To accomplish their mission, non-profits need money to pay their operating expenses, (salaries, rent, office and other expenses), and support projects and programs that advance the purpose of the organization. This chapter will focus on using CiviCRM to raise funds through donations to support this work. In addition, we will touch on other forms of revenue generation, such as grant-writing, membership development, and sales of products or services.
The need to actively raise funds is a necessity many in the non-profit and advocacy world wish they could ignore. Part of the reason they work or volunteer in the non-profit world is because of its orientation toward mission-based work rather than a profit-based bottom line. Nonetheless, your organization needs money to accomplish its mission and raising some or all of those funds through donations is generally essential. Thankfully, CiviCRM is good at helping organizations fundraise.
This chapter is oriented towards fundraisers, those who support them with IT, communications and other services, and those to whom they report such as Executive Directors. To help you raise money better with CiviCRM, this chapter is generously sprinkled with sections and tips on fundraising approaches as well as on how to use CiviCRM. When marketing your organization and its services and products for fundraising purposes you will also find other chapters useful, particularly those that discuss contact targeting, communication, and outreach techniques.
In this chapter, we will cover:
- Developing a fundraising plan
- Selecting an online payment processor
- Initial configuration of CiviContribute and CiviPledge
- Manually recording donations and pledges
- Finding, examining, and acting on contributions and pledges
- Implementing a fundraising appeal
In the first section of this chapter, we provide an overview of how to create a fundraising plan and how CiviCRM plays a role in developing and executing the plan. If your interest is focused on learning more about how to administer and operate CiviCRM in fundraising activities, feel free to skip the opening section. If you are looking to quickly get online contributions up and running, start with the section on choosing a payment processor, then proceed directly to the last section on creating an online contribution page. Getting your payment processor account created and approved may take days or weeks while the rest of the configuration is a matter of minutes or hours. If you're using CiviCRM for offline fundraising only, you will not need a payment processor but will still need to configure CiviCRM for fundraising as discussed in the third section.
Larger non-profits can benefit from hiring a staff person or two with a degree or diploma in fundraising and development who know how to develop and deliver a fundraising plan appropriate to the organization. Smaller ones may benefit from hiring a fundraising specialist as a consultant to help with their planning. The unfortunate reality is that many small and even medium sized non-profits place this responsibility on those without specialized training, and often aren't able to provide adequate training budgets for them, given the competing priorities. If that describes your organization, plan on buying a fundraising book or spend a few evenings Googling how to develop a fundraising plan.
Templates for fundraising plans will vary by author and type of organization. The common elements include:
- A version of the organization's mission
- An analysis of the historical and current fundraising situation of the organization
- A statement summarizing the case to give to the organization
- Short and long term goals for fundraising, usually broken down by type of giving or fundraising program
High-level plans for one to three years will be translated into work plans by laying out tasks with specific timelines for implementing programs and appeals across different channels.
CiviCRM's reporting and analysis tools can help in your analysis. The case for giving will undergird the creative material (such as text, graphics, and others), that will be developed for various programs and included in CiviCRM's public-facing fundraising pages.
Market segmentation is the process of dividing your potential donor audience based on certain characteristics and attributes. Doing so allows you to customize your message and method of communication to more effectively reach each subset of your market. In fundraising parlance, common ways of segmenting donor revenue by (slightly overlapping) categories are:
- One-time gifts
- Pre-authorized monthly gifts
- Major gifts and planned giving
- Legacy or bequest giving
- Tribute gifts (in memoriam or in honor of)
- Events (often sub-divided by event, such as Run for the Cure, an auction, or dinner)
- Memberships and subscriptions
- Corporate sponsorships, memberships, and partnerships
Other forms of fundraising may be important to your organization, including grant-writing to foundations or government, or contests. In addition, some non-profits have fundraising revenue from merchandise sales of branded products such as T-shirts or mugs.
This chapter focuses on fundraising segments that raise the most money for not-for-profit organizations, and touches on how to support other fundraising categories with CiviCRM.
