Fundraising

There is not a ‘silver bullet’ approach that can magically provide needed funding for your organization. Fundraising is not our area of expertise. I (Robert) have participated at a senior level in organizations that have successfully raised money from various sources. I have been taught by the best fundraisers in the business. This, then, is a short primer on how fundraising works and what you and your organization might expect if you hope to benefit from asking for financial support. While much of this book contains lots of original material, this chapter will be familiar to every student of fundraising. I include it because I find that many people don’t understand the concepts and develop unrealistic hopes for fundraising.

Logic Model

If you are familiar with a logic model, you may find it helpful to understand the process of fundraising. A logic model proposes a sequence of actions for you to describe what your organization is and will do. You will also describe how investments link to results. Five core components of a logic model are:

1. INPUTS: resources, contributions, donations, sponsor investments, grants that go into your organization’s programs or services
2. OUTPUTS: activities, services, events, and products that reach the targeted population or participants
3. OUTCOMES: results or changes for individuals, groups, communities, organizations, or systems
4. ASSUMPTIONS: the beliefs you have about your organization’s programs or services, the people involved, the context, and the way you think the programs or services will work
5. EXTERNAL FACTORS: the environment in which your organization exists that interact with and influence the programs or services

A logic model provides consistent anticipation of where you are and what you need to be successful. In terms of fundraising, it provides everything you need to successfully connect with and influence potential funding sources. Among those are sponsors, grant-making organizations, and donors.

Sponsorship, Grants and Donorship

Sponsorship

A sponsor is not a donor. A sponsor is an organization or an individual that provides support to you in return for something you will do for the sponsor. Usually you will provide the sponsor with recognition. For the most part, sponsors seek recognition that will enhance the sponsor’s visibility and prestige in the community. While it may sound crass or cold, sponsorships are often considered business marketing expenses. Why it isn’t crass or cold is that sponsors have lots of choices in spending their marketing dollars. Because they choose to spend them on you means that your organization reflects a perception that the sponsor or his or her target market values.

The support you receive from the sponsor is not a gift. It is the result of a deal you make with the sponsor. Think of a sponsorship as a mutually beneficial business arrangement. Since a sponsorship is not a gift—it is an investment on the sponsor’s part—you do not structure your proposal based on the outcomes of your organization. The process of attracting sponsor investment is that of selling value to the sponsor.

The huge advantage of selling sponsorships is that you will not be trying to tap the sponsor’s relatively small budget for donations to worthy causes. Instead you will be competing for part of the sponsor’s marketing budget. Most businesses are willing to spend money if they can see that it will result in increased profits that exceed the cost of the sponsorship.

When you are researching potential sponsors, you will be trying to find out how they are spending their marketing and advertising budget.

In order to convince them that they should invest with you, you will have to offer equal or better value than other marketing strategies. Consider how a sponsor might determine the best media for their advertising message: radio, television, print media, outdoor signage, social media. You won’t be very successful unless you study and learn the language and metrics of the advertising world. For instance, your sponsor has a geographical or demographical target market. When buying advertising, the sponsor is not interested in the total number of people (eyeballs) who will see an ad on a television program. When looking at the investment, the sponsor is interested at the cost per thousand people only in his or her target market. If you can make a compelling case that the dollars are better spent with you, you will be successful in selling sponsorships.

Marketing budgets are often planned a year in advance, so don’t expect to see short-term results from a sponsorship campaign. Even when you find eager sponsors, try to make your pitches more than 18 months in advance of the need.

Because you are promising the delivery of recognition and visibility, you will have to deliver what you promise. The whole process of securing sponsorships and fulfilling the obligation will take some of your resources over the life of the project. Plan for this. Ongoing care-and-feeding of sponsors is both an obligation and an advantage. Having agreed to support your organization, project, or event, the sponsor now has a vested interest in your success. If you have public events, likely those sponsors will appreciate having a presence or participating. Could you use some support for a related event or project? Likely your sponsors can offer the services of their marketing department for design and printing. Be creative in offering sponsors the opportunity to contribute to your success and, at the same time, increase their own profile.

Keep your sponsors abreast of the developments in your organization. If they loved supporting one event or project you ran, chances are you will have other opportunities for future mutually beneficial business arrangements. If you can benefit from a sponsorship program, be creative in looking for opportunities for sponsors. If you don’t you may be leaving money on the table. Of course, if you are running an event or a conference, you will be thinking of sponsors to host meals, receptions, sessions, and your print materials. People always think of sponsors for their conferences—now, what else is there about your organization that might attract sponsorship dollars?

