Four Steps for Creating an Effective Fundraising Plan
Carol and the Executive Director and Board of Willows Way starting the second day of a two day retreat at the Hermannhof Winery. Willows Way serves adults with developmental disabilities. Hermannhof Winery serves great brats and wine.
If you are creating a fundraising plan, legacy fundraising or planned giving must be included. Used interchangeably, legacy fundraising or planned giving refer to a person’s decision to pass on various types of funds to a nonprofit during a set time or after death. For brevity reasons, we will refrain from using planned giving, and we will go with legacy fundraising to explain the process.
Along with other streams of giving, legacy fundraising helps nonprofits create a robust, achievable and lucrative fundraising strategy. However, many nonprofits fail to tap into this pool of money. Let’s take a look at all of the ways you can raise money, and how you can handle the processes involved.
Four Steps for Creating an Effective Fundraising Plan
Determine Your Needs
If you are a nonprofit newcomer or seasoned philanthropy specialist, you are constantly assessing your organization’s needs. When creating a fundraising plan, you must determine needs.
You must be able to outline the cost of needs. Furthermore, you must rank those needs based on priority. If you go into your fundraising without a clear picture of needs, you will not get what you need.
Do not ask a donor to give because you need money. Ask them to give to cover a cost. Services are the most easily marketed ask. Donors like to know that the money they donate covers something specific.
When creating a fundraising plan sit down with your staff and board to build a budget. In your budget be as specific as possible with your needs. Everything from reams of paper to service costs must be noted. Again, be as specific as possible. Donors want specific needs.
Know Your Options
Let’s look at your fundraising options. You need to know about every option that exists if creating a fundraising plan.
Legacy Fundraising
Before someone passes, they can designate that some or all assets go to your organization. Wills can be created that leave assets to a nonprofit. While this is one of the most popular forms of legacy fundraising, other avenues exist. Bequests are just the most common type.
However, gifts in this category are not restricted to funds available after death. Legacy fundraising also includes gifts given over certain periods of time or after various moments. Clothing, cars and real estate are a few examples. These items can be used by your nonprofit in all sorts of ways. Many non-profits even set up thrift shops to bring in more revenue. Always try to find a way to use anything that anyone wants to give you. For your convenience here are the different types of legacy gifts.
Types of Legacy Fundraising “Planned Giving”
- Bequests
- Securities
- Real Estate
- Estates
- Chattel
- Life Insurance
- Annuities
- IRAs and 401Ks
- Income Pools
- Charitable Trusts
With so many sources out there for legacy fundraising, it can be tough to target all of these areas and manage them. Companies exist to help with legacy fundraising. They know all of the specifics surrounding these potential sources of income.
If you cannot employ a company to handle these matters ask them to do this for you in-kind. Offer advertising space on your website or via social media. A lot of companies offer in-kind services to nonprofits, especially if they are promoted. For a good reference point relating to legacy fundraising check out this article from The Chronicle of Philanthropy.
Individual Giving
Individual donors are important. These people can be tapped into for volunteer opportunities, board development and possibly become life-time supporters of your cause.
Building a pool of individual givers requires enthusiastic stewardship. If you convey to one person the importance of your mission, that one person could be a dynamic ambassador for your organization. One donor is one more person that gets your emails about services. One donor may be a VIP ticket purchaser at your gala. That one donor may leave their estate to you.
Recurring donations from individuals are great, and u should always ask for more. Giving circles/societies are a great way to retain individual donors. Retention is key. Donors can be part of a monthly giving program and be rewarded with quarterly donor get-togethers. It cost less to keep a donor than to find a new one. Successful nonprofits have a strong individual giving program. According to Donorbox Nonprofit Blog, more than 70 percent of money raised comes from individuals.
Also, be sure that your board members are fully invested. Each board member must be assigned a give or get level. If the board member wants to remain on the board, h/she must find a way to bring in money.
Events
Events are fun and can be lucrative. You must budget accordingly. When it comes to events, do not expect; know in advance. Line up sponsors and hosts in advance. All invitations and social media should highlight sponsors and hosts. Sponsors and hosts can be individuals, businesses and organizations.
Let’s look at some of the costs you will need to cover. While you may not have all of these needs for every event, it’s a great starting off point and reference point.
Costs that must be covered:
- Security
- Other Staffing
- Volunteers
- Food
- Alcohol
- Deposits
- Rentals
- Entertainment
- Invites
- Marketing Materials
- Giveaways
Cut costs any way possible. Ask people to donate services and talents. Do not be afraid to ask. Do not wait until people arrive to count on revenue. Get money in early with sponsors, host committees and advanced VIP and general admission ticket sales.