Capital campaigns and special appeals may receive donations that fall into any of the segments listed above. However, it is often useful to separate the revenue for those campaigns into separate line items in your fundraising plan and accounts since the method used to raise those funds and their stated purpose is generally different than on-going fundraising for normal operations.
We will look at practical ways to count prospects in your existing donor and contact database in the Counting prospects with Advanced Search section.
The major channels (methods) of fundraising are:
CiviCRM can assist in all four of these channels. Different activities in CiviCRM are used in these channels and we will be devoting sections to each one.
Cultivating prospects is essential for good CRM and fundraising strategies. Excellent prospect development channels exist in the offline world, including media events, advertisements, and brochure leave-behinds. You should consider giving a prominent role to the other channels in your CRM and fundraising plans. CiviCRM can assist in targeting via these channels. However, make sure that your CRM and fundraising plans are not centrally about how to use CiviCRM, rather they are about underlying development strategies.
Some minor channels such as direct response television and kiosks will not be discussed. Supporting them with CiviCRM can be understood as variations of telemarketing (inbound rather than outbound) and direct dialog. SMS messaging is touched on as an extension of online fundraising.
A fundraising program is usually defined by the primary objective of getting a segment of donors to take some action. Each program may have one or more campaigns, where a campaign may involve several communications centered on a single appeal, such as e-mails, direct mail, and telemarketing calls to renew a membership before it expires.
Common types of programs you may want to include in your fundraising plan are listed below. Only a large development office with a big staff would be able to do a good job on many separate programs. Smaller and newer operations should have fewer. We believe a prospecting program is essential for all fundraising plans, and we'd encourage those who have renewal but not monthly giving programs to consider starting the latter.
Below each type of program, we've indented typical strategic considerations or suggested approaches for developing or improving the program. These suggestions are not going to be appropriate for everyone, but may help you brainstorm ones that are appropriate for your organization's fundraising plan:
- Prospecting (acquiring new donors, usually a break-even activity at best): Extra stewardship in the form of a special "thank you" and additional communication about what your organization does with the money donated will help to develop these relationships.
- First time renewals: First time givers deserve extra attention to encourage the second gift and cement an on-going giving relationship.
- On-going renewals (getting a new donation from those who gave last year): Encourage donation upgrades from the previous gift.
- Conversion of one-time donors to monthly donors: Multi-givers (more than one donation in the last year) and multi-year givers are good prospects for this kind of program.
- Upgrading monthly donors: After a year of monthly donations and regular communication about what the organization is doing with the donations, consider asking for an upgrade to a higher level.
- Prospecting for large donor clubs (for example, a President's Circle for those giving over $1000 per year): Investing the time and resources to set up large donor clubs with special access privileges for VIPs, events and so on is a good way to reward and motivate higher levels of giving. Total annual giving in the past as well as intelligence about ability to give are good ways to create this prospect segment.
- Upgrading between large donor clubs: An end-of-year appeal for additional one-time donations to take contacts who are close to the next level of club up to it can be effective. Using the club benefits to encourage larger monthly donations is also a standard practice.
- Special appeals: Special appeals may be useful when there is extensive news coverage of an event or chance to respond to an important opportunity/threat. If used too frequently, they can become ineffective.
- Capital programs: These programs should be researched and planned to ensure that the project costs will be covered and the fundraising targets reached. Capital programs are often multi-year efforts and multi-faceted.
- Renewal of lapsed monthly donors: This is a high-yield activity that helps address issues like expiry of credit cards and donors moving their bank accounts.
- Renewal of lapsed donors: Another program with good long-term yield. You may find it cost-effective to telemarket lapsed donors in order of their most recent year of giving and ending when the cost per renewed donor reaches the cost of acquiring a new donor.
- Acknowledgement programs: Demonstrating appreciation for donations through thank you calls and gifts may prove a good investment.
Given the goal amount for a fundraising program, industry standards can be used to develop the number of donors at different levels and the number of required prospects. This amounts to a pyramid with a few donors at the top giving the bulk of the money and many at the bottom giving a smaller portion of the total; typically, 80 percent of the money raised in a campaign is given by 20 percent of the donors. This inverse curve holds across many organizations and levels of giving, and is likely to be evidenced for total donations by donor to your organization. For example, 25 percent of Canadian charitable donors gave 82 percent of the total donation (http://www.statcan.gc.ca/daily-quotidien/090608/dq090608a-eng.htm).
