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Should I Consider Raising Funds for an Endowment?

Palms with penniesEndowments are often associated with large nonprofit organizations in higher education or hospital foundations. Money raised for an endowment is invested, and the return is designated to support an organization’s general operating budget, a specific program or staff position. The additional funding stream can sustain a mission-driven organization and its future presence in the community.

While fundraising events and donor visits may be difficult to conduct during a pandemic, small and midsize organizations may further realize the importance and need for an endowment to sustain future operations. So, is raising funds for an endowment right for your organization at this time?

First and foremost, organizations should concentrate on raising money for their annual operating needs. Many donors may prefer to support your organization’s annual operations through special events or direct mail.

Endowments take more time to build and require a substantial amount in principal to yield an annual distribution. They tend to appeal to donors who want to leave a lasting legacy gift to sustain the organization for future generations. In such cases, it is imperative that the organization has a planned giving program in place. This allows donors to make a gift toward an endowment as part of their legacy.

An endowment also provides an opportunity for a donor to make a major gift to your organization. Often, organizations establish policies for undesignated gifts — outside of budgeted revenue — to be included in an endowment fund. This opportunity may complement a donor’s intentions to sustain the future legacy of an organization and reserve major gifts to support an endowment.

When establishing an endowment fund, consider the following steps:

  1. Have a plan. Develop a clear vision for what the endowment returns will support.
  2. Create case materials to promote to donors.
  3. Set a reasonable goal. For example, if your nonprofit raises $5 million a year, an endowment goal of $10 million is not likely to be achievable. However, an endowment goal of $1 million may be more achievable and would also result in a great impact to your organization.
  4. Establish guidelines for withdrawing revenue gains. Set a minimum endowment balance such as $1 million before allocating distributions.
  5. Mine your database for potential donors and target gift asks to support your endowment.

AMPERAGE Fundraising Advisers can assist in establishing and raising funds toward an endowment campaign.  Contact Justin Tolan, director of fundraising, at jtolan@amperagefundraising.com to learn more.

Donor Incentives to Give in 2020

Generational givingIn December, many nonprofit organizations benefit from donors’ year-end contributions. Even during a pandemic year, opportunities have been created in 2020 to encourage donors to support their favorite charities.

In 2018, the Tax Cuts and Jobs Act became effective. The act increased the standardized deduction amount and capped deductions for mortgage interest and state and local taxes. The result was fewer individuals able to itemize their taxes, leading to fewer receiving a tax benefit for charitable contributions. FreeWill notes 30% of taxpayers itemized their taxes in 2017 compared with an expected 10% of itemized taxpayers in 2021.

The CARES or Coronavirus Relief Act passed in spring 2020 provided an incentive for all taxpayers to donate to charity, regardless of whether the individual itemizes or exercises the standard deduction on their taxes. The CARES Act allows all taxpayers to take a tax deduction for charitable gifts up to $300 made in 2020.

The rise in the stock market, coupled with reduced money spent on entertainment and travel this year, has created more wealth for some individuals. This may prove to be another giving opportunity for donors, particularly those who may find an advantage in making a non-cash gift, such as through stocks or mutual funds.

For individuals age 70 ½ and older, making a charitable contribution up to $100,000 through an IRA is tax-free. It also reduces the individual’s IRA balance and taxable income for future years. For these donors, non-cash gifts offer greater tax incentives than cash gifts.

Many donors want to support your organization’s needs but do not always know the best way to do so. Helping donors understand the benefits of making a gift this calendar year will help strengthen their trust and support to your organization in future years.

Is it Time to Update Your Strategic Plan?

StrategyOne thing we’ve learned from 2020 is that we need to be flexible in an ever-changing world. Goals and initiatives set a year or so ago may no longer be relevant as your organization has had to adapt services, seek new funding sources and redefine staff and volunteer capacity. In such cases, you may have to change your organization’s outlook and revise your strategic plan.

Before jumping ahead to gather staff and board members for a virtual strategic planning retreat over Zoom, consider these steps.

