FundClass Archives:

Alternate Sources of Funding

Edited Digest of FundClass Topic #08, December 1997

Co-Facilitated by Bill Scott, Executive Director of the Richmond Youth Service Agency, a medium size nonprofit in Richmond, BC Canada and, Tim Casey, past-president of the (national) Hemochromatosis Foundation, and consultant to several nonprofits in the US Southwest.

[ED. NOTE: Usually we digest these messages in an effort to make it easier to find the "good information" in them . . . this topic was complex, and there seemed to be no good way to digest it, so we've quoted messages pretty much intact, and invite you to read along, just as participants did.]

Opening Message by Bill Scott

Development of Non-Traditional Fund Raising Methods: Becoming Innovative

Introduction:

Up until now FundClass has focused on deepening the knowledge base of its subscribers. In this session, we will seek to expand or broaden the fund raising possibilities available to NPOs by looking outside "traditional" methods and identifying plausible alternatives. Members of the FundClass list will be asked to consider a more abstract topic _ one that looks to *broaden* the possibilities related to fund raising activities as opposed to *deepening* an existing understanding of the issues.

We believe this is uncharted territory and, as a result, the topic may become vague, abstract and esoteric from time to time. We ask for your indulgence, support and especially your assistance in working through these difficult spots. There really are no experts for this topic. No-one that we are aware of has done research on this topic which would provide us with the comfort of understanding the correct way of handling it.

Opening Message - Premise

Nonprofit organizations rarely consider opportunities that fall outside "traditional" fund raising methods. As populations steadily increase, the need for services offered by NPOs also increases. As governments reduce their commitment to the charitable sector, the need for funding grows. Unfortunately, the demand for new funding sources outstrips the supply. As a result, competition for scarce resources is heating up. If NPOs are to succeed in maintaining their organizations in the long term, we will need to develop alternative sources of funds.

To date, FundClass discussions have assisted members of this list in very concrete ways _ how to develop a better annual fund, how to start a direct mail campaign, how to approach corporate sponsors. In short, so far topics have highlighted the existing, "traditional" methods of funds. In much the same way that corporate sponsorships, direct mail campaigns and black-tie auctions were all new ideas at one time, so too will the ideas generated in the next couple of weeks. Before the first corporation was approached, it was a novel means of establishing a reliable funding source. Before the first direct mail campaign was designed, it was a novel means of establishing a reliable funding source. Before the first black-tie auction was held...

The purpose here is to increase the number of choices available to nonprofit organizations so that we can choose a method or methods that most closely matches their needs and circumstances. To do that, we must explore ideas that fall outside the traditional fund raising realm.

 

Opening Message - Intro

Nonprofit organizations must examine what we believe to be true with respect to fund raising. Specifically, are the "traditional" sources of funding -- grants, lotteries, wealthy individuals, corporate sponsors, fill-in-the-blank-a-thons, et cetera -- viable in the long term? I would argue the answer is "yes, but no." Yes they are viable because there are still funds being raised by nonprofit organizations using these methods. But no because these funds are shrinking. due to a number of reasons including:

1. the increasing number numbers of groups seeking them,
2. a reduction in funds being made available for charitable work and
3. whatever other macroeconomic reasons you can think of.

Therefore, organizations need to become less dependent on them. In short, I believe that we all need to diversify our funding base. To continue to depend on these sources is akin to depending on a 286 computer to meet your needs in 1997 -- there are times when it will adequately meet your needs and many more times when it clearly will not.

If you accept this premise, then in my view, organizations must look at alternative funding means -- in particular, ways that are less "traditional" and ways that provide the donor with greater value in return for their contribution. NPOs then, need to discover something about what these strategies might be.

 

Opening Message - Issues to be Raised:

1. What are members of FundClass doing to raise funds in "nontraditional" ways?
2. How effective have they been?
3. What made them effective?
4. What were the problem areas?
5. What solutions were found?
6. If you could do it all over, what would you change?

 

Opening Message - One NPO's Experience

The Richmond Youth Service Agency is a medium size nonprofit organization that serves children, youth and families in Richmond, BC -- just outside Vancouver. I am its executive director.