Googling for "gift range calculator" yields several good results in the top 10 results. The single top-level donation may be 10 to 25 percent of the total amount to be raised in the campaign. Generally, as the gift size halves, the number of expected gifts doubles or triples. It can be convenient to segment levels by reducing the donation amount by a quarter or a third rather than a half, with a corresponding reduction in the number of expected gifts.
Well-established fundraising programs can expect to receive a larger percentage from larger gifts, and newer programs can expect to depend on smaller donations for a larger percentage of their goal.
In traditional capital and major gift fundraising, you need about four prospects (contacts for whom you have some reason to believe that they can give at that level) for each donation at a certain level. More sophisticated gift range calculators factor in the likelihood of prospects at one level ending up giving at a lower level; this reduces the number of prospects expected to be required at lower levels in the gift range pyramid.
A range of communications and outreach activities are deployed to convert the campaign prospects to donors such as e-mails, letters, phone calls, meetings, and so on. Each of these appeals has a much lower conversion rate than 25 percent. The plan for the type, number, and order of the communications often varies by segment, with higher value segments getting higher touch communications like personal visits, meetings, and telemarketing. Successfully raising significant amounts of money from low-value contributions usually involves greater automation and less paid time by humans. Volunteer time is often a precious commodity for non-profits that is best spent on higher value activities.
As you develop your fundraising plan or review your existing one, it is useful to compare it with benchmarks and surveys. Direct mail remains the mainstay of fundraising at large established non-profits, bringing in over 80 percent of donations according to a recent study (http://www.slideshare.net/artezinteractive/artez-interactive-from-donor-acquisition-to-fundraising-performance-benchmarks-for-nonprofits). However, it is notable that the average online donation received and the five-year value to the organization of online donors is greater than direct mail donors.
Assumptions in your plan about the size of lists that need to be contacted in order to generate a certain number of donations can be calibrated against benchmarks. Generally, the lower touch/lower cost communication channels have lower conversion rates. For example, one recent survey found that e-mail fundraising conversion rates were 0.13 percent (http://www.e-benchmarksstudy.com/2010.html), while the conversion rate for a direct mail donor solicitation to a list of previous donors tends to average around one to two percent. Good surveys provide actionable recommendations, such as this one's advice to focus on improving click-through rates in order to join the top-performing group of e-mail fundraisers.
So far in this section, we've been focusing on a top-down approach for planning your fundraising, moving from fundraising goals down to the number of prospects required in each segment. CiviCRM has a number of reports that provide an analysis of how your organization has been doing in its own fundraising, as we'll see below in the Reporting section and in reports described in other parts of this book such as the chapters on events, membership, and communications. These reports provide a bottom-up analysis of historical data for your organization that should be integrated with the results of the top-down planning in two ways:
- First, you should compare your organization's metrics against benchmarks like those mentioned above to help identify areas of strength and weakness. Larger surveys tend to have more reliable data while ones for your sector and region may provide more appropriate comparisons despite their smaller sample. These comparisons should help provide elements of a more general SWOT analysis (internal strengths and weaknesses, and external opportunities and threats) to inform your fundraising plan. Where have we done better or worse in the past compared to standard metrics? Do we know why? How can we address our weaknesses and leverage our strengths?
- Second, you should review your existing donor base by segment to determine whether the number of prospects presumed by your plan can feasibly be attained. Your plan may need to be adjusted to include actions to improve the size of prospect lists through list rentals, prospect development activities like asking board members to review their contact lists, or research into high net worth individuals in your area or with interests in your sector. When all those options are considered, you may decide your fundraising goals need to be raised or lowered for particular segments or programs.
The rest of this chapter will explain how CiviCRM, and particularly its CiviContribute component, can be used to implement your fundraising plan. As a result of the particularities associated with raising funds via events and through memberships and subscriptions, and the special support that the CiviEvent and CiviMember components provide, later chapters will be devoted to using CiviCRM for those types of fundraising.