copyright (c) 2009 Bonnie Osinski

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Getting General Operating Support

Support Center for Nonprofit ManagementDecember 14, 2009

Bonnie Osinski

December 14, 2009

General Support

What does it mean?Why do we need it? Want it?Why should anyone give it to us?Why do donors restrict funds?Are we asking donors to give us money to do anything we want to do?Is it the gift or how we manage the funds?

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General Support

Trust Why should anyone trust us? How do we build trust? How do we maintain trust?

Development can’t do it alone – The entire organization must be involved in building trust

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General Support

Relationships – the essence of successful fund development Successful donor relationships must be built

from the donor’s point of view Importance of good listening All development activities support building

and maintaining relationshipsIt’s not what we want to tell them; it’s what

they want to hear

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General Support

CommunicationsAll communications from the organization reinforce trust and maintain relationshipsYour brand is how a target audience feels about youAre we ready to accept two-way communication?

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General Support

The Case for Support

Why us? Why now? Why you?

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General Support

The Case for Support1. Who are you?2. Why do you exist?3. What is distinctive about you?4. What is it you want to accomplish

and why does it matter?5. How do you intend to accomplish it?6. How will you hold yourself

accountable?December 14, 2009 7

General Support

The Case for Support – Contents1. The problem/opportunity2. Trends affecting the problem3. Your response to the problem4. Your mission5. Your history/track record/market position6. Goals/strategies/objectives7. Organizational resources8. Accountability and evaluation9. Future organization plans10. Role of the prospective donor – THE HERO

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Successful Fund Development

Focus on putting together the best possible mix of fundraising activities to strengthen the organization so it can be as effective as possible in fulfilling its mission.

Effective fundraising requires building and maintaining trustworthy relationships with all constituents.

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Basic AssumptionsFrom the donor’s point of view, development should be a seamless progression of activities designed to strengthen the relationship

Not all funding has an equal effect on the bottom line

CIRCLES OF INFLUENCE

PYRAMID OF GIVING

What do they mean?How do they relate to each other?

How do they affect fundraising management?Why should we care?

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Reliability/Autonomy

RELIABILITY

HIGH MEDIUM LOW

Autonom

y

HIGH

Earned income; Endowments; Memberships; Small/medium individual donors

Fees for services; Event ticket purchasers

Foundation operating grants;

MEDIUM

Major individual contributions; corporate charitable contributions;

Corporate sponsorships

LOW

Ongoing government contracts; Third party reimbursements;

Government project grants; Foundation project grants;

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The Mission

The stronger the connection to the mission; the stronger the supporters

The value of fundraising is derived from the organization’s use of the money

The mission should never be subordinated to fundraising

When an organization merits philanthropic support, fundraising becomes the process of facilitating

transactions

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The Effective Fundraising Program

You have an annual fundraising goal and a plan to meet it

You have the broadest possible base of donors and mix of fundraising activities

You have a master calendar that is known to the staff and board

You have an accessible, well-maintained, and effective database that maintains all key information, supports your work, and can easily develop all the reports you need

You have an intimate knowledge of those who consider your organization their favorite cause and you keep in touch with them regularly

You have an ongoing program to acquire, retain, and upgrade donors

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The Effective Fundraising Program

You work in an environment that enables you to plan and spend most of your time on the activities that are most important and most likely to result in the best possible returns

You have the best possible mix of fundraising activities to appeal to your core donors and raise funds in a cost-effective manner

You annually budget for staff, volunteers, and board members to attend appropriate classes and seminars.

Development staff stays on top of the field by becoming active members of professional associations and keeping up with key publications in the field

The organization is willing to spend money to solve problems

You and the organization’s leadership understand that fundraising is a cumulative process that builds over time; most of what you do this year will not directly yield results until future year(s)

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The Board of Directors

Essential component for building trust – stand behind the organization and bear witness

All board members committed to supporting fund development– giving and getting only?

The board and the chief development officer work together as a team

Development officer works effectively with the board to build trust, maintain stewardship activities

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The Plan

START WITH RESEARCH AND EVALUATION

What did we do to raise money last year, how much did we raise, and how much did it cost?

