Lecture 4 Fundraising Vehicles

1. Lecture 4 Fundraising Vehicles • There are a variety a tactics a non-profit can solicit fundraising revenue. • This lecture will provide a detailed look at those tactics along with some examples of when best to utilize • Personal case exercise

2. Lecture 4 Fundraising Vehicles The Donor Pyramid illustrates the process of a development program and is a common element in fundraising education (note: google “donor pyramid” for other examples). Donors enter at the base (the widest part of the pyramid) and are “stewarded” up the pyramid to more significant giving.

3. Lecture 4 Fundraising Vehicles • Direct Mail • Direct Mail is used to acquire new donors and to renew current donors (note: Individual Donors) • Via a Direct Mail Appeal • CLARIFICATION: “Appeal” is the call to action that motivated the donor to respond with a gift. Often in fundraising, we use “Appeal” to describe a direct mail solicitation – e.g. Fall Appeal • Direct Mail Appeals come in all shapes and sizes and should be right-sized/right-toned to your organization (i.e. mission and culture)

4. Lecture 4 Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): • The letter… • evoke emotion (See Love Thy Reader, Tom Ahern) • write to get the attention of “scanners” and “readers” (use readability statistics on Microsoft Word) • clearly state the purpose of the letter • clearly state the goal; how success will be measured; what results a gift will produce… • use a “P.S.” • signature • Via a Direct Mail Appeal • CLARIFICATION: “Appeal” is the call to action that motivated the donor to respond with a gift. Often in fundraising, we use “Appeal” to describe a direct mail solicitation – e.g. Fall Appeal • Direct Mail Appeals come in all shapes and sizes and should be right-sized/right-toned to your organization (i.e. mission and culture)

5. Lecture 4 Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): • The reply device… • Draft first – before the letter • Test • Include credit card options, “in memory of”, specific programs, check boxes for additional information (E.g. planned giving) • Revise and test, etc. • Use as another communication device (for the scanners) • Include on-line giving instructions if applicable

6. Lecture 4 Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): • The remittance envelope… • Self Addressed and Postage Paid The internet is giving the USPS major competition. Don’t make it harder for your donors (or prospective donors) to have to buy a stamp, look up your address, write it down, and deliver it to the post-office! Note: You’ll need a BRE Permit from your local post-office to use self-addressed, post-paid envelopes.

7. Lecture 4 Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): • The outside envelope… • #10 window or plain (research has shown that this is the most effective/efficient) • Teaser Copy – If you appeal doesn’t get opened, it doesn’t matter how long you spent on your reply device, or how well written your letter is, or even how compelling your call to action is! • “From the Office of the President” • “Learn how your can help others access healthcare” • “See inside for details on a great investment offer “

8. Lecture 4 Fundraising Vehicles Direct Mail (continued) Main components of the Direct Mail Solicitation (a.k.a. Appeal): • Premiums and gifts… • Premiums are Give-A-Ways included in the direct mail package to entice (guilt) a prospective donor • Premiums are most effective for donor acquisitions; less effective for renewals • Gifts are given only to donors; more control on the organization side, but also more time consuming

9. Lecture 4 Fundraising Vehicles Direct Mail (continued) Other forms of Direct Mail (used more for stewardship): • Newsletter • Invitations • Announcements • Surveys • Annual Report Mailings • Event Calendars… Basically, any time you mass mail to your constituency or a segment of your constituency

10. Lecture 4 Fundraising Vehicles Direct Mail (continued) Is the tactic most used to recruit donors because it can be mass produced at somewhat of a low cost. However, it is impersonal, which explains why first time donors don’t necessarily renew their support. Long-Time Donor = Strong Relationship Personal Attention = Strong Relationship Personal Attention = Expensive, Time Consuming and not replicable

11. Lecture 4 Fundraising Vehicles Special Events/Fundraising Events • An opportunity to capture new donors (“Donor Acquisition Vehicle” • Good for organizations that: • need to build a donor base • have a dedicated volunteer group to recruit corporate sponsorships • A mission that resonates with the community at large (to recruit new supporters) -or- • Have a large beneficiary base (Alumni, Patients, Staff, Members, etc) to support the event (note: not a donor acquisition vehicle)

12. Lecture 4 Fundraising Vehicles Special Events/Fundraising Events (continued) • Usually funds General Operating, however could be appropriated to a specific fund or project (this should be discuss with you organization’s CFO ahead of time) • A huge variety, for example: • Golf Tournaments • Gala (Dinner & Dancing) • Silent/Live Auction (stand along or an add-on) • Fashion Show • Food & Wine Tasting • Celebrity Luncheon The only limit is imagination!

