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Smart ideas from Hartsook Companies, Inc.

October 6, 2009

Fundraising: Getting and Staying Ahead of the Curve

All around us, we see glimpses of economic recovery as the Dow inches closer to 10,000 points, consumer spending rises, and Fed Chairman Ben Bernanke proclaims, "the recession is very likely over at this point."

While savvy fundraisers never took credence in the lack of opportunity during this past recession, there are some practical, proactive measures organizations can put in place today to buffer against any future fluctuations in fundraising.

Pay Yourself First
You have likely heard the adage, "pay yourself first." Doing so over time can build financial stability for an organization, and can carry it through a short-term slowdown in philanthropy.

Endowment
An endowment helps ensure an organization's financial health and future. Moreover, it gives donors another opportunity to support your organization, and will attract donations that may not otherwise be realized, such as estate gifts.

Eighty-five percent of endowment support comes from estate gifts and 97 percent of those result from simple bequests. Yet only five percent of people leave a bequest to charity. In their research Adrian Sargeant, the Robert F. Hartsook Chair in Fundraising at Indiana University, and Assistant Professor Jen Shang, found that donors at all levels and age groups might be willing to make a bequest pledge, and that donors are 17 percent more likely to make a bequest pledge if asked. What are you doing to grow your endowment?

Enhancing Operating Revenue
Strong, diversified operating revenue will help an organization maintain stability on a day-to-day basis. But, organizations often find fundraising for operating dollars to be challenging, as the idea of underwriting utility bills does not appeal to many donors. Consider that operating dollars are no different than program expenses - they are the core of your program expenses, providing the staff, supplies, space, heat, electricity, and more that allow you to provide vital programs. Keep those individuals you serve - not the overhead for serving them - as the focus of your appeals and the funds will follow.

Make New Friends, But Keep the Old
Retaining current donors can help ensure a solid, consistent donor base. A study by Bank of America, The Study of High Net-Worth Philanthropy (COP Indiana University, 2006), found that nearly 60% of the high net-worth individuals they surveyed said they would give more to charity if they were able to determine the impact of their gifts. Moreover, another study, The Fundraising Effectiveness Project (AFP, 2007), showed that improvements in donor retention could dramatically improve nonprofit fundraising revenue. The study found that organizations experienced a 51% loss in fundraising revenue due to loss of previous donors.

The time and resources spent to acquire new donors can be significant. While an organization may attract donors to replace those lost, the relationships take time to foster, and it takes time for those gifts to come to fruition. Most donors give to multiple causes, and given the choice of supporting an organization with which a donor has a history versus one he or she recently began supporting, most would direct their funds where they have a long-standing relationship.

With a stabilizing economy, the playing field seems to have leveled once again. What will you do to get and stay ahead of the curve?

- Bridgette O'Connor, Senior Vice President and Chief Kansas City Officer (Kansas City)


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Another Smart Idea...From the Hartsook Best Practices CollectionSM

"Write up three or four of the most urgent endowment needs, and take them to a local CPA or trust officer. Know who to talk to. Return to evaluate the list every two years."- Robert Crandall, CFRE, Director of Development, White's Residential & Family Services (Wabash, Ind.)

If you are interested in Best Practices and smart ideas, see these additional resources from Hartsook Companies:

For a free copy of "Best Practices Coast to Coast" or the "Hartsook Best Practices Collection", please email Cathy Rutz, cathy@hartsookcompanies.com, or visit our web site. We also invite you to contribute your own best practice by emailing Annette Lough, annette@hartsookcompanies.com.

Visit the Hartsook Companies web site for:

• Educational opportunities
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Strategies for Success explores smart ideas, connecting with more than 2,000 fundraising professionals bi-weekly. We welcome your contributions or comments. Send to Strategies for Success editor Annette Lough, annette@hartsookcompanies.com. If you'd like a free subscription to Strategies for Success - or its monthly companion, eHartsook on Philanthropy - contact Cathy Rutz, cathy@hartsookcompanies.com. You also can reach her at 316.630.9992.

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