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Raising Funds From Individuals

Gerald Duhon, Fundraising Consultant
Atlanta, GA
September 26, 2007

About the presentation:
Individuals are the source, year in and year out, of about 80 percent of the charitable dollars given, and individual support provides new nonprofits the credibility they may need to secure funding by foundations and corporations.

Are you new to fundraising? Need a refresher on the techniques used by nonprofits for annual giving and for major gift campaigns? If the answer is yes, this special session provides an opportunity to learn more about this important topic.

On September 26, 2007 at the Foundation Center—Atlanta, consultant Gerald Duhon gave a basic overview of the various ways to approach individuals for support, including:

  • Online fundraising
  • Direct mail
  • Special events
  • Telephone solicitation
  • Face-to-face solicitation

Gerald J. Duhon, Jr., CFRE, runs a full service non-profit consulting practice from his office in New Orleans, Louisiana. Previously, Duhon served as the executive director of the Young Leadership Council, a non-profit that promotes leadership through community projects. In addition, Gerald held development director positions at the Louisiana Children's Museum and at Archbishop Hannan High School. He is a native New Orleanian and a graduate of Loyola University.

Watch the video»
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Transcript

Objectives
Participants in this workshop learned:

  • Philosophies behind individual fundraising
  • How to treat prospects and donors
  • How to ask for money from individuals
  • Different types of individual fundraising

Most important message
The two most important things in your organization are your staff and your database. The one take-home message from today's workshop is: "Protect, backup, check, secure, nurture, expand, groom, utilize and keep current your database." Always back up your database. Everything is based on the fact your organization has a repository of historical and institutional knowledge about your donors.

Why raise funds from individuals?
The vast majority of charitable dollars are given by individuals, about 84 percent every year. Individual contributions are the building blocks for all development activity. They help to build a broad and varied fundraising pool. In the end, individuals are behind all gifts, whether they are personal gifts or foundation gifts.

Definition of "development"
Development is managing the relationships between the key stakeholders and the institution. Development is NOT asking for money. If you're managing your relationships well, the "ask" should come easily and naturally. Your job is to be doting. Be protective. Be a steward. Read and understand the Donor Bill of Rights.

Keeping current donors is a higher priority than seeking new donors. Studies have shown that up to 50 percent of new or upgraded donations are offset by lapsed or downgraded gifts. Yet nonprofits generally spend more of their time seeking new donors than nurturing current donors. Your time will be better spent and will likely yield better results if you pay attention to current donors. How do you nurture or steward donors? Use the Law of Seven: Contact the donor seven times in a year without asking for money. Examples include: Send a Christmas card; send a letter that describes current projects; have a constituent or board or staff send a letter or email; invite them as guests to a special event instead of making them pay for tickets. When you get a nice gift - however you define that - pick up the phone and call the donor immediately. It is totally unexpected and makes a great impact. Even if you have to leave a message with a secretary, the effort you made to phone still makes an impact. Then, follow up the gift in writing, as usual.

Know your prospects
Gather as much knowledge as possible about your donors and RECORD IT. Knowledge about individuals comes from interacting with them. Every prospect has a right to see his/her file, so don't put anything offense in the file, such as, "This guy's a jerk." Very few prospects will ask, but some do. Know what your prospect responds to. If he likes to talk politics, engage him at that level. Act and dress accordingly to what the donor considers appropriate, even if you don't agree with them. If you're a woman who's approaching a conservative male Baptist, he'll probably expect you to wear a skirt or dress and stockings. If I'm approaching a prospect who is more conservative, instead of this checkered shirt/light colored suit combination, I'll probably wear a dark suit with white shirt. Also, be confident. Mishaps will happen; just roll with them. Know and respect that everyone is busy. If somebody thinks they're busy, they are busy. Even if you don't think they're busy, they are busy.

Address your fears about raising money
Talk about your anxieties about asking for money. That tingling sensation you get before talking to a donor is a good thing. It keeps you focused. Train, plan, rehearse in front of the mirror, and debrief. Ask for coaching from your peers. It helps to solicit in pairs. If you have the opportunity to go with a veteran fundraiser, take it and watch that person speak. You can learn so much from just watching. Make your own gift that is personally significant to you. That gift amount will be different for each individual. When I just graduated from college, I gave a $100 contribution to my high school because at that time, that's what I could afford - it was a significant amount at that time. Park your ego and let the mission be center stage: "On behalf of XYZ Organization, I am here today to ask you…." Remember, it's about building long-term relationships.

