Principal Fund-Raising Myth

It’s common knowledge that corporations and foundations give most of the money to non-profit organizations

Principal Fund-Raising Truth

You go where money you think you can get is to be found in the greatest quantities and most of the time that means you look to the individual donor

No fund-raising campaign should ever be started until you have identified the sources from which you will draw contributions. Sources here does not refer to specific potential donors, but to the six categories of donors who contribute money to non-profit organizations. They are:

1. Trustees Of The Organization
2. Individuals
3. Corporations
4. Private Foundations
5. Community Foundations
6. Government

Your plan for a fund-raising campaign should target each source appropriate for that campaign and set a goal for contributions to be achieved from that source. Those goals are determined by rating and evaluating the potential donors that comprise each source.

Trustees

All fund-raising campaigns begin with the trustees of an organization. In general, if you are planning a fund-raising campaign and are not expecting important contributions from your trustees, there is something drastically wrong with either your campaign plan or the composition of your board. Trustee giving sets the pace for any fund-raising campaign, and your board should have on it persons ready, willing, and able to make their best possible gifts to the organization.

A board of trustees is a resource for an organization to draw upon in carrying out its mission, and part of the mission of any successful non-profit organization is to raise money. Therefore, there must be people on an organization’s board who can be counted on to give money. If your organization does not have trustees who can give, add them, even if it means enlarging the board.

Individuals

Individuals are the main source of philanthropic contributions in America. Most successful fund-raising campaigns receive from 70 to 80 percent of their money from individuals. They are the most flexible and spontaneous givers. Unlike corporations, foundations, and governmental entities, individuals are able to make a decision on the spot, and if they want, they can choose to put all their eggs in one basket. Joe Smith can reach for his checkbook a lot faster than the Metropolis Community Foundation with its rigid timetables and layers of committee meetings, and Mr. Smith has no requirement to spread his charitable contributions among a variety of worthwhile causes.

Corporations

Corporations look at requests for support from three points of view:

1. Is it good philanthropy? A contribution made for straight philanthropic reasons is a gift of good citizenship from which a corporation expects little or no direct benefit.Straight philanthropic giving is the kind non-profits usually receive from corporations for annual fund campaigns and operational support. It is the main type of giving, which corporations use to satisfy their commitments and responsibilities to support community initiatives that enhance the well-being of constituencies important to them—employees, shareholders, and customers. Usually, an organization will receive many contributions made for this purpose, and no single corporation expects greater publicity and recognition than that directly attributable to the value of its gift. Corporations rarely ever make this kind of donation in communities where they have little or no presence.
2. Does it enhance the corporate image? A contribution made with image as a major consideration is made with the expectation that it will engender positive feelings on the part of the public toward the corporation.Giving to build image is high-visibility giving, and a corporation expects to receive wide public recognition for such a gift. Often the contribution will take the form of sponsoring an event or program in expectation that the corporation will have its name attached to it. Corporations that have a relationship with a large segment of the public as a result of the products or services they offer are particularly responsive to image-related contribution requests. The greater the visibility a non-profit can promise for an image-related contribution, the greater the likelihood of a positive and substantial response to solicitation. Great care should be taken by the non-profit organization not to promise too much. Out-of-pocket expenses brought on by promoting the sponsored event or program—everything from billboards to tote bags—can severely diminish the proceeds from the sponsorship.
3. Will it generate revenue for the corporation? A contribution made based upon its potential to generate revenue is as much business deal as charitable gift.Giving which produces revenue is bottom-line giving for corporations. For most non-profit organizations, this kind of support should rank a distant third. Essentially, the non-profit organization sells, advertises, or endorses a company’s products or services and receives contributions out of business revenues thereby generated. Unfortunately, the proceeds are seldom in line with the effort expended, and you run the risk of alienating similar companies to the point where you cannot go to them for contributions of any kind. In addition, contracts for this type of program are usually written by the corporation so that it can withdraw its participation on short notice, leaving the non-profit organization high and dry.

