How to Raise Money for a Nonprofit

Step 2: Target Marketing
Target marketing, thoughtfully identifying the most likely potential donors, is one of the keys to successful fundraising. What is target marketing? Think of a target. At its center is a bull's-eye, surrounded by concentric bands that are successively further from the center. You aim for the center, the bull's-eye, where you gain the most points. If you are a bit off, you hit the first ring, which will give you fewer points.

Now think of your limited marketing dollars as a quiver of arrows. All fundraising has monetary costs. How can you maximize the return on your investment? Simple: aim carefully. Go for the biggest payoff, the bull's-eye. With practice you'll improve your aim.

Start with your board and their contacts. These usually will include the earliest donors and people like them. Following well-proven marketing techniques, your chances of successful fundraising starts with people who have already given to your organization, followed closely by those who have already donated to a similar cause. You want to grow the bull's-eye by turning people from potential donors to actual donors. Or, put another way, you want to foster a relationship with more and more individuals. Your staff, friends, and other stakeholders will help you identify more potential donors. Ask for referrals (this is what all salespeople do) and follow up. Slowly, step by step, this will yield a stable base of donors. And, if you are smart, you can begin to cultivate those donors who can make major contributions.

The same process applies when seeking funds from corporations, philanthropies, and/or government agencies. You look for the early donors and cultivate them; then you look for more people like them and repeat the process. An important corollary: corporations, philanthropies, and government agencies don't make the decision to give money. It's individuals in those organizations who make the decisions, and you have to carefully nurture your relationship with those individuals. In a very real sense, all giving is individual.

Step 3: Start with Individual Solicitations
Getting funds for a new nonprofit is very similar to getting funds for a new for-profit venture. Traditionally you begin by investing your own assets. Then you turn to the three Fs: family, friends and fools.

Family and friends have an obvious, natural reason to invest in your new venture. If your idea is as good as you think it is, then you are doing your family and friends a favor by allowing them to invest in your start-up.

Fools are persons who think you have a good business idea with a real shot at success. The label of "fools" may sound harsh, but the success rate of new ventures, relative to other, less risky investments, is dismal.

Take the same approach with your nonprofit. First, if you're not willing to invest in your nonprofit, why should anybody else? Second, if the case for the nonprofit is compelling to you, it probably will also be appealing to your family and friends. The third group of startup nonprofit investors might be fanatics (not fools) who see the same social benefit that drives your ideas.

What you cannot do is hope to attract bank funds (banks have a role to play later, once you have a track record) or philanthropic and grant funds. These organizations aren't interested in start-ups.

Part of your job as a fundraiser is to identify those persons and organizations likely to be interested in the programs and services that you offer. Asking people for a donation to a nonprofit that has no interest to them is folly. Targeting a small number of potential donors is an efficient way to focus your efforts.

Personalized Appeals to Core Supporters
Make personalized appeals to your core supporters. The most efficient method of reaching your core supporters is by visiting them individually. You may do this alone or, more commonly, a board member and the executive director may make the visit.

Before you go, rehearse what you plan to do. What will you say? How large a contribution will you solicit? What kind of supporting material will you take along?

The beauty of a personal visit is that you will be forming a relationship with the individual. You can tailor your presentation based on his or her response. Ask for referrals. Ask for a critique of your solicitation. You are speaking to persons who have already made a commitment to your nonprofit, so asking them for money is not an imposition. While you might feel awkward the first few times you go out to raise funds on a personal basis, that feeling will soon wear off and you may even find that you enjoy the process.

Why rehearse? Simple: winging it won't work for most of us. By having a script that you can fall back on, including an ask level, you develop a consistent approach that you can improve. One suggestion is to make a list of the 100 (or 50 or 25) persons you target for an individual visit and then roughly rank them in terms of their potential value to your organization. Some ranking criteria: potential donation, strength as a referral source, position in community, political or other position. Then visit the list in reverse order, starting with people you rank lowest. The idea is that by the time you get partway through the list you will have honed your presentations and learned the major objections and how to deal with them and you will know what works best. That will concentrate your best efforts on the best prospects.

Individual personalized visiting is a great source of unrestricted funds to cover the unglamorous but vital overhead expenses. It is also a way to pave the way for planned giving and other capital raising efforts.

Make sure to ask-and ask again. A visit without an ask is a waste of everybody's time.

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