Pareto Principle
Have you heard of the Pareto Principle? Its definition is that a minority of inputs yields a majority of outputs. Sometimes it's known as the 80/20 rule. Typically, in an annual fund, ten percent of the donors give 60 to 80 percent of the dollars. Ten to twenty percent of lower level donors are prospects to become major donors. Fundraising programs grow at the top. You need to know who your major donors are, and most of your time should be spent on this 10 percent. This probably will be in the form of several personal meetings, letters, and phone calls. You might send personalized mail or phone calls to your mid-level donors and general membership mail and event tickets to your entry-level donors.

Prospect ABCs
The Prospect ABCs are as follows:

  • Ability, i.e., the financial resources and willingness to contribute.
  • Belief in your mission and/or programs.
  • Contact with your organization and its key individuals.

All of these - ability, belief, and contact - must be in place before one can be considered a prospect. How can you learn about an individual's interests? Look at what they've already supported.

Back-up your data
Have I mentioned that you need to back up your data? Someone asked if one or many people should update the database. I'd recommend designating one to three people to enter information to maintain a standard level of consistency in the data.

Direct mail - advantages and disadvantages
Direct mail fundraising is a mailed or emailed request for support. Its advantages include:

  • Effective by reaching large numbers.
  • Reach new donors and create or update donor profiles.
  • Can be low expense (especially E).
  • Measurable results (response rate and cost).
  • Renew current donors. One of your most important donors is that one who reliably gives $100 every year when they receive that mailing.
  • Staff or even volunteers can carry it out.

Its disadvantages include:

  • Front end investment; can be pricey when you add up postage and materials.
  • Hard to stand out.
  • Smaller gifts and lower response rate.
  • Upgrading is slow and modest.
  • Little donor contact.
  • Technical challenges (E).
  • Staff can carry out.

Direct mail considerations and details
Direct mail considerations include:

  • Do you have an accurate (address, name change, death, or "do not solicit") database?
  • Can you augment your database? I discourage buying lists. Instead, look to your current donors to recruit new blood.
  • Can you service a campaign, i.e. generate a Thank You note?
  • Can you accept pledges? Your rate of return increases if you can, but then you need to have a process to remind donors in upcoming months about their commitments. How can you make good on a donor's pledge? That will depend on how it'll be paid and the donor's history with your organization.

What should you mail?

  • A one-page appeal letter. Customize the appeal for the specific audience. This could be just one paragraph that is changed. Tell a story. Make your "ask" in boldface. If possible, sign each letter. Re-ask in the postscript (p.s.). Studies show that readers who skim will focus on boldface type and the P.S. line at the end.
  • Outside envelope with proper postage. Should you use stamps or meter/bulk mail? Anything that looks more personalized has a better chance of being opened.
  • A reply mechanism, like a one-sided card that is "evergreen" (meaning that it's not dated so you can use it every year). The card should have: Suggested or targeted amounts; all prospect information, including email address; how the donor wants to be listed; option to pledge. Include a reply envelope, with or without postage. I have no strong opinion either way; if a donor wants to support your cause, they'll use their own stamp.

Miscellaneous direct mail details

  • You can attract donors by mail, but need to meet with your reliable annual supporters to investigate potential to increase their support.
  • Bulk mail rules are Byzantine; learn the rules!
  • How often should you mail a request? This depends on your supporters. Watch for patterns. If someone gives once, then once is enough. Maybe they'll give twice. If they can't give in spring, then definitely ask in fall. Know your supporters.
  • Track timing of responses - how long did people hold onto materials? You'll start seeing trends, like returns really increase after X days. Then if they don't come in when you expect them to, it might mean there was a problem in the delivery.
  • Give donors ability to instantly E-donate.
  • Sharing your donor lists is not a good idea. It can turn away donors. Have a policy.

Electronic fundraising
E-fundraising is similar to direct mail, but has its own considerations:

  • Gather permanent E-mail addresses, like Hotmail, Gmail, etc. Do NOT get work addresses because they're more likely to change.
  • Some constituencies will respond strongly to E-fundraising, typically younger people. Finding out the ages of your constituents is a good idea, but not always possible.
  • Publicize your web site. A way to donate should be on every page. Information can be donor-directed and timely.
  • Using a third party vs. doing it on your own? Third party services are easiest. PayPal is low-cost and simple to use.
  • E-fundraising enhances personal interaction but should not replace it.

Telephone solicitation
Telephone solicitation is a more personal contact, so you have a better chance for a gift. It also offers the best bang for the buck. It's ideal if you can combine direct mail AND phone. Focus your call efforts on lapsed donors because studies show the highest success rates of getting a donation are from lapsed donors.

