By Tara Peitzer, Marketing & Communications Director at Giveffect – an all-in-one digital marketing and fundraising platform designed to grow and automate your nonprofit.
Diversifying your funding is critical to your nonprofit’s stability and ability to achieve your mission. With the ups and downs of the past few years, many nonprofit organizations that were heavily dependent on just one or two funding sources found themselves in a tight spot. The lesson here is age-old: Don’t put all of your funding eggs in one basket.
As we plan for 2023 fundraising and all that the year might bring, we know that diversified revenue streams mitigate the risk of losing any single source of funding. Healthy nonprofits diversify revenue by tapping a variety of resource streams and funding channels.
Let’s dive into five ways that nonprofits can diversify funding in 2023:
- Monthly Giving and Pledges
- Peer-to-Peer and Team Fundraising
- Major Gifts
- Email Marketing and Customized Giving
1) Monthly Giving and Pledges
One-time and unexpected donations are great, but recurring donations allow a nonprofit to rely on consistency when it comes to individual contributions. Consistency helps nonprofits to plan and forecast. There are two types of recurring giving: Monthly Giving Programs and Donation Pledges.
What is a Monthly Giving Program?
A monthly giving program, also known as a monthly giving society or circle, is where donors sign up to automatically donate a specified amount to an organization each month. A monthly giving program is recurring with no end date. This type of donation is similar to streaming services like Netflix. A rise in this type of membership or subscription model has primed supporters to make monthly commitments.
What are Donation Pledges?
Pledges are similar to monthly giving programs with some slight differences. Donation pledges are donor promises to give an organization a certain amount of money over a set period. Pledges are typically paid in installments.
Implementing Monthly Giving and Pledges
You may think that monthly giving or pledges must be time-consuming or require a lot of administrative work. The opposite is true. These types of donations, once set up, are easily executed with nonprofit software, such as Giveffect – an all-in-one nonprofit management software that includes donation management, relationship management (CRM), volunteer management, email marketing, and more in one easy-to-use suite.
With Giveffect, for example, you’d set up your campaign with a checkout flow that includes options to donate one-time, monthly, or as a pledge. If your donor selects to make a one-time donation, they will add their payment information, and the payment will process right away. Their contact and gift information is saved in your CRM, a thank you note and receipt are automatically sent, and you are ready to solicit donations again in the future.
A donor who elects to make a monthly recurring donation pays a specific amount each month with no set end date. The payment is automatically processed each month and requires no additional administrative work. With monthly recurring gifts within Giveffect, the donor can also update their payment information or amount without needing the assistance of the nonprofit’s staff.
Similarly, a donor who elects to make a pledge will receive a schedule of payment installments. However, instead of automatically processing payments, donors receive an invoice each month with a link to process their payments. Within Giveffect, the nonprofit has access to a pledges tab to see the status of paid and outstanding pledges and can easily send reminder links.
Benefits of Monthly Giving Programs and Donation Pledges
There are many benefits to your donors subscribing to your monthly giving program.
- Reliable recurring revenue: Many organizations find that monthly giving programs are a source of reliable financial support. Once these programs are set up, they only take minimal administrative work to keep them running.
- Increased supporter loyalty and stronger donor base: Monthly giving programs help nonprofits cultivate a strong long-term relationship with their supporters. This also typically leads to reduced churn and better supporter retention. Better supporter retention leads to less time needed to pursue new donors to reach financial goals.
- Increased Lifetime Value: Additionally, monthly donors typically give more in the long run because there isn’t a set end date. According to AFP, donors who set up recurring donations give 42% more annually than one-time donations.
- Higher supporter engagement: Donors contributing monthly to your mission are likely to engage in other ways too. For example, they may attend your events or volunteer their time or skills.
- Lower donor acquisition costs: Once supporters donate regularly, you’ll need to spend less time, as mentioned above, and less money on acquiring new donors. Keeping a donor engaged is a lot easier than finding a new donor.
