There are a lot of ways to get these two terms muddled together and confused. Having worked at large state-supported universities for most of my career, I'm guilty of using the terms "annual fund" and "annual giving" interchangeably.
Here's the crucial difference: some institutions need unrestricted funding in order to make their operating budget and provide basic services to meet their mission. They have an annual fund, which is unrestricted. And while these organizations accept and appreciate designated gifts to programs and named funds, they still require a certain amount of unrestricted giving. There is a laser focus on unrestricted giving. The pitch is all about the importance and uniqueness of that organization's mission in our world. The need for support is tied to the worthiness of the institution itself. Other organizations just want loyal donors to make a gift of any level, every year. This is annual giving. Usually, it is not fund specific. For instance, at most large universities, the goal of the office of annual giving is to boost alumni participation rates and the ability to designate that gift to a niche department, program or scholarship is part of the pitch. Why would an institution that doesn't need operating dollars run an annual campaign? There are many reasons but here are a few:
I now work for an institution that needs operating dollars and "annual fund" doesn't just mean "small gift amounts". Major donors play a big role in helping our organization to meet our goals. I had to completely clarify in my mind the differences between raising money for the "margin of excellence" versus raising money to meet our budget. Unrestricted giving isn't value-add at many small non-profits and smaller institutions of higher education; it is a necessity. Deeply understanding that there are two very different approaches to annual fund/giving is essential if we are to communication effectively with our colleagues at other institutions. Make sure to ask questions about whether the annual fund is unrestricted giving only, whether it includes major gifts and whether your goals are calculated by what you can raise or by your budgetary needs. Finding a colleague at a similar institution is helpful if you are hoping to craft a perfect pitch for your annual campaign. Do you work for an annual fund institution or an annual giving institution?
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“Predictive Modeling” sounds intimidating, right? It sounds technical and complicated. You probably think you should hire a consultant to help you create a predictive model for your organization.
Well, let’s all agree together to take the bite out of this phrase. I like Wikipedia’s uncomplicated definition of predictive modeling as a system that “uses statistics to predict outcomes”. Creating a predictive model is merely using statistical educated guesses to build projections and then work with those projections dynamically throughout the year. Projections is a version (model) of what you think will happen in your program this year (predictive). I’ll discuss here how to build you’re your projections and next week, I’ll post about how to work with your model dynamically throughout the year as the actual results impact your ability (for good or for ill) to reach the projected goal. For this exercise, you will need:
You’ll building each segment into your spreadsheet like you’re building a house: brick by brick, cell by cell. This takes a long time but it is the essence of predictive modeling. It must be detailed to be relevant. Once done, you’ll have a powerful tool for the entire year. So, let’s take an example or two (see the chart above): Let’s say you want to know how your fall direct mail will likely perform. You estimate from past results and database reports that you have 1,156 lybunts (last year's donors) and 567 sybunts (donors who gave 3-5 years ago) to send a letter to this fall. Looking at past years, you see that your response rate has been between 8-10% for lybunts and 4-7% for sybunts. You feel like playing it safe so you put in the low-end values. Using formulas (see my video on that topic here), the information you have put in so far tells you that you can expect 92 gifts from the lybunts and 24 from the sybunts. Based on past reports and your best guesses, you put in $135 for a lybunt average gift and $87 for sybunts. This makes your likely total dollars $12,484 from the lybunts and $2,096 from the sybunts. Now, assuming those were your only two segments for fall direct mail, you can then total up the letters, gifts and dollars and you know what to expect. Your models might include just one vehicle (direct mail, phonathon, email solicitations, etc.) or it might include everything your shop plans to bring in. Your model might have hundreds of segments or be exceedingly simple. The point is not to be baroque but specific enough to be valid predictions of results. This method is powerful because you’ll be able to see immediately which segments have a negative return on investment and can decide actively whether they merit sending the letters anyway to acquire the donors. You will also know exactly where you fall short if results don’t live up to these expectations, which enables you to course correct in future projections and change strategy for the rest of the year. I’ll show you how to do this in next Wednesday’s post – “Demystifying Predictive Modeling, Part 2”. Don't ever be intimidated about predictive modeling again. In fact, because of your knowledge of your program, you are the best person to build and adapt your predictive models. You can do this! An alternate title for this post could be “How I was able to coach my daughter to complete her raffle ticket sales for dance in 30 minutes”
