According to the business dictionary fundraising is the process of soliciting financial support (usually as grants) for a non-commercial cause.
According to the business dictionary (http://www.businessdictionary.com/), fundraising is the process of soliciting financial support (usually as grants) for a non-commercial cause.
This method used to be reserved for non-profit organisations, but in recent years fundraising has become the main source of money for many different important causes. Originally, fundraising happened offline, but nowadays, it happens online as well.
What are the types of fundraising?
Source: http://www.nonprofitnext.org/sites/default/files/resource_library/fundraising_types_pros_cons.pdf This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License
1. Capital campaigns
These are limited campaigns which are bound by time for a particular project. Often the money raised is for the acquisition, construction or renovation of a building. Sometimes capital campaigns are used to build an endowment for the future. Sometimes they are used to purchase an extraordinary and expensive piece of equipment.
What are advantages and disadvantages for stakeholders and organizations?
Advantages
For the donor
Offers a chance for deepened engagement with the organization and significant public recognition.
For the staff
Capital campaigns can be intense and exciting and inject life into an organization’s routine. They can also strengthen bonds between staff and board bringing them together to focus on a common goal.
Cost
The cost of a capital campaign can be daunting but if planned correctly the cost can be recouped within the first year of active gift solicitation.
Potential impact
The funds raised through a successful capital campaign can literally and metaphorically transform an organization through new or improved facilities, expanded technological infrastructure, and often the retirement of any debt. Campaigns can also create public relations ‘buzz’ and lead to greater community knowledge of the organization.
Disadvantages
For the donor
Donors may be asked to stretch exponentially beyond their traditional giving history with multi-year pledges that can sometimes lead to “donor fatigue.”
For the staff
Unless done with careful planning and budgeting for additional staff, or shifting of duties, capital campaigns can overwhelm already overworked staff, especially in a small shop. If the Board is not sufficiently engaged, the staff can end up feeling resentful and alone in the effort, often suffering burnout as the campaign wears on.
Cost
Capital Campaigns are expensive and can require investments in new technology and staff on top of the cost involved with retaining capital campaign counsel. A feasibility study before a campaign is undertaken is highly recommended and it is a significant expenditure. Often the first fundraising challenge is to conduct a ‘mini campaign’ to fund the costs of the capital campaign.
Potential impact
Unless organizational leadership is willing to invest in and commit to a lengthy and thorough planning period, you could be faced with a poorly executed campaign that fails to meet its goal, negatively impacts the staff and tarnishes public perception. A capital campaign should not be undertaken if the staff and board are not confident that they will be successful.
2. Corporate support
As the name suggests, this is philanthropic giving by a corporate company to an organization. They are usually initiated by the nonprofit organization and are hopefully sustainable.
What are advantages and disadvantages for stakeholders and organizations?
Advantages
For the donor
A company can receive significant marketing benefits from supporting a local organization as well as a sense of “giving back.”.
For the staff
Soliciting corporate support provides a source of increased revenue and offers an opportunity for development staff to take on high-level solicitation and develop a network of corporate contacts.
Cost
Corporate support can grow to be a significant component of your contributed income budget if you start conservatively, take the time to build connections, identify ways to recognize corporate donors, and keep them informed. Done well, corporate support can be transformative for an organization.
Potential impact
The funds raised through a successful capital campaign can literally and metaphorically transform an organization through new or improved facilities, expanded technological infrastructure, and often the retirement of any debt. Campaigns can also create public relations ‘buzz’ and lead to greater community knowledge of the organization.
Disadvantages
For the donor
Businesses can feel taken for granted unless they receive good publicity for their gift, are well thanked and understand the nonprofit’s mission and purpose for the donation. Some businesses have a policy against supporting one organization too many years in a row to avoid dependency upon their giving.
For the staff
The days of picking up the phone and asking for the gift are over. Corporate solicitation often requires structured applications that are decided on via a companywide committee. This means development staff can expect to spend a great deal of time learning each organization’s specific application process, getting to know corporate personnel, and making sure the company understands the mission and need for the gift.
Cost
Giving away ‘freebies” such as tickets or passes or advertising to corporate supporters can add up.
Potential impact
The drawback to sustained and significant corporate support is that an organization can become too dependent on it and not continue to focus on critical fundraising from individuals of high net worth.
3. Earned Income
Earned income is the amount of money earned by producing goods or services provided by a non-profit. One popular nonprofit example is the Boy Scouts’ cookie sales.
What are advantages and disadvantages for stakeholders and organizations?
Advantages
For the donor
Provides a point of entry for customers to support an organization through a more business-like transaction.
For the staff
Takes some pressure off of development staff by providing a second income stream..