- Easier financial forecasting: With at least a portion of your revenue coming in consistently, you’re able to forecast more accurately where your funds are coming from, how much you expect to receive, and what you need to do to reach fundraising goals.
Benefits for Your Supporters
In addition to the benefits for the nonprofit, you can implement specific benefits for your recurring donors. Consider offering your monthly donors special access to things like exclusive discounts to annual events, special giving society-only events, and more. This benefit will make your monthly donors feel appreciated and engaged throughout the year. This type of donor may also donate to support special projects or programs on top of their recurring gift.
Join Giveffect on January 18 for a free webinar, How to Diversify Your Nonprofit Funding in 2023, to learn how to diversify your fundraising efforts in 2023 to mitigate risk and reach your fundraising goals.
2) Peer-to-Peer and Team Fundraising
Peer-to-peer and team fundraising empower individual supporters and groups to fundraise on a nonprofit’s behalf. This type of fundraising uses the power of numbers to amplify efforts, which can be quite lucrative.
How do Peer-to-Peer and Team Fundraising Work?
The way this type of fundraising works is that an organization’s supporters reach out to the people they know to ask them to give to a cause close to their heart on behalf of the organization.
What’s the Difference Between Peer-to-Peer and Team Fundraising?
Peer-to-peer and team fundraising are similar, with a few slight differences. Peer-to-peer fundraising can be specifically for individuals, whereas groups can do team fundraising. Additionally, gamification can be layered on top, where teams or individuals compete to see which team or individual can raise the most money for the nonprofit.
Benefits of Peer-to-Peer and Team Fundraising
- Attract new donors: Peer-to-peer fundraising and team giving are great opportunities for nonprofits to acquire new donors. Fundraisers can easily share a link to this page with their friends and colleagues to garner donations. In most cases, the more personalized the fundraising page, the more their network will donate. This increased visibility means you’ll draw in new and different donors than you’d reach.
- Engage existing donors: Boost engagement with your supporters by providing a fun, interactive way to get involved with your cause. Peer-to-peer and team giving creates camaraderie and even friendly competition to raise funds as part of a large campaign or towards a larger goal for a nonprofit.
- Fundraise more efficiently: A well-planned and executed peer-to-peer campaign can generate an incredible return on investment (ROI) and, as a cherry on top, demand less of your staff’s time to do so. Once an organization sets up the framework, your supporters do much more of the heavy lifting than your organization’s staff to fundraise. Your fundraisers reach out to their networks to garner new supporters on your behalf to raise funds. This is why peer-to-peer is one of the most efficient fundraising strategies (especially when backed up with the right tools and tactics).
How to Execute Peer-to-Peer and Team Fundraising
Like other types of nonprofit fundraising, peer-to-peer fundraising efforts are supported by online fundraising. In the past, fundraisers used manual sheets to track promises and donations, which was a real pain. Now with modern nonprofit software fundraisers work with a nonprofit to create personalized web pages. These pages share their stories, why they are fundraising, and a button to donate easily. Some nonprofits may run peer-to-peer and team fundraisers amongst individuals or larger cohorts of people, such as among schools or corporations. When choosing the right platform, there are a few must-haves:
- Make sure it is easy to set up and share on social media for your supporters
- Seamlessly integration with your CRM, so you can collect information about everyone who supported each campaign and cultivate those relationships.
Giveffect makes it easy for participants to create and publish their own personalized peer-to-peer or team page. Your staff can automatically track the number and amount of donations in one place. Individuals and teams can visit the website to find the status of the fundraising goal, check each other’s progress, and share tips and experiences.
3) Major Gifts
Major gifts are typically the largest donations from a single source that an organization receives in a single year. What’s incredible is that nearly 90% of all fundraising dollars come from just 12% of donors! A vital resource for nonprofits of all shapes and sizes, major gifts help fund the projects and programs that make an impact. Interestingly, there is no industry standard for how much money counts as a major gift. Each organization must look at its donation pool and decide what it means to them.