I had no idea it was coming but my daughter left her acrobatics class with an envelope informing us that we had to sell 20 raffle tickets at $2 each. My family has a lot going on and I wanted to finish this project quickly and simply. But, I also wanted her (at age seven) to take responsibility for this project and learn something from it. We discussed it on the way home and I had her practice a “pitch”. It was simple: “Would you like to support my dance school by purchasing a raffle ticket for a chance to win $200 for only $2?” By the time we made it home, she had it nearly memorized. Then I had an insight! I would film a short 30 second video of her saying the line and then doing a backbend. Then I would post it on Facebook so friends and colleagues would see it. We had commitments for the entire batch and then some in about 30 minutes! We had to pick up another 20 tickets today. There are 3 reasons that I think this little project worked so well: The right audience I’m pretty active on Facebook and I often post videos of my kids and their accomplishments. So, my daughter had a kind of fan club already ready to be interested in whatever she’s doing. (Don’t worry. I am super careful about my privacy settings.) The right medium I could have walked around the neighborhood with her or had her ask people at church to buy a ticket, but that would have taken all week probably. I’m already connected on Facebook to everyone from the neighborhood and church anyway. So, this was perfect as an initial step. A soft ask first on Facebook and if we need to go to a harder sell, we could later. The right messenger Coming from me, it would be people doing me a favor. That’s not as compelling as supporting a very cute little girl who just learned to do a backbend and delivered her fundraising pitch perfectly on video. Next time you have to do a fundraiser quick for a specific purpose, consider seriously what the best niche audience is, where the best place to meet them with the pitch is (medium), and who is the best person to do the asking. If you get these three things right, you can raise the funds and raise them quick. The short answer to this question is “no”.
But, many will miss this because we personally (as marketers) don’t like getting direct mail and probably are cynical in our responses to it. This bias leads us astray from recognizing the particular advantages of this medium. We delude ourselves that email and social media will take the place of this ancient vehicle of communication because we relish the new and the innovative. The problem is that our donors don’t think like we do. And groups act differently than any one individual in that group thinks. The United States Postal Service had revenues of $68.8 Billion in 2015 and that number has stayed rather steady since 2009 (after a drop in revenue associated with the economic downtown in 2007-2008). In 2015, USPS handled 80 Billion pieces of advertising material. Are all of the organizations and businesses sending through the mail kidding themselves? I don’t think so. A significant portion of that mail is non-profit direct mail. In fact, 91% of nonprofits are using direct mail. Out of those using direct response, 54% saw an increase from 2014 to 2015. The real answer to the question “Is Direct Mail Dead?” is “No because bottom line: it works!” The question we should be asking is, “What is direct mail particularly good at? How can we play to those strengths?” Direct mail has powerful things working in its favor: Nostalgic Getting a hand written note (especially a thank you note) in the mail is so much more powerful than an email. Part of this is nostalgic and retro but that nostalgia is rooted in the notion that people today don’t take the time to write notes. Mired in our daily lives driven by insta-communication, when you do take the time to send mail, it’s noticed. Familiar Everyone understands what mail is. We all know the conventions of how to fold the letter, address it, use the stamp, how to check the mailbox, etc. New media like text-to-give and various online giving platforms can be baffling, especially to the very elderly. Mail also allows us to form a visual brand that makes the donors feel comfortable giving because they feel they know that organization and trust has been built. Secure With all of the various information breaches these days, many donors feel that writing a check and sending it through the mail is more secure. The USPS is still a trusted entity protected by laws that forbid tampering with the mail. This reassures donors. Informative Although it is much more difficult to personalize than a phone call, direct mail can be highly informative. You can write a long and detailed letter and include points of pride on the back of the letter. You can include buck slips with more information for very little cost. A donor can, after absorbing your direct mail, feel like they have learned a good deal about your mission and organization. Tangible You can hold a letter in your hand. You can keep it in a file for years. If an angry donor sends a copy of the letter with a complaint written on it to your director, it has much more weight and seriousness than a forwarded email with a complaint. Part of the power of direct mail is the same power as real books and real magazines. People like to hold something in their hands other than mobile phone or kindle. Writing a fundraising letter is tough. Making it sound original and compelling is even tougher. Sometimes you can become stuck, too afraid of writing something that is stale and boring to get anything done. If this sounds like you, you have DMWB: Direct Mail Writer's Block.
