Brother Can You Spare a Dime?
The How's and Why's of Fundraising from Individuals
At a November, 1997 NPCC workshop on development, Lauren Goldstein, Executive Director of Cause Effective, began by instructing the attendees to ask each other for money--between a penny and a quarter--for their organizations, right then and there. After a few moments of stunned silence, people started circulating and pitching. The responses were interesting: although no one was told "no" outright--this being a polite group and also a savvy group as some reported getting pledges--everyone reported that they spent the time cultivating and building the case for contributing.
Nonprofits are always going to have to raise funds, and the more successful an organization is, the more money it's going to have to raise. If cultivated properly, individuals can be a good, steady and renewable source of funds. Cultivating individuals, however, does takes time, resources and planning.
Goldstein offered the following as an ideal giving breakdown to consider when designing individual donor campaigns of more than $30,000: Ultimately, 10% of the donors contribute 60% of the money, 20% of the donors contribute 20%, and 70% of the donors contribute the remaining 20%. This means that striving for small numbers of larger gifts is important--even for organizations that are just beginning to raise money from individuals.
In order to meet this construct, Goldstein recommended caution when "budgeting" solicitation time, because people often have a tendency to spend the same amount of time cultivating a $20 donor as they do a $200 donor. She cited a small organization that had never raised money from individuals that significantly increased their income by spending time soliciting higher-level donors. Smaller contributions were sought and received, but the time invested in the larger donors had a much greater return on the investment
When planning a campaign and allocating resources, Goldstein urged people to keep these facts in mind, include individuals in the picture, and avoid spending all their money on foundation and corporation hopefuls.
The Right Way to Raise Funds
Goldstein believes that successful fundraising is based on the following theory: the right person asking the right person -- for the right amount of the right thing -- at the right time and place -- in the right way.
"When you ask people for money," Goldstein cautioned, "you have to expect to hear no's." When you're told "no," try to figure out what went wrong with the request--which of your rights was wrong--and move on.
The Right Person needs to do the asking. If the only person raising money is the executive director or the development director, you're in trouble. It's too small of a circle of people to do your organization's fundraising. You should expand the circle so that it includes others who can do the asking.
The ideal construct for most organizations should look like the illustration on page 5. In the inner circle is staff and board, the next circle will probably include advisors, clients, etc. If your organization's circles don't include all facets of your organization, you're limiting your fundraising possibilities. Expand your circles beyond the usual people--board and staff--so that they include constituents, volunteers, friends-of and their circle of friends, clients, advisory board, former honorees, donors, current honorees, institutional funders, vendors, and consultants. The more people that say "we" when talking about your organization instead of "you," the more fundraising possibilities you have. Goldstein noted that the maxim, fundraising is friend raising, is true. Likewise, people give money to people: friends to friends, peers to peers.
Goldstein reflected, "Imagine the possibilities if more than 5 people were always thinking about your organization all of the time." She suggested that a nonprofit whose circles were limited start by forming a fundraising committee that should include board members, but must extend beyond them.
One attendee noted that she found the worst part of fundraising was asking people to ask other people to give money. Goldstein replied that asking others to ask requires a serious commitment from people. People are afraid to ask others to give because they don't know how to ask. Goldstein's organization, Cause Effective, has one steadfast rule: every board member must make a "meaningful personal financial contribution." She noted that it could be $1, if that constitutes a significant contribution for that individual. When your board members give to the organization, they will be more prepared to ask others to give. This extends to all askers; a non-donor isn't in the position to ask. Only after a person has contributed will they feel prepared and comfortable asking others to give. Every board of directors is unique, so what makes sense for one board won't make sense for another board, and a mandate requiring every board member to contribute to the organization should come from a peer within the board, not from the staff.
Getting to the right person. Goldstein asked the attendees to write a list of everyone they knew who could write a $100 check to their organization. Again, the results were very interesting because no one stopped writing for three minutes--no one even looked into the air to think.
She noted however, that everyone could probably go through their list of names and find a million excuses why the people listed won't or shouldn't or can't write that $100 check. "Don't," she admonished, "You should not decide for them."
Think about why you contribute time and money to your organization. Find out what compels your board members to serve. These answers will serve as a starting basis for your approach to potential donors.
Goldstein believes that getting to the right person is tied into the "six degrees of separation" theory: that everyone in the world is only six people removed from everyone else. When you've expanded your organization's circles, you'll be amazed at the contacts you make.
Goldstein noted that people often ask her for a list of potential donors. Unfortunately, there are no "magic lists." There are numerous companies that offer lists, but there are no guarantees that the results will be worth the cost. (Generally these are for direct mail purposes, but there are some companies that offer you lists of what they claim to be wealthy donors.)
Asking the Right Amount. When you've done your research, you should know what the right dollar amount is that you're going to ask from the donor. Think of it in the form of a transaction: you're asking and offering. You're offering recognition, a sense of belonging, fulfilling a sense of obligation, self interest, education, the chance to feel good, and possibly a tangible, like a coffee mug or entertainment. Keep these things in mind and tailor your approach when asking.
Right Time and Place. Goldstein feels that most organizations err on the side of asking too infrequently. She asked, "How many times do places of worship ask? And we're always fretting that we just asked six months ago?" The right time and right place are important, although there are no scientific answers. What works for one organization may not work for another. What's important is to consider these questions before asking.
Asking the Right Way. The way you ask for money can range from personal face-to-face requests to direct mail campaigns.
When making a personal approach, you need to bear in mind that you are not asking for yourself, you're asking for your organization. "Leave yourself at the door, and ask for your cause."
Also remember that because you are so familiar with your organization, you will need to step back and plan how you will explain numerous and complicated programs to a potential donor. What you say when you make a pitch will depend on whom you are pitching and what you know about them. For example, if you know that your potential giver is interested in the plight of America's children, you will want to stress those programs and services that assist children. People's giving reflect their values. It's enlightened self-interest. Enlightened self-interest needs to become part of your asking. People should feel good about giving. People give because they want to give.
Acknowledgement and Cultivating for Future Giving
Goldstein emphatically advocates thanking people. Her method is to, "thank people four times, and when you're done, thank them again." The way you choose to acknowledge people (and the number of times you do so) depends on the culture of your organization and the amount that people donate. However, thank every single gift, and in a timely fashion. Some organizations have a policy of not acknowledging contributions under a certain dollar amount. Goldstein cautions against taking that approach. "You can bet that I will never give again to an organization that didn't think enough of my gift to acknowledge it."
Once you've acquired a donor, don't let them fall off the face of the earth. Keep them involved and informed: send them your newsletter, tell them what's happening with new programs, update them on the organization. Just don't let them forget you. Make sure that your communications emphasize the positive impacts of their gifts. Cultivate them for future requests.
Cause Effective: Nonprofit Resource Development Center is a nonprofit whose mission is to help other nonprofits build their capacity to develop human and financial resources. They can be reached at 212/643-7093.Copyright 1998 Nonprofit Coordinating Committee of New York, Inc. (NPCC) This article originally appeared in the January-February 1988 issue of New York Nonprofits, the newsletter of NPCC. www.npccny.org