Cost
Operating a for-profit venture within a nonprofit allows for the cost of the effort to be covered by profit.
Potential impact
Can provide a significant source of long-term unrestricted income by diversifying funding streams.
Disadvantages
For the donor
Earned income not directly related to the organization’s mission is classified as “Unrelated Business Income” which is taxable as UBIT. The organization must make sure they take that into consideration when making the decision.
For the staff
Earned income streams, such as thrift stores, tickets to performances, gift shops etc. require an increase in staff devoted to just those endeavors. Puts pressure on senior management who may not be familiar with for-profit business models.
Cost
Can involve complicated business plans and market research analysis requiring costly outside expertise. Once the venture is up and running there can be upward pressure on overhead, staff and supplies.
Potential impact
Earned Income streams take time to conceive, develop and implement and, as in any business venture, the returns can take years to manifest.
4. Direct mail (for annual giving, membership etc)
Direct mail fundraising is a form of direct marketing used by nonprofit organizations to solicit funds, recruit new donors or members and to inform, cultivate, re-solicit and upgrade the level of their contributions. Understanding the principles, practice and discipline of direct marketing and fundraising is important in a direct mail campaign. Direct marketing tends to look at prospects and donors through a lens of statistics and data, and fundraising looks at them as individuals with varying needs, interests, values and preferences.
Some very important aspects of direct mail fundraising are:
• Writing a good letter that hooks the donor and keeps his interest
• Being clear, repetitious and confident in what you are asking
• Thanking donors immediately and passionately
• Following up direct mail letters with interesting and informative newsletters or other material.
What are advantages and disadvantages for stakeholders and organizations?
Advantages
For the donor
Has a ‘tactile’ permanence lacking in digital fundraising, allows donors to read and respond with more thought. Personalized letters stand out amidst junk mail and email.
For the staff
Staff-driven direct mail campaigns have defined beginnings and ends, and clear components, making them good projects for development staff - particularly for staff new to the profession.
Cost
If you have a good in-house database of prospects your primary cost will be paper and postage. Sending a large non-personalized mailing via nonprofit bulk mail rates can keep costs down.
Potential impact
Effective way to introduce your organization to a large audience all at once. With strategic thought to planning and execution, it can yield significant cumulative returns over time.
Disadvantages
For the donor
Can be easily tossed aside, buried or discarded. Donors often give less by mail than when asked by phone or in person.
For the staff
Direct mailings can take on a life of their own often consuming a small development staff with running accurate lists of recipients, printing letters, designing insert materials, and stuffing, and mailing the appeal. Also requires a strong writer to craft a strong appeal- not something that every nonprofit has on hand!
Cost
A strong database is the basis of all good personalized mailings, so your shop may need to invest significantly in good technology or commit to purchasing lists from a direct mail house, which can be “hit-or-miss” as far as yielding a strong return.
Potential impact
Rarely yields major gifts.
5. Grants
Grants are amounts of cash given to organizations or individuals for precise purposes. An individual who is opting for a grant must keep track of all the data which may be required in the future. There are certain grants by the government as well.
What are advantages and disadvantages for stakeholders and organizations?
Advantages
For the donor
Potential and current donors may be more likely to invest in your organization if they see that it has received grant support from local, regional or national funders.
For the staff
Can be a wonderful way to give development staff “ownership” over a funding stream.
Cost
With good staff at the helm there is very little cost involved in grant writing.
Potential impact
Grant awards can be very generous and provide significant funding as well as increased visibility and credibility for your organization.
Disadvantages
For the donor
On the other side of the coin, some individual donors may feel their support is not needed if they perceive an organization is “taken care of” through grant funding.
For the staff
Grant writing does not come naturally to everyone, so your organization may need to invest in training for your staff. Managing grants can be a full-time job so expectations should be reasonable for a small staff.
Cost
Requires an initial investment in grant writing and grants management.
Potential impact
Grants are not automatic, predictable or meant to be sustaining sources of income, meaning that they cannot be relied on from year-to-year. Organizations may find themselves with a significant hole in their budget when grant funding dries up.
6. Membership Campaigns
This is one effective way of gathering people to know more about your organization and the work that you do. Bringing in members enhances the chances to rake in more funding for your campaigns as most of the members get converted to donors in a short period.
Would a membership program be good for your organization? If you already have a membership program, are you clear on what you and the members gain from having the program, above and beyond being a donor to your organization?
Here are some of the questions to help you decide:
• What role do you want people to play in your organization who are not board or staff?
• What should be the base membership fee?
• What benefits should you offer to members?
• How can you best manage joining and expiration of membership?
Members may have an expectation to be asked to contribute other things in addition to money, such as volunteer time, political support, expertise and influence.
What are advantages and disadvantages for stakeholders and organizations?