Here's 5 steps you can take in about half an hour to break through your writer's block and get a draft completed ASAP: Step 1: Understand that some words are better than no words. The most important thing about fundraising is THAT you ask. Sending some mediocre letters out will generate more money than sending zero perfect letters out. Once you realize this, it is a liberating feeling. Something is better than nothing. So, don't worry so much about it being super-compelling and perfect at this point. Step 2: Find a white board (preferably a big one) On the top of this whiteboard, write what you are raising money for. This might be "OPERATING FUNDS" or "SCHOLARSHIPS" or something else. Now go one level deeper and take that (in just a few words) to what it means for people. How will lives be changed because of raising money for this designation. So, it might say, "Funds to allow more students to study abroad", "more meals for the homeless" or "students able to graduate with less debt". Next, you need to make a short list of 3-5 possible signatories for your letter. Do this step even when you think you've already decided who will sign it. Sometimes a traditional "dean's letter" or "president's letter" isn't the way to go. The best letters I've ever written were signed by students, the recipients of the support. Step 3: Generate reasons to give Add a list of 3 EMOTIONAL reasons that your constituents should want to give and 3 ANALYTICAL reasons that they should give. You need a mix of both of these. Most people tend toward one or the other. For example, I'm wholly analytical. I like to know things like the percentage of the cost of an education that's covered by tuition. I like to know about challenge grants and alumni giving percentages and whatnot. The data makes a rational argument to my mind and that style is much easier for me to write. If you are like me, you're not great at coming up with the emotional reasons to give, but an exercise like this forces you to work with both kinds of case making. The emotional reasons usually include a story of a grateful recipient of the support and can include nostalgia for the organization or pride in past work that the donor participated in. Step 4: Evaluate Based on what you see on your whiteboard so far, can you take the story or voice of one of those possible signatories and work in several of the analytical AND emotional reasons to give in one letter? (If yes, go to Step 5.) If no, return to the top of your whiteboard. Do you need to re-address what you’re fundraising for or do you need signatories with more authority or better personal stories? Step 5: Write without self-censoring At this point in the process, you have a focus for your pitch (your designation), a signatory, emotional reasons to give, and analytical reasons to give. Now, get out of your own way and WRITE, without self-censoring. Don't judge. Just get enough text down in written form. Later, with the magic of cut and paste, you can remove, move and juggle all the juicy bits of language. But you can't get to that point until you generate all the phrases and sentences. Don't forget to think about customizing the language for your different segments along the way. This is the best method I've used for snapping out of a direct mail writer's block: get your psychology straight, focus on what you are raising money for, the reasons to give and how that matches with who should sign the letter. Then get out of your own way and get it all down in words. Happy writing! If you try this, let me know how it works out for you. Among office workers, fundraisers are some of the toughest folks out there. #1 you have to develop the gumption to ask on a regular basis and #2 you get told “No” a lot. If you’re doing it right, you get told no more often than yes, a good deal more often. Lastly, fundraisers have to do this knowing that most of our organizations have persistent need and you’ll be asking year after year. Even if you finally complete a campaign or finally raise an endowment, there are always more people to help and more programs to create.
