Fundraising From A to Z
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Fundraising

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Fundraising or fund raising (also development) is the process of soliciting and gathering contributions as money or other resources, by requesting donations from individuals, businesses, charitable foundations, or governmental agencies (see also crowd funding). Although fundraising typically refers to efforts to gather money for non-profit organizations, it is sometimes used to refer to the identification and solicitation of investors or other sources of capital for for-profit enterprises. Traditionally, fundraising consisted mostly of asking for donations on the street or at people's doors, and this is experiencing very strong growth in the form of face-to-face fundraising, but new forms of fundraising such as online fundraising have emerged in recent years, though these are often based on older methods such as grassroots fundraising.

Contents

[edit] Organizations

Fundraising is a significant way that non-profit organizations may obtain the money for their operations. These operations can involve a very broad array of concerns such as religious or philanthropic groups such as research organizations, public broadcasters, and political campaigns.

Some examples of charitable organizations include student scholarship merit awards for athletic or academic achievement, humanitarian concerns, disaster relief, human rights, research, and other social issues.

[edit] Professional fundraisers

Many non-profit organizations take advantage of the services of professional fundraisers. These fundraisers may be paid for their services either through fees unrelated to the amounts of money to be raised, or by retaining a percentage of raised funds (percentage-based compensation). The latter approach is expressly forbidden under the Code of Ethics of the Association of Fundraising Professionals (AFP), a professional membership body.[1] However, by far the most common practice of American non-profits is to employ a staff person whose main responsibility is fund raising. This person is paid a salary like any other employee, and is usually a part of the top management staff of the organization.

Some non-profit organizations nonetheless engage fundraisers who are paid a percentage of the funds they raise. In the United States, this ratio of funds retained to funds passed on to the non-profit is subject to reporting to a number of state's Attorneys General.[2] This ratio is highly variable and subject to change over time and place, and it is a point of contention between a segment of the general public and the non-profit organizations.

The term "professional fundraiser" is in many cases a legislated term referring to third-party firms whose services are contracted for; whereas "fundraising professionals" or development officers are often individuals or staff at charitable non-profits. Although potentially confusing, the distinction is an important one to note.

[edit] Religious organizations

Equally important are fundraising efforts by virtually every recognized religious group throughout the world. These efforts are organized on a local, national, and global level. Sometimes, such funds will go exclusively toward assisting the basic needs of others, while money may at other times be used only for evangelism. Usually, religious organizations mix the two, which can sometimes cause tension.

[edit] Political campaigns

Fundraising also plays a major role in political campaigns. This fact, despite numerous campaign finance reform laws, continues to be a highly controversial topic in American politics. Political action committees (PACs) are the best-known organizations that back candidates and political parties, though others such as 527 groups also have an impact. Some advocacy organizations conduct fundraising for or against policy issues in an attempt to influence legislation.

[edit] Public broadcasting

While public broadcasters are completely government-funded in much of the world, there are many countries where some funds must come from donations from the public. Pledge drives commonly occur about three times each year, usually lasting one to two weeks each time. Viewership and listenership often declines significantly during funding periods, so special programming may be aired in order to keep regular viewers and listeners interested.

[edit] Taxation

Organizations in the United States established for charitable purposes are allowed to raise funds from many sources. They are given a specific designation by the Internal Revenue Service (IRS), commonly noted as 501(c)(3) organizations. Other nonprofits such as fraternal associations have different IRS designations, and may or may not be eligible to raise funds. Financial information on many nonprofits, including all nonprofits that file annual IRS 990 forms is available from GuideStar.

[edit] Types

Many non-profit organizations receive some annual funding from a financial endowment, which is a sum of money that is invested to generate an annual return. Although endowments may be created when a sizable gift is received from an individual or family, often as directed in a will upon the death of a family member, they more typically are the result of many gifts over time from a variety of sources.

Non-profit organizations also raise funds through competing for grant funding. Grants are offered by governmental units and private foundations/ charitable trusts to non-profit organizations for the benefit of all parties to the transaction.

A capital campaign is when fundraising is conducted to raise major sums for a building or endowment, and generally keep such funds separate from operating funds. These campaigns encourage donors to give more than they would normally give and tap donors, especially corporations and foundations who would not otherwise give.

