The Timothy Group

Is Your Annual Fund Up To The Challenges It Faces?

It is no secret, that since the fall of 2008, the US economy has been on a downward slide. Now it has become a global financial problem. If the stock market is down and investments are worth less, what impact does that have on contributions? You would expect them to go down. But is that true for all organizations?

Giving USA figures are not yet available for 2008, but they will no doubt show contributions totaling approximately $300 Billion, roughly similar to 2007. The Evangelical Council for Financial Accountability (ECFA) recently released a survey showing that 72% of its responding members raised the same amount of gifts or an amount in the 4^th quarter of 2008 within 10% of the prior year, 28% saw giving drop off by more that 10% in the same time period. What made the difference?

Did your annual fund raising program raise less last year than the year before? Are you not sure it is up to the challenge for the future? Why?

Are you doing the same old thing year after year? Or are you testing the results of your efforts to see what works and what doesn’t? If not, you may be repeating mistakes year after year. Did you have staff turnover that caused you to miss some deadlines or some strategies were not used or done well? Do you treat everyone on your mailing list the same? If so, those who can give the most may begin to support other organizations that treat them in special ways. Are your donors getting tired of your constant appeals?

Are there factors at work that are putting increased pressure on your annual fund? Is fee revenue down? Is investment income down? Are corporate donors not able to give as much as before? Fund raising may not be able to make up for all these factors.

If you are in a situation where there are increased expectations of your Annual Fund, can you realistically expect that during a time of recession? Unrealistic plans will lead to disappointment. Support of your annual fund may be a complex issue, but if you break it down you can perhaps find ways to increase contributions.

In the rest of this article I will try to help you do just that.

5 Markets

There are basically 5 kinds of donors you can appeal to:

Individuals - Individuals nationally give about 85% of the total of gifts. You should be spending the majority of your time with them. You need to be wise about who you solicit and how. Those with connections to your ministry are the best prospects. Ask customers, former customers, families of customers, prior donors, members of churches from which you draw customers. Go to them first, before trying to appeal to new donors outside your natural constituency. If you are going to grow your constituency, try to do it through existing friends. And cull your mailing list, so you are not wasting money contacting people that have not given for years, and will not likely give again in the future. I still get newsletters from ministries I helped over a decade ago, even though I have not given to them since. Every time I see them, I am reminded of money wasted.

Businesses - Perhaps you have been supported by locally owned businesses. Go to vendors, sponsors, cash donors, in-kind gift donors. Businesses that you have a natural linkage to your ministry are the ones that care if you continue to exist. They are your best prospects.

Corporations/Associations - National and international businesses are good prospects for employer matching gifts. Are you letting your donors know of this possibility? Some corporations may make grants or have related foundations that make grants where they have a local presence. Are you in touch with the local manager? Local service clubs may be sources of not only gifts but volunteers. Join them, have a presence at them, tell them about your ministry.

Churches - If your ministry has a history of church support, make sure you are informing church liaisons of the benefits of your ministry. Otherwise a new decision maker may come into the picture who does not know of your work and cut you out of the budget. Take time with new churches that are sources of customers, or are in your denomination or association, to explain what you do and how you complement their ministry. When they understand that benefit they may decide to support you financially.

Foundations - The Chronicle of Philanthropy reports in its March 16, 2009 issue that only two foundations surveyed will increase giving this year. While investment income may be down, many foundations give out grants based on multi-year averages of investment income. So while there may be less money to give away, it may not fluctuate 30-50% like the market has. Take the time to get to know the foundation people. Don’t just send in a proposal without making personal contact. Do your research so you only ask for grants within the guidelines of that foundation. Don’t ask for a large proportion of (or maybe even more than) what the foundation gives away in total in a year. You will only look foolish. Remember that foundations usually want to support something new, most are not going to pay for your ongoing operating costs. Also whatever you start with their money, you will likely someday have to continue without their support.

The Timothy Group would like to offer you a free annual fund calendar on which you can plan your approaches to your five markets. Simply register to access our digital resource library (or log in if you are already registered with us) and obtain a copy of this helpful document.

5 Methods

There are five kinds of strategies or methods you can use with the five markets:

Personal - Person-to-person is still the most effective and efficient method of raising support. 80% or more of capital campaign funds and 50% or more of annual funds will come from donors you must talk to face to face. It takes time, and that is why many do not do it. But the rewards are commeasurate with the time you spend in this method. Board members, the CEO and the Development staff must team up to take existing relationships to new levels. Expect a 50% response rate to your requests and 33-50% of the amount that you request. Without this top level support your annual fund may never reach its potential.

Telephone - Telephone solicitation is the next most effective. You should see about a 25% response rate. The gifts will be smaller on average than personally solicited support. You can use the telephone for new donor acquisition, renewed donor support, increased support, and to bring back lapsed donors. Call donors to thank them and offer to pray for them, without asking for a gift. You will amaze them. You will have to decide if you will use volunteers, staff or a vendor to make the calls. It is getting harder to find volunteers. Staff may be stretched. If you use a calling vendor, be sure to check references from other customers to make sure it is a good fit.

Mail - Use mail appeals to acquire new donors. Resume and seek to increase support from the donors of the smallest gift amounts on your list. Offer a premium for increased support. Send a special letter seeking to bring back lapsing donors. Do not send direct mail appeals to your top donors. You will show them you do not know them.

Media - You need to be wise about using media for solicitation. Newspaper, radio and TV advertising can be expensive, and may not target the right audience for your ministry. Use your web presence effectively. Drive people to your web site where they can see what you need support for. I am still amazed at how many organizations are not making good use of their website to support fund raising. Tell people of your needs. Enable them to give without leaving your site.

Events - Events usually have dual purposes, fund raising and friend raising. It is not unusual to spend 50 cents to raise $1 at an event such as a dinner, a golf outing, or an auction. And that usually does not count the value of the staff and volunteer time associated with the event. But if you make new friends and get support from them it may be worth it in the long run. Too many organizations never convert the “friends” to “funds.”

What methods you use, and what markets you target become your annual financial development plan. Create a matrix to show when you will use various strategies, and what part of your constituency you will target. Don’t repeatedly solicit the same group. Don’t treat everyone alike. Spread out the work during the year so staff can handle it. In short, work smarter. Put dollar targets on each strategy. If you fall short on one strategy you will have to raise more from other strategies later in the year to make you goal. Don’t wait until the end of the year to determine if you met your goal or not.

Remember to register or log in to our digital resource library for your free annual fund calendar so you can plan your methods for reaching your five markets.

The Timothy Group has the experience of working with over 1,500 organizations. Call or email us for a no-cost, no-obligation discussion of the challenges you are facing.