For the past year, we have operated our own seminar presentation company. Guest speakers are arranged, rooms are rented at a local hotel (which gives us a small break on price), registrations are taken and clients are served the day of the presentation. Currently, we only use our existing counsellors to staff the operations of the business on a volunteer basis. In exchange for registering clients and tending to both their needs and those of the presenter, our staff are able to attend the workshop free and receive the training.

The agency also operates a fee-for-service program called Richmond Resume and Career Planning Services. Our staff provide resume writing, career testing, career counselling and job search counselling to men and women able to pay for the services. Our staff also present workshops on a wide range of employment and human relations topics to the local colleges, business colleges and businesses.

We are looking at ways to partner with other nonprofit organizations in the development of other fund raising options. These include both involvement in for-profit ventures and retooling donor strategies. For example, a number of community nonprofit organizations with child, youth and family serving missions have begun to discuss the feasibility of joint fund raising with all funds going into a central pot and being administered by them jointly.

Finally, the agency is currently researching the feasibility of operating a retail business. We are participating in a pilot project (along with 9 other NPOs) where consultants are hired by a consortium of three philanthropic organizations (including the United Way) to teach nonprofit organizations in the development of business plans and related advice.

Funds generated from all of these ventures are or will be allocated to the ongoing activities of the agency.

I look forward to hearing from each and every one of you -- that means 300+ separate, individual posts. This topic will only be useful if people jump in and take some risks. Remember, this is basically brainstorming and the number one rule of brainstorming is don't hold back and don't prejudge.

- Bill Scott

 

First Suggestion - Scrip

This successful fundraiser can only be considered by folks who eat. The successful "non-traditional" fundraiser that worked well in the church and school community I worked in has been Scrip. I prefer to look at it as a "funding source" rather than a "fundraiser" because it is a long term change in buying behaviour rather than a one time purhcase. Scrip is the sale of gift certificates for items people normally use; groceries, gasoline, clothing, department stores, restaurants, entertainment, etc. Merchants give varying discounts, depending on their mark up on the product, but it can vary between 2% and 20%. These certificates can be used anywhere in the country that the merchants have stores, so they are great to send to people who live in other places. This program can be set up anywhere in the country, too.

Scrip is a dollar for dollar exchange that is viewed as cash at the store. Income is generated each time a certificate is purchased. It is free money because families or individuals are regularly purchasing these items! It doesn't cost them anything they aren't already spending, therefore keeping them on budget.

People have the options of purchasing grocery Scrip on site in the school or church office or after every Mass, however other items have to be ordered (ordered on Tuesday and available on Thursday for pick up). Purchases can be made with check, cash, credit card.

This program has reduced the number of traditional school fundraisers (selling items that buyers seldom needed or that were more expensive than their actual value), making many parents happy. They were tired of our annual "beg-a-thon" of fundraiser after fundrasier. Moving to Scrip also protected our children from the concerns raised in door to door sales. Another bonus is that Scrip serves as a cooperative venture between the church and school, thereby building community.

The program requires a bookkeeper and some dedicated volunteers who are willing to take orders, sort, sell, and promote Scrip. Our school has 250 families and the church has 1600 households. The participation rate is nearing 50% in the school and about 50 families in the church. (It is interesting to note that the average family spends about $400 a month in groceries.) With this, we sold over $375,000 of Scrip last fiscal year and earned nearly $30,000. This year, our program is growing again and we expect to make closer to $40,000 Not bad for free money.

Now the only question you have to ask yourself, is where do I shop?

 

Scrip - The Discussion

This is a very interesting idea, but I have a lot of questions about it.

• How did it get started? Were there barriers or objections to its implementation? How did you get stores to buy in at first?
• How is the record-keeping done? What's the potential for getting ripped off? How do administrative costs compare to the amount of money netted? Does the effort involved take staff time away from their regular (cause-related) work?
• Has it caused any hard feelings between businesses that do and don't participate? Or feelings among families that they're being pressured about where or how to shop?

