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14 Basic Principles of Fund Development
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Philanthropy means voluntary action for the common good. Fund development is the essential partner of philanthropy and makes philanthropy possible by bringing together a particular cause and the prospects and donors who are willing to invest in the cause. The goal is to acquire donors of time and money who stay with the charity.
This is done through the process of relationship-building. With the donor at the center, fund development nurtures loyalty and lifetime value, thus facilitating philanthropy. You know if your relationship-building works because your retention rates rise and the lifetime value of your donors and volunteers increases.
Key Elements of Effective Fund Development in Philanthropy
1. Understand some basic distinctions.
Predisposed:
An individual, business, or some other entity whose interests and actions suggest a possible inclination or susceptibility towards your organization’s cause / mission.
(“Suspect” is more common terminology. But who wants to hear anyone referred to in such a pejorative manner?)
Prospect:
An individual, business, or some other entity that has demonstrated an interest in your cause / organization. The individual has raised his / her hand by buying your services or asking to join the mailing list or… In some manner, in some way, the individual, business or entity has raised its hand signaling interest in your cause and your organization.
Donor:
An individual, business, or some other entity that has given a gift of time or money or service to your organization.
2. Nurture a culture of philanthropy in your organization.
It’s the right attitude that matters as much as anything. Culture refers to the personality / attitude of your organization. A culture of philanthropy means that everyone accepts and celebrates the beauty of philanthropy and donors, no matter the type or size of gift.
3. Build a donor-centered organization.
Focus on the donor or prospective donor. “It’s not what your organization is selling, it’s what I’m buying that counts. I’m interested in my interests, my motivations and my aspirations.
Match those and then I’ll give to you. Otherwise, leave me alone!”
Don’t universalize your own passion. Not everyone is interested in your cause, no matter how convincing you are. Do not try to convince them! That’s offensive. Instead, find those who share your passion.
4. Giving is an emotional act, not a financial transaction. Your organization is the means by which donors live out their own interests and aspirations.
Neuroscience and psychological research document that all human decisions are triggered emotions.
Then rationale steps in.
“Emotion is multi-dimensional: it focuses on a person’s core goals, directs attention and interest, arouses the body for action, and integrates social group and cultural factors. It is thus a central component of meaning making.” – Carol Saunders, PhD, Brookfield Zoo
Research from the direct mail industry says that people give in response to one or more of 7 emotions: greed, guilt, anger, fear, flattery, exclusivity, and salvation.
People move from one emotion – e.g., anger – to hope, by using your agency as the means to make change. Tom Ahern refers to this partnering of emotions as “twin sets.”
5. Engage volunteers, including board members and others.
Make sure your staff effectively enables volunteers to participate in this meaningful work of identifying, cultivating, and soliciting.
6. Don’t trespass on personal and professional relationships.
Instead, use connections to identify those who might be predisposed to your cause. If you cannot qualify them as prospects (and it’s their choice!), then leave them alone.
Nurture relationships between prospects and your organization, getting them ready to be asked and asked again.
7. Effective fund development is like permission marketing; people opt in or opt out.
“Permission marketing is the privilege (not the right) of delivering anticipated, personal and relevant messages to people who actually want to get them… treating people with respect is the best way to earn their attention. Permission doesn’t have to be formal but it has to be obvious.” – Seth Godin
8. More visibility does not produce more contributions. Everyone focuses on his / her own interests.
Your agency can be more and more visible – but if I’m not interested, I’m not paying attention. And I sure won’t send money.
It’s okay if someone doesn’t know who your agency is or what it does. Tell them, if they’re interested. That’s identifying the predisposed.
Do not solicit someone unless you know for sure that the person knows about your agency.
Where do you need to be visible? Among your current donors, because you want to build their loyalty. Absence does not make the heart grow fonder – it’s out of sight and out of mind! Nurture these donor relationships.
9. You have to give first.
“You” means each board member, the CEO and development officers, and fundraising volunteers. Why Because you cannot represent an agency or cause without demonstrating your own financial and volunteer investment.
10. Why do most people give? Because they are asked.
It’s really that simple. But only ask those who are interested. Ask the right prospect for the right amount at the right time for the right project in the right way with the right solicitor.
11. Build an individual giving program.
Each year, individuals give the largest portion of philanthropic gifts in North America. What about elsewhere? And individuals are more loyal donors than foundations or corporations.
12. Fund development is a process and a profession.
The profession is founded on ethical principles and standards, based on a well-researched body of knowledge, and protects the public through voluntary certification of professionals. Personal opinion – without the body of knowledge – doesn’t and shouldn’t count for much.
13. Most fund development problems are actually not fund development problems.
Most problems relate to other areas of operation. Fix the real problem.
14. A balanced funding mix of solicitation strategies and donor sources ensures stability and credibility.
Whenever possible, the best way to solicit a gift is through face-to-face solicitation.
How do you approach fund development? Let us know in the comments below!
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Nate Nusbaum