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Waiting for Super Donor?

Every nonprofit organization hopes someone will make a significant donation that rescues them from their financial challenges. Do you wait for Super Donor to rescue you? Unfortunately, if you only wait and hope, the odds are that Super Donor is not coming. Nor is he sending a check.

Instead, this article shares what every board member needs to know and do to obtain individual donations.

Know

1. Why do people give money to nonprofit organizations?

Key reasons include a sense of community or duty and the opportunity to pay back, change lives, and to help in time of need.  Most donors also say that they give because they were asked.

2. What are some other examples of how individual donations helped nonprofits?

  • Tom and Dorothy Morris of Ft. Lauderdale, Florida left two million dollars to the University of Georgia’s College of Veterinary Medicine in a bequest.
  • Eight-year-old Caelan McNamara raised $10,000 to help 97 children from around the world who were born with a cleft lip or palate receive corrective surgery.
  • An anonymous donor gave the Twin Cities Food Bank a check for $40,000.

3. Is this a common source of nonprofit income? Yes. Individual donations, depending on the reference, are the second or third largest source of all income. In terms of size they rank after mission earned income and sometimes after government funds. Individual donations represent 75 percent of all donated income and 20 percent of all nonprofit income.

Individual nonprofits vary in their receipt of these donations from none to many. Likewise, efforts to obtain them vary from passive to a complex system involving multiple staff members. For groups that receive large lump sums from other sources, i.e. the government, individual donations are challenging to start with. They begin with $10 and $20 gifts and initially cost more than they earn.

4. What forms do individual donations take?

There are many. Here are six forms:

Nominal Gifts-These are donations you receive from anyone, even if they lack passion for your cause. On Saturday morning, members of the baseball league solicit funds outside the supermarket. While you lack baseball passion, the girls are cute. You give an individual donation of five dollars.

Annual- These are gifts of connection. You solicit them from everyone associated with the organization, mostly by a request letter. Donors with the potential for larger gifts are solicited face-to-face. A major benefit of annual appeals is their ability to identify people with the connection and ability to donate who actually contribute. The goal of established annual appeal drives is not always money, but to identify new and upgrade existing donors.

Special Events- Your organization holds an event, like a gala ball, intimate dinner, or educational workshop. Generally, an entry fee and additional donations are solicited during it. Special events are considered successful if the organization makes 50 percent or more of the event’s cost. Events provide opportunities to deepen relationships and connect people in your community with each other. When done well, they both educate people about your cause and raise money.

The following three forms of individual donations involve greater effort, relationships, and rewards. They focus on donors who give consistently to the organization.

Major gifts- Donations are requested from an individual donor with means, connection, and passion for a specific effort. Each organization determines its own definition of an amount that equals a major gift. The process of identifying candidates, preparing to ask them, and asking them for gifts is deliberate and methodical.

Planned gifts- According to Wikipedia, planned gifts are “several specific gift types that can be funded with cash, equity, or property.” Planned gifts have tax and estate implications that require the help of the donor’s advisors. Donors who give planned gifts have means, connection, and passion.

Bequests- Thesegiftsare the largest subset of planned gifts. They involve connection and passion — and some means. Means is less critical because these gifts are made from a person’s estate. These gifts literally represent money they cannot take with them. Bequests represent excellent opportunities for people concerned about having enough for their own needs and family obligations, but who want to support a nonprofit they love in a meaningful way. The average estate gift is $70,000.

5. What are the benefits of individual donations?Besides money, individual donations offer ways to meaningfully involve people. When gathered, donors create a community that supports, uplifts, and promotes your mission. From the nonprofit culture’s viewpoint, individual donations represent the purest form of income. Individual donations are gifts from people who love your mission enough to invest their personal income. You will love and be in awe of many of these donors.

Finally, since all nonprofit income is based on relationships, successful individual donations help to refine people skills. Individual donations require nonprofits to see the benefits the organization provides from an outside viewpoint. Success with individual donations requires nonprofits to craft a message about the organization that link emotion with logical arguments.

6. What are the risks? Almost every nonprofit would like individual donations. Obtaining them, renewing them, and increasing their size requires disciplined work and expected rejection. Not surprisingly, most nonprofits express less interest in this aspect of the process! Obtaining individual donations is part art, part science, and challenging. You must ask the right people for their money to do something that mostly benefits them only indirectly. Since the best asks are face-to-face, the rejection may feel personal.