 

You raise an interesting point -- and I don't think it is just semantical. I think it represents the kind of shift in thinking that resonates for me. If I may attach definitions to the terms you have identified, a *fundraiser* is any of a number of typical, "traditional" events, campaigns, happenings, whatever while a *funding source* is any funding base used by an NPO to support its operations.

 

I'm not sure if I totally understand the concept of Scrip, Cheryl. Do people purchase a dollar's worth of Scrip for a dollar's worth of cash? If so, what's the advantage to them? Or is that they purchase a dollar's worth of scrip for a dollar's worth of the company's Scrip which comes with the discount.

 

If I'm getting this right, a family buys $40 worth of scrip (or gift certificates) for groceries at Safeway. They use the scrip in place of money at the Safeway, i.e. a $1 scrip certificate for a $1 item.

Now, how much does the nonprofit get, how much does the Safeway keep. Do you redeem the certificates from the store the way Kelloggs buys back coupons, penny for penny? If they discount the $1 item, do you only give the store 80c on the dollar?

How does Safeway make its money?

I'm just trying to understand all the mechanics here

 

AN ANSWER

Scrip was started in Los Angeles about 10 or 11 years ago. It moved to Northern California (Vallejo area) about 1990 when a Catholic school threatened closure due to lack of funding. This woman had been in LA where she heard about the idea and took it to her school board as an idea. They liked it and started buying gift certificates directly from the store. From there, the program flourished and the Diocese of Santa Rosa then agreed to sponsor the Scrip program by setting up the National Scrip Center. The number of schools (private and public) grew and grew as the news of the program got out. The number of merchants also grew as they negotiated with more and more companies around the country.

The greatest barrier in the beginning was the perception that they looked like food stamps. Once we educated people that they were gift certificates, we overcame that pretty handily. In our program, we pay a book keeper to do the financial accounting end. She spends about 20 hours a week on Scrip and her salary is absorbed by the church (the pastor's choice). We have a cadre of 15 - 20 volunteers who place orders, fill orders, sell Scrip, schedule sellers and do the data imput of who is purchasing Scrip. (This is something we do because our parents have a contract to support the school) The Scrip company we do business with offers software programs to address these various areas.

There are several Scrip companies that serve as brokers for purchasing the Scrip certificates. In our situation, we have found it easier to purchase from them because it minimizes the cash outlay we would have if we decided to keep everything in stock. For the most part, we may beef up on some of the department stores and such over the holidays because in the 6 years we have had our program going, we recognize trends and have come to know what our customers want.

Initially, we had a moral concern about promoting stores who furnished Scrip and those who did not, but with time, any store can now participate in Scrip in one way or another. In fact, many stores who participate in Scrip say that there is better control over what and how much they donate into the community. It has stopped a lot of the smaller, more frequent asks for services; a case of this or that.

The merchant makes money because they sell the Scrip is large lots, thereby getting their money up front. They also benefit because the charities with SCrip programs generally promote the participating merchants. Families who feel good about merchants who support their cause, support the merchants with purchases.

 

The advantage to the purchaser is knowing that the store contributes x% of sales to the NPO and scrip is how they keep score.

I've seen other groups clip grocery store coupons, stamp the NPO name on the coupon, and attach them with scotch tape to the products on the store shelves. Purchasers have the option of using the coupon for themselves **OR** (the preferred result) paying regular price and the NPO gets the value of the coupon. The cashiers collect the coupons and the backoffice processes the money.

The large mall in the region also inacted a program/contest for schools. Schools collect sales reciepts showing the value of purchases from mall stores -- any/all mall stores. The mall sets aside a pot of money -- I'm not sure if it is a fixed amount or a percentage of the value of collected reciepts -- near the end of the school year checks are given out winning schools.

 

Affinity Programs

I think many of us were waiting for the scrip discussion to end before bringing any other ideas to the table. I will be happy to lead the discussion in another direction. My clients, the Vanished Children's Alliance and the Volunteer Institute have begun a new and innovative fund raising initiative sponsored by non-profits to assist other non-profits in a fund raising coalition. The program is called Calls-4-Kids, and unlike other telephone affinity programs that offer a portion of a donors long distance to charity, this program is tax deductible which in turn protects the non-profit from unrelated business income tax (UBIT) which can be as high as a 30% tax on income.

