finance

Target the Best Potential Donors

• Know where to begin your donor search.  It is more cost-effective to strategize who will be most likely to make a donation and target those potential donors rather than spend the time and effort to cast your net as far and wide as possible.  Start with the board of directors and their contacts, since they already share a passion and drive for the pursuit of the mission.

Know Why People Donate

• Maybe it’s because they share in your commitment to the non-profit’s vision.  Maybe they want a tax write off if you have qualified as a 501(c)(3).  Maybe they want the PR benefit of being able to call themselves a donor to your organization.  No matter what the reason may be, it is important you are paying careful attention to why your donors choose to donate.  It’s a great way to effectively target them for future donations.

Stay Organized

• Putting prospective donor information into some sort of system will be incredibly helpful in streamlining your efforts to secure donations.  This way you can have an effective system for knowing how much, when, and why a donor chose to help your organization.
• If you plan on having a membership option for your donors, make sure you have a system in place that tracks their membership details.

How to Ask for a Donation

• For in-person and phone requests, it is critical that you train your staff and volunteers on how to ask for a donation.  You can identify who are your strongest donation solicitors.  Make sure they are prepared to handle rejection and can interact with a potential donor in a conversation.  Ask for a donation in a specific amount (or suggest several specific amounts) rather than just asking for any donation – it’s better to propose amounts as options rather than “yes” or “no” as options.
• For e-mail and paper requests, bear in mind that these two forms of contact are usually numerous and easy to disregard amongst the rest of the “junk mail”.  E-mails are inexpensive, but if not done carefully, can alienate your prospective donor.  Make sure to include your organization in the subject line, include a link to your organization’s web page, and encourage the potential donor to forward the e-mail along.  You should also provide options to unsubscribe as well as hide the e-mail address from the rest of the recipients on the list.  You can save on postage if you obtain a non-profit discount on bulk mail.  Your mailing should include a letter asking for a specific donation, a brochure about the organization and a response card for the donor to return.

Sources of Grants

• Unlike donations from private individuals, grants come from foundations, government agencies, private businesses and other groups.  As these groups have access to larger accounts, the grants they give out are usually much larger than individual donations.
• Many grants are only available to 501(c)(3) tax-exempt organizations.
• Grant givers are often looking for an organization that meets the giver’s criteria in terms of the activities and projects conducted by the recipient.  It is important that you look for grants that specify criteria you can meet in order to have the best shot at winning the grant.

Writing Grant Proposals

• Many grant givers have specific application procedures and deadlines, so make sure you are up to date.  Many grant applications have two rounds to screen for appropriate recipients and save the non-profit the time necessary to prepare a full grant proposal.  The full proposal, if you are invited to submit one, includes a cover letter, cover sheet, description of the organization, a needs assessment, program goals and objectives, financial information, a conclusion and any appendices or attachments as necessary.

Corporate Sponsorships

• Approaching local businesses, banks or institutions for corporate sponsorship can also generate a large amount of revenue for the non-profit.  Most corporate sponsors want some kind of recognition – such as their name and logo on a banner or t-shirt – for their contribution.  However, you are only allowed to “acknowledge” your sponsor, not provide them with advertising.  Providing them with advertising can count as unrelated business income (UBI) and be subject to tax or losing your 501(c)(3) exemption status.  Consulting with an attorney may be helpful if you are not sure whether your form of recognition is acknowledgement or advertising.  If you do provide recognition with a commercial value (advertising) than the donor can only deduct the difference in value between the donation and the item of commercial value provided the item exceeds $75 in value.

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Importance of Relationships

• No matter what the amount you are trying to raise, you must have a good connection with your donors.  Especially if the donor is contributing for the first time – a thank you note can go a long way to ensuring continued donations in the future.

Convince Your Potential Donor

• Be specific and build a compelling case for why you need this donation.  Your potential donors have many options for where to donate – if they donate at all – and you must convince them that you are the best recipient of their financial support.

Don’t Forget the Bigger Picture

• But keep the organization’s bigger picture in mind.  You can’t always hide your expenses as a compassionate need – maybe you just need office supplies.  A good fundraiser is also able to bring in funds for the overhead expenses of operating.

Make a Fundraising Budget

• Unfortunately, some of the money you raise is turned around to spend on future fundraising efforts.  Fundraising can add up quickly so make sure you set a budget that is realistic for the amount of money you are wishing to bring in.  Look for ways to cut costs or to get time, space or materials donated to assist with the fundraising effort.

Consider Membership Opportunities

• You can collect dues from members of your organization if you have a program that gives them something in return.  It could be a token gift or the right to participate in an exclusive group such as a list serve or a planning committee.  But you must somehow involve your members for them to feel connected to the organization and continue to provide membership dues, which are a source of revenue.