(a) Annual Giving Programs
The basic concept of annual giving programs is to recruit new donors and renew prior donors, whose gifts provide for annual operating needs. Some programs require only a staff professional to manage, but most require both staff and a volume of volunteer leaders and workers. Charities frequently conduct two or more forms of annual solicitation within a 12-month period; the net effect is to contact the same audience with multiple requests within the year. Churches make appeals weekly through the collection plate; United Way uses payroll deductions to ensure frequent payments. Such gift support is basic to the financial success of these organizations; their needs are urgent, and the funds are consumed immediately upon receipt.
The design behind the choice of any of these several methods offered during any one year is always the same—to recruit new donors and to renew (and upgrade) the gifts of the prior year's donors. Some donors prefer one method of giving over all others because they are most comfortable with that style. For example, benefit events are popular because they include attendance at social activities. Multiple-gift requests to present donors will increase net revenues faster than efforts to acquire new donors, because present donors are the best prospects for added gifts. No organization will be able to use every fundraising method (chiefly because of donor resistance or saturation), so rational selections are required.
A brief explanation of each method and its special value to the annual giving process is presented as follows, arranged in the order of least productive to most efficient.
1 Direct Mail/Donor Acquisition. Direct mail/donor acquisition fundraising uses direct mail response advertising (usually third class, bulk rate) in the form of letters to individuals who are not present donors, inviting them to participate at modest levels. One of the best methods to find and recruit new contributors, this program is perhaps best known to the public because people receive so many mail requests. Usually a charity can expect only a 1 to 2 percent rate of return on bulk mail requests, but this is considered satisfactory. Successful “customer development” may require an investment of from $1.25 to $1.50 to raise $1.00, a formula well accepted in for-profit business circles but often criticized within charitable organizations. The value of new donors is not their first gift, however, but their potential for repeat gifts. Such first-time donors, with care and attention, can become future leaders, volunteer workers, and even benefactors.The mail process includes (a) selecting audiences likely to respond to this organization;49 (b) buying, renting, or leasing up-to-date mailing lists of audiences selected; (c) preparing a package containing a letter signed by someone whose name is recognized by most people, a response form with gift amounts suggested, a reply envelope, and a brochure or other information about the charity or the program offered for gift support; (d) scheduling the “mail drop” during the most productive times in the year for mail solicitation (October through December, March through June); and (e) preparing for replies, including gift processing, setting up donor records, and sending thank-you messages.
2 Direct Mail/Donor Renewal. Direct mail/donor renewal fundraising is used to ask previous donors, who are the best prospects for annual giving, to give again. If some contact has occurred since the first gift, such as a report on the use of their gifts to render services to others, it is likely that 50 percent of prior donors will give again—at a minimum cost to the organization of a renewal letter. A feature called upgrading, a request asking donors to consider a gift slightly above their last gift, works 15 percent of the time, and has the added value of helping preserve the current giving level. Prior donor support is predictable income for organizations that can estimate their ability to meet current needs because of committed levels of proven donor support.
3 Telephone and Television. Telephone calls to prospects and donors permit dialogue and are more successful than direct mail. Public response is not high (around 5 to 8 percent), perhaps because of the intrusive nature of phone calls and their frequent use by for-profit organizations. Television solicitation is more distant but is the best visual medium to convey the message (televangelists already have perfected this technique).50 Both methods are expensive to initiate and require the instant response of donors (only 80 percent of pledge collections may be realized).
4 Special and Benefit Events. Special and benefit events are social occasions that use ticket sales and underwriting to generate revenue but incur direct costs for production. While popular, especially with volunteers, these events are typically among the most expensive and least profitable methods of fundraising in practice today. Events include everything from a bake sale and car wash to golf tournaments and formal balls. If well managed, they should produce a 50 percent net profit. While most fundraising staff deplore the energy and hours required to support events, their greater value is in public relations visibility, both for the charity and its volunteers.
5 Support Group Organizations. Support groups are used to organize donors in a quasi-independent association around the charitable organization. Membership dues and sponsorship of events are used as revenue sources as well as “friend-raising” opportunities. Support groups are like civic organizations, with a board of directors and active committees, except that their purposes are committed to one charity (e.g., an alumni association). Valuable for their ability to develop committed annual donors, to organize and train volunteers, and to promote the charity in the community, support groups also require professional staff management. Smaller charities should consider support groups to secure annual gifts as well as the volunteers needed to produce benefit events and to aid the organization in other ways when needed.
6 Donor Clubs and Associations. Donor clubs and associations are donor-relations vehicles, similar to support groups, that are designed to enhance the link between donor and charity, thereby helping preserve annual gift support. Most organizations use higher gift levels (say, $1,000 and up) and prestigious names (e.g., President's Club) to separate these donors from all others. The clubs' selectivity and privileges help justify the higher gift required, which is rewarded by access to top officials and other benefits. Donor club members also represent a concentration of major gift prospects, whom charitable organizations treat as benefactors, and whose cultivation will pay dividends in the future.
7 Annual Giving Campaign Committees. Campaign committees are volunteer committees of peers using in-person solicitation methods to recruit the largest and most important annual gifts. The performance of such a committee will be the most lucrative of all the aforementioned annual giving methods. The committee is structured as a true campaign, with a general chairperson and division leaders for individual, business, and corporate prospects. After making their own contributions, each volunteer may be assigned from three to five prospects to visit and with whom to discuss an annual gift decision. Donors are receptive because someone they respect has taken the time to call on them on behalf of an organization. The volunteers also can report that they have made their own personal contributions.
8 Other Annual Giving Methods. Several other methods can also develop gift support on an annual basis:Commemorative Giving. A commemorative gift to a charity has the dual effect of honoring the recipient and aiding the donor's favorite charity at the same time. Most often, these gifts are memorials following the death of a family member, friend, or business colleague, and are directed by the family to their favorite organization. Commemorative gifts can also be given to mark a birthday, anniversary, promotion, graduation, or other important occasion, or to honor a friend, physician, or teacher.Gifts in Kind. Instead of cash, donors can make gifts of goods and services that can be used by the recipient organizations (such as Goodwill Industries, Salvation Army, St. Vincent de Paul Society) in their program activities. Businesses often donate products or excess merchandise, either for direct use (food or equipment) or for use as a benefit door prize or auction or raffle item.Advertisements in Newspapers/Magazines. Advertising, while the least likely solicitation method to stimulate a response, can promote an organization, a special campaign, a form of giving, or other purpose. Usually, direct mail or telephone follow-up is required to maximize the gift response from such multimedia