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Electrifying Results: Fundraising Insights to Move the Needle for Your Nonprofit

The New 80/20 Rule for Fundraising

The New 80/20 Rule for FundraisingIf you work in fundraising, you have likely encountered the adage that 80 percent of your revenue comes from 20 percent of your donors. This is derived from the Pareto Principle, which can be extrapolated to just about anything—80 percent of traffic accidents are caused by 20 percent of drivers, 80 percent of beer is consumed by 20 percent of the population, etc.  Although the numbers may not always be exact, the theory holds that a relatively small audience is responsible for a disproportionate number of the results in many fields.

It turns out fundraising is a prime example of where the Pareto Principle is played out to an even greater extreme. According to data collected from over 7,000 small to mid-size charities by AFP and the Fundraising Effectiveness Project, 89 percent of giving comes from the top 14 percent of donors (those giving $1,000 or more). Taken even a step further, 76 percent of contributions come from the top 4 percent of donors, those giving $5,000 or more.

In short, 14 percent of donors are going to decide if you meet your annual or campaign goals. Don’t assume you know these donors off the top of your head. Some will likely come to mind, but others may fly under the radar. Pull a list to be sure. You should be building personal relationships and figuring out what motivates these donors and what they want to see from your organization.

If you’re looking at a campaign, assessing the feelings of these donors through a feasibility study is an important step. These are the people who will make or break your campaign, and you don’t want to find out they have concerns after you’ve already launched.

One word of caution. The 14 percent of donors who account for 89 percent of your revenue often start their giving as one of the 86 percent who make up 11 percent of your revenue. While it’s not feasible to have a personal relationship with every one of your donors, you do still need to have proper stewardship systems in place that promptly and thoughtfully thank donors and let them know how their gift is used. With proper stewardship, consistent and increasing gifts will help identify and build your pipeline of major donors.

Shocking Statistic: Thirty percent of $1,000+ donors made a first gift of less than $1,000 (Ben Miller, DonorTrends/AFP).

Tax Changes and Giving Trends to Watch in 2018

Tax Changes and Giving Trends to Watch in 2018Much has been written about recent changes to the tax code and how they could affect philanthropy. Many forecast decreases, sometimes in the billions, for charitable giving. There are both positive and negative aspects of the tax bill when it comes to fundraising, and the overall impact will depend on which effects outweigh the others. Here are a few keys to watch:

  • Largest impact on midlevel donors. The largest change to the tax code affecting fundraising is the doubling of the standard deduction. While the deduction for charitable giving remains, the number of people who itemize their taxes, and thus realize the tax benefits of making a donation, is estimated to drop from 30 percent to 5-10 percent. The good news is this likely won’t impact your top-level donors, who will still fall into the 5-10 percent who itemize. It will also have little effect on lower level donors, who will continue to simply take the standard deduction. The largest impact will be felt by those who move from itemizers to taking the standard deduction. Keep an eye on your organization’s gifts falling in the 25th to 75th
  • More volatility in giving. Because of the aforementioned changes to the standard deduction, some donors may choose to concentrate their gifts in one year versus spreading them out over a pledge period. As an example, a donor who wants to make a $50,000 campaign gift may choose to pay the entire gift in one year, itemize their tax return and take the charitable gift deduction in the year the gift is made. Spreading the gift out over five years may not get them to the threshold for itemizing, forcing them to take the standard deduction and thus eliminating the tax benefit of the gift. These changes may also accelerate giving to donor advised funds, encouraging donors to make large contributions to their funds and receiving tax benefits in one year, and simply making distributions from their funds in other years. This effect may create large fluctuations in giving from year to year.
  • Increases in discretionary income. While the decrease in those who itemize their taxes will have some negative effect on charitable giving, it is also estimated that many Americans will see an increase in their take-home pay. Many studies have shown a correlation between discretionary income and charitable giving—how much will donors (and which donors) increase their giving with more dollars in their pocket? Some companies, like Wells Fargo, have also signaled they will increase their philanthropic giving due to the reduction of the corporate tax rate.
  • Changes in the estate tax. One of the less publicized aspects of the new tax plan is the doubling of the estate tax provision (from $5.1 million to $11.2 million for individuals, $22.4 million for couples). This only affects high capacity donors, but is worth discussion as you steward existing estate gifts or ask for new ones

In short, there are pieces of the new tax bill that could both increase and decrease charitable giving. While there seems to be more that would discourage giving, the ultimate question will be how much deductions actually incentivize giving? Although studies have shown this is often relatively low on the list of reasons donors give, the next few years will show how true that actually is.

