Fundraising Strategies Volume
11, Number 1 and 2 / Spring/Summer 2004
____________________________________________________________________________________
CHOOSING YOUR FUNDRAISING STRATEGIES
By Pat Munoz
Which
fundraising strategies are best for your situation?
When planning your fundraising
activities, you need to become familiar with the various fundraising strategies
that are out there (see chart that follows) and which of these strategies are
most appropriate for your particular situation. This article does not purport to dictate what
strategies your organization should use in any given situation—there are
exceptions to every rule in fundraising—but to suggest that certain strategies
are more suited than others for certain situations or funding needs.
Groups that are just starting
up, or making a significant transition (from all-volunteer to paid
Suggested
Funding Strategies:
1. Personal Visits with Individuals and Local
Businesses. People give to people, and it's a good thing,
since new organizations don't have much other collateral to offer prospective
supporters! Get yourself jazzed up,
practice your speech a few times on your spouse or mother, and then get out
there and talk to people—friends, colleagues, businesses you patronize. Be sure you have the essentials: a mission
statement, a budget, a good case statement, your 501(c)(3)
status.
2. Special Events. When there is
a perceived need in the community, an event at which an appeal is made (after a
discussion of the problem/solution and possibly a testimonial by someone who
has already done something similar in another community) can generate cash as
well as in-kind donations of goods and services for a new group. It is important to focus on getting people to
the event.
3. Board Giving and Getting. If you have
board members, now is the time to use them!
Ask board members to make challenge gifts or to help you with
foundation, government or corporate contacts. For new groups without a track record,
supporters will have to take a risk that the group will succeed. This means that the best prospects are those
who are heavily invested in the success of the organization, like board members.
4. Foundations. Some
foundations like to be in on the launch of a new and exciting organization (or
a new phase in the life of an existing one), especially if the newcomer has a well-thought-out
plan, a solid board and/or letters of support from other established
organizations. Ask your board members or
other well-known supporters to accompany you on your visits to foundations to
lend credibility to your requests.
5. In-Kind Donations. Individuals and
corporations will often help a new group get started by donating equipment,
supplies, and even office space and services.
Put together a good list of “needs” and circulate it at every
opportunity.
II. General Operating Support
All organizations need
reliable, steady sources of funding that will pay the rent, phone bill,
etc. Although some of these on-going
expenses can (and should) be included in foundation and government proposals
for specific projects, other sources are usually needed to make up the balance.
The more an organization can “diversify”
these strategies, the less vulnerable it will be to the vagaries of politics
and the economy.
Suggested Funding Strategies
1. Individual and Organizational Memberships. The best
insurance against the volatility of government and foundation grants is to
build a large base of individual members.
These members, if treated properly, will renew their memberships year
after year and gradually increase the level of their gifts.
2. Small Business Membership Program. Small businesses
located in the watershed are often willing to join a business membership
program and pay dues year after year to support ongoing operations, if they are
cultivated and recognized properly. One
way to recognize them is by putting together a “Support Our Supporters”
directory of businesses that you can insert into an issue of your newsletter.
3. Special Events. A good “signature”
event which promotes the organizational mission, is fun, exciting and
repeatable, and builds on itself year after year, is an excellent source of
"general operating support." Keep
costs down by getting food, printing, and other items donated.
4. Major Donors. Individual donors
who can make large gifts are probably the best source of general operating
support in the long term. Get to know
these individuals as people, and build relationships with them through
in-person meetings, events and phone calls.
5. Board Members. Board members
are naturally very invested in the health and sustainability of their
organization and, like major donors, are usually a good source of funds for
ongoing operating costs.
6. Earned Income. Income from
sales of goods and services and other business ventures, particularly where
these are closely allied with and/or promote the mission of the organization,
is usually unrestricted and can be used for general operating expenses.
7. In-Kind Gifts. It is often
easier for companies to give equipment or supplies than money, and a gift of
goods or services is as good as cash.
8. Matching Gifts. Companies will
often “match” the gifts of their employees, even those who have retired. It is important to let your members know that
they can double or even triple their giving by applying for a match.
9. Workplace Giving. Organizations
which have been around a few years should investigate joining a state
environmental or social action federation for the purpose of raising funds at
government and corporate workplaces through payroll deductions.
10. Special Appeals. A compelling
special appeal can be made at year’s end for funds to cover all of the
organization’s work, including the costs of keeping the doors open. Be sure
that your members understand that you are asking them for a gift over and above
their membership dues.
III. Projects
All organizations have
specific projects they want to undertake, from education and outreach campaigns,
to removal of a dam, efforts to monitor a particular river or stream, or a
campaign to buy a piece of riverside property.
