Chapter Eighteen
“Imbue your money with soul, your soul, and let it stand for who you are, your love, your heart, your work and your humanity.”
—Lynn Twist
I gave a presentation at the Global Good Fund Conference in DC on how I raised $2 million in two years, and that event generated dozens of questions on how I did it and what I learned.
There are thousands of organizations in the world that are doing incredibly impactful work, and people are being solicited by them all the time. Your job isn’t just to demonstrate to people that your mission is important but to also prove to them that their donation is going to have more of an impact on the work you’re doing than it will at one of the other organizations they could potentially be giving to.
Here are some of the most important aspects I’ve learned about raising funds:
- The majority of giving in the United States comes from individuals.
This takes a little while to sink in. Most new nonprofit founders come up to me and ask me about the secret to getting grants and how we got all of the grants we needed to fund our organization. There are usually a few things that are wrong with that. First, they are assuming that the majority of our funding came from grants, which, in fact, is not the case. More than 50 percent of our funds raised came from individuals. I came across this mini-blurb in my fundraising journey, and it drastically changed how my team allocated its time within fundraising:
According to Giving USA’s Annual Report on Philanthropy, in the year 2000, more than $200 billion was given to the not-for-profit sector. Of that $200 billion, only 5% came from corporations, 7% from foundations, and 80% from individuals. The bulk of the giving comes from individuals, and from those people who give 88% of the money, 75% of them made less than $150,000 yearly.
Second, most foundations don’t make hundreds of grants a year. They tend to have a portfolio of organizations they give to or support, and they continue to support them year after year. Unless the amount of money in the foundation increases, they usually don’t look for new organizations. With that said, if there is an individual who emphatically believes in your work and they happen to sit on a foundation board, you can bypass most of the traditional bureaucracy involved with getting money.
- You don’t need to have a nonprofit status or a 501(c)(3) to start raising money from individuals.
I strongly advise that organizations consider finding a fiscal sponsor. Having a fiscal sponsor allows organizations to leverage another nonprofit’s tax-exempt status to take on donations from individuals.
- When you’ve met one individual, you’ve met one individual.
Everyone gives for different reasons, and the level of involvement and engagement they want to have is also different. One of the biggest mistakes you can make is trying to treat two people in the same way or using the same method to get two different people to donate.
- Communication trumps impact.
This is a sad truth. You don’t have to like it, but you have to appreciate it if you’re going to be successful at fundraising. If you do incredible work and no one hears about it, then it is rarely going to get the funding that it needs. I’ve heard horror stories of organizations that have had very little impact, yet had incredible storytellers and communicators who brought in way more money to support their work.
- People give to people not necessarily causes, especially in the very beginning.
Trust is the most important quality to exude. Having strong leadership within an organization is important. The leaders of an organization have to be able to deliver results and impact. In the earlier days of an organization, before the viability of the concept is proven, people are investing in the founder and the leadership team. You have to be willing and able to ask people for money to support your mission. More importantly, you need to connect with the people who are giving you money. Even though the person making a donation is giving to support a cause, they know that it is a person who is leading the charge.
- Friends asking friends is powerful.
Building off of the last lesson learned, when people ask their friends to support a cause they are donating to, they are more likely to give than if they get a solicitation from an organization. It is also much harder to say no to your friend, who is a real person, than it is to say no to an inanimate thing (the organization in this case). There is a huge body of research as well as consulting companies out there that help advise organizations on fundraising from friends. They call the field “peer-to-peer” fundraising.
- Fundraising is like sales.
You have to convince people that your work is worth supporting. More importantly, you have to follow up. Persistence is key. Most people don’t like to think about giving away money, so they have to be constantly reminded that it is the right thing to do and that your organization is the right place to give the money.
Recently, the team at Signals by Hubspot launched an entire SlideShare based on the Referral Squirrel data, and the results showed:
2% of sales are made on the first contact.
3% of sales are made on the second contact.
5% of sales are made on the third contact.
10% of sales are made on the fourth contact.
80% of sales are made on the fifth to twelfth contact.
However:
48% of salespeople never follow up with a prospect.
25% of salespeople make a second contact and stop.
12% of salespeople make three contacts and stop.
Only 10% of sales people make more than three contacts with a prospect.
- The Benevon Model works.
If you don’t know what the Benevon Model is, quickly look it up. In essence, it is great for helping you build your network through “friendraisers” if you don’t have a particularly large network. If you have a large network already, this model can have an exponential effect on your giving. It also allows other people within your circle of friends to get involved with your work.
- Diversifying your funding streams does not increase your odds of succeeding.
In 2007, Stanford published a study that showed that more than 200,000 nonprofits had been started in the US since 1970, but only 144 of them had reached $50 million in annual revenue. Contrary to common logic around diversification, they actually raised the bulk of their money from a single type of funder, and they built professional organizations that were tailored to the needs of their primary funding source. I highly encourage people who are starting to think about growing their nonprofits to read these three Stanford Social Innovation Review articles: “Ten Nonprofit Funding Models,” “Finding Your Funding Model,” and “How Nonprofits Get Really Big.”
- Hiring a development person too early is a waste of money.
When you’re first starting an organization, people don’t want to meet with your development person. (For those not in the nonprofit space, development is another term for a fundraising professional.) They want to meet with the founder. They want to hear about your vision and why you’re taking on this risk and sacrifice. What will ultimately wind up happening if you hire a development person too early is that they will just become an overpaid assistant. They will be reaching out to people in your network with very little success. Trust me, I made this mistake. Instead, hire an assistant to help you free up your time from menial tasks so you can focus your energy on building relationships and engaging more people in your mission.
- When you can’t get in touch with someone, handwrite them a letter.
With the hundreds of emails super-busy people receive every single day, doing something unconventional like handwriting a letter will almost always get you an answer. I don’t advise you hand write a letter to a hundred people or anything like that. Instead, target three to five people who you think would be compelled by your work or mission based on what you know about them, and make sure you have some sort of connection to them (i.e., same alma mater, similar interests, crossed paths somewhere before, etc.). Then write them requesting a meeting. If they take the time from their super-busy schedules to talk, they are already signaling that they are invested.
- Learning is the key to success.
You need to be actively learning and seeking out resources. I’m only in a position to be able to provide this information with you all because I’ve taken the time to seek it out. The field is always changing, and new innovations will continue to disrupt how things are done. A few of the lessons here should stand the test of time, but many of these may not be relevant in five or ten years. Also, for every one resource I mentioned here, I’ve easily gone through fifty others. Make sure you continue learning!