This guide is for organizations new to fundraising that want to learn how to raise money.
Creating a Fundraising Strategy
Set Fundraising Goals
Before asking for any money, outline your fundraising goals. Why do you need to fundraise? People fundraise to:
- Create and maintain scholarships
- Create and grow endowments to increase financial health of organization
- Create or improve some large capital asset (house, venue etc)
- Raise money for charity
- Accomplish other goals
Once you have a list of fundraising goals, you can budget. There are two goals of budgeting:
- to outline how much a given goal will cost
- to prioritize
Is this cost an annual cost or one time cost? It's nice to have a target amount of money to raise, along with a minimum amount needed to satisfy each goal. Each dollar and cent does not need to be accounted for, but having a ballpark estimate is important to get an understanding of the larger fundraising effort.
Once you have your goals outlined with ballpark budgets, you should try to prioritize them. This helps you communicate the fundraising effort to your constituents. You will have an easier time raising money when your goals resonate with your donors.
Did you know: 71% of donors care that their money is wisely used (Source).
Is this a capital campaign for a new wing on a house, or is it a charitable drive for cancer research? It might be both, but your donors will appreciate knowing exactly where their money is going.
Once you have outlined the cost of your fundraising goals and prioritized them, you can come up with a larger fundraising picture. By this point, you should know the goals you want to achieve and how much you need to achieve them.
Set a Reasonable Fundraising Goal
Once you have your target number, you should do a sanity check. Can you raise this amount of money given the number, wealth, and energy of your prospective donors? For instance, if you are trying to raise $10 million from 100 college graduates, you might have a hard time. Better to go back to the drawing board and come up with more realistic goals.
Part of identifying a reasonable fundraising goal is strategizing how you will raise this money. Are you going to mass email and try to get a large number of small donors? Are you going to spend considerable energy on a few large donors? When setting reasonable fundraising goals, it's important to understand your donor population (hint: Wavelength can help!).
Key Fundraising Concepts
In this section, we will go over a couple key concepts to help you reach your fundraising goal. The concepts we will go over are:
- Tax status
- Recurring Donations
- Giving Leaders
- The Importance of Participation
- When to Fundraise
- How to Acknowledge a Gift
How does the IRS identify your organization? Certain organizations like 501(c)(3)s allow donors to deduct their donations from their taxes. This means that beyond their philanthropic motivation for donating, donors get tax incentives. It is really helpful to communicate that your organization is a 501(c)(3) because it will increase the number of people that donate and the amount that they donate. 501(c)(3)s are highly regulated and only certain organizations can be 501(c)(3)s. Lots of schools, camps, and mentoring organizations that Wavelength work with are 501(c)(3)s.
Even though your organization might not be a 501(c)(3), your organization may still get the benefits of a 501(c)(3) if your parent organization has 501(c)(3) status. Many student groups at universities work this way and use their university's status to allow their donors to deduct their donations. If you don't know, ask your accountant!
Not all nonprofits can have their donations deducted. Donations to most greek organizations cannot be deducted, because most are designated as a 501(c)(7) social nonprofit.
Corporate Matching Programs
Employees of some corporations can donate via a 501(c)(3) matching program. This means the company will match some or all of an employees donation to a nonprofit. The employee donates the same amount, but the organization gets an additional contribution from the employer. If your organization is a 501(c)(3), you may want to work with donors to identify whether they have corporate matching programs.
Recurring donations are super important. For one, the amount that a person gives annually increases. A $20 a month gift is equivalent to a $240 annual check. Many donors may be more willing to write a smaller monthly check than the equivalently sized annual check.
Recurring donations also get people in the habit of giving. A donor that has previously given is more likely to give in the future. Development offices try to create habits of giving so that their organization becomes a philanthropic priority over time. A $5 a year contribution, though still valued greatly in the short term, will not make a meaningful impact on a multi-million dollar capital campaign. Development offices still want young alumni to give, because they are thinking of the future. 10-15 years from now those young alumni will have more financial stability and can give more generously.
Recurring donations, whether monthly or yearly, are a great way to create this habit of giving without straining your organization's development resources.
A couple key stats:
- The average recurring donor gives 42% more in one year than donors who give one-time gifts. Source
- Donors are 31% more likely to initiate a recurring gift on a branded donation page vs. a generic one. Source
People like to donate to causes that they think will work. They want to donate to fundraising initiatives that will succeed and meet the fundraising target. A donor might feel like they wasted their money if they donated to help build a field house, but find out it was never built for lack of funds!
One great way to communicate confidence is to work with a couple of large donors. These large donors are likely people with a strong interest in the organization and feel aligned with the fundraising goals. Before you launch the campaign, you can work with them to lock down gifts. Being able to say that you have raised 50% of some fundraising goal before the campaign even started is a surefire way to get other people to donate.
Another good idea is to ask these large donors whether you can use their name when fundraising. Friends like to donate to causes that their friends or people they respect support.
Another strategy is to work with large donors to create either a matching gift program or a fundraising goal incentive. The donor does not need to be named; they could be anonymous! In both cases, the goal is to incentivize other donors to contribute to the cause.
In the former, you can market that a donor will match the next X dollars raised. Other donors will feel like they are contributing twice as much!
In the latter, you set a lower fundraising target than the overall fundraising goal. Once you hit that lower goal, the giving leader will contribute their funds. Ambitious campaigns can take a long time to complete. When it is just starting out, it may seem like there is a long way to go. By setting mid-campaign goals with rewards, you incentivize your donors to give earlier in the process.
The Importance of Participation
The participation rate is the number of alums that give over the number of total alums in that cohort.
Participation is important becomes it communicates engagement and energy in the organization's mission. Young alumni may not have a lot to give an organization, but seeing high participation from these groups will communicate to older alumni that the organization is in a strong place. For that reason, it's also a great tool to measure your organization's efficacy over time.
If you are just starting a fundraising campaign, participation will be all over the map. After a couple years of solid data, you can better identify swings in your constituent's assessment of the organization.
When to Fundraise
In addition to the quarterly or yearly updates your organization sends, you should be thinking about other donor touchpoints. It is unlikely your donors will donate out of the blue. So you need to send out material to get them to donate at relevant times.
Reunions and Homecomings are great events to send out solicitation reminders. Alumni that attend these events already feel close to the organization. Reminding these alumni of the energy of the organization will be a great solicitation jumping off point.
Alumni unable to attend reunions are also a great population to solicit. They often feel motivated to help out even though external factors prohibit them from attending the reunion.
Another great time to solicit is when people leave an organization. There are typically send-off ceremonies for this population. Organizing a campaign to get small donations from these alumni is a great start to making your organization a philanthropic priority. These alumni may be hard to track down, so it's even more helpful if they set up a monthly or yearly recurring donation.
A couple key stats:
- Importance of timing:
How to Acknowledge a Gift
Everyone wants to be thanked for their gift. Beyond feeling appreciated, they want to know their gift has been received. In addition to a "Thank You" screen upon donation, Wavelength provides custom receipts for all donations with thank you text.
For your biggest donors, you may also want to send handwritten thank yous. These thank yous go a long way and will make soliciting from these donors easier.
Beyond simple handwritten thank yous, you could further acknowledge donations with gifts like apparel, special access to events, or recognition (for bigger capital improvements, a donor may even want their name on the building).
Other Helpful Stats
Interested in learning a bit more about the development space? Here are a couple more interesting stats that Wavelength has used to design its platform.
- Importance of donation design: