Introduction to Fundraising Planning

Category:Bootcamp
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Scott Ullman, Training Coordinator, Foundation Center
Listen to Part 1 of the podcast
Listen to Part 2 of the podcast
Index of audio - Part 1 (running time 33:42)
*00:00 Series introduction
*01:19 The Foundation Center is the premier non-profit in the United States that studies and promotes knowledge on philanthropy, to help grant seekers succeed. Offers 18-25 free programs. A database with over 86,000 funders, giving away $35 billion a year, updated weekly – costs $180/month, but free at the Center. Five libraries around the country, with 290 cooperating collections.
*03:13 Let’s start the class. Introduction to Fundraising Planning is a class for people who are new to the planning process. It will give you a step-by-step 5-step process on how to put your fundraising plan together. 
*5:00 What you would have at the end of this process: try to visualize, running across the wall here, a gigantic piece of butcher paper. And on the butcher paper we have the 12 months. At the start of it, we have the fundraising strategies, who’s going to take leadership in conducting that strategy, when it’s going to start, when it’s going to be implemented, and what follow-up is going to come from that fundraising strategy. A good fundraising plan should be calendarized out where there’s a clarity of when you need to start to put together that special event. And it has to have follow-up.
*6:22 You should not separate your fundraising strategy from your program and service strategies – they need to be integrated. Every part of fundraising should have an educational component. Every educational aspect of your work should have a fundraising component. 
*7:04 The average fundraiser development person in the Bay Area lasts 18 months on the job. Why? Incredibly unrealistic expectations. No fundraising plan that integrates volunteers, staff, and board members. The calendar should show how education, services, and fundraising link together.
*8:24 The 5 steps. Start the fundraising plan on the strengths of your organization, your leadership, you volunteers. Build on their skills, background, and experience.
*10:46 Take all those strengths and make a Case Statement – a basic piece of literature that you hand out to anyone who wants to learn about your organization. What you are about, your strengths. Not a grant proposal. Think of a general brochure. Goes with the grant proposal or description of special event, as an overview piece. 
*11:26 Set realistic fundraising goals. There’s a number of ways you can approach this, I’ll give you several possibilities. One of the keys to long-term sustainability is a diversified funding base. Need 2-5 or more fundraising strategies, be they government grants, family foundation grants, special events, product sales, service fees – don’t rely on just one. 
*13:09 Put together a calendar. Budgetary figures, breakdown each fundraising strategy. See handouts. I’ve never done this class with more than 20 people, and there are more than 100 people in the room. This should be fascinating. Why do this? Helps you set priorities. Helps you see ahead, or you might get lost in the day-to-day crises of fundraising. It’s a buy-in for your board – there should be lots of buy-in around financials. They should approve a yearly plan – this is how we’ll raise it, this is who will be responsible, this is how long it will take. 
*16:50 When you look at private sources of money, that’s a pie of about $260 billion. Most people think it comes mainly from foundations and corporations. 80-85% come from individuals. Corporate America is 5% of the pie (spikes during crises, e.g. Katrina then drops away). There are more dead Americans that give to non-profits than corporate Americans. 
*19:00 Q&A Where does government funding come in? Overall the pie is about $1.1 trillion. Earned income accounts for 40-45% - fee for services, product sales, use of volunteers, in-kind contributions. Next largest is governmental – open mainly to the largest non-profits, not so much to the smaller ones. Far and away the #1 source for non-profits with budgets less than $500k is from individuals. 
*21:31 If you’ve been around for a long time and have only one or two strategies, does that make any difference? It will with some funders. They know it’s a less viable model. But a proposal is a projection, over 1-2 years, not just about current funding, but future funding strategies. 
*22:33 If you’re just starting out, what would you recommend? It depends on the type of agency you have. If you’re community-based, I would look at municipal grants, but they’re very unstable. You should look more closely at individual donors. The real answer is what are the skills, experience, and background of your leadership? What do they bring to the table? If there’s grant writing experience, and interest, that’s going to have a lot more weight than say a special event. 
*23:55 If you have a budget of $250k or less, can you apply to the Gates, the MacArthur, the Ford? The answer is no. You need to find grant makers whose average grant makes sense. Probably no funder will give you 100%, most won’t give you 50%, because it makes you too vulnerable. You should look at 4-6 grants of $30-60k. You should find ten funders to have a reasonable chance to maybe get four grants to equal the $200k. Most funders who give large grants also have a starting up range – grow with time. The larger organizations also tend to not fund community organizations – they fund regional and national organizations primarily. Gates doesn’t even accept applications – they have over 100 people that look for organizations.
*26:42 Project money vs general operating. Of the 86,000 funders, we know of about 19,000 that will give general operating funds. The vast majority give program support, so they can see how many people benefit from the funds. They don’t want to fund the new toilets going in – they want to fund a service that so many in the community got benefit from. 
*27:53 This is the complete 10-step process, from this book – Securing your Organization’s Future ISBN 0879549009. This 700-page book walks you through each of the fundraising strategies. We have day-long workshop based on this, normally run by Kim Klein. Another book – The Fundraising Planner ISBN 0787944351 – is 170 pages, full of templates. Another one you should have is Fundraising and Marketing in the One-Person Shop ISBN 0965716139. Come to our library – we have 23,000 items on fundraising and non-profit management. If we can’t overwhelm you, nobody can.
*29:47 Let’s look at some of these key parts. Presenting a Strong Mission Statement. Maybe 10-15% of this audience can recite their Mission Statement. Funders fund mission-driven organizations. They actually look at the words to see if they match their own mission statements, goals, and priorities – if yours don’t match, it goes in the reject bin. Just one to two sentences that give clear imagery – the elevator pitch condensed, the first two lines out of your mouth. We are so and so and we do this and this. If you don’t know it, learn it. If you don’t have one, get one. 
*31:26 Do you fulfill a unique, distinct niche in the non-profit community? Are you highly relevant? Look at it from the funder’s perspective. Serve people who are not being served, or use a different approach to serving those needs. You have to know what the other non-profits do. The basic question they’re asking is since there’s 1.6 million registered non-profits in the United States, should you really exist? Is there a need for another organization? And you have to answer that.
Index of audio - Part 2 (running time 38:59)
*00:00 Series introduction
*01:19 Case study: Youth for Community Action. Make notes on the strengths and assets that this organization brings in three areas. What successes have they had with their program? What does its leadership provide? What skills, experience, and background did they need to have those successes? 
*02:16 It is far easier to build on an existing fundraising strategy than to start from scratch. It makes much more sense to find out which individual donors you have who can give larger donations, make them major donors. 
*03:14 How do they measure success? (1) Retention. Most of the youth came back for a second year. That’s really difficult for most youth organizations. (2) There’s a waiting list – they can prove demand, that there are more youth who want to take this program than they currently can fill. 
*05:29 Leadership – volunteers, staff members, board members – what skills, experience, and background did they have to have to do two leadership trainings a month, three retreats, a summer camp? (1) organizational skills to put together a lot of types of events, (2) they know how to do outreach, because you’ve heard about them, (3) ability to communicate with youth, to make them want to come back.
*06:55 Now talk about the specifics. What went into the accomplishments? The years of experience, background, how to lead groups. Lastly, fundraising. What strategies have they been successful at – there’s only three. 
*07:41 Only 3,000 of the 86,000 funders give seed grants. Most funders want at least a two-year track record. So YFCA went after a certain population of funders who give startup money. They now have a much larger range of potential funders as they build capacity. They’re looking for capacity-building grants to hire their first staff person, doubling their budget, doubling the number of youth that they serve.
*08:43 Other sources: parents ($500), and in-kind donations ($15k) from parent organizations – staffing, rent. 
*09:39 You take all these skills, you create a strong Case Statement of why somebody should give you money, why someone should be involved with you. Case Statements can take a lot of forms – sometimes a couple of pages that you give to an individual donor during a visit, sometimes just a general brochure – your main communication piece. It takes the strengths and lifts them up in a statement. Differs from a grant proposal, which is geared toward one specific grant maker, meeting their needs, goals, and priorities – more focus on program. 
*10:49 Plagiarize a lot. I put together a planned-giving statement for a foundation, taking sentences from about twelve Bay Area organizations. See what’s successful and base it on that – don’t start from scratch. The language has been invented to talk about this stuff, why sit there with a blank piece of paper in front of you?