Calls-4-Kids is not a program sponsored by a commercial telephone company but rather a non-profit fund raising program that happens to use telephone long distance as a vehicle for sustained donor giving. The average gift generated in Calls-4-Kids is $60 to $90 annually which is tax deductible. Calls-4-Kids also has a voluntary giving module that allows donors to give an additional gift. The donor is informed every month in the Calls-4-Kids newsletter how much they have contributed through phone usage or voluntary giving every month so that they can claim the contribution on their tax returns.

 

What can a non-profit expect in terms of mailing costs if it wants to tell it's contituency about an "affinity-group" program it has contracted? It could be a VIsa card, or long distance telephone service, or some other prodct; in all cases the NPO receives a percentage of the revenues generated by the sales to it's members by the company offering the affinity-group plan.

Is there a way for an NPO to do this and still mail at the NPO bulk rate?

 

In most cases a company sponsored affinity program will market to your donor base at their cost. The draw back is that you lose the control of your donor base. If you market under your non-profit meter you are at risk of unrelated business tax and the loss of your non-profit meter. The postal code of October 1995 specifically prevents non-profits from using their meters to sell insurance, travel, bank information including credit cards. If a non-profit is found promoting these products with their meters they can be fined over $30,000 for each incident as well as lose their non-profit meter. One of my clients sent a credit card brochure in their newsletter mailing and was hit with a fine.

The other draw back using credit cards for {affinity] fund raising is that a donor may have on average up to ten cards in their possession. They need to be encouraged to use the credit card that may have limited benefits compared to credit cards that give donors frequent travel airline points, etc. Credit cards and typical long distance affinity programs are also not tax deductible.

 

Unrelated Business Income Taxes (UBIT)

This topic raises a concern for me: what about Unrelated Business Income (UBI) and the tax on that UBI? What are the specific guidelines for what is related and what is not? In an earlier post, someone mentioned the grant for the espresso machine and someone else commented on that. I believe the Unrelated Business income tax laws/rules were created with this type of "unfair" competition in mind. Why should a business operating as a for-profit get tax breaks? (Of course, I know why but what about the IRS?)

 

If your organization sells t-shirts with the non-profit logo as a fundraiser, that is related business. If your organization stands outside a rock concert selling rockstar t-shirts, that is unrelated business income that is taxable. The coffeehouse idea is good, but are you in competition with local for-profit coffeehouses and do you owe therefore UBI taxes? It's possible that it's worth it even after paying the tax. But not knowing there is such a tax and operating for several years without paying could be a problem.

 

Sponsorship In Exchange For Donated Services

Here's an example of the type of thinking I believe Bill was looking for: In most sports leagues, the teams are supposed to come up with a team sponsor for anywhere from $60 - $500. All the businesses get in return is a warm fuzzy feeling and a plaque (which is enough for a lot of people). But what if the merchants that had something to offer the other business people as well? Like a lawyer who would donate an hour of his time for a free consultation, a mechanic - a free inspection, restaurant coupons, etc. All put in a booklet (a $1000 value of services) given to any sponsor. How much easier is that to sell to a potential donor? Now they get the first two things and the third thing which makes the deal totally pain free or even profitable. The lawyer, mechanic, plumber, restauranteur, et al get new customers, a fourth advantage! Hows that for win - win - win.

I know it's extra work, and requires the creative thinking outside the box as Bill has described and it takes a little extra selling on the front end, which may be why some of us don't do these things - we're out of our element.

 

Voluntary "Taxes"

I am the Director of Development for a local Salvation Army in Augusta, GA. We help support The local Task Force for the Homeless. With the cut backs in social services we have had to come up some inovative fundraising ideas to make up the difference. One such program we call "Share The Banquet".

This is a simple idea that has been used in other contexts. The Task Force is contacting by mail and personal follow up the over 1,000 churches, civic groups, catering facilities, wedding planners, florists, and party planners in our local area and asking them to "Share The Banquet".

The program is a voluntary 3% tax on any meal that is done in a group setting (ie, a banquet). The 3% tax is voluntarily paid to the group secretary and remitted to The Task Force once a month. According to our internal survey, there are approximately 30,000 people that eat each week at a "church supper" with an average cost of $3.50 per person. That's a potential target of over $160,000 per year. The beuty of the program is that after the initial setup and PR roll-out, the program is somewhat self sustaining.

With catering, civic group "rubber chicken" dinners, conventions and corporate parties, etc. we feel that we have a legitimate annual target of over $500K.

This type of project isn't for everybody. This is a community-iwde solution to a community-wide problem with a community-wide coalition. But, it can work well in this setting.

 

Looking At The Bigger Picture

I think the most "innovative" thing I've been able to do over the past year is to learn to look at the bigger picture, and to avoid grabbing any idea that comes along. (Of Course, that doesn't always work, but it's been amazing how often it does work!)

Setting principles is one great thing I've been doing. All activities will: further our mission, respect staff and volunteers' time, conserve our resources for best outcomes, etc.

One of the major ideas I've been working with is developing relationships -- trying to fit this to all levels of development not just major donors. I have been trying to plant this idea in every plan I work on. For instance,in planning for corporate relations, I plan for a multi-year sponsorship program, where they sign on for three years. In planning for small business fundraising, I am trying to plan a way for businesses to "join" as a charter member of our program. Giving them a sense of ownership. When someone gives a gift more than twice in a year, even if it's ten dollars, get them signed on for Planned Account Withdrawals from their bank to ours. When someone gives a memorial gift, ask them to consider giving honor gifts for the holidays.

Many of these are old-fashioned "whale of a sale" approaches to fundraising. But if we as leaders in the field can change our point of view to a larger one, we can stop sweating the details. And that would be truly innovative.

 

Selling Your Mailing Lists

Another suggestion for fund sourcing is one that has come up before in other forums: generating revenues by selling the organization's mailing list to other organizations.

This suggestion often meets great resistance in the NPO arena. Many are not comfortable in selling the names of people who have sacrificed (donated). Others are afraid competing organizations may steal important people away if they lose control of the list.

While these are legitimate points, the fact is many NPOs are already selling their lists, albeit often very quietly. And while this is not exactly a new idea, it might be new to your organization. If your organization has rejected this idea, how did the deciding group justify the loss of revenue? If you do sell the list, how do you handle the inevitable conflicts that arise from this activity? I'm not looking to discuss the mechanics of list sales, or a list of brokers, but how this source fits into your funding plan.

 

First of all, you don't sell a list, you rent it for one time use at a specified time. Only the donors who respond to the mailing become known to the list renter. The rented names are sent to a mailing house, not the organization. Direct mail has worked this way for many years and for many organizations. As someone mentioned earlier, for nonprofits who do not generate their own prospects, like universities or hospitals, this is the only way to build a mailing list. Often lists are exchanged not sold and, again, they are used once and only those who respond become known to the new mailer.

 

Selling Mailing Lists - The Ethics

Selling something that is not yours, is not justifiable. The information was given either in confidence or to complet the donation. The information on any single individual is already available from many different sources. By selling mailing lists, you lessen the credibility of your organization.

 

Information that results from a transaction is yours. GAAP, FASB, even the IRS identify a mailing list as an asset owned by a non-profit. Privacy guidelines dictate that, before a list is made available to others, the option be made available to donors that their name not be included in such rentals or exchanges.

 

I think there are some additional details specifying what "the option be made available to donors" means. I think a NPO has to take an active role in making sure that people know about such an option. A few ideas: 1) a check-off box on any membership signup cards; 2) a post card in the next mailing asking for permission with the default being no response grants permission which is stated on the card; or 3) a section in the next newsletter asking people to go the NPOs web page to fill out a quick form if they don't want their information rented. I know that I like it when I see this type of care taken by corporations when I send in a registration card or the like.

 

It seems that non-profits have a strong legal right to do whatever they want with mailing lists. However, just because something is legal does not make it moral or ethical. For example, it is perfectly legal to lie in many situations. I think we can all come up with examples in which a lie is legal, but not moral. This suggests that additional criteria are needed do decide when renting a mailing list is ethical.

 

Some donors have expressed anger that their names have become a commodity and have reduced or stopped their support. The reason for the anger is that these donors notice a marked increase of direct mail solicitations from many other non-profits. Many donors, especialy those who have names that can easily be misspelled, have been able to trace which NPO sold their name. There is a feeling of trust and loyalty when a donor gives to charity, selling their name takes that trust away.

 

While some non-profits see their contributions go up and down over time, there is no study that gives evidence that list rental is a cause for that. In fact a thorough experiment by a large non-profit several years ago indicated that contributions are basically unaltered by list rental. That group put 100,000 donors in a list rental segment and compared long-terms contributions with an identical group of 100,000 donors that was not rented. Contributions from both groups were statistically the same.

A group certainly can decide not to rent its names out, and many survive that way, even thrive. (Hopefully those groups who believe so fervently in the sanctity of a donor list don't compromise their beliefs by renting the lists of OTHER non-profits.) Most of the major non-profits in the USA got that way in part through direct mail to rented lists, and most of them make their list available to non-profit and even (gasp) for-profit organizations, whose mail dates, prices, and mailing pieces are approved in advance, and who comply with industry standards regarding list practices and privacy guidelines.

 

Good data, but I think the experiment needs to be examined further. First, was the privacy guideline noted above followed? If it was, then the populations were already divided into people who did care about list rental and those who did not. The result was not too surprising since it simply confirmed a preference already stated. If it was not followed, then I bet few of the rented segment guessed that their increased "direct" mail was due to their membership in the large, probably respected non-profit. Since mailing lists are rented so often, they would assume it was one of the for-profit corporations that have info on them that was the source of their information. Most people would not expect a non-profit to be participating in list rental without their knowledge.

 

I think there are some additional details specifying what "the option be made available to donors" means. I think a NPO has to take an active role in making sure that people know about such an option. A few ideas: 1) a check-off box on any membership signup cards; 2) a post card in the next mailing asking for permission with the default being no response grants permission which is stated on the card; or 3) a section in the next newsletter asking people to go the NPOs web page to fill out a quick form if they don't want their information rented. I know that I like it when I see this type of care taken by corporations when I send in a registration card or the like.

 

Alternative to Selling Mailing List - Endorsement Mailings

There's another way to do this that would meet with less resistance and may even generate more profits. That would be an endorsed mailing on behalf of the people who would like to rent the list.

How this works, is that no one but you (or your organization) do the mailing, therefore no one else gets the names. But since you have the trusted relationship with the clients, you write a letter extolling the virtues of company or NPO "X" in which they include their info. In your letter, you reaffirm that you don't rent out names. The other organization pays all the costs associated with the mailing and either pays you a fee or if you want to get creative (not fully up on the ramifications of this idea, but it works well in the business world) you could take a % of the revenues.

This works to control the list and as a trusted resourse to the clients it actually works better at raising money than if it came cold.

 

I'm currently working on several versions of this theme for a few non-profits. In each case, they are partnering with a for-profit that can get them benefits they couldn't otherwise afford. The non-profit generally wants exposure for their educational message, and a chance to raise funds, either from their existing donors or (better yet) new donors that have an affiliation with the for-profit. For-profits want to use new lists, especially ones that haven't worked with their normal offer, and they want to enhance their "brand identity" to differentiate themselves from their competition. It's a case of each side understanding their strengths and their partner's complementary strengths.

I'll use some examples of present and prospective partnerships I'm working on:

Example A. Non-profit has a huge database of donors, and has recently had it enhanced with demographics and lifestyle information, so they can segment their own files better (e.g. mail a gardening premium to the donors on the file identified as gardeners). Gardening direct marketers love the idea of being able to reach just the gardeners on this file. The for-profit will design a special cover of their catalog and feature the non-profit. In lieu of a list rental fee, the for-profit will donate either a % of sales or an amount per order generated from the donor who buys from the catalog.