Is it fun to get told "no"? Nah, but what it does for fundraisers is builds resiliency. Fundraisers become warriors. They take their mission out there and champion it no matter the cost to their own egos. For example, it is such a feeling of freedom when you realize that if you expect 20% of your prospects to make a gift, which means 80% won’t! How wonderful to know that you can be told no that many times and it constitutes SUCCESS! Without having been a fundraiser for so long, overcoming obstacles and the fear of failure might have held me back in my career and in life. But, I’ve fallen off that bicycle so much and had to get back on immediately, it just doesn’t bother me much anymore. I have fundraising to thank for giving me such a steely outlook. Ironically, it’s getting told no that signals that you are asking enough. And it’s continuing to ask even though you get told no that makes fundraisers resilient. That’s another reason why I love my career in fundraising. When I was 22 years old, I got my first professional fundraising position. The philosophy of the organization was to hire new college grads who were smart, enthusiastic and cheap! Then, they basically threw us into a ton of job situations that we weren’t fully prepared for. It was a stressful, sink-or-swim situation and eventually was a major reasons why I left this job. I’m so very grateful for the time I spent there. Surprised? Don’t be. I would like to make a case for being deep in the job chaos. This is where you learn the most and grow both as a professional and a person. I planned a national convention, led a database conversion, started an internship program and I did all those things at the same time. When I left at age 24, I had gotten more experience than I would likely have in ten years at any other organization. Embrace the job chaos. Try to ride the wave and think of how much you’ll be prepared to put on your resume. You’ll have so many stories to reference in future job interviews. Use the wide range of experiences like a menu to decide which tasks you truly like and those that you don’t. Then you’ll know for sure what area you want to pursue with more depth in your next position. Although it never seems like it at the time, the chaos is a gift. Take advantage of it. When your team is working on your strategic plan, you’ll find that sometimes you will have a hard time imagining what environment you will be working in beyond 2 years or so. Here are two things you can truly be certain of: 1) If you don’t do anything different, things will not get better. 2) There will inevitably be a change in circumstance that you will not have been able to predict. Things will change in ways you don’t expect. Strategic planning should mostly be about things you can control. Actions you will take in order to increase revenue for your organization’s mission. But, an amazing strategic plan takes into account the unexpected. For instance, there is for most areas of the country, natural disasters of one kind or another that are likely to occur at some point. Where I live, it’s hurricanes and tornadoes. At the seminary I work for in California, it is earthquakes. Floods and fire can happen anywhere. Your strategic plan should think through how your organization will handle these kinds of emergencies. On the first level, there is preparedness. Do you back-up files regularly? Every employee should regularly back up key files on a thumb drive and those should be collected and kept at an off-site location (perhaps the CEO’s home). Your staff should regularly review emergency plans at staff meetings (once or twice per year) including contingencies for fire, tornado and active shooter incidents. This should also be part of any new employees’ orientation process. For instance, in every office at the seminary I work for, there is a 5 gallon bucket filled with earthquake supplies and the protocols are reviewed regularly with staff. The school estimates that it could take care of 100 people for up to 3 days if necessary. But, your fundraising strategic plan should go to another level with this preparedness. You should plan for how your staff will coordinate a response in the event of such a crisis and, if necessary, how you will mobilize quickly to maximize fundraising. Your constituents will want to help immediately if a disaster affects your organization. I got experience with this first-hand at The University of Southern Mississippi, when a tornado sliced through our campus in 2013. We had a website and a new emergency relief fund ready within hours, and a huge direct mail campaign within 2 weeks (which was record breaking). We blocked affected zip codes from phonathon calling immediately. Luckily, our phonathon was off-campus so we didn't have to stop calling entirely. Within about 2 months, we coordinated our first “Day of Giving” campaign to raise funds to replace over 70 lost trees and restore the beautiful landscaping. Was it grueling and sad to see our campus and community so damaged? Yes. Was this campaign a tremendous success that helped the school recover, including funds given directly to affected employees? Yes. Who will be responsible for the different elements (data, web, social media, etc.)