Community vs. Annual Fund Approaches

Any nonprofit that has been in existence for more than 10 years has probably implemented some version of the “annual fund” approach (see Q&A section at the end to see what we mean by “annual fund,” a US-centric term).

They are most likely seeing fewer and fewer donors giving to them, but do not have an alternative framework to guide their work.

Thus, they are stuck in incremental improvements (i.e. “send more solicitations”) or are constantly on the lookout?for the next technological shiny item (right now, cryptocurrency or AI). This impacts their morale and staff turnover rates: nobody wants to be aboard a sinking ship.

Traditional “Annual Fund” Approach

• One or two large appeals per year (Fall/Spring)
• Plus other targeted solicitations throughout the year
• Content-poor?
• Very light on stewardship/recognition
• Give first / engage second
• Focuses myopically on revenue vs. donor motivations

Uses the following technologies:

• Direct mail / email / calls / texting / in-person events

Communities of Purpose Approach

• Starts by identifying existing communities, their needs, hopes, and ad hoc leaders
• Then, provides these groups with a structure to support their needs
• Digital “town square” (Google Groups/Discord/Facebook Group/WhatsApp/Slack)
• Routines/traditions to convene the community on a regular schedule
• Content-rich. Provides a steady stream of purpose-centered content
• Heavy on stewardship/recognition. Thank you note within 48 hours. Multiple thanks from different voices. Badges/honor rolls. Facilitates public displays of status.?
• Engage first / ask second. Asks around meaningful fundraising “drives” or concrete initiatives.?

Uses the following technologies:

• Facebook Groups / Discourse / WhatsApp / Teams / Email / Zoom / Automation tools for mail (i.e. Lob)

Example: Fundraising from Alumni

“Annual Fund” Approach

We send two large mail/email appeals per year. We come up with most of the content based on what we’ve done in the past or what our strategic priorities are at the moment. We also run a student calling program, which is barely breaking even.

As the well dries up, we start to send more and more targeted solicitations (graduates of a particular major, participants in a specific student activity) and try to generate excitement through means like Giving Days. None of this is increasing the number of donors, which leads to turnover and increasingly frantic efforts in a death spiral-like behavior.

Donors may be recognized once per year in the annual report. They receive a template thank you letter several weeks after their donation.

“Communities of Purpose” Approach

First, we identify the leaders in each graduating class and reach out to them individually and in groups to ask them about their experience as leaders, the roadblocks that they’ve encountered in their relationship with their alma mater, and try to discern any unmet needs (Would they like help to meet more often or to reach more people? Is their class more interested in career and networking? Or in continuous education? Would they like to hear from leadership?)

Second, we roll out a digital “town square” where alumni with something in common can gather. The most common places to do this are: Google Groups (email listservs), Discord (a chat app), or Facebook Groups. When we roll it out, we make it clear that this is a tool that their alma mater is making available for them to gather and connect with each other while supporting causes that are important to them. The goal is not to achieve quantity, but quality (getting the right people to join) and growing from there.

This is the trickiest part, and also why new nonprofits may have it easier than established ones. In established nonprofits, there are numerous groups with differing purposes (networking, affirming a part of their identity, socializing, career development, etc.). On the nonprofit side, there may be multiple goals as well and little coordination among them. The hardest part and where most effort should be invested is in creating alignment between what the nonprofit wants from its communities and what its community members want. This can typically be achieved more expediently by offering first to support existing communities in their needs and then introducing the organizational needs.

If this proves impossible, creating new communities from scratch is also an option and could be simpler. See an example invitation letter at the end of this article.

Third, we develop a content-sharing plan that is distributed through different channels and is based on three pillars:?

1. Donor recognition and highlighting. Monthly updates thanking donors and featuring stories of why they gave.
2. Impact. Constantly reflecting and showing how individual support makes a difference in the outcomes that donors most often care about: helping other people.
3. Conversation and participation-starters. Frequently asking for opinions and trying to start conversations, using tools like polls and surveys. Then, summarizing the outcomes and reporting back on how this was shared/used at the organization.