  1. Conduct a needs assessment. Community needs have shifted as a result of the COVID-19 pandemic, economic uncertainty, equality unrest and environmental disasters. What services within your organization have been impacted and how are you serving the community in new ways? Do you have the infrastructure to transition programs through new service delivery? Has your clientele changed due to services provided?
  2. Review your latest year of funding sources. Even if a vaccine is close on the horizon, it will take a while for our social patterns to change. A gala that was postponed in 2020 may not yet be likely to occur at the same capacity in 2021. Did you need to increase your direct mail or digital fundraising tactics? If so, how is that reflected in your current strategic plan?
  3. Evaluate your marketing strategies. Methods for reaching your constituents and donors in the past may be different today. Do you need to focus more on digital marketing tactics rather than guerrilla marketing techniques? Do you need to create branded items to accommodate our current lifestyles such as face masks instead of canvas tote bags?
  4. Examine your staff and volunteer structures. What worked in 2019 may not be as efficient of a structure today. Do roles have to shift or be adjusted to new services provided? Are new skill sets and knowledge required to deliver online programs or a line of service to more constituents?

If your organization has experienced large shifts in these areas, it may be time to update your strategic plan. To learn more or to receive a proposal for strategic plan consultation contact AMPERAGE Marketing & Fundraising at jtolan@amperagefundraising.com.

Is a Development Audit in Your Future?

ReportThis year has posed many challenges for nonprofits, from the inability to host in-person events such as galas and golf outings, to the inability to meet with donors face-to-face to cultivate, solicit and steward major gifts.

The current state of the world and the impact of the coronavirus pandemic and natural disasters may have amplified your organization’s need to:

  • Update processes and procedures in place for accepting donations
  • Diversify funding streams and/or fundraising activities
  • Restructure your development office
  • Engage more board members or volunteers in your fundraising efforts
  • Consider a future capital or endowment campaign to expand facilities or to ensure your organization’s sustainability

If your organization is experiencing any of these needs, it may be an ideal time to conduct a development audit. An AMPERAGE development audit assesses your fundraising program by identifying strengths, areas of improvement, capacity and readiness to engage new fundraising tactics. During a development audit, the following may be appraised:

  • Donor communications and marketing materials
  • Fundraising calendar and activities
  • Donor database
  • Current funding streams
  • Donor cultivation and stewardship actions
  • Fundraising involvement of staff, board and volunteers

Examining each of these items enables us to make recommendations for an enhanced development program designed for success in raising funds for your mission.

To learn more or to receive a proposal for an AMPERAGE development audit, contact Justin Tolan, director of fundraising, at jtolan@amperagefundraising.com.

Year-End Giving

Donation JarFundraising activities for nonprofits are often busiest during the last three months of the year as organizations conduct their year-end giving campaigns. Although 2020 has been an uncommon year and one of uncertainties, a recent study by DickersonBakker found that giving is likely to remain constant from the previous year or even increase through the end of 2020. The CARES Act issued this spring provides benefits to donors contributing to charities, such as the ability for individuals not itemizing their taxes to deduct up to $300 for gifts made to a qualified nonprofit organization. These findings suggest that organizations should plan to conduct their year-end appeal campaigns as usual, but may want to consider some adjustments.

    1. Consider beginning your campaign a bit earlier.
      If you’re like many nonprofits, you may have experienced shortfalls in revenue this year as a result of the coronavirus pandemic and economic conditions. Special events and donor visits may have been canceled, or grant funders may have adjusted award schedules or priorities for giving in 2020. A year-end appeal is a way to reach your audience and have them contribute to your cause in a safe environment. Extending your campaign can allow for more time to follow up a direct-mail letter with an email, phone call and/or video.
    2. Incorporate digital strategies into your campaign.
      If you have not already, extend your direct-mail approach with electronic appeals and the ability for donors to quickly react with a “donate now” button on your website. The donate now button can be easily linked to email appeals and social media messages, easing the ability to make a gift while your request is top of mind for a donor.
    3. Be transparent.
      Don’t be afraid to paint the true picture of the challenges your organization has faced in 2020. How has your organization been impacted by the COVID-19 pandemic, or natural disasters such as the August derecho in the Midwest? Has your organization had to change course or create a new way to provide services as a result of these conditions? Being true to your donors allows them to support you in a way that meets both needs.

2020 has also been a year of social turmoil. How is your organization addressing social issues such as racial equalities? These are areas of concerns for your donors and they want to know how your organization is addressing issues of importance to them.

Making the Virtual Ask

Male Giving Virtual PresentationIt’s six months into the coronavirus pandemic and we are still managing to maintain social distance with one another. This can be challenging for nonprofit organizations that rely on connecting with donors in person to keep them engaged and providing financial support to the organization. So how do you ask donors to continue their support to your organization when you are unable to meet with them in person? Just as we have adapted our internal meetings with Zoom and other virtual platforms, we need to consider video conferencing tools in meeting virtually with our donors. Below are steps to assist in completing a virtual gift ask.