Shocking Statistic: According to Forbes, the new tax bill will decrease the number of taxable estates from 5,000 to 1,800 in 2018.

Giving Circles and What Donors Want

Giving Circles and What Donors WantAlthough they come in all shapes and sizes, giving circles are broadly defined as a group of people pooling their money and making a donation to a nonprofit organization. According to the Collective Giving Research Group (CGRC), the amount donated by these groups has tripled over the last decade, surpassing $1 billion in grants.

The growth and granting power of giving circles should grab your attention. So should what they might be telling us about what donors want. First, donors want to have a BIG impact. While an individual in a giving circle may only contribute $50 or $100, the group’s gift will be much larger. This shifts a donor’s mindset from thinking their modest gift doesn’t really make a difference, to feeling more like a major donor (with proper acknowledgment, of course).

Second, giving circles show that donors want to see the impact of their gifts. The same CGRC report showed that 84 percent of groups make grants in their local geographic area, preferring smaller, local organizations to larger national groups. This allows often overlooked organizations to take on ambitious projects that otherwise would never get done. And it allows giving circle members to track the progress of their grant—not just formally from the organization itself, but because of the locality it may also be discussed on the news, in board meetings and at holiday parties.

So research what groups may be in your area and find opportunities for impact projects you could pitch to them, based on their typical grant size. And don’t forget that all your donors, no matter the size, want to create big impact and see how their gifts are changing their community for the better.

Finally, from all of us at AMPERAGE Marketing & Fundraising, we wish you and your family, friends and colleagues a happy and joyful holiday season. We look forward to hearing about all the great work your organizations will do in 2018!

Shocking Statistic: Seventy percent of giving circles have a majority of women as members (CGRC).

Campaign Lessons from Disaster Fundraising

Unfortunately, the last few months have seen a string of natural disasters affecting the U.S., Mexico and Caribbean islands. The positive side of these disasters is the outpouring of support, and usually fundraising dollars, that follows to help those who are suffering. While your nonprofit may not receive the national attention hurricanes and earthquakes garner, the campaigns to support those affected provide some important reminders on what can make your campaign successful.

  1. Leadership is key. Perhaps the biggest fundraising story out of the recent disasters was the success of JJ Watt’s campaign to raise relief funds for Houston. Watt had all the traits you want in a campaign leader, including:
    • Being well-respected. Watt is viewed as one of the best players in the NFL and is free from scandal.
    • Watt’s “celebrity” status gives him access to a group of high-capacity donors. He also has millions of followers on social media.
    • Passion and communication. Watt was consistently posting videos to say thank you to all those who supported the campaign and why it was important.
    • Skin in the game. He made a large gift of his own, setting the bar for others to follow.
  2. Success begets success. People want to be part of a winner, and the more people that got involved with Watt’s campaign, the more positive momentum was created. Once the ball gets rolling, no one wants to be one of the few who don’t support a cause. Watt’s campaign raised over $37 million…with an initial goal of $200,000.
  3. Crowdfunding is a powerful tool, and not just for small gifts. Somewhat overlooked in Watt’s campaign is the fact that he wasn’t steering people to give to an established organization, but rather a crowdfunding campaign he set up. These campaigns can be a powerful tool to provide updates to specific groups, like a workplace or professional association, on fundraising progress. A successful crowdfunding campaign requires items one and two on this list as well.
  4. Credibility is important. Many charities were featured in the press as suggested organizations to direct funds to, and oftentimes those were the highest-rated charities from watchdog sites. Recent disasters also renewed the debate about the Red Cross and how effective they are in using donor funds. A thank you is no longer enough—donors want follow-up and need to hear how their gift is being put to work in an effective way.

Although there may be some adjustments, these fundamentals can set your campaign up for success, no matter the cause.

Shocking Statistic:  JJ Watt’s crowdfunding campaign raised over $37 million from 209,417 donors, and was shared over a half million times on Facebook.

Tips on Going Live with Facebook

Tips on Going Live with FacebookWhen it comes to telling the story of your organization, few, if any, mediums are able to capture emotion and impact the way video does. While there will always be a place for professionally produced videos, new channels like Facebook Live provide a more informal option for communicating with supporters.

Facebook Live can give supporters and fans a more immediate, in-the-moment, snapshot of what is happening with your organization. It could be a short thank you for a special gift, the announcement of a fundraising milestone or an update on construction progress. Even outside of fundraising, Facebook Live can be used to give your followers a “behind-the-scenes look” at your organization or utilized for a Q&A around a new program or event. Here are a few tips for getting started with Facebook Live:

  • Have a plan.