Consider selling naming rights. This might be the name of an annual lecture, a student scholarship, a new building (or an existing one), a room in the building, a seat in a theatre, a bench in a park, or a facility like a swimming pool. Planetariums have raised money for their theatre by selling the stars in the projected sky. When your organization is thinking about honouring a past volunteer by naming something after that person, you may want to consider if it would be better to offer that name to a sponsor in return for funding. If a facility is named by the sponsor, be sure that the amount of the sponsorship is enough so that the interest on the dollars received will still be supporting your organization a decade or more in the future (because the name will still be used).

In addition to providing visibility, there may be other things you can do for sponsorship dollars. Do you have an interesting building or some other facility? Perhaps a sponsor might like to use your venue to meet with business associates. Your boardroom might become a Sponsors’ Office that is available in the hours when you don’t need it. If you are running a festival, perhaps you could set up a Sponsors’ Tent for the sponsors and their guests. The concept is that you are providing great value to the sponsor at little extra cost to your organization.

In the social profit world, people are often very humble about their value to the community. If you are doing wonderful things for your community and people truly love you, sponsors may see great value in aligning with you. I mention this because, by offering sponsorships, you may be offering more value than you imagine. As you structure your sponsorship program, be sure not to undervalue your work.

Since a sponsorship is a deal, anyone in the organization may be permitted to sell sponsorships—as long as these people know what can and cannot be offered in return. Obtaining sponsorships is not usually done by the board (although board members may offer their contacts).

Having said all of the above, there are sponsors who will support you just because they think you are worthy—even though they know there will be little financial return on their investment. In effect, they are called sponsors, but their support is really a donation.

A few last words about your sponsorship program.

• If you are going to share your public image with sponsors, you should be careful about what sponsors you choose.
• Remember that the care-and-feeding of sponsors will require your resources.
• If sponsorships are for you, probably you should plan to nurture your family of sponsors for a long time.
• All offerings to your family of sponsors should be made in a consistent and even-handed manner.

Is someone accountable for your sponsorship program? Do you have policies that scope what is possible for the sponsorship program? Be sure to think through your whole sponsorship program, not just a pitch to a single sponsor.

Grants

Providing funding is the reason grant-making programs exist. A large number of government and non-government agencies, corporations, foundations, and even individuals offer financial support through grants. I am concerned when I learn that an organization depends almost entirely on grant funding. If you are in some financial difficulty, people will no doubt tell you that the solution to your problems is to secure one or more grants. Let’s put this advice into perspective. If aspects of your mission and the grant-maker are almost identical, your organization and the grantor can do excellent business together. It is probably worth your while to monitor who is offering grants that relate to your business, and when appropriate, go ahead and apply.

The business of winning a grant begins with research. Grant-makers have very specific goals and objectives. Make sure your goals and objectives are aligned with the funding source. Pick up the phone and have a conversation with the person who is managing the grant program you believe is a good fit. Working with grant-makers is relationship building. Start off on the right foot by doing diligence to ensure your project or program fits well with the funding source’s objectives. It is helpful to learn all you can about the grantor, and what has been funded in the past. If you merely fill out the application and post it (or email it) without any personal knowledge of the people who will receive it you will reduce your chances of success.

Once you have determined that your project or program is appropriate for the grant award, read the application material thoroughly. The big mistake that I have seen as a grant reviewer is that the applicant focuses on how wonderful their organization is, and what amazing things they want to do with the money. Instead, try to imagine you are in the shoes of the people writing the grant application form. What, exactly, is the grantor seeking? Then figure out what you are going to be able to do to fulfill their intentions. Again, talk to the people at the grant office. Likely these people will be helpful with your application. The truth is that they want successful applicants!

I often tell the story of serving on the adjudication committee for a large government grant process. We began by going through the stack of applications and scoring the replies to each question. Only the highest scoring applications received any further consideration. As you fill out the application, see if you are truly acing all of the important points. If you cannot, chances are you are wasting your time. Can you guess who else is also likely applying for the same pot of money? If you expect to win at this game, you want the grantor to read your application and say, “This is exactly what we are looking for!”

Please don’t pin your hopes and your future on successful grant proposals. As the years pass, the people in the grantor’s office change, and so does the focus of those agencies. The fact that you received a grant one year does not mean that you will the next. In fact, the grantors do not like to feel that by receiving their funding, you are now solely dependent on them—as if they are your employer. Many grant-makers are now limiting the number of years that a particular organization can receive funding.

Should you use grants at all? Certainly—just try not to depend on those grantors for your survival.

