking to strangers. This fear keeps many fundraisers going back to events and other arm’s-length appeals.

If you’re begging, you’re not fundraising. That’s because begging is desperation. Instead, fundraising is the appeal for an investment. You’re looking for investors: people who understand the need, align with your mission, and are willing to help fix the problem.

The worst thing you’ll hear is “no.” It happens a lot. But your chances get a lot better with practice and training. Spend the time to learn how to properly cultivate, engage, and steward your donors. You’ll find it gets easier, and it gets results.

Time isn’t on your side

The development process takes time. After the fear of fundraising, time is the number two reason that people resort to less effective tactics. Developing a major gift requires a strong relationship and trust. These things do not happen overnight. Be patient and fill the gaps with your events and other fundraisers, but don’t let yourself believe that they are the most important.

Get out there

This whole article could be distilled into a single word: active. The difference between successful fundraising organizations and struggling fundraisers is whether they are actively fundraising. To overcome the fear and become an active fundraiser, here are some tips:

• Make a goal to call or visit one person each a day or week – not just prospects, but call or visit current donors to thank them.
• Create milestones so you can measure yourself against your fundraising goals.
• Find a mentor who can help you learn the ropes and bring him or her along on a fundraising visit.
• Interview your largest donors about why they give.
• Ask them to recommend potential donors.
• Make sure you have given first. If you’re not willing to invest in your mission, it’s hard for you to convince others to give.

I need software. As a long-time tech guy, I have high standards. But I just can’t find what I’m looking for. I’m asking for your help.

Here are two “user stories” to consider how the software might be used.

User Story 1

A donor writes a check. We log the donation, making sure his contact info is up to date. A review of the donor’s giving history shows that the gift is a step up from previous gifts, prompting me to make an extra phone call to thank him.

User Story 2

We’re working on a new campaign and are identifying prospective major donors. We produce a report of all gifts in a certain time range, over a certain amount, and from certain segments of our people. The report reveals a prospect with close ties to one of our board members, who helps secure a significant lead gift.

Requirements

The user stories help determine requirements, but I’ve also given a lot of thought to features. These are usually split into “Must Have” and “Nice to Have” lists.

Must Have

1. Web based – Our team is made up of volunteers all over the area
2. Multi-user – We have several people who need access to the data
3. Giving history – pull up all previous gifts from a donor
4. Reporting – arbitrary reports such as gifts in a date range
5. Restrictions – noting that gifts are restricted for a specific purpose
6. Export – it’s our data, and if we need to use it outside the software we need to be able to export it

Nice to Have

1. Campaigns – Indicate that gifts are part of a specific campaign
2. Helpful reporting – some systems offer suggestions for donors who are more likely to give and why
3. Accept online donations – we don’t have any online donation system yet but we plan to – some web-based systems actually handle this for you
4. Integrate with online giving – at the very least, we’ll need to get that data into the system and it would be great if we could automate that
5. Alerts – email alerts or reminders of certain things – hitting campaign milestones, major gift anniversaries, etc.

Hmmm…

So, for a small non-profit with relatively small budget and no paid fundraising staff, what options would you recommend? What’s easy enough to learn and use, but powerful enough to provide value?

Every non-profit fundraising and marketing consultant I’ve met recommends hosting a single “signature” event each year. This event becomes part of your brand and continues to grow in revenue over time. Many organizations rely on this event to produce their entire operations budget, even without any program fees.

When I started at Camp Fire, we had a dozen or so events each year. These ranged from program- to fundraising-oriented events that usually took place over a few hours or a few days. We held a yard sale where we collected and sold all kinds of donated goods. It took a month to collect stuff, most of it never sold, and in the last year we did it we brought in something around $750.

That’s $750 more than we had before. Not bad, you say?

How much did we spend on this fundraiser?

Say we had 10 people average 20 hours to collect, organize, price, set up, and run the event. I believe it was far more time than that, but let’s just estimate.

So for 200 hours, we made a whopping $750. That’s $3.75/hour. Given that the people running this included a handful of paid staff, we lost a lot of money running such an event. Not only did we lose money, we wasted valuable time that could have been better spent marketing, developing programs, and more efficiently raising money.

Crunch the numbers

In order to make a wise decision about fundraising, consider some basic factors:

• What is the profit we’ll make from this event on an hourly basis?
• Are the people who do this work worth more per hour than this?
• What other activities could we focus on that would generate more revenue?
• Are there indirect or intangible returns: marketing, publicity, relationship building?

