There is probably nothing more daunting in trying to grow a small nonprofit than drafting and implementing a fundraising plan. You know you need money to grow. There are many things you could do, but because you have limited time, hands and financial resources, you need to be selective. Board members press you to organize a “big event” because that’s what most people think brings home the most bacon for nonprofits. (While it’s not the purpose of this article to dispel this “special event” myth, trust me when I see that it is a myth. I’d recommend sharing this article with anyone who has yet to be converted to the belief that special events are not a panacea. For something along the same lines but more in depth, there is this recent piece, “Breaking the Gala Tradition,” available for $15 through Board Source).
It's also true that there is a plethora of material out there that one could consult about fundraising planning. I set a record in the number of sources I consulted in the research for this post. I also set a record for how few of those sources are actually shown as resources below. Why? If you don’t have a dedicated development person in place, it’s hard to do many of the things that experts recommend as “best fund development practices.” You can still be strategic, however, and you can still begin to build a strong fundraising foundation for your organization. I believe that a few hours spent thinking about your data, your unique fundraising assets, and the things you have decided to tackle in your strategic plan, i.e. a foundation for fundraising success, can put you light years ahead of organizations twice your size.
Building that foundation has 3 simple steps, which include: (1) Collecting and analyzing relevant data on (a) communications strategies, (b) donor acquisition, (c) donor retention, (d) sources of revenue, and (e) organizational assets; (2) Developing goals, including (a) an impact goal; (b) goals necessary to implement strategic plan initiatives like finding grant funding for new programs; (c) goals for retaining and reinstating existing and lapsed donors respectively; (d) goals for acquiring new donors; and (3) Adding remaining elements, including proper objectives, responsible parties, and the budget necessary to implement the plan. Let’s take a look at each of the steps.
1. How to write a fundraising plan: collecting & analyzing relevant data
To succeed at fundraising requires strategy. Strategy, in turn, requires data. So the first step in developing a fundraising plan is to collect and review relevant data. What are relevant data?
a. Data on communications strategies
Deciding what to collect and review starts with recognizing that the base of the fundraising pyramid is all about communications. You have to communicate with prospects and earn their trust before they will become first-time donors.
It follows, then, that the first layer of data to collect is about how well your communications strategies have worked for you, going back three to five years, including:
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- Social Media: (a) Number of Fans/Followers; (b) Number of Posts; (c) Number of Engagements (This data can be tallied easily if you use a tool like Hootsuite to manage social media. Hootsuite offers discounted monthly plans for qualifying nonprofits).
- Web: (a) Bounce Rate; (b) Number of Sessions; (c) Number of Users; (d) Number of Page Views; (e) % New Sessions. (This data can be gathered easily from Google Analytics once you have installed the program on your website. An important benchmark is your bounce rate, that is the percentage of users who leave your website without interacting with a page. The FY 2019 typical bounce rate for nonprofits was between 60% and 75%).
- Email Engagement: (a) Number of Non-fundraising emails sent; (b) Median/Average % Unique Opens; (c) Median/Average % Bounced. (This data is typically readily available from your email marketing provider, such as Constant Contact, Mail Chimp, or Vertical Response. An important benchmark for email effectiveness is the average open rate, which was 28% for nonprofits nationally in 2018).
- Communications List Size Growth: How many members are on your communications list? How many have an email versus snail mail address? By what percentage has the list grown? To which strategies do you attribute its growth?
(Ideally, these strategies come straight from your marketing plan, which may or may not be a part of your fundraising plan. For information on how to draft a marketing plan, click here).
b. Data on donor acquisition
The second layer of data collection and analysis has to do with conversion. How many individuals on your list are making a contribution? Why are we so focused on individuals? The answer has to do with the fact that the vast majority of philanthropic giving can be traced to individual gifts and bequests as shown in the diagram below.
You need to understand which fundraising efforts and communications strategies led to the greatest conversions of list members to donors. What is the Return on Investment (ROI) for each activity (event, mailing, etc.)? This data is typically available from your donor/event management software. If you’re not using software, it is still possible to collect this information in a spreadsheet. Doing so requires setting goals about funds you want to raise and measuring what you spent in staff time and other resources to achieve those goals. The difference between what you spend and what you ultimately raise is your return on investment (ROI). (S. Rees, 7 Steps to a Simple Successful Fundraising Plan).
C. Data on donor retention
The third layer of data collection and analysis is about retention. Here, we want to look at donors who lapsed and donors who were retained in a given year. An important benchmark statistic is that, on average, 45% of donors are retained from one year to the next. We also want to look at how many of those who lapsed in a prior year were reinstated? We want to look, too, at the number of donor cultivation and retention initiatives, which are things like snail mail publications sent only to donors (e.g, a print newsletter), video updates, and events, especially donor recognition events. (Ideally, the source of this data is your donor management software; however, if you do not yet have such software, it is still possible to collect and analyze this data in a spreadsheet).
d. data on sources of revenue
Another task is to look at revenue by source from one year to the next. A healthy nonprofit is one with diverse funding streams, a hedge against a reduction or loss of one of them. What is the trend toward diversification as you compare data across fiscal years? In an ideal world, no one stream (e.g., government grants, foundation grants, individual donations, and business donations) should make up more than 25% of your revenue. Are you headed toward greater diversification of your revenue streams?
e. inventory of unique assets
If you’re a land trust like my organization and you can pitch a tent in a new park to show your donors the value-add they’ve helped to create in a community that previously lacked open space, that should play into your fundraising strategy. Maybe you have a renowned expert on a topic key to your mission on your board who could be a draw for a fundraising event or campaign. The point is to think carefully about your assets and use them to effect as you develop your fundraising plan.
f. analysis of results
I like to collect and analyze this data in an Excel workbook using column and bar charts, with one tab of the spreadsheet devoted to each chart, as shown below.