Evaluation – successes and failures Cost-effectiveness General support Implications for the future

What can we do to increase general support? Are we using restricted funds most advantageously? How much change can the organization and its constituency

tolerate this year? Did communications support trust and relationship building/

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The Plan

Fundraising cost/benefit analysis Keep in mind issues of overall budget, staffing, and organizational

culture Do we have the necessary skills and knowledge in-house? Could we do more with consultants?

Develop a calendar of activities for the year, keeping in mind:cash flowstaffingthe organization’s programmatic and administrative

planning

Plans and budgets serve as important political documents: use them to get leadership and staff buy-in.

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Types Of Support

RESTRICTEDDonor specifies the use

If you accept the money, you are legally obligated to comply

Make sure the specified use is in line with your mission and strategic plan

Best to turn it down if it is not a fit

Only a donor can legally restrict contributed funds

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Types Of Support

UNRESTRICTED The most desirable type of support Enables you to be flexible and responsive to changing conditions

and client needs Your best bulwark against a turbulent, unpredictable environment Virtually impossible to run a strong and effective organization

without a high level of unrestricted support

OPERATING Generally a sub-set of unrestricted Can also be restricted funds for specific or one-time operating

costs e.g. Computerization, financial systems, fundraising start-up costs

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Types Of Support

CAPITAL Construction, purchase of facility or renovation Generally a campaign with specified goals and time limits

ENDOWMENT - best possible unrestricted funds

Best way to insure long-term financial health Should be big enough to generate significant annual income Can it be too big? Less appealing campaign than bricks and mortar Can be built with planned giving income, much of which cannot be

projected in annual operating budgetsComposed of donor restricted and quasi-restricted funds

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Sources

GOVERNMENT – Can it work as unrestricted support?Contracts and grants

Really big money; often renewable over the long run Political realities make it less stable that it appears Can suppresses the impetus to build an effective constituency You can’t use government operating funds for fundraising

THE PROCESS: Following detailed instructions in lengthy and complex RFP’s Funding agency tells you what they want Proposals often voluminous Complex budgeting process Reporting and evaluation is different for each grant

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Sources

PRIVATE FOUNDATIONS Mostly restricted grants in their area of interest; flexibility in project

design within guidelines Not meant to be an ongoing source of support Grants much smaller than government; paperwork less onerous For those that give general support – trust, relationship building is

key Many restrict the first grant; general support comes with successful

relationships

THE PROCESS Creativity to develop & implement projects that meet your needs

and funder’s priorities Plan to leverage time limited grants for future benefit – capacity

building; success story for other donors; learning that will inform programs

Research to find a match22

December 14, 2009

Sources

CORPORATIONS Multiple entry points and interests possible within the same

corporation Corporate self-interest is key Most often general support Source of financial, in-kind, sponsorship, matching and volunteer

support Partnership and joint marketing possibilities Relationships and mutual trust foster general support commitments Excellent source of board members

THE PROCESS Can be very similar to foundation grantsmanship The more contacts, the better –board networks important Research is different from foundation research Developing joint marketing and sponsorships can involve complex

negotiations

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SourcesINDIVIDUALS

Source of more than 80% of all philanthropic funds Your best bet for long-term strength and survival; reliable

insurance against fluctuations other funding sources Investors; advocates for your cause Best source of ongoing, unrestricted funds Only source of planned gifts; best way to build endowment General donors enter at lower levels; can be cultivated into major

donors

THE PROCESS Research essential Requires ongoing maintenance of relationships and stewardship Best returns come after years of cultivation. Direct mail for general donors – entry way for major donors –

expensive start-up On-line email and social networking present cost-effective support Events bring in some new donors; reinforce & cultivate others

