For most emerging organizations, the dividing line between just making ends meet and true sustainability lies in developing a solid base of private funding from individuals. When leaders in philanthropy talk about diversifying revenue, they are usually talking about increasing the base of individual giving.
Emerging organizations are too often focused on institutional giving in the form of sponsorships and grants – funding that is far less likely to go to an organization without a track record. Institutional funding is attractive because it is likely to be larger sums than are initially possible from individuals, and because the sources of institutional funding invite requests. Fewer private individuals are likely to advertise that they are open for solicitation.
And yet, of all private giving to nonprofits, 72% comes from individual donors. And while a good portion of that sum is from very wealthy individuals with the capacity to give in the millions of dollars, there are many more donors of more modest sums who are the lifeblood of the social good sector – $100, $1,000 and $10,000 gifts are the bedrock of support that help to ensure sustainable operations year in and year out.
Organizations participating in CULTIVATE will learn best practices for increasing contributions from individuals through exploration of the following topics:
Embracing the Moves Management Model
Generating revenue from individuals is not magic – it isn’t something that just happens. The best nonprofit leaders understand that private contribution success is not a function of the individual waking up one day and deciding to make the gift, but rather the payoff of much hard work to move that person to action. In this way the nonprofit leader is empowered, deriving confidence from the knowledge that fundraising success is in the hands of that leader and not subject to the whims of philanthropists.
The framework for this concept is the moves management model which suggests a cycle of identification, communication, cultivation, solicitation and stewardship that develops a donor from day one. Also expressed as a funnel or a pyramid, the development cycle is a way of thinking about how people learn, experience and make decisions. CULTIVATE participants will map a new target constituency through a moves management construct.
Once an individual makes a gift to an organization, the decision to make another gift (or a larger gift) similarly depends on the actions of the nonprofit. Retention of donors is a significant challenge for nonprofits, with nonprofits only retaining 48% of their donors year over year. With such turnover, nonprofit founders must run awfully hard just to stay in place. Many donors suggest that the lack of communication or receiving the wrong sort of information was a contributing factor to their decision not to renew their support.
Organizations raising funds from individuals must consider separate strategies for acquiring donors and keeping them, increasing their sense of belonging and giving them a feeling of leadership for their alignment with a mission. Participating CULTIVATE organizations will understand the four important tipping points in the relationship with donors and how to achieve success at each.
Developing a Mix of Individual Giving Strategies
When nonprofits first start out, their leaders are apt to think of fundraising in tactical terms – e.g. an event or an appeal letter. Success comes from understanding the development cycle and the role of solicitation as a part of a series of activities. Still, the manner in which an organization chooses to ask for funding is important – ask strategies must be aligned with the nonprofit’s brand and mission.
Solicitation strategies fall into three categories – the annual fund, major gifts and planned gifts. There are many ask strategies in each of these three categories, with a corresponding use of the funds. While most early growth organizations pine for major gifts that would unleash the potential in missions, they must first work to build the annual fund as a critical first step in fundraising. Organizations involved with CULTIVATE are no exception.
We’re Half-Way Thorugh!
It is remarkable that CULTIVATE is almost half-way through! Many thanks to all who have been following along. The participants are doing a great job!
Up Next: Mastering Grantsmanship