*11:29 Set goals for the income side of the budget. Different for program budget and organizational budget. In program budgets, income should very closely equal expenses – or they’ll raise questions and flags. Organizational budgets have reserve funds, carryover money – and they’re often not balanced. 
*12:29 Deep dark secret: Most funders have someone who does unit-of-service measurements (budget/number of clients). In YFCA’s case, with 50 youth and a $68,500 budget, that’s about $1360/youth. For 24 bi-weekly trainings, three weekend retreats, and a summer camp, I think that’s a tremendous bargain and should be highlighted. 
*15:00 How do I prove success? You do things like surveying your clientele, see what they got out of it. Ask community leaders and others to comment. Measure attendance. Show your success by statistics. 
*17:02 Most of the funders admit that they only scan your document. The most important sentence is the first sentence. No run-on sentences. 
*17:41 When you create a budget, create the income side first – it’s harder to do. When you do your expenses first, you start assigning numbers to the income side. Do the research, see what’s realistic, how many funders would fund your type of organization. 
*19:12 One of the hardest things to do is this: what will bring the most dollars for the least amount of work? Think about the long term, go after funders who will fund for longer terms, even if it means less money. It’s a better partnership. 90% of people do the opposite. 
*20:10 What fundraising strategy raises the least amount of dollars per hour of work? Events. You don’t do events just to raise money. You do it for publicity, a use for your volunteers, a way to get your board involved in fundraising (maybe the only thing they’ll agree to – the don’t want to do individual asking), reputation, visibility. 
*21:18 What strategy loses money almost every time? Direct mail. The average direct mail response rate is 0.8%. You don’t look at it as a fundraising strategy, but as a donor acquisition strategy.
*22:14 What raises the most money per dollar per hour? Asking individuals – the person-to-person ask. The more personalized, the higher the results. Most of you are scared to ask people, and love writing proposals and letters - but the return rate is poor, compared to getting them on the phone or talking to them one-on-one.
*23:55 Look through the 2-page list in your packet, choose just one fundraising strategy for YFCA, and give your rationale. Two other books: (1) The Wilder Non-profit Field Guide to Crafting and Effective Mission and Vision Statements ISBN 094006927X, (2) Developing your Case for Support: How to Develop a Case Statement ISBN 0787952451.
*25:31 Participant responses. (1) One-on-one with parent organizations – they want to leverage us into a separate non-profit, they have partnerships with other foundations, corporations, and social services, they can introduce us for more one-on-ones; this is the year to do it; (2) special events – the youth volunteers picked it, do a video and show it around; (3) foundation grants, first from existing supporters – foundations tend to go in bunches, getting the first is the hardest; they may want to do community foundations.
*28:29 Take the two strategies and build on those. (1) The first logical place is to go to the parents and get a buy-in. As volunteers they raised $500, but they got a lot more back. Then go after corporate dollars to underwrite the membership fees, or the summer camp. (2) Send one fund appeal a year to the families, youth contacts – time it late November, early December – tax deductibility, holiday spirit. Least desirable – around April 15. May is a good month, also September, start of school year. Kim Klein says January is the best month – starting a new year with commitments of time, energy, and money, but she hasn't seen my Visa statement. 
*31:01 Tap into the contacts of the group – youth may have contacts in service clubs, Mooses, Rotary etc. Have a youth speak about leadership benefits to community. Individual gifts – still the organization's major source; foundations have dropped off. 
*32:34 The youth saved that organization. They went to the staff when they heard they might be closing and said we’ll go to our uncles and aunts and neighbors and in lieu of Christmas or Hanukah gifts we’ll ask for money for this organization. They raised $22,000. That’s the best way – it came from them, organic to the needs, experience, and desires of the people who do the fundraising, not imposed.
*33:41 Now put this on the calendar. Notice that we spread the load to different leaders. Whole board must approve the plan. Each plan has a rationale. Specific names for each donation, otherwise it’s just wishful thinking. Schedule an evaluation of each event. 
*36:46 If your first event is in January, when do you start working on your fundraising plan? August-September. Most fundraising strategies take two to four months to implement. 
*37:44 I do about 15 classes a month at the Foundation Center. You can get really sick of me very quickly, but come to these classes.