If you do a phonathon, make it an event for your volunteers. They can energize each other when they get donations. It also ensures that the calls will get done and will be done consistently. Give volunteers a script that includes reasons for the "ask" and the "ask" amount. Make sure that the reasons are not so specific that it restricts how you can use the money. You might say, "It'll support programs like…." The script should also address the "So what?" question, i.e., what does the program accomplish? Some fundraisers have the "3 Nos" rule: The prospect has to say "No" 3 times before you let them go. I don't agree with that. For me, no means no. I would say, "Thank you so much. We'll contact you at another time." Phonathons work best in conjunction with a direct mail campaign. First, email or mail them information, then follow up by phone. Be flexible; depending on your prospects, you might try calling during the day instead of at the dinner hour. IMMEDIATELY acknowledge pledges with a thank you note, The sooner it goes out, the more real and connected it is. Have a way to send information if it's requested and then follow up. Remember, studies show that every "no" is that much closer to a "yes."

Special events
Special event fundraising is the most common form of fundraising, but it needs to be profitable. I have the 25 percent rule: Your event-related expenses should be no more than 25 percent of your gross revenue. Your expenses don't include staff time because that staff time is a cost your nonprofit will have regardless of whether you have the event.

The advantages of special events include the publicity generated, cultivation of current donors and identification of new prospects. Among the disadvantages, special events require labor and a cash investment and sometimes the money raised at special events can be difficult to convert to annual support because attendees might be in the habit of expecting something in return for their money.

Try to create a signature event, i.e., one that connects the event's name with your organization's name in the public's mind. It should be one that's open to the public. If you're doing an auction, do it only if it is the main event because a lot of labor is involved in getting the auction items. Get auction items that people can't get for themselves. For instance, instead of a free haircut, auction off time with a local celebrity. Create and maintain an event "bible": All vendors, logistics, lessons learned, everything related goes into this bible. Create a budget and policies for approving expenses. Create roles and job descriptions. Designate one or two key people who know the event well to make decisions on the day of the event, and make sure they are on the same page about everything. Remember that staff are there to work. At a sit-down dinner, your donors are in one place and are a captive audience. I eat something beforehand so I can spend the time circulating the room, talking with donors. Ask for feedback immediately, especially from your board members, volunteers and staff. You will be amazed at what you will get, then add this to your event bible for next year.

Face-to-face solicitation
Face-to-face solicitation is what we work for. The Number One rule: Listen to the donor. Among recent donors, 50 percent can name the nonprofit, but 90 percent can name, or at least describe, the person who asked. It also has your highest rate of return - a 50 percent response rate if the donor and prospect know each other. Pledges are more solid and are paid quickly. This is your best change to manage the relationship between the prospect and you, and you can get deep, rich donor feedback. For this, you should develop a feedback form so everyone is asked the same questions.

The face-to-face "ask" is labor intensive, especially for the executive director, board members, and development staff. You have a higher risk of doing more harm than good. You won't offend prospects by asking them for money; you're more likely to offend them by not knowing them well. How to get started? Enlist a committee of five to seven strong volunteers and staff. Select 20 to 30 best prospects; this is a pretty good number for a small nonprofit. Set goals and a timetable. Assign the prospects.

There are four phases to the "ask:" 1) Make the appointment. Email or send a letter introducing yourself before making the appointment. 2) Solicit. They will probably ask in some form, "Are you coming to ask for money?" You answer, "Yes, but we also want to talk with you about our programs." 3) Celebrate. 4) Evaluate how the "ask" went.

The solicitation outline:

  • Open with some small talk to establish or renew the personal connection, then introduce the big need.
  • Ask questions to explore the prospect's interests and concerns. If the prospect disagrees with your approach - which ideally you would avoid with good prospect research - present some facts in a non-confrontational manner, e.g., "Several studies show that students who learn a foreign language generally perform better in their other subjects." Offer to send some additional information. Invite them to your organization to observe the program if appropriate.
  • Present how your organization's vision and agenda meets the prospect's interests.
  • Close by asking for their support. Ask again. Leave with a planned next step(s).

Also, some prospects will agree to a meeting in hopes of furthering their own agenda. If it contradicts yours, don't bow to it, no matter how much money they offer.

Some other tips for face-to-face solicitation: Don't outnumber the prospect; a good rule is to have 1 more person than the prospect. Clarify everyone's role, especially who will make the "ask." When you finally ask, ask…then stop: "We are thrilled that you've invited us to talk with you today. On behalf of XYZ Nonprofit, we'd like to know if you can give $N to support the ABC program."

Summary thoughts
People will not give money if they are not asked. Not being asked is the Number One reason they do not give. Organizations are not entitled to support. They must earn it. Successful fundraising is not magic. Fundraising is not only raising money. It is nurturing relationships, building community, and enabling your organization to have sustaining impact.

Summary prepared by Sandy Pon and Pattie Johnson

Additional material:

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