Special events are another method of raising funds. These range from formal dinners to benefit concerts to walkathons. Events are used to increase visibility and support for an organization as well as raising funds.[3]. Events can feature activities for the group such as speakers, a dance, an outing or entertainment, to encourage group participation and giving. Events can also include fundraising methods such as a raffel or charity auction. Events often feature notable sponsors or honoree. Events often feature a charity "ad book" as a program guide for the event, but more importantly, as another fundraiser providing members, supporters and vendors to show their support of and to the group at the event by way of placing an ad-like page, 1/2 page, 1/4 page, stating or showing support. Events and their associated fundraisers can be a major source of a groups revenue, visibility and donor relations.

While fundraising often involves the donation of money as an out-right gift, money may also be generated by selling a product of some kind, also known as product fundraising. Girl Scouts of the USA are well-known for selling cookies in order to generate funds. It is also common to see on-line impulse sales links to be accompanied by statements that a proportion of proceeds will be directed to a particular charitable foundation. Tax law may require differentiating between the cost of an item verses its gift value, such as a $100.00 per person dinner, for a $25.00 cost meal. Fundraising often involves recognition to the donor, such as naming rights or adding donors to an honor roll or other general recognition. Charity Ad Books are another form of donation for recognition, sponsorship or selling of ads often in an event related program or group directory.

When goods or professional services are donated to an organization rather than cash, this is called an in-kind gift.

A number of charities and non-profit organizations are increasingly using the internet as a means to raise funds; this practice is referred to as online fundraising. For example, the NSPCC operates a search engine which generates funds via Pay per click links, and Better The World operates tools allowing funds to be raised via members viewing ethical ads on a browser sidebar and/or blog widget.[4]

Some of the most substantial fundraising efforts in the United States are conducted by colleges and universities. Commonly the fundraising, or "development" / "advancement," program, makes a distinction between annual fund appeals and major campaigns. Most institutions use professional development officers to conduct fundraising appeals for both the entire institution or individual colleges and departments. Examples of this include athletics[5] and libraries.[6]

The donor base (often called a file) for higher education includes alumni, parents, friends, private foundations, and corporations. Gifts of appreciated property are important components of such efforts because the tax advantage they confer on the donor encourages larger gifts. The process of soliciting appreciated assets is called planned giving.

The classic development program at institutions of higher learning include prospect identification, prospect research and verification of the prospect's viability, cultivation, solicitation, and finally stewardship, the latter being the process of keeping donors informed about how past support has been used.

[edit] Relationship building

Often called donor cultivation, relationship building is the foundation on which most fundraising takes place.[7] Most development strategies divide donors into categories based on annual gifts. For instance, major donors are those that give at the highest level of the organization's fundraising scale and mid-level donors are in the middle.

More sophisticated strategies use tools to overlay demographic and other market segmentation data against their database of donors in order to more precisely customize communication and more effectively target resources.[8] Research by Peter Maple in the UK[9] shows that charities generally underinvest in good marketing research spending around a quarter of what an equivalent sized for profit company might spend.

Donor relations and stewardship[10] professionals support fundraisers by recognizing and thanking donors in a fashion that will cultivate future giving to nonprofit organizations. The Association of Donor Relations Professionals (ADRP)[11] is the first community of stewardship and donor relations professionals in the United States and Canada.

Recent research by Adrian Sargeant and the Association of Fundraising Professionals' Fundraising Effectiveness Project suggests the sector has a long way to go in improving the quality of donor relations. The sector generally loses 50–60% of its newly acquired donors between their first and second donations and one in three, year on year thereafter. The economics of regular or sustained giving are rather different, but even then organizations routinely lose 30% of their donors from one year to the next.[12]

[edit] Events

[edit] Ad Book Fundraiser

An “Ad Book” is a fundraising tool or fundraiser used by charities, and non-profit organizations such as associations, teams, community organizations or groups to raise money and recognize sponsorship in a book-form or event program. A charity Ad Book can be a stand-alone fundraising tool but is often part of a fundraising event such as a dinner, tribute, outing, auction, gathering or a fundraising campaign. Donor recognition is a primary method of fundraising relationship building, thus, though called an “ad-book” most ad book “ads” are not advertisements, but are laudable statements, sponsorships, support or congratulations to the group or honoree or member for the group’s cause. Ad books are a valuable way for groups to make / raise money and can serve many complex or layered purposes for both the donor and the group. Alternatives that are acceptable ways of spelling “Ad Book” are “AdBook” and “Ad-Book”

[edit] Major Ad Book Group Types

Though there are hundreds variations of not-for-profit group that use Ad Books for a fundraiser, the most common are the general categories. The most common group types are: School Sports Associations (trade & business)' Churchs, Health related, Synagogue/Jewish, Arts & music related, First Responders (Fire / Police) and many more types such as for community or political groups.

