Fundraising for Social Change

Kim Klein

• Publisher: Wiley
• Year: 2016
• ISBN:
  9781119209799
• Edition: 7
• Topic: Commerce
• Subtopic: Commerce Général

The bible of grassroots fundraising, updated with the latest tools and methods

Fundraising for Social Change is the preeminent guide to securing funding, with a specific focus on progressive nonprofit organizations with budgets under $5 million. Used by nonprofits nationally and internationally, this book provides a soup-to-nuts prescription for building, maintaining, and expanding an individual donor program. Author Kim Klein is a recognized authority on all aspects of fundraising, and this book distills her decades of expertise into fundraising strategies that work. This updated seventh edition includes new information on the impact of generational change, using social media effectively, multi-channel fundraising, and more, including expanded discussion on retaining donors and on legacy giving. Widely considered the 'bible of grassroots fundraising, ' this practically-grounded guide is an invaluable resource for anyone who has to raise money for important causes. A strong, sustainable fundraising strategy must possess certain characteristics. You need people who are willing to ask and realistic goals. You need to gather data and use it to improve results, and you need to translate your ideas in to language donors will understand. A robust individual donor program creates stable and long-term cash flow, and this book shows you how to structure your fundraising appropriately no matter how tight your initial budget.

• Develop and maintain a large base of individual donors
• Utilize strategies that pay off sooner rather than later
• Expand your reach and get your message out to the donor pool
• Translate traditional fundraising methods into strategies that work for social justice organizations with little or no front money

Basing your fundraising strategy on the contributions of individual donors may feel like herding cats—but it's the best way for your organization to maintain maximum freedom to pursue the mission that matters. A robust, organized, planned approach can help you reach your goals sooner, and Fundraising for Social Change is the field guide for putting it all together to make big things happen.

PART ONE
What’s New, What’s Hot, What’s Over, What’s Not

I travel a lot, both for work and for fun. When I travel for fun, I like to have a map or two, some idea of where I am going to stay, and what I would like to see along the way and at my destination. When I return to favorite places, I am often struck by how they have changed, but equally so how they have not. In this section, we are going to travel down a fundraising highway. We will look at the new and exciting ideas and inventions that make our fundraising lives much easier. We will touch briefly on strategies and ideas that are hot now, but will become the Beanie Babies of fundraising (a commercial flare so over that many younger readers may not even recognize the reference), and mention some old tropes that have finally gone to rest in the great idea landfill in the sky. What will be most interesting, and what we will spend the most time on, are the principles of fundraising that remain true through recessions and boom times, through generational and other demographic changes, through technological revolutions, and through all kinds of political changes.

I start with a look at the nonprofit sector as a whole—how it has grown and changed, how much more we know about how to raise money, but also how much more money it takes to be successful. This overview will help you understand how some of the problems you have are true throughout the nonprofit sector. Then I discuss the importance of creating a fundraising philosophy: What is your belief about how the work of your organization should be paid for? You may have to make some compromises from the ideal, but if you haven’t answered the question to begin with, you will not know when you are compromising and when you are simply sending your organization down a rabbit hole of problems. Next I discuss several key principles that apply to all fundraising. To make it all work leads us to the final chapter in this section, about how organizations need to structure their fundraising strategies and who must be available to help raise money. (HINT: That is the chapter on the Board of Directors.)

chapter 1
Nonprofits and the Money They Raise

In this chapter I review some basic understandings about the size and scale of the nonprofit sector, important changes, and some things that never change. The word nonprofit is used to distinguish organizations that work for the public good and are not obligated to shareholders or owners to deliver a profit. In fact, organizations that are afforded nonprofit status by the Internal Revenue Service are subsidized by tax exemptions, financial donations, and the free labor of volunteers, all of which are designed to let them focus on fulfilling their mission rather than seeking profits. Even though businesses and corporations can work for the public good, they must operate profitably in order to stay in business.

Over the past forty years, the word nonprofit has gradually replaced the word charity, as more and more nonprofit organizations do work that is not strictly “charitable,” such as community organizing, advocacy, arts programming, or environmental protection. The word charity also carried a whiff of noblesse oblige—a sense of “fortunate” people helping the “less fortunate.” This frame has largely been rejected by progressive nonprofits, which seek to work “with” people rather than “for” them.

Many have argued that the term nonprofit, too, is an unfortunate one, as it describes an entire sector by what it is not; they have suggested using the term community benefit organization (CBO) instead. In most countries other than the United States, nonprofits are referred to as “nongovernmental organizations” (NGOs) to distinguish them from the work of government, or civil society organizations (CSOs), which can include informal associations of people or temporary coalitions and movements. In this book, I use the term nonprofit most of the time; despite its limitations, it is the most commonly used and commonly understood word to describe the sector in the United States. To describe an individual nonprofit entity, I mostly use the word organization or agency. To remind ourselves that we are organizations set up to benefit the community, but we do not take the place of government, I sometimes use the term NGO, and to keep us focused on the fact that we work on behalf of our communities, I will sometimes use the term CBO.