This is often the easiest money to raise, because everyone likes to see
a tangible outcome for their donations.
Suggested Funding Strategies:
1. Foundations. This is where
foundation grants are easiest to get, for specific projects with measurable
outcomes. Do your research carefully,
and be sure to follow the foundation’s guidelines to the letter! Always include
a proportional share of salaries and benefits, rent, utilities and other
administrative costs in the project budget unless the foundation guidelines
specifically prohibit it.
2. Corporations. Large
companies will often fund projects, when two conditions exist: 1) the project is NOT controversial, and 2) the
project will in some way enhance the corporation's image with the public and/or
their employees. They are particularly open to funding events where their name
and logo are prominently displayed.
3. Special Appeals. Sending special
mail appeals to members asking for funds for particular projects is the best
way to capitalize on the cost of bringing in new members. All groups should do an end-of-the-year
special appeal, and most should do at least one other appeal (in addition to
renewal requests) to bring in additional revenue from members. Even when people
do not respond, these appeals educate your members about your activities.
4. Major Donor Requests. Going to major
donors with a personalized mail appeal or in person is an excellent way to
raise funds for projects. Try to match
the project with the donor’s interests if possible. Sending a short version of
an existing foundation proposal is one strategy that works well.
5. Government Grants. Government
funding is often available for project work, but usually requires a match and
small groups must be prepared to meet stringent demands for financial and
outcome data. Also, monies may only be available on a "reimbursable"
basis, meaning payments are made AFTER the work is performed.
6. In-Kind Requests. If a project
requires certain heavy equipment or the services of experts, these can often be
obtained pro bono by publicizing them to local corporations and individual
members.
IV. Office Equipment, Building Purchase
Acquiring an expensive piece
of equipment, such as a copy machine, GIS equipment, a large boat or a building to house
your organization presents a special funding challenge.
Suggested Funding Strategies:
1. Foundation or Corporate Request. There are some
foundations and corporations which will fund this kind of capital investment,
especially if they have already funded you for projects in the past and you can
make a good case for the long-term benefits the purchase will make possible.
2. Special Appeal to Your Board, Individual Members
and Major Donors. If the need is important and urgent, this
could be a good subject for a special request to your board, members and loyal donors
who care about the ongoing health of the organization.
3. In-Kind Appeal. Occasionally, large
items like a boat or free office space can be located by publicizing your needs
to your supporters in your newsletter, website, local newspaper, etc.
4. Capital Campaign. When you need
to raise large sums of money to purchase a building or a piece of land, a
capital campaign is probably the way to go, but don’t undertake it lightly. Be sure you have enough donors and consider
the impact the campaign will have on your day-to-day fundraising.
5. Loan/Line of Credit. Some lenders
will provide upfront funding for a building or piece of equipment using the
building or equipment as collateral. Be sure to develop a realistic plan for
repaying the loan.
V. Crisis/Emergency Funding
All organizations experience
financial crises when they need to raise money fast to tide them over a
difficult period. In such cases, it is
important to be completely open and honest about the situation and why it
happened, to enlist the help and support of those who are the most heavily invested
in the organization, and to come up with a plan for remedying the situation.
Suggested Funding Strategies:
1. Board Appeal. Since time is
of the essence, the board of directors is a good place to go first to find
emergency funding. Board members may be
willing to make an immediate contribution or no-interest loan to help the
organization get through the crisis.
2. Personal Requests to a Few Major Donors. This is
delicate, since you don't want to alienate your major supporters with tales of
mismanagement or other financial woes.
However, some emergencies (like fire or flood) are “acts of God”. Use your judgment and call upon donors you
feel will be sympathetic to your situation.
3. Personal Request to a Foundation. There are a
limited number of foundations who respond to emergency requests, usually for
organizations they are already funding.
Check the guidelines of existing supporters or call your program
officers if such a situation arises.
4. Special Event. If the crisis
is due to a natural disaster, such as a fire or flood, a special event might be
appropriate. An event would NOT be
appropriate, if the crisis is due to mismanagement. (People give to opportunities, not needs).
5. Bank Loan/Line of Credit. Many banks
will extend a loan/line of credit to creditworthy organizations to be used in
time of need. It is best to take out the
line of credit when times are good, and have it in reserve, since it may be
harder to get once the crisis has arisen.
VI. Reserves/Endowments
Many organizations seek to
create an "Operating Reserve" which can generate interest income for
the organization and guarantee its survival in the event of a major
organizational crisis or disaster. Some
organizations also have an “endowment fund,” a pot of money invested in
perpetuity, which generates a certain return on the investment, and which is
usually dedicated to funding a particular project or activity.