[edit] Ad Book Revenue Model

The typical book containing 100 to 200 pages of ads or statements of support will differ in how much it can raise due to the size of the ads – full page or smaller ads. And at an average of over $300 per page for various size ads, a 100 to 200-page book can raise $30,000 to $60,000 for the group. Organizations can raise more money if the cover pages on the Ad Book go for a large premium. The cost of an ad book generally falls in to three main categories; labor, pre-print production (or layout) and printing. Distribution is typically nominal and limited to the group and/or event. Labor can also be nominal owing to the fact that ad books as fundraisers are most often created by volunteers or members of the group. It is often a committee of the group and the “Ad Book Chair Person” who organizes or leads the effort. Ad Books take a significant effort and are thus not created more often than once a year. Pre-print production or layout can be done by a group member, volunteer or a 3rd party. Most small neighborhood commercial printers can print ad books. Due to the small custom work of ad books, small local printers work with ad books most often. After accounting for costs of production, the ad book can often represent a greater source of funds to the group than the events they may accompany, such as a dinner or golf outing.

[edit] Ad Book Business Model

Though group sizes and charity donations vary widely for recognition in an ad book, the typical book can contain 100 pages of ads or statements of support. And at an average of over $300 per page for various size ads, a 100 page book can raise $30,000.00 for the group. In fact, the ad book can often represent a greater source of funds to the group than, the dinner or golf-outing which it may accompany. The “business model” for a charity ad book is quite simple, though the actual work is more complex than a dinner, where much of the work is done by professional event facilities people, staff, servers, food-service providers, down to the table-napkins. By contrast, many groups prepare their own pre-print production for their local printer, and then the printer takes an ad book that last mile – with the inevitable last minute issues. But months of ad-sales can be more difficult than just obtaining an RSVP to a dinner. Each “ad” or message needs to be laid out for print. And an ad book page-order can be just as complicated as a seating chart for a dinner. Few groups are professional publishers, and fewer wish to be. It is often said that the “Ad Book Chairman’s first job is to find next year’s ad book chairman.” And most swear off doing it again, let alone year after year. Never the less, the simple math example is as follows: Front & back cover (special sponsors): $ 2,000 Ad Sales / Average Price per page: $ 250 Average number of ad-pages: x 200 ====== $52,000

Typical number of NON-ad pages (content): 25 Total number of pages (“ads” + content): 225

Hard Costs: Pre-print production/layout costs / page: $ 10.00 Printing cost / page: $ 10.00 ====== Total cost / page: $ 20.00 Total cost: $ 4,500 ====== Net raised for group or cause: $47,500

[edit] Ad Book Fundraiser Pricing

Ad book pricing follows easy and obvious amounts – relative to the group and the economics of its members, as opposed to commercial advertising concerns such as circulation or general demographics. Prices vary widely, but tend to group in round numbers and follow full-page, half-page, quarter-page, business card size, and listings or messages of support. For example, it is common to find ad book pricing of $250.00 for full page, $150.00 for half page, $75.00 for quarter page. Etc. With so many different types of groups, the pricing model of an average across diverse groups is less revealing than a more grouped or clustered evaluation. The full page ad is the standard measure, although there is pricing for the various sizes. The following is a pricing distribution for full page ads showing that there is pricing from low to high: % Under $100 / Full Page: 5% % From $100 to $149 / Full Page: 24% % From $150 to $199 / Full Page: 11% % From $200 to $249 / Full Page: 7% % From $250 to $299 / Full Page: 8% % From $250 to $299 / Full Page: 9% % From $300 to $399 / Full Page: 3% % From $400 to $499 / Full Page: 17% % From $500 to $999 / Full Page: 15% % Over $1,000 / Full Page: 1%

Averages of groups for all kinds of causes in very different locations can be a less appropriate measure. The simple averages (over a sample of many hundreds of groups) are as follows. Note that often full page ads are also priced over colors, signifying even higher support, such as white, gold, silver, platinum, diamond, etc... For full page ads, the standard page and the average highest full page is shown, though not all groups have a high-low. Average Full Page Ad Book ad $ 490 - High Average: $1,883 Average ½ Page Ad Book ad $ 282 Average ¼ Page Ad Book ad $ 147 Average Biz Card Ad size ad $ 70 Average Line-Item Mention $ 31

The price for an inside cover or rear cover of an ad-book is often priced at a high premium signifying special support. Ad book covers are often key sponsors and can run in the hundreds to tens of thousands of dollars.