When I ran a planetarium, we wrote lots of grant applications. Someone on staff would dedicate a day or two to write the best application possible; and then forget about it. The planetarium was fairly successful with grant applications. For every 10 or 15 applications, one would be accepted. After the letter arrived announcing that the application was successful, it was on the agenda for the next staff meeting. The question discussed was, “Are we going to accept this grant?” Why wouldn’t we celebrate and automatically accept the grant? Even though the grant would enable the planetarium to do something new that we would like, it would take resources away from the things we’d planned to do for that period—things that were essential to our real mission. Sometimes the cost to the core program was too great, and the grant was declined. On the other hand, there were some grants that really advanced our work, such as full support for an intern program, and an employment program that permitted the hiring of very qualified fabricators for a new display area that was under construction.

When you agree to accept a grant, your work begins. If you ever expect to receive further funding from this grantor, you must fulfill all of your obligations. Remember what it is that the grantor is trying to achieve (not just what you are doing with the money). If you can, exceed their expectations. Also provide all of the required reports in a timely and thoughtful manner. Use every opportunity to keep in touch. You are doing more than fulfilling the terms of the grant, you are building a relationship that can serve you well for years. I have had grantor call me at the end of their grant-period to say that there is some leftover money and ask, could I use it? Keep in mind that the people at granting agencies talk to each other. Your reputation (good or bad) with one may influence your success with others.

Donorship

The big difference between a sponsor and a donor is that the sponsor agrees to a deal, but a donor is asked to provide a gift.

Major Gifts

If your project requires major funding, it is usually secured by high-net-worth donors writing large cheques. In most cases, those people decided to provide support because they were asked. Learning who to ask, who should do the asking, how much to ask for, and how to do this effectively is the reason that many organizations decide to hire a donor relations professional or a fundraiser consultant.

The first shock for many boards that decide to hire fundraising consultants is that the fundraiser is not going to go and raise the money. The consultant is going to coach the board in the process.

I remember listening to the late Max Tapper—one of Canada’s great fundraisers, and the person who taught me much of this process—explaining to a board that fundraising begins with the people most responsible for the organization: the board itself. Their influence in their community, Max explained, is like a stone dropped in a pond: the ripples are largest close to the stone, and extend out from there to the whole community. The asking begins with the members of the board approaching their friends and colleagues. I recall being present at three meetings with other professionals who were giving a similar talk to boards. The result in each case was that the board decided that major fundraising was not something they wanted to do.

The first thing someone who is being asked wants to know is, “How much have you given?” Professional fundraising consultants prefer the organization to have a very large board of high-net-worth and well-connected people. This philosophy conflicts with the more modern view of the board as a smaller body comprised of people who take seriously the business of governing. Fundraising is not their first priority. However, if the primary purpose of your organization is to raise money for a worthy purpose, the board may well be front-and-center of fundraising activities. A good compromise is to maintain a small governing board and strike a fundraising committee. If the CEO or ED of your organization is responsible for revenues, the committee will be accountable to him or her. You can call it anything, such as The Capital Campaign Cabinet. This is the group that will have the people with the community connections necessary to achieve the funding you need.

The process of asking for support requires research. Because research includes discovering information about many influential people in your community, these discussions and the associated records must be kept secure and visible only to a very small circle. Despite the fact that almost all major development projects use this process, it is by design kept very quiet. Because many of you may not know how this works, I’ll briefly outline the process.

It doesn’t take too much work to discover who are the major donors in your community. Collect the annual reports and programs of your local museum, ballet, theatres, zoo, etc. Many will list their donors and even reveal the level of support. If your fundraising cabinet is truly connected, they will probably know who are the potential donors. This will produce a list; but before any asks are made, more research is needed.

The rule of fundraising is: people give to people, not to organizations. When you have that list, the next question is: who can ask? You will begin with the members of your cabinet and determine the pathway of trusted friends and colleagues between your cabinet members and the person to be asked. Having learned the pathway, and decided on the person who will ask the donor, the next question is: how much should be requested? The research involves investigating whatever is available about the donor’s giving record, perhaps estimating that person’s worth, and being sensitive to how well their business has done recently. No wonder this discussion must be kept confidential.

The next step depends on a number of factors, but is probably a variation on this. The person who is going to make the ask writes a letter that says, “I would like to talk to you about making a gift of $20,000 (or whatever is appropriate) to an organization that is very important to me.” The rest of the letter is fairly brief and describes why the donation is necessary. This is followed up by a phone call and then a personal visit. One visit may not be enough. Sometimes this early contact is just the beginning of a process of wooing the donor. The volunteer who is making the ask may need to be coached in the important step of asking for the cheque.

That visit to meet with the donor may include a member of the staff, but the staffer is there only to provide technical support and answer questions. Unlike selling sponsorships, it is seldom appropriate for staff to ask for money. To donors it seems as if the person is asking for money to fund their employment.