Private Foundations

Private foundations are for the most part repositories of funds from a single source or at most a very few—for example, an individual or family. They often operate with greater freedom than community foundations and act quite quickly. While many have formal guidelines, some will make grants on the strength of a relatively informal request. Private foundations give to all types of organizations, programs, and fund-raising campaigns. Often they are good sources of start-up funds and seed money. Some give to specific subjects and causes, while others limit their grant-making geographically.

Community Foundations

Community foundations are repositories of funds contributed by individuals and corporations for use primarily to improve the quality of life within their community. They can cover a single city, a region, a state, or even an entire country. Most commonly, they make grants to non-profit organizations from the income earned on endowment. Sometimes they make a distribution of principal from endowment or invest endowment funds in a community initiative.

The funds at a community foundations disposal can often be restricted, meaning that grants have to be made within an interest area, such as arts, or to a specific organization, such as a community’s art museum. Unrestricted funds are distributed according to the foundations best determination of need.

It takes time for a community foundation to analyze a grant application. A number of individuals and committees usually review a proposal—which must be submitted following specific guidelines—before it is accepted or rejected. Grants are made on a regular schedule, usually quarterly, and you can expect months to pass between first contact and grant approval.

Government

Government at the local, state, and federal level contribute funds to non-profits. Federal agencies such as the National Endowment for the Humanities and the National Institutes of Health make grants in their particular areas of interest. The states have similar area-of-interest grant-making agencies. Sometimes an organization, such as a state arts council, isn’t actually part of state government, but exists as a semi-independent authority to administer the distribution of state and federal funds. On the local level, agencies ranging from park boards to the mayors office may have a process for making contributions to non-profits. In general, the lower the level of government, the faster the turnaround time for a grant proposal. As is the case with foundations, governmental grant-making agencies usually require that an organization follow a set of predetermined guidelines when requesting funds.

Elected officials are the ultimate controllers of the funds governments make available for grant-making, so lobbying legislators, as well as informing and involving other key government officials, is an important tactic for any organization that sees government as a funding source. Trustees who have clout with elected or appointed officials can be invaluable in presenting an organizations need for funding.

Where Will You Find Most 0f Your Money?

Your analysis of the best possible fund-raising sources is dependent on the cause for which you are seeking money, and the ways in which you are going after it. In some campaigns, all six source groups may be fair game. In others, it is conceivable that only one or two will be targeted. A long, hard look at your organization and its mission, your community and its philanthropic traditions, and the number of foundations, corporations, and governmental entities with a history of supporting your organization or the type of programs it offers will help you assess your chances with each category of funding sources.

Every fund-raising campaign requires you to examine the cause you are touting, the arguments you have marshaled in support of it, and the people and means available to present those arguments. You then determine which sources are likely to have the most money you can access.

I remember when the American Symphony Orchestra League (ASOL) asked its then more than 1,500 members what topics they wanted to see addressed at the League’s annual regional workshops. More than 80 percent listed fund-raising. When asked what specific fund-raising topic they wanted to focus on, over 80 percent said corporate giving. Yet many of ASOL’s orchestras, ensembles, and bands are in small communities where there is little or no corporate presence.

Why did they choose corporate fund-raising? Because most of us find it easier to ask a corporation for money than a private individual, and because as a society we have come to view corporations as the holders of vast wealth. When a corporate contributions officer says no, it seems less personal. However, a fund-raising campaign strategy should not be based on anticipating the least painful turn down. Nor should fund-raising strategy be based on an erroneous understanding of wealth. It is the owners of a corporation, individuals who hold a corporation’s stock, who have the money to give to worthy causes. You go where money you think you can get is to be found in the greatest quantities, and most of the time that means you look to the individual donor.

Note: Additional resources to help you determine the best funding sources for your organization are available on my website. You may access them by using .pdf and/or .html methods as follows:

• Funding Sources to Resources
• Funding Sources to Applications