Giving USA provided research that showed that Americans gave $449.64 billion to charity in 2019, a 5.1% increase from 2018. Adjusted for inflation, total giving increased 4.2%. Giving is influenced annually by a variety of factors, including economic and policy activities that affect donor giving decisions.
An AGN Resources blog points out the difference between the terms annual giving and annual fund. There is no universal definition for the term annual fund, and criteria varies between institutions. Annual funds have exactness and financial emphasis, and can focus on unrestricted and restricted gifts. This fund is in alignment with institutional needs and priorities. Annual giving is a much broader term that implies annual gifts regardless of where they are designated. This type of gift typically supports current operating needs. Annual giving can be viewed as a way most donors will support an organization every year.
The late Henry A. Rosso is one of the foremost authorities on modern fundraising. He noted in his book, “Hank Rosso’s Achieving Excellence in Fundraising,” that there is a great need for nonprofit organizations to have a strong annual campaign. He believed the annual fund is the building block for all fundraising. It creates a base of donors and provides a steady flow of revenue for the organization.
The annual fund seeks funding from individual discretionary income. Involvement is invited through the annual solicitation of gifts. The process of solicitation encourages the donor to better understand the organization they support. The annual fund must have an annual plan and timetable that is well-thought-out with objectives in mind. The key target market must be individuals as they give the most money each year to charity.
Annual fund objectives should be to:
- Solicit and secure a new gift, repeat gift and upgraded gift.
- Build and develop a base of donors.
- Establish habits and patterns of giving by regular solicitation.
- Expand the donor base by soliciting new prospects.
- Raise annual unrestricted and restricted money.
- Inform, involve and bond a constituency to the organization.
- Use the donor base to identify large potential donors.
A DonorSearch guide to annual fund strategies states that besides securing operational costs, one of the main goals of annual fundraising is to deepen existing donor relationships. The annual fund grows through fundraising efforts known as annual giving campaigns. Annual giving campaign strategies include campaign planning, investing in the right fundraising software, conducting ongoing prospect research, encouraging donors to give through donor membership programs, considering child campaigns and mapping out your marketing strategy.
You also need to craft an annual calendar, use multiple outreach channels such as social media, email and text, segment your list (for example, one-time donors, recurring donors, lapsed donors), personalize your asks, encourage recurring giving, make a year-end appeal, have a pledging program in place, promote matching gifts, offer engagement opportunities, evaluate your data, explore corporate sponsorships, organize multiple smaller annual fund events, keep annual events interesting, host a celebratory event at the end of your campaign, show your gratitude and customize follow-ups based upon donor interest.
An Arjuna Solutions blog suggests several best practices to enhance your annual giving campaign on a consistent basis. The goal of an annual campaign needs to be to target donor acquisition and retention, increase annual support each year and cultivate major and planned gifts. According to the blog post, to execute a successful annual giving campaign, establish smaller sub-campaigns, use multiple channels, test and optimize metrics, tell stories to enhance awareness, foster sharing through videos, make donating easy through online options, use personalized ask amounts based upon capacity analysis and follow up with donors with hand written notes if possible.
Many fundraising professionals have studied various forms of a fundraising pyramid. The basic pyramid was having the annual fund at the base of the pyramid, which reflected the lowest giving amounts, but showing the largest number of donors; major gifts in the middle of the pyramid with larger amounts of funds giving, but having less donors than the annual fund; and at the top of the pyramid planned gifts, which represented the fewest donors, but the largest gifts.
This pyramid was a complex tool consisting of education, cultivation, motivation and stewardship techniques designed through time to move the prospect through various stages of donor engagement within the organization. Through an evolution of time, techniques and strategies, the basic pyramid has changed its functionality. According to Stelter, the donor pyramid is now a thing of the past.
A recent article by Stelter points out that the traditional donor pyramid has changed and is perhaps dead. In the past, annual giving donors were transactional in nature. Over time, nonprofits worked at moving donors up the pyramid using various tools, like moves management. These donors became consistent donors, major donors, lead donors and planned gift donors. Through technology and process changes, donors are now interfacing with organizations at a variety of points in their giving cycle as opposed to a linear progression.
In today’s world, donors now encounter fundraisers and organizations at different entry points. For example, planned gifts are now being made from first-time donors. As such, the traditional donor pyramid has now become a donor vortex. This vortex process allows you to engage today’s donors through having a variety of entry point channels. You need to treat all donors equally as you do not know their total long-term organizational value until this relationship matures. You also need to place a higher value on social media at the outset. Traditional movement of a donor from annual giving to planned giving may or may not exist.
The annual fund, as we historically have known it, has evolved. Understand it for what it is, and be prepared to change your processes, techniques and strategic thinking accordingly. Your fundraising program must be multi-faceted and appealing to all types of donors. Your annual fund must understand best practices and the vortex theory. Are you prepared for this complexity?
- Categories:
- Annual Campaigns
Duke Haddad, Ed.D., CFRE, is currently associate director of development, director of capital campaigns and director of corporate development for The Salvation Army Indiana Division in Indianapolis. He also serves as president of Duke Haddad and Associates LLC and is a freelance instructor for Nonprofit Web Advisor.
He has been a contributing author to NonProfit PRO since 2008.
He received his doctorate degree from West Virginia University with an emphasis on education administration plus a dissertation on donor characteristics. He received a master’s degree from Marshall University with an emphasis on public administration plus a thesis on annual fund analysis. He secured a bachelor’s degree (cum laude) with an emphasis on marketing/management. He has done post graduate work at the University of Louisville.
Duke has received the Fundraising Executive of the Year Award, from the Association of Fundraising Professionals Indiana Chapter. He also was given the Outstanding West Virginian Award, Kentucky Colonel Award and Sagamore of the Wabash Award from the governors of West Virginia, Kentucky and Indiana, respectively, for his many career contributions in the field of philanthropy. He has maintained a Certified Fund Raising Executive (CFRE) designation for three decades.