  1. Contact the donor by phone. Share that you would like to connect with them more personally and ask if they may be comfortable visiting with you by video conference. Select a video conference system they may be most comfortable using, whether it’s Zoom, Google Meet, Microsoft Teams, LifeSize or even FaceTime on an iPhone.
  2. Send an email and/or calendar invite confirmation with meeting details such as date, time and meeting link.
  3. Plan to log into the meeting 10-15 minutes ahead of schedule. This allows time to adjust your video and sound settings and display any visual aids you wish to share. You also want to be on time and not keep your guests waiting.
  4. Greet your guests as they log onto the video conference. Display a smile and wear clothing as you would if you were meeting the donor in-person.
  5. Open the conversation by asking how they are doing. How have they been coping during the pandemic? How have they been spending their time?
  6. Transition to share updates about your organization. Use the video conference as a tool to help tell your story by displaying graphs or infographics to communicate your message and needs. Note anything special your organization is doing to help its clients adjust or stay safe during the pandemic.
  7. If it feels appropriate, ask the donor if they may be willing to help support your organization’s needs with a financial gift. If you have a target ask amount, make sure to make that known in the gift ask.
  8. Pause and wait for the donor to respond.
    • If the donor is able to make the commitment during your conversation, share details about how they may be able to make a gift, whether you plan to send a link to the online donation form on your website or place a pledge card in the mail.
    • If the donor needs some time to think about the request, discuss a time that you may be able to call and follow-up on your conversation.
    • If they decline, express your understanding and appreciation of their time to listen to your needs.
  9. Close the conversation with your gratitude for their time and any support they may have shared during the conversation.
  10. After the virtual meeting is complete, thank the donor with a thank-you note. A personal, handwritten card sent in the mail will go a long way to making an impression, especially during this time.
  11. Recognize any gift received through your regular acknowledgement processes. Also, include a board member or volunteer in the gift thank you.

Getting to Know Your Donors Better

Fundraiser on PhoneWhether you’re a new development director or have donors who quietly mail an annual donation to your organization without attending any events, you probably don’t know all of your organization’s supporters. Since your other fundraising activities may be on pause due to COVID-19, now is a perfect time to pick up the phone and get to know your donors. How do you begin to engage these donors you do not know?

 

  1. Make a phone call and introduce yourself. Share what you do at the organization, how long you have been there and why you enjoy working at your nonprofit.
  2. Recognize their contributions to your organization and thank them for the impact they have made with their previous support.
  3. Ask questions. Inquire how they and their family are doing and adjusting to life through this pandemic.
  4. Ask more questions. If it feels appropriate, ask why they contribute to your organization. Are there programs your organization offers that they are drawn to support? What is their history with your organization? The donor’s answers will help you gain knowledge about how they want to help and can assist in tailoring future proposals for their consideration.
  5. Share updates about your organization. Disclose how the pandemic has impacted your organization or changed how you deliver services. Describe how the projects they care about most have been affected by the current pandemic and how you plan to overcome any obstacles.
  6. Connect donors to ways they can participate in your nonprofit. Provide details about an upcoming virtual event or program. If it seems appropriate during the conversation, suggest ways they can volunteer or support your organization financially at this time.
  7. Thank the donor for their time, the chance to get to know them and support for your organization. Follow-up with a thank-you note, either through an email or handwritten card.

Stay in touch. Continue to reach out to these donors throughout the year and provide updates to further strengthen your relationship.

Increasing Your Digital Fundraising Presence in a COVID-19 World

Computer VideoAs fundraisers, we tend to be social people. We get to know people over a cup of coffee and attend social events hosted by our volunteers and donors. COVID-19 has put a halt to those interactions, but as fundraisers we cannot just sit back and wait for the doors to open. Our nonprofits depend on us to continue to bring in revenue for services that may be most critical at times like these.

While people are at home surfing the internet on their electronic devices, you want to be sure the information up on your website is accurate. Display prominently ways to reach your organization during the pandemic. Delete past or canceled events from your site.

Assess your ability to accept online donations. If you’re unable to, it’s time to get that capability on your website — especially because staff are not in the office to receive donations in-person, retrieve the mail and make a bank deposit.

