Non-Profit Basics: What is Fundraising?

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Perhaps you’re taking a new job with a non-profit organization.  Or, maybe you’ve been asked to join a board or to volunteer with a local charity… or you’re just interested in how non-profits operate.  No matter the reason, you’re here because you are wondering: what, exactly, is fundraising?  And how do non-profits go about the process of raising money to support their cause?  In this article we’re going to look at a basic overview of non-profit fundraising.

At its root, fundraising is the process of building relationships with people, companies, and other organizations who might want to support your mission by donating money to your non-profit.  Fundraising requires patience and determination… the best fundraisers seek to build long-term relationships with their donors to provide an ongoing source of funding for the organizations they are working with.

Best Practices in Non-Profit Fundraising

When it comes to answering “what is fundraising?” it is important to understand three key concepts that underlie the entire non-profit development process:

First, the vast majority of money available to non-profits comes from individuals… not companies or other non-profit organizations.  In the United States and most other developed countries, nearly 80% of the money that is donated to charities comes from individual donors.  For this reason, you should focus most of your fundraising efforts on raising money from people, not corporations, foundations or other non-profits.  If 80% of the money comes from individuals, you should spend 80% of your time on building relationships with individual donors.

Second, cold fundraising is your last resort, not your first option.  Some non-profits are successful with raising money through “cold fundraising,” i.e. raising money from people who don’t already know and support the organization.  This money may be raised through direct mail prospecting, over the Internet, or through tactics like street fundraising (“chugging.”)  Those organizations that are successful with cold fundraising are almost always bigger organizations with large fundraising budgets and data-driven fundraising operations.

For most non-profits, the best way to raise money is through “warm fundraising.”  This means reaching out to people your organization and staff already has a relationship with… your current donors, volunteers and friends, as well as those who know your donors, volunteers and friends.  By calling and meeting with people you know (or who know people that already support you), you will have a warm introduction to your prospects and a much better chance of being able to successfully raising money from them.

Finally, as noted above, fundraising is all about building relationships.  Your goal as a fundraiser is to build a long-term relationship between the non-profit and the donor.  This allows your organization to build a base of support that lasts from year to year, rather than having to find new avenues of support every 12 months.

What is Fundraising: The Fundraising Funnel

Now that you know the basic best practices for non-profit fund development, it is important to understand what the donor lifecycle looks like.  This lifecycle is sometimes called “the fundraising funnel.”  The funnel is the process for turning new contacts into lifelong donors to your organization.  There are four steps in the fundraising funnel:

Step #1 – Prospecting

This step involves identifying people who might be interested in your mission and approaching them to begin the relationship-building process.

Step #2 – Cultivation

Once you have approached a prospect for the first time, you will want to cultivate them.  This is the process of communicating with them on a regular basis to build a strong relationship with them.

Step #3 – Asking

At the appropriate time, you will want to ask your prospect to make a gift to your non-profit.  It is a common maxim in non-profit development that “people don’t give unless they are asked.”  Don’t make the mistake of thinking that someone will give to your organization just because of your cultivation work.  In order to receive a gift, you will need to directly ask the prospect to make a donation to your organization.

Step #4 – Stewardship

Stewardship is the process of continuing to build a relationship with your donors after they have already made their first gift.  During this phase, you continue to communicate with your donor until the next time you ask them for a gift.

Common Fundraising Tactics

There are lots of different ways to ask someone for a donation to your non-profit.  These include all of the common tactics you probably had in mind when pondering the question, “What is fundraising?”  Some common tactics include:

Smart non-profits use a mix of fundraising tactics to reach their fundraising goals.

The Two Things You Need Before You Begin

In my experience, before you begin fundraising, there are two items you need to have in place at your non-profit, school, church, or other charity:

The first is a fundraising plan.  While this can certainly be a full-fledged 30-50 page fundraising plan, it can also be a simple, 2-page plan that sketches out your fundraising strategy and tactics for the coming year.  Either way, it is imperative that you have a written strategy for reaching your fundraising goals that includes firm deadlines for your activities.

The second thing you need is a donor message (sometimes called a “case for support.”)  This donor message should tell donors what your organization does, why your mission is so important, why you need to raise money, and how donors can get involved with your work.  This document can be short (2-7 pages) and should form the foundation of all of your donor communications.

Conclusion – You Can Do This!

While non-profit fundraising can seem intimidating, it is important to remember that it’s not rocket science.  While you may still be trying to figure out exactly what is fundraising… remember that there are tons of great guides out there to help you get started.  One of the best things you can do is to use our list of the best non-profit fundraising blogs to find great articles and tips to help you on your journey.  Best of luck in your fundraising endeavors!

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Photo Credit: Tax Credits

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