Suggested Funding Strategies:
1. Surpluses. Always budget
a surplus (a basic tenant of good financial management), and instead of
spending it, put it into a reserve fund or endowment. If you are good at making budget, you'll be
surprised at how quickly your reserve or endowment fund will grow.
2. Bequests. All
organizations which intend to be around for the long haul should have a
strategy promoting bequests from members.
When a bequest arrives, tuck it away in the reserve or endowment instead
of spending it.
3. Special Appeal. Send out one
special appeal each year dedicated to raising funds for your “rainy day fund”
or endowment.
4. Major Donors/Board Members. Ask your best
donors and board members for a one-time special gift for the reserve or
endowment.
5. Capital Campaign. Conduct a
capital campaign to raise funds for your endowment.
Best Uses of Certain Fundraising Strategies:
|
Best Strategies |
Start-up |
General Operating Support |
Projects |
Building/ Equipment Purchase |
Crises |
Reserve Fund/ Endowment |
|
Bank Loan/Line of Credit |
|
|
|
X |
X |
|
|
Bequests |
|
|
|
|
|
X |
|
Board Requests |
X |
X |
|
X |
X |
X |
|
Capital Campaigns |
|
|
|
X |
|
X |
|
Corporate Proposals |
|
|
X |
X |
|
|
|
Earned Income (sale of goods, fees for services, etc.) |
|
X |
|
|
|
|
|
Foundation Proposals |
X |
|
X |
X |
X |
|
|
Government Proposals |
|
|
X |
|
|
|
|
In-Kind Requests |
X |
X |
X |
X |
|
|
|
Local Business Memberships |
X |
X |
|
|
|
|
|
Major Donor Requests |
X |
X |
X |
X |
X |
X |
|
(Employee) Matching Gifts |
|
X |
|
|
|
|
|
New members and Renewals |
|
X |
|
|
|
|
|
Organizational Memberships |
|
X |
|
|
|
|
|
Special Appeals |
|
X |
X |
X |
|
X |
|
Special Events |
X |
X |
|
|
X |
|
|
Workplace Campaigns |
|
X |
|
|
|
|
Checklist for ranking fundraising strategies
When selecting individual
strategies for your organization, there are a number of questions you should
ask yourself in additional to the considerations discussed above. Use this checklist to evaluate individual
strategies that you are considering:
Selected Strategy: __________________________________________________
Instructions: Fill in each blank with “yes,” “no,” or a
“?” Calculate the score for this
strategy by giving 1 point for each “yes,” -1 for each “no,” and 0 for each “?”.
_______ 1. Does this
strategy fit with the mission of our organization?
_______ 2. Is this strategy cost effective
(will it bring in at least twice what it will cost)?
_______ 3. Will our target constituencies
respond well to this strategy?
_______ 4. Do we have the skills/expertise
we need to carry out this strategy?
_______ 5. Do we have the
resources (money, people) to carry it out?
_______ 6. Does this strategy build our
organization/
_______ 7. Does this strategy represent a
stable (repeatable) source of income?
_______ 8. Can this strategy be integrated
into program activities already planned?
_______ 9. Has this strategy worked well
for us or groups like ours in the past?
_______ 10. Does this strategy take
advantage of our special fundraising assets (a celebrity on the board, a member who owns a restaurant, a large
group of volunteers, etc.)?
_______ 11. Timing: does this strategy fit
well with other activities we have planned?
_______ 12. Are there other benefits
accruing from this strategy beside money (media exposure, good will, etc.)?
Score for this strategy: _____________
You MUST be able to answer
“yes” to items 1-6. Strategies that
score 10 or more are winners; those with scores of less than 7 should probably
not be considered.
Fundraising Strategies Chart
The following chart attempts
to lay out the various fundraising strategies commonly used by river and
watershed nonprofits to raise funds, along with some prerequisites, pros and
cons for each strategy. The information
on each strategy has of necessity been simplified in order to fit it into the
chart format. More in-depth information
on most of the strategies listed is available on River Network’s website, www.rivernetwork.org, in the Resource
Library or as part of the River Advocate’s Fundraising Guide.
|
Strategy |
What you need |
Pros |
Cons |
|
Bequests/ Planned Giving |
· Base of members/ donors ·
Long-term mission and goals |
·
Large $s ·
Unrestricted $s |
·
Income cannot be predicted |
|
Board Contributions |
· Board leadership ·
Willing board members |
·
Reliable $s ·
Unrestricted $s |
|
|
Business Members |
·
Visibility and other benefits for businesses |
·
Reliable $s ·
Good partnerships ·
Credibility |
·
May affect your public image |
|
Canvassing |
·
Trained canvassers · |