There are many ways to raise funds to support the missions of nonprofit organizations. Of the various strategies and tactics, there are two categories of fundraising that seem to attract loyal (and often polarized) devotees among development professionals:
- Major gifts programs with a high-dollar, low-volume approach
- Online fundraising that casts a wide net and is generally characterized by smaller donation amounts
I have always been a strong advocate of employing a balance of the two (in addition to other methods, like direct mail and grantwriting). Now that COVID-19 has changed almost every aspect of our world, I am even more dedicated to the necessity to diversify fundraising.
Diversifying “funding streams” refers to expanding the number of funders so that your organization does not rely upon one entity for more than 33% of the organization’s total budget. For example, if your organizational budget is $1 million, you don’t want more than $330,000 to come from one person, company or foundation. Arguably, even 33% is a bit high for comfort.
Diversifying “fundraising” means relying on more than one method of raising funds. For example, some agencies are almost 100% funded by special events. If something like the pandemic were to erase a large portion of that event revenue, the consequences for the nonprofit could be dire if adjustments are not made.
To fundraise to the highest of our potential, we must examine our donors and prospective donors to identify:
- Their affinity for the organization: How much do they care about the mission based on their history of interactions with the organization and/or gifts to organizations with similar missions?
- Giving history: Have they given to our organization before? If so, how often, in what amounts and by what methods?
- Communication preferences: Do they generally respond to emails, but never return phone calls?
- Financial capacity: Donor research and screening data can identify the donor’s or prospective donor’s potential to give gifts yearly from income or in the form of a major gift given from assets.
In all likelihood, our donor management systems are full of people who fall across the whole continuum from smaller online gifts to larger in-person investments.
Nonprofits must adapt and hone the skills needed both to grow and/or maintain a solid major gifts program and to communicate with and raise funds from people across many other platforms.
It does not have to be one or the other. Major gifts have a very low cost to raise a dollar coupled with high yield. It makes sense to spend time building lasting relationships with donors at this level. Online giving also has a low CRD, especially when compared to special events and direct mail. You can conduct broad campaigns that reach thousands of people that result in hundreds of gifts under $500. What matters then is that you actively and continually engage those donors, show your appreciation and let them know how their donation helped others. Some of these donors may become major donors over time. Others may remain loyal online givers for a decade, while being social ambassadors that spread the news of your mission digitally far and wide.
If you are a small nonprofit, it can be difficult to divide your time between the different types of fundraising. If you have just one development person, it is important to make sure that they don’t spend 35 hours a week on social media fundraising and virtually no time cultivating major gifts. Creating and implementing a solid strategic development plan can help outline the types of fundraising the organization is doing and how much is projected to be raised from each method. It is also a good tool for allocating staff time and resources.
If your organization is larger, then division of labor is much more cut and dried. You can have one person focus on major gifts and one on annual gifts and online fundraising.
How you break down the time management of fundraising is up to you. But it is important to make sure all of your constituency groups have your attention. An organization that chooses just one focus — major gifts or online fundraising — is missing many opportunities to secure funds to deliver on its mission. You don’t have to choose; you just have to be strategic in your actions.
Tracy Vanderneck is president of Phil-Com, a Florida-based training and consulting company where she works with nonprofits on fundraising, board development and strategic planning. Tracy has more than 20 years of experience in fundraising, business development and sales. She holds a Master of Science in management with a concentration in nonprofit leadership and a graduate certificate in teaching and learning. She is a Certified Fund Raising Executive and an Association of Fundraising Professionals Master Trainer. Additionally, she designs and delivers online fundraising training classes and serves as a Network for Good Personal Fundraising Coach.