Example B. Non-profit has produced a series of books on different countries, but lacks publishing and marketing expertise to turn it into a revenue stream. We introduce it to a publisher who wants authoritative copy, and let them market it under the non-profit's name. Membership in the non-profit comes with a purchase.

Example C. Catalog of women's clothing wants to support breast cancer research. We find them a cancer organization that wants to get their message on cancer prevention out to lots of women. The non-profit's list is mailed a clothing catalog with a special endorsement. ALL the catalog's customers receive cancer prevention info in the packages of clothing that are shipped.

In each case above, the partnership is a combination of the strengths and weaknesses of each organization. In "A", the non-profit has a strength (large, enhanced donor file) and wants contributions. The for-profit has a product line that's just right for that market, and wants a new list to mail to productively. In "B", the for-profit gets content, and the non-profit gets publicity and members (and money). In "C" the catalog gets to use a list that wouldn't have worked without the endorsement, and the non-profit gets money and they get their cancer prevention message read by 100,000 women. In all cases, the for-profits get something else: the enhanced image that goes with supporting non-profits. Call it "brand identity" or what you will, it helps one clothing catalog to stand apart from all the others.

One of the keys to success, as you might guess, is to find potential partners who can think past the end of their nose.

 

"...has recently had it enhanced with demographics and lifestyle information..."

How do you do this? Collect or buy this demographic information?

 

Buy it. Computer service bureaus who license this data from the compilers (Metromail, Donnelley, Polk, NDL) will append it to your records that match their addresses. I think the minimum fee for such a program is about $2500. One recommendation is Merkle Computer in suburban Maryland.

 

Variation on Endorsement Mailing

A variation on this theme is getting the local utility, phone company, bank, etc. to include a message or a solicitation reply envelope in their regular mailings to their customers. This may be a good tool for building awareness but the one or two times I have used it for previous employers, it yielded almost no revenue. One reason for this may be that donors are found primarily on lists of donors not lists of customers. Or maybe the cause just didn't match the interests of the customers. It would be interesting to hear if anyone else has had success with this method.

 

I can think of two other reasons why this might not work. First, in a first class mailing to a utility's customers, weight is at a premium, and it's hard to tell a heartstring-tugging story, with response device, in 1/10 of an ounce!

Second, you're accompanying BAD news (the need to lose more discretionary dollars), not good news. If the utility were partnering with you, matching donations, and the person got a chance to check off a part of their bill to the charity, too, with one check... well then, it might be a good way to attract new, albeit small, donors.

 

Fundraising on the Net

We've discussed some very interesting ideas in our "Alternate Methods" topic. Most of them have centered around familiar modes of interaction, such as selling a product, mailing a letter, or gather people together for an event. These interactions have been with us since our cultures first developed charity. But today we have access to a device that will affect history as significantly as Gutenberg's printing press: widely & easily available, instantaneous, global communication over the Internet. Sees there must be way to capitalize on an invention that powerful.

But how can an NPO put the 'Net to work? Selling tangible goods over the Internet has grown to a in-the-billions business. But that requires a large distribution center and other retail support not possible for most of us. Other companies such as online stock brokers sell access to their service and restrict access with passwords. Our organizations on the other hand, by law in most countries and obligation everywhere, should be freely accessible. And to date nearly everyone who has tried to make money selling subscriptions to online consulting services, magazines, etc., has closed their doors due to poor profits. This includes some very big names including Time-Warner and Microsoft.

What's left? We could advertise on the World Wide Web. It's important, and many of us already do it, but there's nothing uniquely effective about that anymore. We could send email to everyone on a donor's list that we have rented ;-) and ask for money, but that's no different than paper mailing. The point of this topic is to look for something completely different.

What do you think? Can you see a way to use the Internet to raise money, especially a consistent and sustainable cash flow? I'm sure there is, and I'd like to hear your thoughts. And don't dismiss the methods I suggested above. Just because we're non-profit doesn't mean we can't leverage the inroads made by the for-profits.

Finally, if you're stumped for ideas about the Internet, try asking your kids. This is the medium many of them are growing up in, and they may surprise you with their insights. And we're looking for new ways to think, right?