[edit] Ad Book Fundraising Events

Ad Books are a charity fundraising tool that often accompanies charity events, outings, dinners, and other fundraisers. The Ad Books serve as or are contained in program books for events such as dinners, outings or playbills for charity theatre. By way of example, Ad Books are to charity events what a “Playbill” is for a theatre event, except that the Ad Book is not simply a means to an end, but is a fundraising vehicle in and of itself. Its charity “ads” often run into the hundreds of pages while the book’s content may be minimal by comparison to the volume of advertisements or statements of support. With an unlimited number of ad book pages, and high-profile support for donors of all sizes, ad books can and frequently do exceed the fundraising efforts of the events to which they are occasioned. The occasions come in many names. Of the many dozens of events, the most frequently are called: Conference / Convention Tournament Auction Celebration / Festival Anniversary Honoring Award Concert / Show / pageant Banquet / Gala For the sports category, most common are golf, outing or run.

[edit] Fundraising Ad Book Content and Organization

An Ad Book is generally not a book of just advertisements and is not a coupon book, though it may include both. Ad Books include statements of affinity or laudable statements for their local charity, good-works, event or honoree. Ad Books can contain nearly all ad-messages, with virtually no other messages or content. The basic message or content of ad books is self-descriptive of the group that publishes the ad book itself. Ad Books often feature a message from the group president, director, board members, and key staff. Ad Books can tell the story of the group, its mission, history or future. Ad Books with an honoree or event act as an event program. However, the overriding purpose of the ad book is to recognize the support and donations to the group. Ad book ads are viewed as a form of charity, and thus do not follow commercial pricing models based on circulation. In fact, ad books are often printed in very small print-runs and do not represent a circulation to the general public as much as to the sponsoring group or event. The “Ads” of group-members, family and friends are not like ads for business in that they do not feature a commercial call for action or contact information.

[edit] Ad Book Pagination / Organization

Ad Book pages are typically organized in the ad book from front to back by “value” of the donation. Full pages often go in the front, followed by half, quarter, etc. Primary placement and recognition is given to larger payments or sponsorship, as further recognition of the importance of larger givers. This pagination is different than most other publications where ads are secondary to subject matter content and not placed in a “pecking order” or hierarchy. The curiosity is the ad-messages themselves and it is known that larger and more prominent ads indicate larger and more prominent giving.

Ad Book Size: A tally of dozens of ad books found the size of the typical book to be approximately 248 pages of ad-content. With a wide range of pages from only in the 20’s to over 600 pages of ads. The study of book-sizes showed a generally even distribution of numbers of pages for books ranging in number of pages in the 10’s, through hundreds up to nearly 700 pages for larger books. Thus it is not much more common to find a small book than a large or medium size, in terms of number of ad pages. And it is the number of pages that can matter in an ad-book success, more than its physical size, quality or production value or the number of copies that are distributed.

[edit] The Ad Book ‘’’Form’’’

The Ad Book ‘’’Form’’’ or solicitation forms or contract is one key aspect of the process of soliciting donations along with messages or “ads” in exchange for ad-like recognition or genuine advertisements. The Ad Book Form generally consists of pledge or a commitment of a certain size ad; generally full page, ½ page, ¼ page, business card size or line reference. Often pages can also have color or other associated value such as diamond, gold, silver, bronze pages that make for higher price, priority and stature. The Ad Book Form also allows for the “Ad” or message to be hand written or the attachment of an ad or message or business card. The form also provides for payment information, deadlines, print rules, and can also reference any associated event or occasion. By contrast the contract for commercial publication for print advertising in magazine or periodical is referred to as the Card Rate and frequently includes commercially relevant information such as circulation or target market demographics. The ad book target and circulation is known to be the group or event itself, and is thus quite limited.

[edit] Ad Book Chairperson

An Ad Book Chairperson is often the title used for the person in a group who is in charge of the ad book fundraiser. Group participation is important for a fundraising ad book, both to solicit donors/advertisers as well as to compile and publish the book – often in conjunction with an event. For the Ad Book it is important to get the ad book committee and members involved in community outreach. It is just as important to find many small gifts or ads for the major donors. Ad book sales are a good way to develop both community givers as well as those who find time to help raise funds and awareness for the group. Very often being seen in an ad book can be a true allegiance, even more than buying a seat at a table or a box of cookies. Ad Books often encourage 100% participation – at any price point and thus are seen as important opportunity for outreach.