Why an Hourly Rate?

Federal minimum wage right now is $6.55 an hour. So at the very least, you could get a minimum wage job and donate all of the paycheck to your organization. So your baseline should start at $6.55. Now hopefully you’re talented enough to get yourself a job that pays more than minimum wage. Now that baseline goes up again. Say you’re at $10/hour. But in reality, that’s only a $20,000/year salary. Your board members probably make more than that, right? So they don’t want to work for $10/hour for your organization – their time is worth more than that. In fact, if given a choice between working for $10/hour and simply paying you the $10/hour (because they make a lot more than that) they might just pay you instead. See where I’m going with this?

If your board member is a lawyer who makes $300/hour, is he going to volunteer for your fundraiser all day to make a measly $100? Or would he just offer to work an extra hour and just donate the extra cash?

You have to determine how much your fundraiser will make per hour worked and, if that’s acceptable, then get the right people to do that job.

I’m not an MBA, but I play on one my blog

Let’s look at a sample model I drew up for a small fundraiser. We assume two staff members both making $10/hour and an additional six volunteers. Everybody would work 48 hours each.

Expected revenue: $10,000

$10,000 from 384 hours of work means that our hourly rate is $26.04. That’s not trivial, especially since we can pay a couple of staff members $10/hour to coordinate and recruit another 6 volunteers to help for free. We still make a profit on the staff members, and the volunteers’ time is pure profit.

What else could we do?

The real question is whether this is enough to warrant doing the fundraiser. Would the staff and volunteer time be better spent developing our fee-for-service programs, or sending appeal letters to our mailing list? How about making visits and calls to schools to promote our camps? One of our board members responded to this by offering to just pay $26/hour to not have to work the event. He’s clearly not the right person to be working at it, but in the past the board was the de facto source for volunteers.

What you don’t know can definitely hurt you

What staff or volunteer activities are more profitable than others? How can we maximize the return on our time and payroll? Unfortunately, many organizations don’t even ask these basic questions. The answers aren’t always easy, but they’re worth pursuing.

Take the time to create a budget, project revenues, and evaluate even your smallest events. Because sometimes, you’ll find that the same amount of work goes into the tiny events as the biggest ones, with very different outcomes.

Beth Kanter cracked me up today when she wrote, “if the bulk of your audience is from the baby boomer and older and you don’t plan to reach out to younger people—perhaps social networking sites are not the best Internet strategy for your organization.”

I’m hyperconnected. I read a lot of blogs, belong to a bunch of social networking sites, and maintain more websites than is probably healthy.

I’m not the average user, and I know it.

The key is to realize that your own usage patterns do not necessarily mirror those of your audience. And if you’re a non-profit, one of your biggest audiences is prospective donors. Knowing your audience is critical to any organization’s marketing or business efforts, so let’s take a look at prospective donors.

There are varying approaches to the average age of donors, including segments of gift sizes or retention rates. The biggest groups range from the upper 40s to mid-60s. Your biggest online donor segments are still no younger than 45 years old. In fact, the 18-24 and 25-30 ranges are ridiculously low in both gift size and retention rates. They don’t make major gifts and they aren’t as likely to keep giving.

Check out the graph for one such breakdown of online and offline donors by age ranges. Graph source:Target Analysis Group and Donordigital

If your average Facebook user is under 30 and is highly unlikely to give, let alone build a relationship with a non-profit, is it worth investing your time and money into that area? Though as many have demonstrated, a large number of small gifts is often easier to gain and maintain than one large gift.

NonProfit Times shares some tips from a conference presentation about how to raise the first $100,000.

A couple of the tips:

• Fundraising from people is asking for money and is not a quick fix, but it is dependable and renewable, is internally controlled and provides multiple sources.
• 76 percent of fundraised money in 2006 came from individuals, according to Giving USA.
• Big money comes from individuals who are asked.
• Getting money from individuals? Begin with the board, then membership dues, annual donations, major gifts and special events.

Notice something? They talk about fundraising from individuals, not corporations or foundations. That is, most gifts come from people. If you think about your donors as human beings, with varying backgrounds, interests, and motivations, you will begin to understand how giving works. Donations are not transactions, they are the culmination of a positive, two-way relationship between an organization and a person.