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Rethinking the Annual Fund

Social Entrepreneurship

Rethinking the Annual Fund

Nonprofit fundraising efforts should not put all eggs in a single basket. Instead, annual funds should serve as a springboard for other fundraising initiatives.

For better or for worse, a lot of nonprofits put all of their fundraising eggs in the annual fund basket.

Unfortunately, those eggs frequently don't hatch the way you thought they would, leaving a gaping hole in the organization's annual budget. So what's the deal . . . Are annual fund campaigns a good idea or are they just a big waste of time?

Annual fund campaigns are fundraising drives designed to raise the annual support required for the ongoing needs of the organization. These funds are attractive to nonprofits because they are typically undesignated and can be used for any purpose.

However, problems arise when the annual fund is seen as a one-size-fits-all fundraising solution loaded with expectations no fundraising vehicle can be expected to achieve. Rather than going for broke with a one-time annual fund event or short-term pledge drive, you may yield better results by reassessing your annual fund goals and fundraising strategy.

Employ Multiple Vehicles

The vast majority of funding for nonprofit organizations doesn't come from grants, fees, or planned giving. It comes directly from individuals.

So it makes sense that one of the primary goals of your annual fund campaign should be to touch base with as many individuals as possible. But if you are relying on a single, one-time event like a banquet or golf tournament to raise operating funds for the entire year, your ability to reach the maximum number of people is severely limited.

Instead, think about spreading your annual fund campaign over multiple fundraising vehicles sprinkled throughout the year. If one event bombs, no big deal because you have four other events scheduled. Multiple vehicles also create an opportunity for momentum to build between events as more people become aware of organization's cause.

Leverage Board Giving

Although it's impossible to mandate annual fund giving from your board members, board members should be expected to give financially - above and beyond the time they donate to the organization.

As a general rule, it's not unreasonable to expect the board of most nonprofits to contribute 15-20% of the annual fund goal. Other contributors will read board giving as a sign that the organization is on the right track, but a lack of board contributions will be an indication that the organization's leaders don't really believe in the organization's goals or in its ability to fulfill them.

Strongly communicate the importance of financial contribution to your board members and then make a point to communicate the combined board contribution to potential contributors.

Value Prospecting

The most important goal of the annual fund campaign is to bring in the funding required to keep the doors open for one more year.

However, there is another secondary goal that can help keep the doors open for years to come: Prospecting. Annual fund campaigns and events can be a great tool for introducing your organization to potential contributors, even if they don't immediately contribute themselves.

You might even want to assure new prospects that their participation in the event does not come with an expectation of a financial donation, but is simply intended to educate them about your organization and its cause. If they like what they see there is a good chance they will donate anyway, or at least be open to the idea of making a contribution at a later time.