Even though the benefit of Facebook Live is spontaneity and being in the moment, you don’t want to completely wing it, especially if you are interviewing someone. Be sure interviewees are aware of discussion topics beforehand so they are able to think about their responses.

  • Do a test-run.

If you’re planning to use Facebook Live for a big event, like a press conference or campaign kickoff, consider testing a different broadcast beforehand. Like any new technology, there’s always a bit of a learning curve, so work the kinks out before your bigger event. Facebook offers some tips for nonprofits here.

  • Promote.

Don’t forget to tell your followers about your planned live event in the weeks and days prior to it. Just like networks need to promote sitcoms and football games, you need to remind people when your event is and why they should tune in.

If you’re set up to accept donations through Facebook, you can also add a donate button to your live video stream (instructions here). So start brainstorming opportunities to share your story with a live video. Look at what you post regularly to Facebook and find places where you could share a video message versus just text.

Shocking Statistic: According to Facebook, live videos are viewed 3 times longer than non-live videos.

Don’t Abandon Direct Mail

Don't Abandon Direct MailStrategizing about direct mail can sometimes feel like plugging holes on a sinking ship. You fix one leak (low response rates), and another springs up somewhere else (lower average gift). With the ever-growing number of communication channels, it’s often tempting to just jump ship to the next new thing.

Despite being written off for years, direct mail is still an important piece of your fundraising arsenal. One of the benefits of direct mail is the ability to test new ideas, and the following are some insights we’ve picked up over the summer:

Takeaway: Yes, you should still be sending direct mail. Donors are more likely to read direct mail than email, and they think it does a better job telling a story and conveying facts. There are distinct differences between age groups—consider asking your donors which communication channels they prefer when they give their first gift.

Takeaway: Donors like a well-designed piece—you need to meet a certain standard for professionalism. But they can tell what’s expensive to make, and that can be a turnoff. So don’t go overboard with extras like heavy cardstock and gold trim.

Takeaway: This tackles the age-old question regarding how many direct mail appeals you should send each year. In general, small organizations tend to under ask and larger organizations over ask. Instead of a one size-fits-all solution, Roger Craver offers some thought provoking questions to discern what makes sense for your organization.

The bottom line is direct mail can still be effective, but there isn’t an out-of-the-box solution that works for every organization. And we haven’t even gotten into who you should be mailing to, which is just as important. Don’t be afraid to test and experiment to find out what is most effective for your audience.

Shocking Statistic: A recent study by Grey Matter Research and Opinions 4 Good found more donors (38 percent) believe direct mail is better at telling a touching story, versus 23 percent who thought email was more effective.

Watching Your Watchdog Profiles

Watching Your Watchdog ProfilesIt’s no secret that your website is quickly becoming one of the most important tools for fundraising. It’s where donors go to seek validation or specific information about your organization, and it’s important to concisely communicate how donated funds will be used and how you have effectively used past donations.

But there is one more website to keep in mind: the watchdog site.

Just as consumers might check out a product on Consumer Reports or CNET before making a purchase, they are also increasingly looking for third party validation of the charities they support. This has given rise to nonprofit watchdog sites, the two biggest being GuideStar and Charity Navigator.

There are plenty of arguments for or against criteria used to rate charities on these sites, but most important is understanding what your potential donors see when they search for your organization.

Much of the information is pulled from each organization’s 990, and you are at the mercy of the rating criteria selected by the site. However, GuideStar offers the chance to include more information, which often leads to higher rating levels. GuideStar recently reorganized the way organizational information and impact is displayed—learn how to update your GuideStar profile here and check out the American Cancer Society page for a robust example.

Once your GuideStar profile is updated, you can share a widget on your site that links to your profile. In addition to adding credibility and transparency to your organization, making research easier for your donors will lead to higher conversion rates.

Shocking Statistic: GuideStar reports 10 million visitors to its site per year.

Impact Investing and the Effects on Philanthropy

Impact Investing and the Effects on PhilanthropyOver the past several years, the idea of impact investing has gained significant momentum, driven primarily by large foundations and mega-donors. In a nutshell, impact investing is the idea that money can be put toward for-profit companies that provide both social and financial returns, as opposed to the purely social returns offered by a traditional philanthropic gift. In addition, by providing returns, these businesses show they are sustainable and scalable—no annual gifts required.

This trend is likely a little troubling for nonprofits. The big, yet-to-be-answered question with impact investments is whether the dollars for these investments are coming from what would normally be given to nonprofits or what would be put into for-profit investments. The answer is likely a little bit of both.

This means that, to some extent, there’s increased competition for philanthropic dollars. As for-profit businesses become more socially minded, it’s important for nonprofits to become more business oriented. What areas should your organization be focusing on, and which could be outsourced to someone who could do it more efficiently?