What is Major Giving?
From a donor’s point of view, major giving is the act of making a significant donation to a nonprofit. However, from a nonprofit’s perspective, it’s a bit more complicated than just receiving a big check. A major giving program focuses on building relationships with a portfolio of prospects with the capacity and affinity to make a major gift.
Major gift fundraising encompasses six essential stages: Identification, Qualification, Cultivation, Solicitation, Negotiation, and Stewardship. A well-built nonprofit software can help you progress your prospects through the stages by helping you stay organized and automating processes.
Who are Major Donors?
Major donors are a small subset of your donors. A typical major donor is wealthy, wants to make an impact, and has the capacity to donate larger amounts. It’s strategic to identify these contributors and build strong relationships to help your organization fulfill its mission. This person typically has a high net worth and may own real estate, stocks, and even cryptocurrency. They are also heavily involved with your nonprofit or other nonprofits, possibly have a personal connection to your mission and has likely made larger contributions before. Wealthy older donors have historically been the best prospects; however, don’t rule out millennials. We are seeing this group acquire more wealth and increase their capacity to give.
How to Identify a Major Gift Donor
Many nonprofit organizations use wealth screening software to identify prospects. Wealth screening is the process of learning more about your nonprofit’s current donors’ and prospects’ wealth or capacity to give to your organization. With wealth screening, you’re looking for indicators of wealth such as past giving to other charities, political contributions, business affiliations, real estate ownership, SEC stock holdings, and a connection or relationship with your cause or nonprofit. Wealth screening can be done manually or by using software. Giveffect partners with industry leader DonorSearch to add wealth screening to the comprehensive nonprofit management software suite.
Benefits and Types of Major Gifts
There are many types of major gifts that can fund your mission. Major gifts don’t necessarily mean cash. When your major donors gift noncash assets, not only does your organization benefit, but your supporter may also receive tax benefits.
- Securities, such as stocks, mutual funds, bonds, and exchange-traded funds (ETFs), can all be gifted to nonprofits. If held for more than one year, donors don’t pay capital gains tax and may also receive an income tax deduction for the current value of the shares.
- Donor-advised funds (DAFs) have become increasingly popular in recent years. DAFs allow donors to make a lump sum charitable contribution to a private fund administered by a third party. As a result, the donor receives an immediate tax deduction for the entire amount and can recommend grants and add to the fund over time.
Cultivating major donors is a long process. It’s important to keep all of your notes in one place, set tasks, and stay on top of all communications with major donors. The best way to do so is to leverage technology such as a nonprofit CRM.
Auctions are an excellent revenue source for nonprofits. Nonprofit auctions (whether live, silent, online, or hybrid) are fundraising events in which supporters bid to win items or packages. The items and packages are typically donated and sometimes purchased at cost. No matter the auction type, the highest bid wins, and the fundraising organization receives the proceeds. A win-win!
Any nonprofit can host an in-person, online, or hybrid auction; however, online and hybrid auctions require resources to create and execute, and in-person auctions run so much smoother with the help of such software. Let’s look at three types of auctions:
Live auctions are high-energy events. An auctioneer presents auction items and manages the bidding process. Attendees typically place bids by raising paddles or shouting, but mobile bidding apps can also streamline the process. Live auctions are often more elaborate with high-value items and packages and are hosted as part of a gala.
Fully online auctions are a great way to raise funds from supporters worldwide. Like in-person auctions, supporters place bids on items, and the highest bidder is the winner. The difference is the bids are placed online. Online auction formats can be live or silent. Silent online auctions require supporters to visit the auction web page during a set period and place bids on items or packages they would like to win. Of course, they should be reminded to check back on the items they wish to win, not to get outbid!