 

I don't know how to do what you propose (fundraising on the 'net), but I think I know WHEN it will happen. I heard someone say a year ago, "When people start paying their bills on the internet, we'll start to see donations come in that way." It makes sense. People used to write checks to pay bills, and our donations came via checks (and many still do). Recently (the last 10-20 years, really) people started buying things and paying bills with credit cards, and donations that way are now common.

I think the internet will be (already is, for some) a way to communicate, to respond to donor and prospect requests for information, and to motivate giving. We just need an easier method for giving, and some geeks at Microsoft are probably working on that right now.

 

In response to the current topic I would have to say that we are already doing fundraising on the 'Net. We can research grant sources through the internet, we can ask for grant guidelines through email, we can even apply for grants over the 'net. There are also quite a few groups who do research on the net, using questionaires with a broad section of society to fill them out, to justify the need for programs and causes. Fundraising on the net has already begun. I'm waiting to see how we can apply the 'net to local fundraising.

 

Actually, the Net makes a large distribution center much easier to avoid. You can set up a "Build to Order" system with a vendor so that the item is sent directly to the buyer/donor. The whole process can be automated with virtually no intervention by the NPO, or the vendor. There is no need to hold onto the inventory, and the item will be delivered just as quickly if not faster. Dell Corporation did a $1B worth of business in 1996 this way. Processing the payment can also be heavily automated as well. Don't forget, it's open 24-hours a day, 365 days a year. Returns are still a pain, but that is only if you want the item back.

 

Pure on-line direct mailings are VERY different from paper mailings. They are far cheaper, easier, and must be much shorter. Cheaper: no duplication cost; no marginal mailing cost; the list rental will probably cost you though. Easier: hey, what are you doing right now? Would this class exist without the ease of e-mail? Shorter: e-mails, by convention, must be short. You get the info you want in the mailing by providing a link to your web page. Cheaper, easier, and shorter means that you can do more mailings that are smaller and better targeted at your audience. For example, a quick note at the end of the year suggesting people donate to reduce their taxes, plus provide a link to the secure donation form on your Web page.

They can also be easier for the donor. Following a link to a secure donation form and filling it out is easier than finding a checkbook, filling it out, and mailing it. (True, this depends upon how comfortable people are with the task. Rick Christ's comment is applicable here.) Also, the secure donation form is available all the time, i.e. at the donor's convenience. Will she go there if not prompted? Probably not, but now any request for a donation can prompt a donor to donate to any on-line NPO because all they need is right at their fingertips, even when they are at work. (It certainly can make procrastinating at work a non-guilty experience if you donate while procrastinating!)

 

A New Fundraiser's Question

I'm in charge of fundraising for a small church ( membership between 70 and 80). We have only recently jumped into the fundraising game.

Last year we did the bazaar thing, giving people "seed" money that they could "multiply" any way they chose. Then, we allowed folks to sell their services, ideas, or the things they made. We made about $2,000, but found the event was a far better "fun" raising event than a "fund" raising event.

We also raised about $2,000 from a garage sale. We collected items for about a month.. but instead of pricing the items, we simply asked people to make a donation to the church. It saved time in that we didn't have to price everything. And sometimes we actually received more in donations, than we would have if we had marked the prices.

Now, we're looking at more profitable ideas that are less labor intensive. I'm working to train a "team" of people to simply ask for money. I'd be glad to hear more on people's experience with "the ask."

 

If you are asking people for money either for annual, capital, or endowment giving you will need to establish some parameters. First, you need to establish the case or reason for raising funds. If the project is to renovate your facility or add to it, than you are talking about a capital campaign. If you are looking to pay for ongoing expenses at the Church than you are looking for annual support. When you talk about teams and asking for funds I would think you are looking at a more intensive fund raising need. If you can clarify why you need the funds than we can talk about the ask or request for support.

Of course, the basics are: If you ask for funds face to face you will receive a Yes from 1/3 of those you ask, a Maybe from 1/3 of those you ask, and a No from 1/3 of those you ask. This response has been universal in almost every church based fund raising campaign I have conducted. The most important task is to ask for a specific gift.