How to Raise Money for a Nonprofit

Annual Fund Appeals
Most nonprofits conduct annual fund appeals in which they invite their stakeholders and other potential supporters to each make a small donation to cover the expenses of running the organization. These are appeals for unrestricted funds.

Most appeals rely on mail to deliver a series of requests for money. One or two letters won't break through the clutter of mail the recipients are receiving. Some experts call for as many as eight or even more mailings. The incremental costs (using a mass mailing permit) are small for each additional mailing.

The key here is to have a clean mailing list. Do not purchase or rent a mailing list unless you have money to burn. Instead, compile your own list, starting once more with current and past supporters and stakeholders, paying particular emphasis to those persons who have benefited from your programs and services. A compiled list is built around people who have expressed an interest in what you are trying to accomplish. These are selected people, already qualified.

Phonathons are another way to conduct an annual appeal. The same list qualifications apply: make sure the people on the list are involved in some way with your organization. "Blind" calls are seldom productive for non-profits and may indeed stir up resentment.

If you decide on a phonathon, prepare a script for every caller to follow. This facilitates data collection and will help your organization improve results in the future. Hire a professional to prepare the script. The difference between the results of a good professional script and the results of an amateur effort will astound you. In most cases a good script will pay for itself.

E-mail is an increasingly popular fundraising method. Once again, the results depend on the quality of the list. Advantages of e-mail include cost (very low), information transfer (very high if properly prepared), ease of collecting information (high), and flexibility. You can make changes very easily.

If you can, sample a small number of prospects before rolling out a full mailing, phone calling, or e-mailing. These forms of direct mass marketing have a logic all of their own, and small changes can lead to big differences in results. Accordingly, most nonprofits try to get direct marketing expertise on their boards or, failing that, rely on outside advisors to help develop the mailing package (cover letter, pamphlet or collateral, response device), the script and record, the e-mail, or the Web site. This is too important to be left to learn-it-yourself efforts.

Special Events and Benefits
Even a prospective nonprofit can run a successful fundraising event. It might be a cocktail party, a tea, a golf tournament, a famous speaker, a dinner dance, an auction, a day out on a yacht.. The possibilities are almost endless. As with any fundraising effort, start with a goal in mind. How much cash do you hope to gain (net of expenses)? How many people must you attract to have a shot at reaching that goal? If holding a successful special event were easy, there would be many more of them. Unfortunately, there are plenty of fundraising events that don't come close to meeting expenses.

Marketing is as important as raising money. Think about it. Most benefits have two goals: raising awareness of the nonprofit's mission and raising money. In some cases raising money is considered secondary, especially if the nonprofit is new and unfamiliar. A successful event will elevate awareness of the organization.

How do you plan for a successful event? Start with the goal: unrestricted cash and/or marketing goals. Then ask these questions:

  • Are there timing issues? Well-established conflicting events can be a damper on your efforts. At times there seem to be golf tournaments or auctions every day.
  • Who will be on the guest list? Think target marketing. You will want to invite your core supporters, your stakeholders, potential donors, and perhaps some community leaders. The event must be tailored to their schedules and desires-and if you try to reach too many people, you almost guarantee failure. Keep it simple.
  • What will you ask for? Donations, true. But other asks are important: recruiting new board members, advisory board members, referrals. Simply getting to know more people is valuable; the more friends you can make for your nonprofit, the better.
  • Should there be an entry fee? That depends on the event and the crowd. This is a judgment call. If you do ask for a donation, think carefully about how much (or little) to ask. If your audience is well-heeled, ask high. If not, ask low or don't ask at all.
  • What is the budget for the event? A budget is vital: expenses can easily get out of control. The budgeted costs will affect what you ask for. Plan ahead on the financial front and prevent unnecessary losses.
  • Can you solicit in-kind gifts? Perhaps a caterer will provide services at cost or a facility will waive charges. You have to ask for this kind of donation; if you do not ask, you will not receive.

Memberships provide another source of unrestricted funds. Many well-known nonprofits are purely memberships: Lions, Kiwanis, Rotary, and so on. Some religious groups are quasi-membership organizations. Some non-profits are barred from offering memberships due to the terms of their major funders, while others find that the added burden of keeping members happy is not worth the effort. However, if your nonprofit can easily provide basic membership benefits (newsletters, lowered fees for events, preferred treatment of some kind), it's worth considering, since membership income tends to be very stable over time.

Planned Giving
Especially helpful for capital funds and endowments, planned giving is a long-term effort that begins with establishing and nurturing a relationship with the prospective giver. Methods can range from providing financial planning services (use a professional) to a group, encouraging inclusion of the nonprofit in wills, and using life insurance or greatly appreciated stock to fund a major gift (with consequent tax savings) to more sophisticated methods that are beyond the scope of all but the largest nonprofits. As always, the better you know the prospects, the greater the chances of success.

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