Advantages
For the donor
Provides a regular, often modest, way for a donor to stay connected to your organization and feel a sense of belonging. Membership often also comes with “perks” for donors in the form of special access, member benefits, or small gifts.
For the staff
Membership campaigns are relatively routine and easily managed by a smaller shop. Staff members new to development might also feel comfortable working on membership to gain confidence.
Cost
Once an initial investment in materials is made, the largest costs will be postage, which often pays for itself fairly quickly.
Potential impact
Can provide an immediate and ongoing source of unrestricted funds while growing a loyal constituent base
Disadvantages
For the donor
Donors may not hesitate to drop a membership gift from their yearly giving in times of difficulty, perceiving it more as a purchase than a charitable gift. Unless a member retains strong involvement with the organization (i.e. attends performances, goes to exhibit openings) they may not feel they are “getting any value” from their membership gift.
For the staff
It can be easy to fall into a rut with a membership campaign, so care must be taken to encourage creativity. Organizations with a large base of members such as museums and theaters may need more than one staff person to handle the work of managing the solicitation, renewal, and thank you process.
Cost
The costs of membership - postage, materials, staff time, and recognition events- are often invisible and can add up if not monitored on a regular basis. Investing in sophisticated technology to record and track gifts and provide a means for on-line giving can be quite costly.
Potential impact
In difficult economic times, membership funds can dry up leaving a significant hole in an organization’s budget.
7. Special Events
Raking in funds to support a cause from special events can prove to be the most efficient way as you not only get funds but, increase awareness about your brand and the importance of the cause. Many artists, like Justin Bieber, Coldplay.etc support few charities, and they organize charity concerts to contribute a certain share of their earnings for charitable purposes.
What are advanatges and disadvantages for stakeholders and organizations?
Advantages
For the donor
Engages a large number of donors at one time. Can often allow donors of all giving levels a way to participate and connect with an organization.
For the staff
Special events can inject a sense of excitement and fun into the work of the development staff.
Cost
Obtaining sponsorships and in-kind donations can keep the cost of a special event down ensuring that the maximum share of the event profits are netted by the organization.
Potential impact
The funds raised by a well-run, well-supported special event can be significant. Events that are strategically planned and attended to in order to ensure yearly growth can ultimately become synonymous with your organization and generate community or even state-wide support.
Disadvantages
For the donor
In a crowded event landscape donors can feel event fatigue and stop attending or pledging support to various events.
For the staff
Special events are a tremendous amount of work for the staff who must engage in planning, invitations, seeking donations to support the event, and often the physical set up and clean-up of the event itself.
Cost
Costs can skyrocket if not attended to carefully or if sponsorship support is not obtained.
Potential impact
Often the return on the event does not justify the investment of staff and volunteer time and monetary resources. Events also tend to have a certain life span and once returns begin to decrease, an organization may want to consider retiring the event.
8. Phone-a-Thons and Telemarketing
The most success with phone-a-thons and telemarketing comes from well trained volunteers who are already donors to the organization. A good script is needed for the volunteers to use when making calls and a call sheet form for each donor is also needed. The background and history of the donor, as well as a place for callers to record the response to their call is included in the call sheet. Research shows that the best evening times to call are Tuesday through Thursday, 6:30-9:30pm, although 9:30 may be too late for some donors. Know your donors and what days and times will work best for them.
What are advantages and disadvantages for stakeholders and organizations?
Advantages
For the donor
Allows for personal connection to donors and a dialogue about the organization.
For the staff
A good phone-a-thon effort staffed by volunteers can provide development staff with much-needed relief and assistance in fundraising efforts..
Cost
If held on-site with volunteer callers, phone-a-thons can be accomplished with very little cost.
Potential impact
A well-run phone campaign with strong prospect lists can generate 10-to-12 times as much as a mailed appeal effort.
Disadvantages
For the donor
Some donors feel phone calls are intrusive and may be put off by them..
For the staff
A well run phone effort requires the staff to invest a great deal of time preparing call lists, training volunteers, and organizing materials. Volunteers who fail to attend phone-a-thons can leave staff members holding the bag.
Cost
Organizations without a strong volunteer base may engage professional telemarketers which can be very costly.
Potential impact
Not everyone who pledges over the phone delivers on that pledge. Fundraising experts estimate nearly 20% of people making pledges will not fulfill them. This can negatively impact fundraising goals when anticipated pledges are not received.
Once you already know all different types of fundraising campaigns and their pros and cons, we propose to watch this video to identify the 7 key aspects to develop a fundraising campaign with success:Commitment
Case for support a clear and a consistent message that connect everyone to the cause.
Local impact
Measurable outcomes
How will money be spent
Asking for money
Stewardship