The Three Ways to Raise Funds
In fundraising, we often talk about Annual Giving, Major Gifts, Grants.....but really, there are three types of fundraising: Arms length—the fundraising we do from a distance, assuming our mission is so important that donors, regardless of how we lump them together, will give Transactional—where you get something in exchange for your donation, like a gala, or a golf tournament. Grants are also largely transactional: for their grant to an organization, the funder can expect the organization to do something specific. Relational—where a connection is made, cultivated, stewarded. Where the focus is more on what the donor hopes to accomplish than what the organization needs.
The fundraising behind door #3 raises the most money—but few small and mid-sized nonprofits spend much of their time on it. In fact, for many of these nonprofits, it is the “fundraiser”—the transactional way to raising money is the one most nonprofits focus and depend on. They are also the ones that have the worst return on investment; the highest cost to raise a dollar.
The reasons for this are clear: people don’t feel comfortable asking other people for money. It’s hard enough to ask someone to buy a ticket or a sponsorship, but at least there is something concrete the donor gets in return. And arm’s length fundraising happens at such a distance, there is no stress about asking
Successful fundraising programs typically rely on a mix of all three ways to raise funds; and institutional donors, as well as individuals, are often romanced and asked all three ways. Arms-length and transactional fundraising are, in fact, ideal ways to bring people into the organization and to keep them involved, but by themselves, they will not raise the kind of money needed to transform your organization and serve your clients or your cause in the best possible way.
Janet Levine Consulting helps their clients be the best they can be by helping to increase fundraising capacity, strengthen boards and move them from mired to inspired. Learn more at www.janetlevineconsulting.com. Sign up for the newsletter and do schedule your free, 30-minute consultation.