Annual funds are appealing
Posted on: June 17, 2020 at 3:51 pm

By: Marion Lee, CFRE

Kenneth Burnett in his book, Relationship Fundraising, said, “Fundraisers are members of a profession that is one of the world’s most powerful catalysts for change.”  Good fundraisers raise money, great fundraisers make caring service possible by developing processes through the lens of relationship or donor-centered fundraising.  They raise life-long friends for an organization.  That friendship begins with an annual fund process-the cornerstone of an organization’s fundraising strategy.

Primarily considered unrestricted funds, the annual fund is a recurring fundraising strategy designed to sustain operations, expand programs and services and/or fill the gap between funding from government sources, foundations and operation costs.  Usually smaller gifts, annual funds build a cadre of donors who grow-up with the organization, investing annually at increasing levels (hopefully) and who eventually become the close friends or investors for capital investments, planned giving gifts or emergency funding in times of crisis. 

Annual fundraising builds a base of friends who are interested and compassionate about the organization’s mission.  These individuals can expand their relationship for a lifetime.  In addition, these friends can add to your volunteer corps, bring other funders to the organization and over time provide security for the future. Annual fund donors make decisions quickly, rarely include spouse or partner in the decision, require some but not a lot of cultivation and will remain with the organization a minimum of five years if communicated with appropriately.

Step into almost any fundraising department and one will find two separate schools of thought on donor relations and annual fund strategies.  Old school proponents rely heavily on direct mail appeals (snail mail), extensive planning, use of committees who meet in-person and personal contact with donors (phone or in-person).  This method is more time consuming and costly. The new wave camp relies on email, social media, building plans in-flight and meetings on the go in a virtual setting with little personal contact.  The new method is less time consuming and less costly.

In reality, a strong annual fund is a combination of old school and new wave that is tailored to the culture of the organization and community donors.  Studies presented by the Nonprofit Research Collaborative demonstrate that 77 percent of organizations with a structured annual fund process meet total fundraising goals. This holds true across large and small organizations.  The Individual Donor Benchmark Report conducted by Heather Yandow, presented in the Stanford SOCIAL INNOVATION Review and Philanthropy Journal, supports the need for creating a replicable annual strategy utilizing email, social media and direct mail appeals that have well-defined metrics combined with personal connections through phone calls and visits.

What Works Well

  1. The creation of a consistent replicable strategy that combines online, direct mail, allocation of some small foundation gifts (usually under $25,000), personal appeals, and events
  2. Thoughtful well- written, email and text appeals directed to individual donors and small businesses
  3. Personalized communications: using donors names and addresses
  4. A gift acknowledgment plan that responds quickly to gifts, with communications that are personal, sincere and include a one-on-one component
  5. Several small events versus depending on one large luncheon or gala
  6. Board member participation by chairing the annual fund and taking the lead (board gifts, signatures, visits, phone calls)
  7. Setting a financial goal for Board annual gifts to kick off the annual fund- FIRST!
  8. Hand signed letters or very, very good electronic signatures
  9. Personalized note on letters or electronic communications
  10. Manageable giving levels that encourage raising levels of giving annually
  11. Setting realistic goals
  12. Tracking gifts and measuring success

Less effective are blanket appeals of any kind that are not personalized (address or signature).  Gifts from blanket appeals net a gift of 1/3 less than a personal appeal and a response rate of .05 percent, while personalized appeals and in-person appeals have a 50 percent donation rate. Additionally, once a donor has made their annual gift, they should be placed on the cultivation list and removed from active solicitation until the next year unless a need or project arises that might have a special appeal to the donor.

In Chapter 17 of Donor Centered Fundraising, Penelope Burke relates a story about a campaign leader who always, regardless of what else was happening, walked donors, volunteers- friends to the elevators and stands there until the doors closed.  It was a long walk, but much was accomplished in building friendships.  Every day, we are caught up in presenting our organization to our donors.  We are driven to make goal, prove value, help our organization realize its vision and serve people – faster, better, with the least cost.  With a strong annual fund, you will have a dedicated group of friends to actively participate in helping you fulfill the organization’s mission but don’t forget – walk your donor to the elevator even metaphorically and wait for the door to close.