Nonprofits that succeed with individual donations are open and outwardly focused. For those who have not succeeded in this arena, learning to express gratitude and creating a culture of philanthropy can represent real cultural shifts. Nonprofits that succeed adroitly balance donor and organization needs. The recent National Public Radio scandal highlights the dangers of being “too eager” to obtain money. High-net-worth donors can demand or suggest actions that get their recipient nonprofits “off track.” The impact can be subtle or dramatic.

Most critically, long-term individual donations require that your organization be healthy and led by healthy, mature people. Fundraising is relationship-based. Donors want attractive, self-assured, and inviting relationships. Undone housekeeping in this area will impede your success.

7. What is the general process of developing individual donations?

Individual giving involves two levels:

Level One- A numbers game. You create as large a community around your cause as possible and encourage people to donate to it. Over time, you help them to renew and increase their donations.

Level Two- A strategy and execution exercise. You identify a subset of passionate, committed donors with means from Level One givers and then focus on them. This level gets the right players on the bus, finds out what motivates them, designs requests around mutual goals, and asks these donors to make significant gifts.

8. Who makes a good prospect for large donations?

The three classic tests for nonprofits of donor readiness are ability, passion, and connection. Ability involves the financial means to make a gift. Passion is that they care about your cause. Connection is based on a relationship with your organization: they volunteer, use the service, or otherwise know about you. Of the three, you have the most control over connections. Offer numerous opportunities for people to increase their relationship with the organization.

Industry-wide, 90 percent of individual donations come from 10 percent of a group’s donors. Most large donors will make a small gift first to test the waters.  For large donations, develop personal relationships with around 20 to 25 people from your pool of donors who are well-to-do local individuals with an interest in your cause. Find donors. Listen to their needs and interests. Develop opportunities that match their interest and your nonprofit’s needs. Ideally a team of two visitors, one of whom is a peer who has made a similar gift, requests a major gift in person. Acknowledge the gift. Continue the relationship. Repeat.

Do

This section discusses what board members can do to support individual donations.

9. What questions should we as board members ask about individual donations? Inquire about yoursuccess. How many people do we have on our contact lists? How many donors do we have? What is the range of gifts? How do these numbers compare to industry averages? What plans exist to gain new donors, keep current donors, and upgrade them? How do we acknowledge and thank donors? What kind of gift do you need from me each year? How can I help you to meet potential donors? How will you help me to be comfortable asking friends and acquaintances to be involved with this organization and even for money?

10. How can I help as a board member?

“Let there be peace on earth and let it begin with me.” Do you remember this song? It reminds us of the need for individual donations from nonprofit leaders. Individual donations begin with the people closest to the organization. The board, volunteers, staff, and customers make gifts first. Why? This group knows and loves the organization and is closest to it. They believe the cause is wonderful and vital. Some organizations set a specific dollar amount for board donations. Others ask for a meaningful gift each board member determines his or her self.

Besides first gifts, sharing your passions with your connections is critical. For grass-root groups, this can be as simple as sending an upcoming special events announcement to your email list with a personal note, and following it up with five personal invitations. For larger organizations, consider serving on committees that plan for and ask for gifts. Make calls to make appointments with your peers. Make calls to thank donors. In all cases, help the nonprofit to network with potential donors.

11. What if this is scary for me?

If you feel uncomfortable asking for a gift or sharing a list of friends, tell your nonprofit staff. Insist that they help you, or find the training needed to make this process something you want to do. This is a group effort. Insist your organization do individual donations well. Learn how they will treat any names you give them. When the preparations are adequate, brave the waters. Believe that when your friends and contacts know what you know, they will want to help.

Are You Sure Super Donor is Not Coming?

Don’t wait for Super Donor. Instead, invite a large community to help your nonprofit. From within them, identify those with means and commitment. Build connections. If Super Donor is within your reach, he or she will slip in among them. Don’t be surprised when Super Donor’s check arrives and outsiders call it luck. Know that the gift is the result of your careful work to invite individuals to share in the work your organization does to change lives.

 

Resources

This article is part of a series on nonprofit income sources in the free newsletter Added Value. Find back issues at here.

Need more help? Buy these audio downloads: Money-tastic #2: Nonprofit Income Opportunities and Money-tastic #3  Creative Revenue Streams for Your Nonprofit at www.kedconsult.com.

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