Friday, October 7, 2011

Why Annual Fund Donors?

If Annual Fund donors contribute “only” 20% of the revenue, why not hire another Major Gifts Officer and redeploy Annual Fund staff? We hear this question frequently.

Now, Arrowhead Management is biased, as we make a good portion of our business advising nonprofits on maximizing the Annual Fund segment. And, we’ve spent a significant amount of time on this blog sharing some of these strategies.

But, we believe there are four objective reasons for running an effective Annual Fund Program – and, these reasons inspired us to launch our business:

Planned Giving Prospects: The majority of nonprofits with an established planned giving program have experienced the phenomena of receiving a notice from an estate attorney that Sally Smith is leaving a portion of her estate to them. An experienced VP of Development calls the Annual Fund Director to bring over Sally’s giving history: Sally has given an average of $25/annually for the last 35 years. The VP has never met her, Sally’s never attended an event, but she is a true believer in the cause.

Major Donor Prospects: Donors giving at the Annual Fund level do so for a variety of reasons, and one is disposable income levels. Once a donor can afford to give a major gift, s/he will remember the nonprofit that effectively thanked him/her when the gift was smaller.

Donor Retention: During 2010, donor retention levels actually increased among most nonprofits, which helped mitigate the impact of lower average gifts. Keeping donors engaged – even when their incomes fall or stagnate – ensures consistent revenues.

Only Engagement Avenue: Giving is the only way for some people to be engaged in your work. Not everyone in your community has time to volunteer, serve on your Board, work for you or be major donors.

Remember giving is about donors expressing their values. By investing in this segment, you are validating those values – and your mission.

For nonprofits with particularly transformative impacts on their clients – such as domestic violence agencies or homeless shelters – an annual fund can even be viewed as an extension of your programs and mission.

When your former clients give $25 or $50 annually to you, they are continuing the healing process.

Maybe that sounds cheesy, but it’s true – your clients feel good about being part of the hand up that helped them when they needed you. By running a robust annual fund program, you’re also continuing to empower and impact your clients.