Few people recognize the hard and complex work of creating a charity ad-book. Thus, it is often said, “no one wants to be the ad book committee chairman twice”. Unlike the charity dinner chairperson, who can work with catering staff or event planners, the Ad Book Chair-person from one-year to the next must often start from scratch or with a different printer or team. For the Ad Book it is important to get the ad book committee and members involved in community outreach. It’s just as important to find many small gifts or ads as well as the major donors. In fact ad book sales are a good way to develop both community givers as well as those who find time to help raise funds and awareness for the group.

[edit] Ad Book Tax Status

Entries into an ad book can be treated for tax-purposes as either a donation (for registered charities and tax exempt groups) or as an advertisement that is expensed as a normal business expense. Reporting ad-entries is considered a matter of the donor/advertiser’s intent. Commercial publications do not share this potential duel status.

[edit] Ad Book - Top City & States

Ad Book use is also clustered. The top states and cities for Ad-books are: ‘’’By State’’’ ‘’’By City’’’ 1. IL (By far) 1. Chicago, IL (By far) 2. NJ 2. Los Angelis, CA 3. PA 3. Philadelphia, PA 4. MA 4. Boston, MA 5. CA 5. St. Louis, MO 6. CT 6. Washington D.C. 7. FL 7. Cherry Hill, NJ 8. MD 8. Baltimore, MD 9. NY 9. Dallas, TX 10. MI 10. Glenview, IL

Outside of the USA, ad books are found Canada, and as far away as New Zealand and Taiwan.

It is believed that Ad Books were first made popular in Chicago, Illinois in the 1950’s. This may account for the greater use in Illinois.

[edit] Capital campaigns

Capital campaigns are the most common way non profit organizations raise the funds necessary for special large projects, such as a new building or a permanent endowment. A capital campaign is an intensive, time-limited effort usually engaging volunteer leadership, and seeking a larger-than-usual sum of money from the perspective of the nonprofit. A typical capital campaign might last 18 months, with a pledge payment period of 3–5 years. Individual donors are most likely to give to a capital campaign, but sometimes pledges may be secured from corporate donors or foundations. Most non profits consider hiring an outside consulting firm for a capital campaign rather than hiring or utilizing internal staff, since such campaigns are periodic in nature rather than continuous. The consulting firm is typically paid a flat fee rather than a percentage of the funds raised, and capital campaigns are among the most cost effective of fund raising activities.

[edit] See also

[edit] Notes and references

  1. ^ "Code of Ethics". Association of Fundraising Professionals. Archived from the original on 2006-12-06. http://web.archive.org/web/20061206142837/http://www.afpnet.org/ka/ka-3.cfm?content_item_id=1068&folder_id=897. Retrieved 2007-01-23. 
  2. ^ For example, "Active Charity Promotions in Kentucky". http://ag.ky.gov/cp/active.htm. Retrieved October 9, 2005. 
  3. ^ "Events - How to organise an event to raise money/awareness for your organisation". KnowHow NonProfit. http://www.knowhownonprofit.org/funding/fundraising/events/events. Retrieved 16 July 2010. 
  4. ^ "Alabama Charity Blog". http://alabamacharity.wordpress.com. Retrieved April 22, 2010. 
  5. ^ Barnes, C., H. Rice, and I. Sturrock, "On the Offense: Three Athletic Fund-Raisers Tell How They Score." CASE Currents, December 1981, 12-18.
  6. ^ Lorenzen, Michael. (2009). Academic Library Development Officers in Fund Raising: How They Perceive Their Work, VDM Verlag Dr. Müller, ISBN 3639193733
  7. ^ Yonker, Larry; McGinty, Chuck; Donaldson, Devlin (June 2002). "The Kingdom Currency" (PDF). http://www.theelevationgroup.com/documents/TheKingdomCurrencyYonker.pdf. Retrieved 2007-06-22. 
  8. ^ "Useful Past Tips: Marketing". Nonprofit Times. http://www.nptimes.com/enews/tips/marketing.html#market7. Retrieved 2007-06-22. 
  9. ^ Maple P,(2003) Marketing Strategy for Effective Fundraising, DSC
  10. ^ "Stewardship & Donor Relations," Entrepreneur.com
  11. ^ Association of Donor Relations Professionals
  12. ^ Sargeant A and Jay E (2004) Building Donor Loyalty, Jossey Bass, San Francisco.

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