13. Lecture 4 Fundraising Vehicles Special Events/Fundraising Events (continued) • A downward trend • Expensive (% of net vs. gross) • Ethical considerations (misleading donors) • Time consuming • Sponsorships correlated to economic times • A purpose beyond raising money • Communicating your mission • Recruiting new volunteers • Recognizing community leaders • Bonding experience for organizational staff • Opportunity for your Board Members to participate

14. Lecture 4 Fundraising Vehicles Corporate Gifts/Sponsorships First, some background • Charitable contributions to non-profit organizations reduces a corporation’s tax-liability • A contribution to your organization helps the corporation pay less in taxes • Good Economy = Sponsorships • Two “pots” to pull from: • A charitable division of the corporation (usually larger with giving guidelines) • The marketing department (usually smaller with less restrictions)

15. Lecture 4 Fundraising Vehicles Corporate Gifts/Sponsorships • The marketing department: • Contacts are usually public; reach out to them • Personal/Professional relationships are helpful (engage Board Members and Volunteers) note: we will discuss in greater detail in future modules • Do your research – What organizations has the corporation sponsored in the past and for what project? (usually located on the organization’s website under “Community Relations” or a similar heading) • Tailor your ask to what the corporation has done in the past • Make sure it contains a marketing benefit • Examples

16. Lecture 4 Fundraising Vehicles Corporate Gifts/Sponsorships • The Charitable Division: • Contacts are also public; reach out to them • But first, do your research as there is usually a distinct mission of this function (see Foundation Center – www.foundationcenter.org) or call them directly for their “Giving Guidelines”) • Review the funding needs of your organization – do they fit within the giving guidelines? If yes, begin proposal process • A word on square peg round hole approached • Proceed with caution on exploiting Personal/Professional relationships • Examples

17. Lecture 4 Fundraising Vehicles Corporate Gifts/Sponsorships • Are viewed as “major gifts” by organizations • Show a higher level of commitment/loyalty than the first time individual donor • May take a couple of applications/solicitations to be successful • Result in loyalty and often support on the volunteer level • Stand alone tactic or add-on (i.e. part of special event) • More difficult to secure

18. Lecture 4 Fundraising Vehicles Foundation Grants • Similar to Charitable Division gifts from Corporations • Usually fund specific components of your mission: • A program • A building project • Vary in size, scope, geographic area, mission requiring a substantial amount of research before the solicitation process • www.foundationcenter.org (free resource) • Foundation Directory Online (http://fconline.foundationcenter.org/) annual membership based on level of service/access • Guidestar – 990s

19. Lecture 4 Fundraising Vehicles Foundation Grants • Researching Foundation Grants (note: will be discussed in future module) • The 990 – All non-profit/501(c)3 IRS Status file thee 990 as their annual tax return (foundations are non-profit/501(c)3 IRS Status) • The 990 contains valuable information, such as: • The value of the endowment • Application instructions (note: “…gives to only preselected organizations…” is the default on the 990) • Board of Directors Listing • Grants Awarded Listing – with amounts to each organization and often an explanation of the purpose • Website

20. Lecture 4 Fundraising Vehicles PORTFOLIO ADDITION - 990 Research Assignment • Register on Guidestar (if not already) www.Guidestar.org 2. Look up your personal case organization, find the 990, report the amount of public support (line 1e) for the most recent fiscal year • On the same 990, look up the amount of (1) fundraising (2) management (3) total expenses reported 4. Include your findings from #2 and #3 in this week’s assignment

21. Lecture 4 Fundraising Vehicles Major Individual Giving • Individuals who give major gifts (the amount that qualifies one as “major” is determined by the organization) have a strong connection to the organization or the cause (e.g. your board members) • They are usually not first time donors, nor do the gifts come out of the blue (i.e. unsolicited) • These gifts are in the upper-tiers of the donor pyramid • Donors are engaged and want to see their gifts make a difference (measurable, innovative)

22. Lecture 4 Fundraising Vehicles Major Individual Giving (continued) • The focus on MG programs is increasing: • Less expensive; High ROI (return-on-investment) • Less dependent on the economy like Corporate Sponsorships (however, not isolated from it either) • Major Givers are usually great stewards of your organization (if they are going to give multi-figure gifts to your organization you can bet they will say great things about you!) • Due to the proven success of MG Programs, good MGOs (Major Gift Officers) are often the highest paid in the Development Office

23. Lecture 4 Fundraising Vehicles Major Individual Giving (continued) • However (the downside): • High pressure to meet metrics • Lack of organizational strategic • Generally does not support General Operating Expenses • The donors are very knowledgeable about non-profit operations (they are using the same research tools you are using!) • The cultivation period is long (two-years) • The investment in a MG Program is hard “to sell” to Executive Leadership when return is in future fiscal years • Ethical considerations