Alternatively, live online auctions can take place online by live-streaming the event. Heading into 2023, more people are gathering in person. However, many people have become accustomed to solely online events. Many still participate in them and, in some cases, prefer joining from home.
To conduct a successful online auction, create a webpage supported by an online bidding and auction management platform. This page should include the auction items, a way to place bids and collect bidder information (including payment information), and quickly identify and notify the winner. There are a variety of such platforms on the market with different features. Giveffect is an all-in-one nonprofit software suite that offers a very robust, but easy-to-use auction management tool.
Hybrid auctions are a very popular type of auction. This type of auction combines an in-person auction with the ability to take bids from online supporters. Event organizers are also able to track the auction’s progress online. Those at the event and those online can place bids from their device, and when the bidding period ends, the highest bidder wins.
This type of auction requires a webpage and the ability to take bids from a variety of devices. The advantage of a hybrid auction is that you can have an engaging in-person bidding experience and access to bidders worldwide.
Hybrid auctions maximize your chances of reaching fundraising goals. It is important to note that just like fully online auctions, hybrid auctions require an auction bidding and management platform. To connect the online and in-person experience, so it feels like one event instead of two, utilize auction management live event broadcast software to project your auction status at your gala events in real time. The Giveffect scoreboard, for example, keeps everyone in the loop to create a truly engaged hybrid experience.
Benefits of Auctions
Auctions have many benefits. Auctions can be executed as a standalone initiative or as part of a larger effort, such as an event or gala. Auctions held online or in a hybrid model allow more supporters to bid and win items and package and may increase the winning bid’s value. The higher the winning bid, the more money nonprofits can raise.
Additionally, events in person and online with auctions are highly engaging and lay the groundwork for long-term relationships with donors and partners.
- Partnerships with local businesses: Working with local businesses to donate items and packages for an auction is a great way to initiate a relationship. Use this opportunity to share your mission, get to know decision-makers, and share benefits for the local business as well.
- Opportunity to engage with new supporters: It’s very common for loyal supporters to extend invitations to events and galas to their network. This makes galas and events with auctions a great opportunity to engage with your supporters extended network. And turn their networks into supporters.
To make the most of these benefits, use a CRM with seamless integration with your events and auction tools. Creating a tech stack or using an all-in-one nonprofit management system is necessary to cultivate relationships with new supporters, whether individuals or businesses. One of the worst mistakes a nonprofit can make is letting an interested and engaged supporter slip through the cracks or lose interest due to a lack of communication or outreach.
5) Personalized Email Marketing with Customized Giving
Personalized emails strengthen supporter experiences by sending the right content to the right individuals at the right time. Just using someone’s name in the salutation isn’t personalization anymore. There are many more impactful and innovative ways to personalize emails, including customizing the giving experience.
How to Personalize Email Marketing with Customized Giving
To personalize your emails, you first must collect actionable data about your constituents. With the information you collect, you can create meaningful audience groups. Data you may want to collect and track include interests, occupation, and previous touchpoints such as attended events or campaigns and amounts donated.
One way to gather information is to ask! Use your volunteer application or donation checkout form to ask questions and gather preferences. Data points collected and organized within a CRM can help you connect with your audience and utilize the data in a meaningful and automated way.
Within an email, insert specific fields from your CRM. For example, consider inserting the amount each contributor donated last year in this year’s appeal email and encourage them to donate a slightly higher amount. Giveffect takes personalization to the next level with customized giving. Our proprietary smart automation generates suggested donation amounts. It creates unique checkout flows, including customized suggested giving tiers following the rules you set using variables such as giving history and last donated amount.
When your CRM, email marketing, and campaign checkout flows work together or are part of the same software, you can easily personalize your ask. This is personalized marketing and prospecting at scale.
In conclusion, there are many different ways to fundraise in 2023. The biggest takeaway is fundraising to reach and appeal to many types of donors. Additionally, selecting the right tools will support your efforts and empower you to raise more.