I then drop the charts into an 11 x 17 PowerPoint sheet to create a dashboard, like this one. This makes it possible to see relationships between the data elements and to draw conclusions that will lead to strategies in the fundraising plan. Once you’ve taken the time to set up the Excel spreadsheet, you only have to update it to be able to use the charts in the next and succeeding quarters.
2. how to write a fundraising plan: setting goals
a. impact goal
Once you’ve collected and analyzed your data, you’re ready to start planning. Step one is to think about an impact goal, i.e., what will you do to help the community that you are serving in a truly measurable way, like doubling the number of people or animals you serve if they are part of your mission. (S. Rees, 7 Steps to a Simple Successful Fundraising Plan). A good source for an impact goal is your strategic plan, which may also be a source of goals related to fundraising needs of programs that will need to be included in your plan. (For information on how to develop a strategic plan, check out these posts).
b. goals for donor retention & reinstatement
Next, look to the data analysis that you did in Step 1 and create goals for retaining and reinstating existing and lapsed donors respectively. What percentage of existing donors will you strive to retain? What number of lapsed donors can you realistically reinstate?
c. goals for acquisition of new donors
Secondary to retention and reinstatement is new donor acquisition. What will you do to convert the non-donors on your communications list to donors and to acquire new donors and prospective donors? A tertiary goal is creation of a pipeline for major and planned gifts – how are you planning to solicit and track those donors who are capable of making larger gifts now or as part of their estate plans?
If you haven’t done so already, take the time to invest in donor management software that will help with these tasks. Check out this page on TechSoup, where there are links to evaluation documents on donor management software programs as well as information on discounts for small nonprofits. If I might offer one piece of advice: if you’re small, start with something that provides an all-in-one solution for donor management, email marketing, and event management. These products automatically collect information on who opens your emails (and how many times they do so) and who signs up for events. This is invaluable in cultivating people on your list to become donors, major donors, lead donors, etc.
3. how to write a fundraising Plan: adding remaining plan elements
Finally, in writing goals, you need to be sure they are SMART, i.e., specific, measurable, achievable, relevant, and time-based. For each goal, there should be one or more objectives that explain how the goal will be achieved, when, and by whom. I find it helpful to include these goals in a chart with rows that are color-coded according to how the objective is to be implemented, with separate colors for email campaigns, snail mail campaigns, grants, special events, and social media. Your plan should also make sure to account for the resources that will be necessary to implement each strategy, e.g., the cost of postage, supplies, and additional contractual help for mailings or the cost of special fundraising software like GrantStation, a helpful tool available through Tech Soup for finding grants. Here is a link to the template just described, but it is certainly not the only one. As respected fundraiser Sandy Rees has noted:
I find that a lot of people get really stuck around what format to use. They think oh, well, I need to know how should I do this, like give me the right template and I’ll fill it out. Give me the right paper and I’ll get this going. The truth is I don’t think it really matters. So I think you can use … a Word template. We’ve got one we call “Fundraising Blueprint “…. It matters what format is going to make sense to you. Because if it makes sense to you and it seems easy to you, you will use it …. Pick what works for you.
4. CONCLUSIONS & RECOMMENDATIONS
Sometimes tasks that seem hard to complete have fairly simple solutions. Getting to that answer requires us to stop and think about where we are and what we need to achieve. That’s what I’ve tried to suggest as a common-sense strategy for creating a fundraising plan for a small nonprofit.
It’s not that there isn’t great advice on fundraising planning out there. It’s just that hoisting it all aboard can feel a lot like grabbing an elephant gun to kill an ant. In this case, choosing to improve is all about collecting the right data, learning from that data, and planning your next steps accordingly. Let me know how you fare.
Resources
Board Source. Breaking the Gala Tradition. (Available at: https://boardsource.org/product/special-event-fundraising-breaking-gala-addiction/)
Garry, J. The Nonprofit Leadership Lab. (This is a membership site that currently costs $37.00 a month. It is well worth the subscription given the available resources, including fundraising plan articles and templates and direct access to nonprofit expert, Joan Garry. Get more information at nonprofitleadershiplab.com).
Garry, J. Why Do So Many Nonprofits Live or Die by Special Events? (Available at: https://blog.joangarry.com/special-events-mistake/)
Google Analytics (Introduction available at: https://marketingplatform.google.com/about/analytics/)
Hootsuite. An app for managing multiple social media accounts and for gaining insights on post engagement over time. There are nonprofit discounts available at: https://hootsuite.com/pages/landing/non-profit-discount-application2
Rees, S. 7 Steps to a Simple Successful Fundraising Plan. (Bloomerang Webinar, 1/12/2017) (Available at: https://www.youtube.com/watch?v=hts3PmZm3rg).
TechSoup. Choose the Right Donor Management Software Through TechSoup. (1/25/2019) (Available at: https://www.techsoup.org/support/articles-and-how-tos/choose-the-right-donor-management-software-through-techsoup)