The Timothy Group

Money Business

Whether you do not need to raise contributions currently, seemingly are always involved in seeking contributions, or are somewhere in between; it is appropriate to ask: "Are we doing what we should be doing in the area of financial development?" For some the answer may be: "We are doing everything we can, and we are doing it right." For most the answer is more likely: "We could be doing more, and we could be doing it better." But what should you be doing, and what can you do better?

Consider the Purpose

One way to answer this question is to consider whether you're seeking contributions for all the possible purposes. Contributions can be sought for three major areas: operations, capital and endowment. The most common purpose for which contributed dollars are sought is to keep the cost of the camp or conference services affordable. Assistance may be given out in the form of camperships, or perhaps prices are kept below costs. But there are other operating uses that can be featured in fund raising. Perhaps you need to replace equipment or program supplies such as craft materials, canoes, and bow and arrow sets. Some camps may simply buy supplies out of operating revenue, but you could feature these items for donors support. The list of operation items you need to buy can be as varied as your program.

You don't have to be in a capital campaign to raise money for capital items. Suppose you have a vehicle that needs to be replaced. The replacement cost could be listed as a project that an individual or group could fund with contributions. Donors respond to these suggestions because they can see what difference their gifts will make.

Not many camps or conferences raise money for endowment purposes. There are good reasons to grow an endowment. You might need the income it would generate for camperships to annual fundraising. You might need the income to renovate buildings or replace major pieces of equipment. You can raise current contributions each year to increase endowment assets. You should constantly promote planned gifts, since 90% of most people's wealth is tied up in assets. A planned gift is usually larger than most donors can give in any one year.

Consider the Source

Second you should ask "Are we asking for contributions from all appropriate sources?" Your plan should cover: individuals, businesses (both large corporations and local small businesses), foundations, churches and other groups.

Each category can be further divided. For example, individual gift sources might be current and past board members, current and past employees, service recipient families, volunteers, church members and other friends. Businesses could be subdivided into: vendors, businesses owned by constituents, local businesses, and larger corporations with a presence in your area, and employee matching gift businesses. Churches could include those from which you have served people in the past and those which you would like to serve in the future. Foundations could be divided into those that provide only capital grants and those that will fund operating costs. You must develop the detailed scheme that makes sense for your camp or conference.

Consider the Methods

Third, ask yourself if you are using all the possible methods of fundraising. Methods include: personal, telephone, mail, events/product sales and media.

Personal solicitation is the most effective and least expensive, since it is usually reserved for the donors of the largest gifts. Another reason is that sometimes solicitors are volunteers whom you do not pay. A higher proportion (50% or more) of donors will respond to personal solicitation than other forms. You should reserve personal solicitation for your top donors whether that is donors of $500 or more annually or $5,000 or more. You must develop a genuine relationship with donors at this level.

Telephone solicitation should be reserved for donors of smaller gifts. The response rate will also be somewhat less, maybe 25%. The average gift size will likely be less, maybe $100-$500. The cost may be higher if you have to pay solicitors or use a vendor or long-distance costs are involved. Telephone solicitation can be used for increasing the level of gifts, renewing support from those who have stopped giving and other purposes.

Mail (or direct mail or mail only) solicitation is usually reserved for the smallest gifts,
perhaps $100 or less. The percent of response (10 % or less for your natural constituents, less for new prospects) will be lower than personal or telephone. The average gift will be smaller (less than $100). Therefore, the cost to raise each dollar (from $0.10 for renewal appeals, to possibly more than $1 [yes, more than $1] for new donor acquisition) will be more.

Events are any occasion at which you gather people (banquet, golf outing, auction) for fundraising purposes. One of the values of this method is the opportunity to deliver the same message to a group of people compared to sending out teams of solicitors. But the cost of the event may consume about 50% of the gross receipts. Is there an appropriate place for events? Ask Greg Anderson of Inspiration Point (Minnesota), who raised $250,000 in four banquets in one week. Events may also serve public relations purposes. Donors will be encouraged to see that many others give, too. Events provide an opportunity to bring in new friends (who like that kind of event) and communicate much more than you could with letters or newsletters.

Product sales have higher expense-to-gross revenue relationships because the cost of what is sold and added selling costs may consume 50 % or more of the gross revenue. Be sure to follow IRS requirements for correctly receipting individual gifts when goods or services are provided to the donor. Some states require advance registration and annual reports for auctions. However, many states also provide exemptions for at least some religious and other organizations. For both matters, get capable advice from those specializing in nonprofit financial matters.

Media fund raising includes the use of print or electronic media to address large audiences in order to seek contributions. It may use newspapers, magazines, radio, television, your website or social media. Some forms of media fund raising can be relatively expensive, commercial television for example. But the reason they are used is the value of generating new donors whom you would otherwise not be able to contact. Less expensive is to use your web site. Make sure your home page makes it is easy for people to determine what you are raising money for. Direct donors how to give, using your web site if at all possible. Increasingly camps and conferences will make greater use of social media for fund raising. What might start on Facebook as former staff connecting with each others can be move to fundraising through the use of Facebook's "fans" and "causes" capabilities.

The best financial development plans use a combination of strategies focusing on a variety of audiences or markets. People have come to expect that you will know information about them when you contact them and do not want to feel like they are grouped together with everyone else. Thus, it is no more defensible to send a major donor a direct mail renewal letter asking for a gift of $50 than it is to send a letter seeking an increased gift to a lapsed donor.

Consider Planned Gifts

In addition to these current gifts strategies, invest some resources each year in the promotion of planned gifts. Planned gifts are gift arrangements that donors make while they are alive that a charity gets to use after the donor dies. Donors who are helped with estate planning, may also see the value of making current gift(s) to the camp or conference providing the estate planning service. Common forms of planned gifts are bequests, life insurance, charitable remainder gift annuities or trusts.

Because estate planning involves the transfer of wealth that has usually been accumulated over time, it is best to speak to donors about long term unchanging needs such as endowment, where the gift is retained and only the income is available for annual use.

Since estate planning can involve understanding the tax laws and legal issues, relationships with outside professionals such as attorneys, accountants and financial planners need to be developed so that they are readily available for competent consultation and assistance.

Keep in mind that the work of a comprehensive financial development program cannot be carried out in the director's "spare time." The director should relate to the top donors, but is not usually bogged down at the detail level. Therefore, most camps and conferences that want to see this area reach its potential must hire financial development staff. When this staff resource is present, it still needs the support and guidance of the director and help of the Board to be most effective.

While this may seem overwhelming, two suggestions may help. One is to start small, but start. You may not be able to start with a full-time development staff, but begin with a part-time employee or even a volunteer. Second, get some help to put together a plan that fits your organization. Find a colleague, mentor or consultant who understands your organization and its constituency and has the depth of experience to help you develop a plan that is uniquely yours.