The word philanthropy comes from two Greek words that together mean “love of people.” In modern times, this goodwill or humanitarianism is often expressed in donations of money or volunteer time or property to causes that are important to the person doing the giving. (Similarly, the word charity comes from a Latin word meaning love in the sense of unconditional loving kindness, compassion, and seeking to do good.) The roots of these words remind us of the fundamental reasons for the work of most nonprofit organizations: expressing a love of people through good work. Philanthropists—people who practice philanthropy—are often thought of as rich older people who give away a lot of money. This is unfortunate because, in fact, anyone who gives anything away out of the goodness of his or her heart is a philanthropist. Philanthropy is also often used as a way to describe foundations and foundation funding. “She works in philanthropy” will most often mean that the person has a job at a philanthropic foundation. More recently, the word philanthropy has sometimes been used in place of fundraising, particularly in articles about how to create a “culture of philanthropy” in an organization. (Type “Culture of Philanthropy” into a search engine and dozens of articles will appear.) These are all legitimate uses of the word, but we need to keep in mind that it has a much broader and more inclusive meaning at its root.

THE SIZE AND SCOPE OF THE SECTOR

Arguably, the biggest change in philanthropy over the last half-century is the growth of the sector. Measured as a share of total employment, the nonprofit sector in the United States is the fifth largest in the world. The Netherlands has the largest proportional nonprofit sector, followed by Canada, Belgium, and Ireland. (For more information on nonprofit sectors in other countries, see Global Civil Society: Dimensions of the Nonprofit Sector by Lester Salomon and others and The Canadian Nonprofit and Voluntary Sector in Comparative Perspective by Michael Hall and others, both of which can be found at ImagineCanada.ca.)

If the nonprofit sector in the United States were a single industry, it would be among the three largest, accounting for about 10 percent of the workforce and about 5 percent of the gross domestic product. As of 2015, more than 1,700,000 organizations in the United Sates were designated nonprofits by the Internal Revenue Service.

Several million more small, grassroots organizations are not registered with the government and have no formal tax status. These include organizations just getting started; organizations that use very little money, such as neighborhood block clubs; organizations that come together for a one-time purpose, such as cleaning up a vacant lot or protesting something; and organizations that don’t wish to have a structural relationship with the state or federal government.

Because of the size and growing sophistication of the nonprofit sector, it has increasingly drawn government attention, as well as that of researchers, academics, and many members of the general public. Although recognized nonprofits are regulated by federal, state, and local government laws and regulations, an added layer of self-regulation is imposed by public awareness coupled with the role of individuals in funding nonprofits, encouraging voluntary compliance with accepted ethical standards of accounting, personnel, and fundraising practices. Nonprofit status is a public trust, and tax exemption is, in effect, a public expense. Even organizations that have no formal tax status that seek to raise money from the public recognize that they have the same moral duty as registered nonprofits to operate ethically, be truthful with donors, and provide the highest quality of services to constituents.

WHERE MONEY FOR NONPROFITS COMES FROM

As with many endeavors that are critically important and use the resources of millions of people, it is not surprising that a number of misconceptions have grown up about fundraising.

Surprising to many people is the fact that nonprofits earn money through a number of avenues, not just straight-out monetary donations. These avenues include fees for services, products for sale, earnings from investments, and even earnings from businesses that a nonprofit may operate. Examples of these fundraising methods abound: Girl Scout cookies; Goodwill stores; Sierra Club calendars, cards, and books; and the like. For hospitals and universities, earned income is often the lion’s share of their income. In fact, 55 percent of all the income of all nonprofits is earned income, including 5 percent derived from investment income largely generated by endowments.

Another 32 percent of nonprofit income is derived from government funding programs (collectively known as “the public sector”). Extensive cutbacks in government funding, starting in the 1980s and continuing to the present, have reduced such funding a great deal, but it remains a significant source for many organizations. This change is not only financial; it also reflects a change in political philosophy about the role of government and the role of private funding in paying for the common good. (See Chapter Two, “Creating a Fundraising Philosophy.”)

The final 13 percent of nonprofit income comes from the private sector: individuals, foundations, and corporations. Although the private sector provides the smallest portion of all the income available, for most of the organizations using this book, the private sector will provide the largest portion of their funding. Surprising to most people, individuals (living and dead, through bequests) account for 80 percent of private-sector funding, far more than all donated foundation and corporate money combined. To be sure, a great deal of earned income is earned by large hospitals and universities and a great deal of government funding goes to large direct-service agencies and to universities for research. Small nonprofits, which are the focus of this book, raise most of their money from the private sector.

This book focuses almost entirely on how to raise money from that enormous market of individual donors. It is also important to recognize that the work of the nonprofit sector is “funded” by the contributed time of volunteers. In the USA, more than 64 million people volunteer regularly, the equivalent of nearly eight million full-time jobs and valued at more than $300 billion (Independent Sector). Without volunteers, the sector would not exist.

What Research Tells Us About the Nonprofit Sector

There is now an enormous body of research on nonprofits and their income streams, both in the United States and in other countries. Some of this research tries to determine who gives, why they give, and ...