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Fundraising Vehicles

SPECIAL EVENTS Costly form of fundraising; Staff time required is often

underestimated Net income translates to general operating support Can be good for building visibility Means for volunteer support and involvement; opportunity for

donor cultivation Can bring in new donors Caution: If not effectively integrated, an build a constituency that is

loyal to the event, rather than the organization or it’s mission

THE PROCESS Determine level of substantial support from board members and

current supporters- more than 50% of gross revenue required Scale event to organization’s capacity – realistic projections Consultants well worth it for large events; free staff to focus on

donor cultivation and solicitation Important to make sure event contributes to relationship building

and trust 25December 14, 2009

Fundraising Vehicles

DIRECT MAIL Can be a very reliable support of unrestricted annual cash income A successful mass mail program usually loses money for the first

three years; Pays off when a critical mass of repeat donors is reached

Becoming more costly as postage and other costs increase Entry point for major and planned gift donors Not all organizations or causes can be successful in the mail Consider starting an in-house mailing program with contacts

generated by board staff, and other supporters

THE PROCESS Get professional help to develop competitive text and graphics –

even for in-house or donor renewal mailings; Don’t even think about donor acquisition – renting lists – without hiring a professional direct mail consultant

You must mail several times a year to be successful Excellent opportunity to build trust and commitment

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Fundraising Vehicles

MAJOR GIFTS PROGRAMMost effective way to raise the largest gifts and the lowest costRequires a major investment in building relationships and trust – one

donor at a timeContinuous stewardshipCan become strong advocates and solicitorsBoard must be intensely involvedBest indicator of long-term organizational strength

THE PROCESS Regularly mine general donor lists from direct mail, events, on-

line, etc. for major gift prospects – your own constituency is the best source

Research and “moves management” systems are essential Determine and respond to donor’s interest in becoming more

involved

LISTEN!

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Fundraising VehiclesPLANNED GIVING – The ultimate evidence of trust

Gifts made from assets, not income Require long-term planning on the part of the donor, preferably

with the help of a financial planner or attorney Bequests are the most common source; not the most beneficial for

donors The ultimate payoff does not correspond to the costs incurred in a

given year The desired end result of individual giving programs; not limited to

major donors Most effective source of general, ongoing support when put into an

endowment.THE PROCESS Any organization can remind all donors about making bequests in

newsletters, web sites, targeted mailings, etc. Maintain awareness of the possibility of planned gifts as part of the

major donor process Stay on top of general tax law as it applies to philanthropy Investing in outside expertise yields the best results

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Fundraising Vehicles

CAPITAL/ENDOWMENT CAMPAIGNS Time-limited campaigns to reach specified goals Requires existing supporters to make significantly larger gifts Organization must be able to maintain annual giving income Reaching the goal requires that at least 10% of income comes

from one or two donors Depends on an existing major donor base Bricks and mortar tends to be more popular than endowment General support under your control

THE PROCESS Outside counsel is highly recommended; feasibility study can

make a difference Campaign chair and committees essential Start bringing in lead gifts as soon as possible Silent phase until lead gifts and half the income is committed

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Fundraising Vehicles

WEB SITE Good web site can be a source of on-line contributions New prospects contacted by means of direct mail and other

outreach check websites before making gift commitments Effective ongoing donor cultivation – newsletters, event

announcements, press releases, photos, etc. Invest in the best you can afford Not an electronic brochure or annual report

Interactive Donor participation Reasons for return visits

THE PROCESS Don’t do it without expert assistance – can be expensive to set up Requires continuous maintenance

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SOCIAL MEDIA Facebook, Linked-In, You Tube, Twitter, etc. Increasing number of nonprofits have a presence Popular outreach vehicles for supporters Upfront financial investment is low Requires a significant, ongoing investment of time Studies show combination of direct mail & internet is especially

effective Facilitates coordination with marketing and communications The jury is still out on the best use and ultimate effectiveness –

we are all making it up as we go along

THE PROCESS Get on the learning curve and move up fast – periodicals,

newsletters, training, consulting Growing number of on-line and consulting resources available

Fundraising Vehicles

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Let’s Get Real

What will work best for my organization?

What changes can I make?

What barriers do I face?

The first thing I will do, based on what I learned here will be………..

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