A Silver Lining to Gloomy Predictions for Charity Fundraising, from Getting to Giving
(PRWEB) July 26, 2013 -- Giving USA 2013, The Annual Report on Philanthropy for the Year 2012 recently reported that donations rose just 1.5% after inflation last year, adding that it may take six more years to raise as much money as before the recession. Less than welcome news for many nonprofits.
"We see a silver lining, though; nonprofits are being forced to rethink how they do business, and how they go about fundraising," said Harvard Business School professor emeritus and billion dollar fundraiser Howard Stevenson. "It’s about economic sustainability. Or, as the nun in charge of a hospital explained it to us: No margin, no mission."
Fundraising leaders – board members, executive directors, development professionals, and volunteer fundraisers – are ready for change. In fact, nearly 40 percent of respondents to a survey conducted by the Nonprofit Finance Fund said that they plan to change how they raise money. Now, how to do that?
"Nonprofits must be willing to challenge traditional 'rules,'" said Stevenson, "even the sacred giving pyramid." The pyramid is a planning tool that assumes giving at all levels, with 80 to 90 percent coming from the top 20 percent of donors. This type of fundraising approach is problematic.
Problem #1: the pyramid strategy may be right for some organizations – it’s especially popular with academic institutions – but not for others. It's important to consider some fundraising alternatives:
• A participative strategy's goal is for everyone to give at least something. This can be important for rallying an entire organization behind a cause.
• The elephant hunt strategy is where an organization's supporters are few but passionate. An astronomical lab in need of a very expensive telescope has no choice but to use this approach.
• The dual strategy includes different approaches for different purposes. It’s common in membership organizations, where fees cover the basics, but organizations need elephants for big projects.
Now, another problem with the traditional giving pyramid: major gifts.
Major gifts are defined in absolute terms, and from the organization’s perspective. (A major gift for a local youth organization wouldn’t register a blip on Harvard’s screen.) It's important to think about the gift from the donor’s perspective, and in relative terms. "It’s about the willingness to 'stretch,' not the number of zeroes," said Stevenson. "That’s why we use the term 'significant gift' rather than major gift."
In fact, a field study conducted by two of my HBS students (Katie Cunningham and Marc Ricks) showed that donors have their own giving pyramids, divided into three "importance" categories:
• At the bottom are checkbook gifts, which reflect a sincere but passing interest. A donor may make many of them, but they’ll only represent 5-15% of his philanthropic dollars.
• An individual is likely to make fewer but larger gifts to causes that are important to him. Those priority gifts will represent 20-30% of his giving, for three to seven projects.
• At the top are core gifts, representing passions that warrant a major sacrifice. A donor will have one to three of them, and devote 30 to 60 per cent of his philanthropy to them.
"That makes sense," some fundraisers say. "Let’s go for the core gift!" That’s a mistake.
The problem is that core gifts are few and far between, and often represent "once in a lifetime" gifts. Also, organizations don’t want to get into a fight with their donor by telling him that their organization has to be number one on his list! Better to aim for number four or five, which can still yield a significant gift.
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Getting to Giving: Fundraising the Entrepreneurial Way is written by Howard Stevenson, Harvard Business School professor emeritus, chair and member of dozens of nonprofit boards, and billion-dollar fundraiser; with Shirley Spence. It offers new perspectives, proven approaches, and real-life examples for nonprofit leaders interested in changing how they raise money, and how they do business. For more information, visit us at http://www.gettingtogiving-fundraising.com.
Shirley Spence, Getting to Giving, http://gettingtogiving-fundraising.com/, 617-945-5724, [email protected]
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