Similarly, just because you are a nonprofit doesn’t mean that you don’t have valuable assets. Maybe it’s an engaged audience, location, expertise or recognized brand. That brand may be of value to more traditional for-profit businesses looking to “outsource” the social aspect of their brand or to convey their values to their customers.

Finally, don’t be afraid to think big. What will the issue your organization addresses look like in five, 10 and 20 years? What will you need to address it that you don’t currently have? Don’t be afraid to discuss these ideas with your boards and close donors. While nonprofits will never be able to provide financial return, the growth of impact investing means they will have to be more effective and efficient at providing social return.

Shocking Statistic: Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, have committed 99 percent of their Facebook shares, estimated at $45 billion, to the Chan-Zuckerberg Initiative, which is structured as an LLC rather than  a private foundation.

Thoughts from the AFP International Conference

Thoughts from the AFP International ConferenceThe Amperage Fundraising Advisers team traveled to San Francisco for the 2017 AFP International Conference from April 30 – May 2. There was a lot to take in from hundreds of speakers over the three days, but we wanted to share some of the ideas we found most useful, thought provoking and insightful.

Volunteers (Jan Brazzell, Ph.D., ACFRE & Kate Ward)

  • Volunteers make better givers. Seventy-four percent of volunteers give, compared to 41 percent of non-volunteers.
  • More than 1/3 of nonprofit volunteers do no volunteering during the year following the campaign.
  • It is important to create a strategic volunteer plan that incorporates your overall strategic and development plans.

Annual and Major Gifts

  • Seventy-two percent of donors stopped giving because of over-solicitating. Time isn’t the important factor, but rather when a donor feels satisfied with his or her gift. (Penelope Burke)
  • Speaking of satisfaction—how is your organization measuring it? This is an important, but untapped measure for nonprofits. Think of how often airlines, hotels, restaurants and hospitals gauge customer satisfaction. Why don’t nonprofits do the same? (Adrian Sargeant)
  • Three things that make first time donors give again and again (Burke):
    1. They’re thanked promptly and meaningfully
    2. Their gifts are assigned to something specific, not the “annual fund”
    3. They receive reports on the impact of their gifts
  • Fifty percent of donors will do research on your website. They need to easily find (Burke):
    1. How will their gift be used?
    2. What impact will their gifts have?

We were treated to keynote addresses from Shiza Shahid, co-founder of The Malala Fund, and Cleve Jones, a longtime AIDS and LGBT activist. Both emphasized the importance of empathy and storytelling when sharing your message. We look forward to sharing more and applying all we learned in our work over the next year!

Shocking Statistic: 71 percent of first time donors said their first gift was deliberately low. (Burke)

Tips for Successful Board Engagement

Tips for Successful Board EngagementBringing up a nonprofit board with an executive or development director can often create quite a bit of anxiety, or maybe even angst. Boards can be a great source of counsel and expertise, but more often than not require serious investments of time and resources. Here are some tips to make sure you are maximizing your board’s fundraising potential:

  • Set Expectations
    • Board members need to know they are expected to play a role in fundraising. These roles can take many forms, whether it’s an asker, thanker, event planner, door opener, etc. Match what each board member is willing to take on with the roles needed within your organization. But be sure everyone is pitching in.
    • It’s also good practice to set expectations regarding annual gifts. Required gifts may vary from organization to organization, but in any case, it’s best to address this upfront.
  • Train and Practice
    • Whatever role your board members take on, it’s important to provide the tools they need to succeed. Take time in a board meeting for everyone to practice their elevator pitches for your organization—what is the mission and why is it important?
    • Bring in the beneficiaries of that mission and let them share your stories. This gives life to your work and provides anecdotes board members can share.
  • Have a Board Advocate
    • Just as volunteers make effective askers, it’s a good idea to have a designated board member who will speak to the importance of fundraising. This adds credibility and positive peer pressure to messages delivered by an organization’s staff.
  • Meet One-on-One
    • Even if you chat with board members at meetings, make a point to meet with them outside that meeting at least once a year. Beyond simply thanking them or asking them for a personal gift, this is a time to discuss any concerns or answer questions they might hesitate to bring up in front of the whole group.

Some board members may be hesitant to engage in fundraising, which makes it all the more important to have the conversation with them before they join. Find a role within fundraising that accentuates their strengths, then give them the tools and confidence to succeed.

Shocking Statistic: A survey conducted by Stanford GSB found 46 percent of nonprofits do not have requirements for individual board donations, although 92 percent of board members make an annual contribution.