FundClass Archives:
Planning and Fund Development
Edited Digest of FundClass Topic #05, September 1997
This FundClass topic was, for the first time, facilitated by a "Visiting Expert", in this case, Kim Klein of the Grassroots Fundraising Journal and Chardon Press in California. We are indebted to Kim for her time, energy, and efforts on our behalf.
Opening Message by Kim Klein
Kim is a fundraising consultant, with over twenty years experience in the field. In her opening message, she offers some reminders and thoughts on fundraising and planning. . . . "the real purpose of fundraising is to build relationships. We are trying to find prospects who care about our cause, invite them to become donors to our group, and then invite them to become donors of more money, of time, of contacts, of advice, and so on. Analyzing how people become donors, remain donors, and become larger donors is critical for planning.
"New donors usually comprise 70% of a donor base, and account for about 20% of income; regular habitual donors account for 20% of donors and 20% of income, and major donors account for 10% of donors and 60% of income. Understanding fundraising in this way provides a blueprint for planning.
"Groups need to decide how many new donors they need, what percent of regular donors will give again (a normal retention rate is 66%), and how many major donors they need. This information will come from their donor base, their budget, and their history with fundraising.
"Having looked at what amount of acquisition, retention, or upgrade is needed, a group can pick strategies that make sense for their needs. So a group might plan a direct mail for acquisition, a newsletter and some regular special events for retention, and a personal face to face solicitation program for upgrading. . . .
"I have found that by starting your fundraising planning with the number and types of donors your organization wants to reach, along with the financial goals for each type, you can more easily assign a strategy that fits your goals, and then you can fit each strategy into the fundraising plan as a whole.
"Questions each group needs to answer:
- Who is in charge of planning, and what are the stages of approval for the plan?
- What are the backup plans and how are they created?
- What happens when the projections of the fundraising committee or development director are far lower than the program needs? How are programs cut or projections raised?
- How should you factor in grants from foundations and corporations, given how insecure that funding is?
- If an organization has no base of individual donors, how much money and time should it spend developing one, and when would a donor base begin to be profitable?"
What's more important? Doubling the list size or Upgrading donors?
The first questions asked were about the figures in Kim's opening remarks about percentages of donors and income. Using Kim's figures, one reader said that if his group has a budget of $50,000, then new donors will provide about $10,000, habitual donors also $10,000, and major donors $30,000. Then, if the average small donation is $30, the group must have 333 new donors, 333 habitual donors, and 67 major donors giving an average of $450 each. So, if the group's current list is only about 350, is it reasonable to try to double that list, or is it better to try to upgrade them, or something else?
Kim's answer: first, let's answer a question you didn't ask: what amount of time do I spend doing what? In that $50,000 budget, with $30,000 coming from 67 donors, about 60% of your time needs to be spent in indentifying, cultivating and soliciting those people. Too many groups spend 70% of their time with 70% of their donors, but that group only yields 20% of the income!
Now, to answer your question of what to do: it depends on your group's goals, and what kind of group you are. Some groups find a list of 350-400 fine, as it may represent the number in your community who are likely to give to your group -- in that case, spending most of your time increasing the loyalty and giving of this group of donors is worthwhile. On the other hand, if you think your list should be larger, then more time spent on acquisition would make sense. Personally, I'm a fan of a combination approach: time spent on acquisition, retention, and upgrading. Remember that the generic percentages mentioned above will not apply to brand new groups who have no one to upgrade or retain yet.
Which strategies for which goals?
As to what strategies work best for what: Direct mail is primarily an acquisition tool, although it can work well for retention and even upgrading; it is versatile, cheap, and one of my favorites. Direct mail has gone out of fashion because there is so much of it and much of it is badly done. . . I still believe that a good direct mail package, sent to a list of non-donors who have shown evidence of being interested in your cause, can yield a 1-2% response. Special events can be used for acquisition (especially those events built around something people like to do anyway or involving a famous speaker or band) . . . a regular, well-done event is good for retention, as people feel continually involved in the organization . . . Fundraising is incomplete without personal visits, phone calls, letters, etc. If you attract a donor and get him/her to give, but never call or visit that person, you will not build a relationship that allows maximum involvement from this donor."
Retention and Upgrading Tactics
Several messages followed which stated that many small organizations do better than 66% retention, often reaching 85%; and the same participants feel strongly that that retention rate is due in large part to their practice of thanking every donor for every contribution, no matter how small.
And a caveat about upgrading and cultivating donors is that it should not be done by just one or two people in an organization. It's too easy for something to happen to that person, and then an organization can literally fall apart. So, whatever time is spent on upgrading donors, a good deal of it needs to be spent on building a team of volunteer fundraisers, so that the biggest donors meet several people in the group over the course of several years . . . and so that the organization is not dependent on the abilities and services of just one or two people.
Finding Time For Planning
One message about having trouble finding time for planning, in among all the daily tasks of answering phones, writing thank-yous, etc. brought several responses, mostly from people who are in similar circumstances and share the frustration. One writer said that breaking her ankle gave her a month of time at home, during which time she caught up on six months of planning and long-term work that she'd never have gotten to at the office! There were no good, clear-cut, easy answers to this problem . . . one writer suggests that an attitude of "activity involvement discipline" can help: ask yourself throughout the day as you go from activity to activity "will this activity create dollars for my organization on either a long-term or short-term basis?" This will create an environment for both staff and donors which will encourage and facilitate giving.
Starting a New Job as Development Director
In response to a question, Kim had some good ideas for someone starting a job as development director for an organization: "first, make sure the organization has fundraising goals. Then, get to know the long-time donors (how many? how many have given for five years or more? how many are known personally to the executive director or board members?) and board members . . . use your ignorance to advantage, and ask questions like 'what are the most important things we are doing now?' , and 'what would you like to see out of the development office?', and 'how can I help you do your job as board member?' .
Wearing Too Many Hats
Another question brought up the issue of development staff wearing too many hats, and not being taken seriously/respectfully by others in the organization. Kim's response: ". . . fundraising involves huge amounts of responsibility and little authority. . . .little room for input to management. Yet the donors and funders will have questions that the development office will often have to answer. It is in this paradox that some of the not taking fundraising planning seriously happens. One way to get planning to be taken seriously is to not do it for awhile, and watch income sink. Then the organization starts asking questions: what's the plan? What are YOU going to do? -- I'm not recommending this strategy, though it does happen sometimes.
What to do?
- Find allies . . . make friends on the Board, staff, etc, and let them in on your concerns, doubts, plans. . . if people see you as friend and colleague, they take you seriously even if the content of what you present is not serious to them.
- Don't plan alone. Good plans can go nowhere when the development director creates them and presents them as a done deal. Get advice and input.
- Educate people about fundraising. The more knowledgeable the people in your organization are about fundraising, the more seriously they'll take it.
One Final Tip
One participant gave a good example of how planning worked for her. In developing a single "look and feel" for publicity materials, planning to create basic materials, including a folder, and then varying pieces for the inside, which can be changed easily and printed on the in-house laser printer. This allows for flexibility, while retaining consistency, and saving time and money. While planning this project, with several staff people from different branches of the organization, it became clear immediately that making the overall decisions, and then keeping that big picture very much in mind, was vital. . . . that before small decisions could be made (can each department have different wording on their folders?), the large ones needed to be made, and kept (no, not on our budget). Then, having the big picture firmly in mind, solutions to the small questions could be found (use clear laser labels to add a custom message to the folder for each department) that allow both big picture needs and smaller ones to be met.