Why does someone make that large financial gift? The main reason is because they value the friendship of the person asking. If that person is a respected member of the community, the donor is probably honoured to be part of this worthy community development. Of course, the donor must also come to appreciate the value of whatever it is that is being created with the gift. Sherry related a story to me about one such friend-to-friend appeal. It turns out that the donor had a deep connection to the organization because it influenced his experiences as a child growing up in a poor, single mom family. Because he had not ever had the opportunity to reflect on the importance of this organization to his childhood and who he became, he had not thought about donating. The board member friend left his office with a $500,000 cheque.

Maintaining good records of everything associated with your donorship program is essential for future fundraising. I am still receiving personal correspondence from a high school I attended over 50 years ago. They regularly contact me to be sure that I am alive, interested, and that I haven’t moved.

When you have a sudden need for money, who do you approach? Of course it is your existing donors. Someone will say that we approached them only a few months ago and we cannot go back. Nonsense.

The Ongoing Relationship

The ongoing relationship with your existing family of donors is very different from your sponsors. The most important response to a gift is an appropriate thanks. Even if the donor insists that the gift be anonymous, the person asking must give thanks. Consider honouring donors by inviting them to special events, some of which might be just for donors. Somehow, keep them up-to-date with news of your organization. Sooner or later you will want to ask them again, and you want them always to feel like they are valued members of your family.

Other Elements of a Fundraising Program.

The visible part of a fundraising program is usually the public activities——the bake sale, the raffle, the fundraising dinner, the silent auction, the direct mail campaign, the telemarketing program, the bowl-a-thon. For most organizations, when the subject of fundraising arises, these are the options that come to mind.

Have you been part of these activities? It is hard work to find the right venue, assemble the prizes, get the invitations out, sell all those raffle tickets (or whatever is the program). Probably it means that you have to motivate an army of willing volunteers and actually deliver what you promise. Sometimes you will hear people complain that the amount of work does not justify the small number of dollars raised. So is it worth the trouble? In most cases, the answer is yes. The first reason is that it did bring in some much-needed unencumbered cash. Second, it energized the community of supportive volunteers whose personal involvement has re-dedicated their commitment to your organization. And third, the program had some buzz and publicity that raised the profile of your need. If you also have that inner fundraising cabinet asking for large cheques, this visible support by the community will give your major donors the comfort that their money is going to the right place.

What else can you do? The answer is a lot; but it requires some imagination to figure out what can work well with your special organization or project. For instance, when I worked for the Vancouver Island Marmot Foundation—we had the job of recovering Canada’s most endangered species—our fundraisers developed an adopt-a-marmot program. It started small, but this is an endearing animal, and the plan was to grow the program to the point that it would be providing major annual support for the Foundation. Instead of just hearing about it, you can see in operation. I encourage you to read about my marmots here—and please consider joining the Adopt-a-Marmot Club and experience the program for yourself:

http://marmots.org/how-you-can-help/adopt-a-marmot/

Planned Giving

As I write, that huge population bubble, the Baby Boomers, are in retirement or quickly reaching retirement age. Many of them have planned for their retirement years. They are also making their wills. As they look back on their careers, they may be thinking about their legacy. If your organization is seen by them to be making a valuable contribution, they might appreciate the opportunity to include your association in their will. This is just a brief comment to be sure that if this is a reasonable consideration for your organization, you are not leaving any money on the table.

Membership fees

For many readers, your annual membership dues structure provides one primary way your association is financed. If yours is a membership organization, and for some reason you find that you have to take a public stand on some issue, other forms of funding may dry up. Usually I recommend that an association should not be dependent on anything but their members for core funding. This is why the membership fee—not programs, not donations, not historical bequests—should cover the core servicing of its members.

Members must perceive value for the fees. Fees should cover the cost of servicing all of the members and funding the programs that must be supplied as a part of membership (not including the assumption that volunteers will do a lot of the work).

Fees should be increased to cover inflation, and it should be automatic every year. Never avoid this because the increase might cause concern among membership. The catch-up, sometime later, will be too hard to bear. Do it.

The War Chest, Nest Egg, Rainy-Day Fund, or Reserve

Some organizations that receive government funding find that if they do not spend the money allocated to them this year, next year’s funding will be reduced. So, at the end of the year there is a spending frenzy to ensure the budget is spent, but care is taken not to overdo it and create a deficit. Some boards believe that, as a non-profit, they are bound to spend all of the income every year. Eventually, this kind of planning is suicidal.

Hard times happen. When things are going well, be sure to designate some funds for future purposes.

In addition to hard times, your office equipment will eventually have to be replaced, or your facility will need refurbishing, or something. Someday you will have a necessary expense that is beyond your annual budget.

All that I want to do here is encourage you not to delay putting aside some funds for unexpected costs, depreciation of your facilities, and for future development.