Planning for Successful Fundraising. Michael J. Worth June 12, 2013

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1 Planning for Successful Fundraising Michael J. Worth June 12, 2013

2 Today s Agenda Philanthropy overview Understanding donor motivations The fundraising process The fundraising team Fundraising strategies The fundraising plan

3 Purposes of Philanthropy, 2011 Total $ billion (% of total to each purpose) Environment, animals 3% International affairs 8% Foundations 9% Other 4% Arts, culture, humanities 4% Religion 32% Public-society benefit 7% Health 8% Human services 12% Education 13% SOURCE: Giving USA, 2012

4 Sources of Philanthropy, 2011 Total $ billion (% of total from each source) Bequests 8% Corporations 5% Foundations 14% Individuals 73% SOURCE: Giving USA, 2012

5 Flow of Philanthropic Funds (Based on Frumkin, Strategic Giving, 2006) DONORS Living individuals Estates Corporations INTERMEDIARIES Private foundations -Independent -Family -Corporate -Operating Public charities -Federated funders -Community foundations -Charitable gift funds RECIPIENTS Nonprofit organizations and institutions

6 Understanding Donor Motivations Corporations Business strategy and goals Foundations It s the business they re in (and they have their own priorities) Individuals Complex and mixed motives The heart leads the mind where reason points the way. Harold J. Seymour Designs for Fund Raising, 1966

7 Individual Donor Types (Prince and File, The Seven Faces of Philanthropy, 1994) Communitarians 26.3% Devout 20.9% Investors 15.0% Socialites 10.8% Re-payers 10.2% Altruists 9.0% Dynasts 8.3% Interview with philanthropist Conrad Prebys

8 The Fundraising Pyramid Cultivation/personal solicitation/ gift planning Cultivation/ personal solicitation Principal gift/ultimate gift donors Major gift donors Regular donors Direct response: Mail, phone, Internet First-time donors Constituency CORPS 7-8% INDIVIDUALS 85% FOUNDATIONS 7-8 %

9 The Fund Raising Cycle Step 1 Step 2 Step 3 Define the case Identify prospects Cultivate relationship Step 6 Step 5 Step 4 Steward the gift and relationship Acknowledge gifts, recognize donors Solicit the gift

10 Fundraising begins with a case for support Relates to a cause larger than the organization (It s not about you!) Describes achievable goals Justifies financial needs in terms of impact Uses stories and examples Warms the heart and stirs the mind Creates urgency

11 Fundraising is a team effort Volunteer Leaders (Board) owners, blockers, runners President/Director/CEO manager, runner Chief Development Officer coach, quarterback, runner

12 Worst Case Scenario (All too common)! Board gives their time Organization has no plan, no goals, no prospects we just need money! Maybe Bill Gates CEO too busy to raise money Trouble on the board Trouble between CEO and board We just need someone energetic with a nice personality to go out and raise money. Development staff responds appropriately to this scenario

13 TYPE OF FUNDS SOUGHT LIKELY GIFT SOURCES CURRENT SUPPORT Unrestricted/general support Program/project support Individuals Local and family foundations Businesses (usually as sponsors) Foundations Businesses Individuals (especially investor/ entrepreneurial donors) CAPITAL Physical capital (buildings, equipment) Individuals Foundations (rarely) Businesses (sponsorships in certain situations) Financial capital (endowment) Individuals Foundations (rarely) Businesses (very rarely)

14 METHOD/CHANNEL ADVANTAGES DISADVANTAGES DIRECT MAIL PHONE PERSONAL SOLICITATION EVENTS INTERNET/WEB/SOCIAL MEDIA TEXT Inexpensive Creates a visual image Long life Can communicate complex message Two-way communication Can negotiate gift Can tailor message to individual Immediate gift (credit/debit card) Focused attention of prospect Includes nonverbal cues Builds relationship Visibility/involvement Point of entry for new donors Inexpensive Can personalize/segment message Interactive/relationship building Leverage relationships Inexpensive immediate response Easily ignored, lost in clutter Requires donor initiative Limited ability to personalize More expensive than mail Barriers (caller ID, cell phones) Intrusive Expensive Low volume Not usually cost/beneficial (hidden costs) Often no connection to the case No proportional giving list maintenance Barriers (e.g., spam filters, overload) Website is passive Possibly intrusive Limited content Intrusive

15 Giving Channels SOURCE: TargetAnalytics, 2011 Direct mail still largest source of total gifts Direct mail still largest source of new donors Online largest source of new donors under age 65 Online giving growing rapidly as percentage of new and regular donors Significant generational change

16 Donor Strategies Upgrade annual giving Top prospects for major gifts Annual giving, but manage costs Prospects for projects AFFILIATION (Inclination) CAPACITY SOURCE: Adapted from Blackbaud

17 Planning With the Gift Chart What is our current pattern of gifts? What gifts are needed to reach higher goals? Are these gifts available? (Do we have the prospects?) What are alternative strategies (larger base, new donors, upgrade current donors, major gifts, etc.)? What are the most promising sources (individuals, corporate sponsor, foundations)? What are the best methods to use? (mail, phone, Internet, events, etc.?) Who needs to do what to make this happen? What will we need to spend? Gut check: Can this be done or do we need to change our goal?

18 Range # gifts now Total in range now ($1 million) # gifts needed ($2 M goal) Total In range needed ($2M goal) 200, , , ,000 Using the Gift Range Chart 100, , ,000 Total raised now $1 million, goal to 75, , ,000 increase to $2 million 50, , ,000 25, , ,000 10, , ,000 5, , ,000 1, , ,000 <1,000 1,125 (Avg. $200) 225,000 1,500 (Avg. $200) 300,000 TOTAL 1,216 $1,000,000 1,655 $2,000,000

19 ELEMENTS OF A FUNDRAISING PLAN Background Analysis of past/current support By market Individuals (by affiliation: board, member, former client, etc.) Businesses/corporations Foundations Other (sponsoring church, intermediary, etc.) By purpose (operating, capital, endowment) By program (annual fund, campaign, planned giving, etc.) By channel/method Direct mail Phone Internet Events Personal solicitations Proposals

20 ELEMENTS OF A FUNDRAISING PLAN Background Current expenditures By category Personnel Materials and supplies Travel and entertainment Etc. By program By method/channel Current return on investment (by program, method) Benchmarking data (if available) How and from whom do other organizations like us raise money? What resources do they expend (staff, budget, etc.)? Trends in giving (in relevant marketplace)

21 ELEMENTS OF A FUNDRAISING PLAN Objectives, Strategies, Goals Objectives, for example: Acquire new donors, broaden base Upgrade current donors Increase corporate support Increase foundation support Strategies, for example: Increase mailings Increase number of personal solicitations Engage more board members Write more proposals More (or fewer) events Goals (dollars and donors): By market (constituency) By program By channel/method (direct mail, Internet, phone, events, etc.) By gift level

22 ELEMENTS OF A FUNDRAISING PLAN Implementation Specific activities (mailings, events, etc.) Timetable/calendar Budgets Responsibilities (CEO, staff, board, etc.) Performance metrics

23 Resources Association of Fundraising Professionals Board Source Partnership for Philanthropic Planning Michael J. Worth & Associates, LLC