The online environment is crowded, especially now as every nonprofit and small and large businesses are dedicating their marketing efforts to the digital platform to attract their audiences. Search engine optimization (SEO) can improve your online visibility. Invest time in the creation of blogs, videos and infographics and put them online to boost your online discoverability. A study by Google found 57% of people who watch fundraising videos will go on to donate to that cause. Facebook also reports that posts that include videos have the highest level of engagement.

Being active on social media shows your organization is continuing to serve its constituents and can mobilize current supporters as well as attract new people to your cause. Consider a presence on multiple social media platforms:

  • Facebook and Twitter are invaluable for furthering the engagement of key influencers.
  • Instagram enables you to tell great stories or share current activities.
  • LinkedIn targets a corporate audience, which can translate to sponsorship support and volunteers.

Post updates on social media platforms often with a simple call to action. Respond to comments and questions posed to your organization promptly. It’s essential to show that you want to engage with your followers and demonstrate it’s a two-way conversation.

COVID-19 is changing many industry practices, including fundraising tactics. Increased use of digital fundraising strategies will help organizations transition to raising funds in a new way.

Fundraising in Uncertain Times

Uncertainty SignThe year 2020 has begun with some uncertainties impacting how we work, relax and spend our resources. The outbreak of the new coronavirus has led companies to restrict travel, individuals who had traveled to be quarantined and others to practice social distancing. The virus also has its ripple effects on the economy, impacting trade, the ability to access goods and services, and the hospitality industry, all of which has led to the stock market slide. Nonprofit organizations also wonder how to fundraise in uncertain times. Before you hit the pause button on your fundraising efforts, carefully consider your development activities and if the current state of the world will have an impact.

  1. Assess your events. Is your population at risk at your activity? Develop contingency plans that ease participants’ minds to participate, such as providing additional sanitation stations. If the event is scheduled to take place in the fall, ramp up your planning now and conduct business as usual in terms of marketing, soliciting sponsors and recruiting participants. After assessment you may feel the best decision is to cancel or postpone the event or look to replace it with other fundraising activities.
  2. Consider increasing direct mail efforts. Whether it’s replacing an event with a fundraising appeal or adding a new appeal or two to your fundraising calendar, this will help share your story, needs and how the current state of affairs has impacted your organization.
  3. Implement or enhance a monthly giving program. Monthly giving programs keep donors engaged in your organization while regularly supporting operations and program needs.
  4. Enhance communication with your target audiences, whether it’s through a mailed or electronic newsletter, social media engagements, or special letters and email updates from the “Director’s Desk.” Keep donors informed while also providing easy access to donate online or by mail, if they wish.
  5. Connect with your audiences virtually. Set up town hall meetings, conferences or events that people can engage with online from home or workplace.
  6. Initiate one-on-one conversations with your donors and prospects, either in person, over the phone or video conference. This can be valuable time spent getting to know them and building relationships with your donors or engaging new prospects to your organization.
  7. Be flexible with how donors may make a gift and consider offering or extending pledge periods. Some donors may be reluctant to support your campaign or cause due to the downturn of the stock market, but knowing they can support your needs over a longer period of time may make a major gift commitment more palatable.

New Year, New Decade – Fundraising Trends in 2020

2020 Piggy BankCharitable giving increased by over $147 billion from 2009–2019 (Lilly Family School of Philanthropy at Indiana University). As we begin a new year and decade, nonprofits will need to adapt to the changes in how and why donors contribute to charity.

Virtual fundraising has been on the rise for years. The ease to interact, participate and fundraise on one’s own time make virtual fundraising an attractive option to support charities. Online fundraising platforms such as crowd-funding and virtual events are relatively low-cost and low-maintenance for nonprofits to implement compared to traditional fundraising methods and have the potential to engage a larger audience.

The digital age has also allowed donors the ease and ability to research organizations before making a gift. (All the more reason to make sure your 990s and other organizational information are current on GuideStar.org). Becoming transparent about use of funds and making asks for tangible items such as a project or program will appeal more to donors. To ensure future engagement with your organization, report on the donor’s impact of their gift.

A new decade also means a new generation of donors. Focus will shift to attracting Generation Z (individuals born between 1995–2015) into philanthropic giving. This generation is just entering into the workforce, but their heightened social awareness and desire to make positive change is an opportunity to engage this audience in philanthropy early in their adulthood.

To appeal to the new workforce, corporations will become more focused and strategic about their philanthropic giving in the community. This opens the door for nonprofits to enhance their corporate engagement initiatives with event sponsorships and volunteer activities for corporate employees.