? What if those employees are affected by the same disaster? How will you cross-train employees so that you have back-ups for all functions in an emergency? How might you continue phone fundraising if your student callers aren't allowed on campus or have been affected by the disaster? What are the public relations elements you must think through? It is likely that your CEO will be too busy to provide intense direction in this kind of a situation, so review how protocol will be modified now. Think through these things now and train your staff to think this way. If the unexpected happens, you will be glad you did. Hi! It's Jessica. I draw on these concepts in this article in my webinar presentation titled Fundraising in a Crisis. This webinar will launch Wednesday 3/18/20 for free as a resource for nonprofits to respond to the COVID-19 crisis. You can register here: www.realdealfundraising.com/crisiswebinar. If I ever saw Mary Louise Parker in an airport, I would probably run to her screaming, “Oh my Gosh! Nancy Botwin!” and hug her. After security pulls me away from her, I would consider a peak experience of my life. Weeds is one of my shows. I haven’t just seen the entire series. I’ve seen the entire series (all 8 seasons) multiple times. I love the quirkiness, the drama, the humor of it all. If you have never seen it, it begins as a show about a suburban housewife in California who sells marijuana to make ends meet after her husband dies of a sudden heart attack. It starts there but the twists and turns the series takes is absolutely addictive. So, for a show with arguably shaky moral grounding, what can non-profit fundraisers learn from this show, particularly from Nancy Botwin?
You really can take inspiration from anywhere. Even a fictional drug dealer can be a source of motivation. If Nancy Botwin can survive and thrive, you can too. In 1999, I saw a blurb on the Honors College listserv advertising for job in the call center. I thought, “Hey, I can talk to people. Why not?” (Little did I know that I would still be writing about phonathon and doing fundraising some 17 years later.) I interviewed and was hired. I arrived excited but a bit nervous for my first night on the job.
I entered the room and the manager told me, “Sit behind Julie and watch what she does. When you feel ready, you get on the phone too.” I watched Julie manipulated the automated computer and calling system and listened to her phone calls. “Do you have a script or checklist?” I asked. “Not really,” she said. “Everyone kind of makes it up as they go along.” Really, this was my introduction to being a student fundraiser! It’s amazing to me that I stayed. But, I’m stubborn. The manager that hired me left and soon a student supervisor, Becky, graduated took over operations. Becky taught me something very important: Look to best practices in order to improve and grow. She read books about how other call centers operated and visited phonathons at both peer institutions and aspirational schools. And she began to change some things. I became one of Becky’s student supervisors and was helping her implement these positive changes. She did things that made us feel like Chicken Little. “Instead of giving up immediately after one ask. We are going to ask two times for money,” Becky said. “Oh no! The sky is falling!” the supervisors would cry. But it didn’t. Our participation rate soared. Becky said, “I am going make it mandatory to ask for a credit card.” “The sky will fall!” we asserted. It didn’t and our credit card giving rate went through the roof. Time after time, this was the story. Soon, we began to believe her when she made “crazy” suggestions. I had no idea at the time but I was learning the basics of “evidence-based fundraising”: looking at the data to drive your decisions, not anecdotal evidence or your gut feeling. Your gut feeling is fallible. At the heart of it, evidence-based fundraising is about using the scientific method. Testing things and looking to the numbers to tell the truth of the situation. Complaints in the call center are one example of this: your boss hears of 3 complaints. To them it seems like a pattern, perhaps the beginning of a crisis. But – you need to put this into context for them. You could have had over 10,000 contacts that year. That means those complaints represent only 0.03% of your interactions with constituents! That’s pretty great. This is evidenced based fundraising at work. We can all be a bit “Chicken Little” sometimes, so we have to have the discipline of the evidence to fall back on before we make decisions that can keep from our full potential at best, or at worst, can hurt our institutions. |
Jessica Cloud, CFREI've been called the Tasmanian Devil of fundraising and I'm here to talk shop with you. Archives
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