24. Lecture 4 Fundraising Vehicles Planned Giving (or Gift Planning) According to the AFP Dictionary - “a systematic effort to identify and cultivate a person for the purpose of generating a major gift that is structured and that integrates sound personal, financial, and estate-planning concepts with the prospect’s plans for lifetime or testamentary giving. A planned gift has tax implications and is often transmitted through a legal instrument, such as a will or a trust.” For the purpose of this course, Planning Giving will be presented as an overview to the average Development Officer

25. Lecture 4 Fundraising Vehicles Planned Giving (or Gift Planning) - Two kinds: (1) outright or current gifts (2) deferred (realized in the future)* A donor who is considering, or has already made, a planned gift is at the top of your donor pyramid: • They know, believe and trust in your organization • They’ve donated (money and/or time) for several years, if not decades) • They tend to be savy; appreciate the tax benefit and creativity involved in establishing a planned gift to a non-profit organization • They want to be involved up until their passing (if deferred)

26. Lecture 4 Fundraising Vehicles Planned Giving (or Gift Planning) • Types of Deferred Planned Gifts • Bequest • The most popular type of deferred planned gift and the least daunting • Once made, less than 10% change, those that do increase the amount to charity • Easiest to publicize; verbiage should be on your organizational website (See http://www.butler.org/body.cfm?id=245); on reply devices, in newsletters, etc. • Discuss with the donor the intent of the gift • Gift Acceptance Policies should reflect every situation imaginable

27. Lecture 4 Fundraising Vehicles Planned Giving (or Gift Planning) • Types of Deferred Planned Gifts (continued) • Charitable Gift Annuity – A legal contract between the donor and the charitable organization, through which the donor exchanges cash, stocks, or other assets for an agreed-upon income for life • Charitable Remainder Trust – The Donor transfers assets to a Trust, which then goes to the charitable organization after the death of the beneficiary. The donor retains a fixed or variable income for life • Life Estate Contract – The Donor transfers the deed of real property to a charitable organization while reserving the right to live on the property for life.

28. Lecture 4 Fundraising Vehicles Planned Giving (or Gift Planning) • Types of Deferred Planned Gifts (continued) • Charitable Lead Trust – Donor transfers assets to a trust; the trust provides income to the charitable organization for a period of X years. After the said period, the assets revert back to donor (grantor) or someone else (non-grantor) • Life Insurance Policy – Two types (a) transfer ownership of an existing policy to the organization or (b) purchase a new policy/contract that names the charitable organization as the beneficiary (note: can also add charity to existing policy as another beneficiary) • Pooled Income Fund – A common trust with many donors; pro rata shares; as each beneficiary dies, the value of their portion transfers to the organization

29. Lecture 4 Fundraising Vehicles Planned Giving (or Gift Planning) • Advantages to the Organization: • Long-term relationships with donors • Provides future funds • Promotes alternative thinking: “assets as gifts” • Benefits to the Donor • Opportunity to give (via assets as gifts) • Income tax deductions • Fixed or variable income • Retirement income • Reduction of capital gains • Asset management

30. Lecture 4 Fundraising Vehicles Planned Giving (or Gift Planning) What the experts won’t tell you…You don’t need to know it all; the details are done by estate attorneys and financial planning experts! • Resources: • RI Foundation – Videos on Options for Giving http://www.rifoundation.org/ProfessionalAdvisors/VideosOptionsforGiving/tabid/530/Default.aspx • Partnership for Philanthropic Planning (PPP) – formerly the National Committee on Planned Giving (NCPG) • National website: www.PPPNET.org • RI website: www.PPPRI.org (for RI meeting schedule/info) Invitation to attend a PPP-RI Meeting:If you are in or close to RI, contact me if you would like to attend a meeting as my guest at no charge. Those outside of RI and interested in a PPP chapter meeting, please contact me and I’ll make arrangements for you.

31. Lecture 4 Fundraising Vehicles Other Tactics – Telephone & Internet • Both are in a state of transition but each has a role in recruiting first time donors and renewing donors • Phone-a-thons are a good way to follow-up on a direct mail appeal • Provides a higher level of personalization and acts as a reminder • A great way to engage volunteers in the process (especially in phone-thank-a-thons) • The prominence of cell phones/cancellation of land-lines makes it difficult to reach a “live person” • “Do not call” list myths

32. Lecture 4 Fundraising Vehicles Other Tactics – Telephone & Internet (continued) • Internet Giving depends on the scope, target audience, and mission of the organization • Walks, Bike Rides, etc. have sophisticated web programs that are very successful as they empower the grassroots based fundraising team • Most organizations don’t have such a force and should regard internet fundraising as a add-on • Have an on-line giving option and include that link on all direct mail pieces • Incorporation a scope of programs to support on your on-line portal • Increase the number of credit cards accepted on your on-line portal • Great way to get more information about your donor, e.g. email address, mailing information, preferred phone number; can also include one or two survey questions on your online portal