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Annual Giving – The Bread and Butter of Most Nonprofits

 In Blog

The following blog post was contributed by Janet Levine. Janet will be leading a training on Getting Gifts Year After Year: Annual Giving Campaigns on October 20, 2016.

ANNUAL GIVING—the most important fundraising you’ll ever do

As a sector, we are overly focused on—and salivate about—large gifts.  We spend way too much time looking for wealthy prospects; people and organizations who will give us big gifts.  Far more important are your annual donors.  Those people who give to your organization year after year after year.  They are loyal.  They love you.

You’ve all see the fundraising pyramid—with the broad base of annual donors, tapering up through major gifts and planned ones.  Only 3-5% of our donor pools have the ability to make those large gifts, and many of them don’t see your organization as a philanthropic priority.  And, many large gifts are one-time, very restricted donations.

Paying attention to your annual fund is smart.  Yes, sometimes annual gifts are very small.  And they are flexible.  Because most annual gifts are unrestricted, you can use these funds for any purpose necessary to move your mission forward.

More to the point, instead of looking at the size of one gift, consider the lifetime value of an annual donor.

Allow me a moment to rant.  Fundraising studies drive me crazy—they look at year to year rather than the larger gestalt.  Every year, the Fundraising Effectiveness Project or Giving USA (among others) tells you that this increased by X  percent over last year; or that declined by Y percent.  So, for example, years where extraordinarily wealthy individuals die and leave large bequest to charities, the percentage of bequest increases exponentially.  Does this have any substantial meaning?   I don’t think so—those folks are not going die again, leaving yet another humongous bequest.

But it is different with annual donors.  Because “annual” infers that these are people giving to you continuously over a number of years, you would have to look at aggregate giving to see the real value.  And, indeed, according to one study by Target Analytics, over 75% of donors who ultimately made a $10,000 or more major gift first made 6 or more smaller annual gifts.  So yes, annual giving is the stepping stone to larger gifts.

Beyond raising dollars, annual fund is a marketing device. The appeals, events, newsletters, etc. that are (or should be) part of your annual fund drive, promote your organization to a broad audience.  Some of these will, over time, become donors.  Others will steer potential donors your way.  All will have the opportunity to know more about you.

More prosaically but just as important, annual giving helps to clean up our databases. Those without annual appeals are doomed to lists with incorrect addresses, duplications, incomplete information.  Gathering donor information is something that annual giving excels at.  In fact, the techniques of annual giving often collect more information updates than any other activity of the non-profit world.

Beyond this, annual gifts are also the way that major donors first get involved with your organization.  It is the stepping stone to larger gifts for most donors.

The annual fund sets the tone of your organization.  It helps to create a culture of philanthropy that, in turn, assures success in meeting needs today, tomorrow, and for a long time to come.

This blog post was contributed by Janet Levine. Janet will be leading a training on Getting Gifts Year After Year: Annual Giving Campaigns on October 20, 2016.

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