What Nonprofits Need to Know About Annual Fund Campaigns
The Stodgy Annual Fund Has Grown Up
If the words “annual fund” conjure up an image of one big mailing to everyone in your nonprofit's database, once a year, you’re likely still living in the 1960s.
The stereotypical annual fund as a concept is still legitimate, but it has become a much more complicated beast in an era of multichannel fundraising.
Let’s think of your annual fund as the hub of a wheel with many spokes, not unlike the way we now think about content marketing. With that, we typically imagine a website or a blog at the center of a sprawling web of other communications tactics, including social media.
The annual fund can anchor your yearly fundraising in the same way. Think of it as an overarching plan or a strategy with many moving parts rather than one fundraising campaign.
Why Do You Need an Annual Fund/Fundraising Campaign?
The motive for an annual campaign is to establish regular giving habits in your donors. Just think what might happen if donors only heard from you every couple of years, or twice this year and once next year?
What if you only got in touch when you were facing a crisis, such as not being able to stay in business? Or your organization experienced a sudden overwhelming need?
It wouldn’t work. You would be mostly cold calling. Plus retaining your donors at all would be hard because you would be starting all over again each time to make your case for funding your cause.
But the annual fund campaign does much more.
For instance, it:
- Provides steady income, both restricted and unrestricted for your programs
- Builds up a database that tracks giving over time, providing patterns that can be used to discover which donors can give more.
- Encourages donors to give once again to your cause and to upgrade that gift.
- Brings in new donors to replace donors who drop out due to death, disinterest, or economic changes. There is considerable churn among donors. It’s important to keep finding new ones.
- Stewards donors. That’s a fussy word that means keeping donors feeling good about what you are doing, the impact your organization is making, and how donors make it all happen.
- Identifies donors who are especially enthusiastic about your cause and move them toward greater involvement. Think volunteers, board members, social media ambassadors, major gift solicitors.
Does One and Done Work?
One big campaign once a year is better than nothing. But, the days of one and done are numbered. Modern donors don’t work that way, and communications channels are fractured, not monolithic.
That one big effort is now your “signature” campaign. It can be the centerpiece that brings in the majority of gifts, but it will rarely fill your organization’s funding needs for the year.
Many charities mount a signature campaign during the last few months of the year (or before their fiscal year is up). That push is often a themed campaign across multiple channels over a defined period.
Year-end campaigns work well because donors are accustomed to giving at that time of year, and the looming deadline if they want a charitable tax deduction provides added incentive.
Many donors use the end of the year to revisit their giving plans, determine how much they wish to give in total to charity, and add or subtract charities from their list of favorites.
If a nonprofit does not already have an annual fundraising campaign, the year-end general appeal is a must. Most nonprofits start their fundraising in this way, and many have built on that base successfully.
However, the most creative fundraisers go beyond the signature campaign. They devise waves of smaller campaigns throughout the year. These can be more focused both by theme and audience.
Supplemental campaigns work well when coordinated with holidays, such as Mother’s Day or Valentine’s Day. Or they can piggyback on the many cause days throughout the year. A breast cancer charity would be remiss, for instance, if it weren't fundraising during Breast Cancer Awareness Month in October.
Who will respond to these campaigns? Just about anybody! Think of the people who did not donate when you sent the signature mailing. They might well do so when they get a second wave of communications. Consider the people who read email, but not a snail mail letter. Or the opposite.
Some experts have suggested that it takes four to seven contacts before a donor gives. You will get tired of the follow up much faster than the typical donor will. That’s because donor attention is just not focused on you.
Donors have busy lives, multiple ways to get information, and poor memories. Don’t obsess over whether you’re asking too often. It’s much more likely that you will ask too little.
Annual Campaign or Development Plan?
Even though your annual campaign might turn into multiple campaigns rather than just one big mailing, it is essential to make it all work together.
You might try thinking of that annual campaign as your total development plan for the year. As such, it should be carefully planned and executed.
Plus, it can and should include all the disparate fundraising activities that you have going on. Pitch a big tent and bring in your special events, direct mail, phonathons, email campaigns, major giving, planned giving, and even your grants program.
How can you make all of those work together in a seamless way? Can your themes and messages be coordinated? Can you schedule all of these on a master calendar, so they complement each other instead of competing for time and energy?
How much do you need to raise in total for the year, and how will each component of your fundraising do its bit? Will special events be responsible for 10 percent? Major giving for 40 percent, and your signature annual campaign for 60 percent?
What role will volunteers play? How much will be staff driven? Strategy and execution are essential for mounting a multi-faceted annual fundraising plan.
Planning for a signature campaign should be meticulous. If you do this one well, it will be easy to spin off adjunct campaigns during the year.
Misty Cato, VP at Diversified Nonprofit Services, suggests that there should be nine phases to annual campaign planning. Those phases include:
- Creating a steering committee
- Campaign planning
- Recruitment of campaign committee
- Marketing strategy development
- Conducting an internal campaign (all board members should give first)
- Development of prospect list for solicitation of major donors
- Leading the campaign
- Analyzing/Evaluating campaign
- Ongoing cultivation and stewardship
Just Don’t Call It an Annual Fund
Most donors yawn when they see the words, “annual fund.” I’m surprised that I still see that on some direct mail appeals.
Today’s donors are savvier about their giving and more demanding. They want to make something happen. “Annual Fund” sounds like a black hole. How do they know what they will accomplish beyond helping your charity close its gaping operational budget?
You don’t have to call your annual appeal anything at all. If you make a good argument that you are doing work that matters and that the donor is the key to doing that, people are likely to give.
Your “signature” campaign should focus on current donors or recently lapsed donors. You already have a relationship with them so that a basic appeal might work well. If I like the local theater I always go to; I will probably respond to a generalized request for funds to keep it going.
But, calling your appeal something snappy won’t hurt, especially if you’re sending out multiple requests throughout the year and segment them in some way.
One type of campaign will appeal to a Millennials, a different kind to older donors. Also, donors like to give to something particular. So make your follow-up requests for a specific project, program, or group of people.
Illustrating what various donation amounts will accomplish works well. For instance, $40 takes care of Fuzzy the cat for six months; or $75 pays for four horseback lessons for a physically challenged child. Provide some options, but not so many that decision fatigue sets in.
Do Annual Fund Campaigns Pay Off?
What you call your annual fund/campaign is less important than that you do one. Even a single campaign is better than nothing.
Recent research found that nonprofits with annual funds are more likely to reach their yearly fundraising goals than those without annual funds. The Nonprofit Research Collaborative surveyed 945 nonprofits in the U.S. and Canada in 2014. Seventy percent of those nonprofits had an annual fund.
Large organizations were the most likely to have an annual fund, while smaller groups often did not. But, regardless of the size of the nonprofit, those with annual funds were more successful overall than those without.
The same research suggested that annual funds are just better at maintaining donor loyalty over time. Those charities with retention rates of more than 50 percent in their annual funds were financially more stable.
The takeaway is that annual funds do work. So if your nonprofit does not have one, you need to establish one, even if it is only one campaign using direct mail.
If you already have a simple annual fund campaign in place, think about making it more sophisticated with an all-year-round plan. Eventually, start thinking of your annual fund as your overall development plan.
The Annual Campaign, Erik J. Daubert, Wiley, 2009