State and Federal Awards
Grants are a great revenue stream for nonprofits and must be included if creating a fundraising plan. Two types of grant awards are state and federal donations. Anyone can nab a grant. It simply requires a heartfelt solicitation with a specific ask to meet specific needs.
When writing a grant be specific. This ups your chances of receiving a grant. It also helps when it comes time to report on how usage of grants. State and federal awards come with stipulations. Grantors typically want regular reports to make sure money is used as intended.
All kind of resources exist to help you locate potential grant money. Make sure you incorporate state and federal awards into your fundraising plan. Grants are awarded for administrative needs, programs/services and operational costs. Having a clear grasp of these three areas helps you find appropriate grants. It also helps with making your budget.
Institutional Giving
Institutional Giving comes from corporations, businesses, foundations and any organization outside of state or federal government. Having institutions invested with your mission further builds your brand, and it helps make you more marketable. Many institutions look for ways to volunteer, too.
While you definitely need to ask these sources for money and/or services relating to your events, you must be certain not to confuse the two giving streams. This can easily happen. Giving from these groups should be documented appropriately.
When these groups help with grants, those monies typically are given with similar stipulations as federal and state awards. They also require similar reporting. Don’t be afraid to simultaneously solicit for a grant and an event sponsorship. The only awkwardness would be if you didn’t.
Did you know that many employers have matching gifts programs? Tap into this giving stream. Set up meetings with employees at a company and provide insight into the mission of your nonprofit. At the end of the meeting, ask everyone to donate. Companies will often match those gifts.
Some companies have set in place matching giving programs with rules that must be followed. Reach out and get approved. Some companies participate through umbrella groups like United Way. You must be sure you get approved to be a registered benefactor from these umbrella type groups.
The Centers for Disease Control has a very impressive matching gift program for their employees. Take a look at their efforts and those efforts by the United Way to get a better understanding of how matching gifts work.
In-Kind Donations
When creating a fundraising plan, you would think in-kind donations would be a priority. Somehow, so many groups forget to ask for in-kind donations. Time and time again nonprofits belly up from too much spending. Instead of asking for in-kind donations and being more frugal, some nonprofits just fail to ever reign in on spending.
Take, for example, rolling out a new meal plan for the homeless community you serve. Wouldn’t it make sense to invite local restaurants to help with taking ownership of meals as a tax write-off? Why would you fork out money to pay for food that could be donated? Wouldn’t other donors like grantors admire your ability to get services donated? Get those needs covered through in-kind donations when able.
That is just one example. You should always be on the lookout for ways to get things for free. Your grantors will be impressed by your frugal approach, the money will open up for other needs, and people will give you more money because they admire your frugal approach. If you have a landscaper sitting on your board of directors, do not shell out money every month for landscaping. Get in-kind donations when able.
Establish an Action Plan
Now that you know the available means to raise money, you must have a detailed action plan. Create a spreadsheet that presents a weighted balance showing when donations can, did or did not come through. This funding pipeline should cover your budgets and the projected means to match those budgets. It must be updated regularly.
Donors want to know where you are with fundraising at all times, especially those high dollar donors and grantors. You do not want to be on the phone with a donor and find yourself unable to answer the questions. You should always know where you are with fundraising goals. This information must always be at your fingertips.
You must also build a donor calendar. Know your ask deadlines and your reporting deadlines. Outline events, donor gatherings, types of asks like the end of year ask, costs for services relating to fundraising, dates of emails and dates of social media posts. When you create a fundraising plan, any actions you take or plan to take must be calendered and referenced.
Record and Report
There are many services out there to assist with recording and reporting. All of your donations must be tracked. There are specific rules and regulations that must be followed. Check out these guidelines from the Internal Revenue Service for recording donations.
To provide an extra level of protection do two things. Make sure you have a finance committee on your board that helps with this and rely on an outside vendor. Companies like Blackbaud have great software to help track your gifts. Government regulations must be followed, and these companies help with that process. They also help streamline your data. This comes in very handy for board reporting and funder reporting, and it also helps with your annual report.
With strong recording and reporting systems, you are able to better pinpoint fundraising problems and realign strategies. These reporting systems help you do more than pull donor records and send receipts for gifts. They provide around the clock insight and analysis to help you stay on track and shift when needed. These are insured platforms that also protect data accuracy and data privacy. When creating a fundraising plan, you must make sure to have a foolproof plan to record and report all of your donations.
Above we have provided steps that will assist you when creating a fundraising plan. Each of these strategies will help you maximize your fundraising potential and bring vital services to those you serve.
To recap the four steps we covered are determine your needs, know your options, establish an action plan, record and report. By making sure that these four areas are covered, you will be able to create an effective fundraising plan.