Fourth, we institute traditions and rituals that convene the communities on a predictable schedule. That might look like a monthly Zoom call with a webinar, or town hall with leadership, followed by networking. Think of the Aggie Muster or the Muhlenberg Toast Heard Around the World, just more frequent.

Finally, as part of our regular meetings with alumni leaders we co-design and review the solicitation calendar to make sure that the causes are timely, relevant, and reflect real interests of their communities. With their buy-in, we build an outreach strategy,

Example: Healthcare Organization

“Annual Fund” Approach

• Sends 2-3 mail/email solicitations per year (National Doctors Day, etc.)

“Communities of Purpose” Approach

(This section is based on the work of Dan Lombardi. Connect with him in the comments.)

• Quarterly impact emails showing where the money raised is making a difference.
• Personal updates to donors sent every 4-6 weeks for all donors not assigned to a relationship manager
• Personal thank-you cards sent using automation immediately after each donation
• Open and constant call for feedback and open communications. Mass email replies go to a staff member. Foundation CEO is easily contacted.
• Fundraising initiatives are flexible and reflect evolving donor interests (including an online store)
• Discord channel to for digital community-building. Regular Ask Me Anything videos with hospital staff.?

Frequently Asked Questions

Q: How Does this Support Major Gift Fundraising Efforts?

Major gift officers should attempt to be visible participants in these communities to identify the people that “raise their hand” to help. In addition, very rapidly (within 48h) acknowledging gifts is a key conversation starter and natural way to make introductions. As should the champions of the initiatives for which major gift officers are seeking support.? Content first.?

Q: What if We Can’t Identify Alumni Leaders or if My Institution is Too Young?

Every effort should be made to use existing and new networks to discover who are the “connectors” among alumni. If this is a startup organization or we are trying to create communities for new areas, then staff can serve as the temporary leaders while they kick the effort off.

Q: Can we Repurpose our Giving Societies as Communities of Purpose?

Possibly. The main issue to consider is that you need to give each community a purpose. If the only common factor among giving society participants is that they give a certain amount or a certain way (planned gifts), it may be counterproductive to attempt to turn that into a community. You can and should recognize giving society members often, as part of your content-sharing plan.

Q: Isn’t This Too Much Work? How do we Transition into this Model?

Undoubtedly, it requires new capabilities from “annual fund” staff or a renaming of that unit to “Supporter Communities” or similar. Once initial buy-in is achieved, the volunteers can and should be trained to take on a lot of the work. This model integrates the work of alumni affairs, advancement marketing/communications, donor relations, and annual fund. The org structure and pooling of resources must reflect it.

“Too Much Work” is also a concept that is relative to the team’s comfort with technology. Applying automation and refining processes on the engagement side of the shop will be necessary.

Q: What do you Mean by “Annual Fund”?

Different organizations call this part of their individual fundraising effort something different (direct response/marketing, annual giving, etc.). This group, whatever you call it, is typically tasked with promoting broad-based participation in the nonprofit. Traditionally, donors were happy with "participation = giving", but now increasingly they demand "participation = donor citizenship." This requires a change in the philosophy,? organizational structure, and techniques used (as outlined in this article).

Q: I’m not Sure This Applies to my Nonprofit Organization.

I’ve interviewed, hosted (as part of the Donor Participation Project), and/or analyzed a dazzling array of organizations that are successfully incorporating elements of these approaches: The Dinner Party, CrossFit, Public Media, Jeffersonian Dinners, The Influencers Dinner (book and TED talk), Dream DAO (site and #DPPOfficeHours interview), Grand River Hospital Foundation, Charity:Water, Langley Innovations, and more.

Organizations that are growing are applying these lessons.

Q: What do you Mean by “Leader”? We Already Have Designated Leaders and they Don’t Do Much.

“Leader” is an overused term that I use for lack of a better one. This article refers to de facto leaders, not necessarily those who are officially appointed. I’ve observed that healthy organizations will have a lot of overlap between those two groups.

Defining de facto leaders: "who is putting in the work to bring their peers together? Make sure people stay connected? Share updates regularly? Coordinate get-togethers?"?

Perhaps rather than the traditional "leader," we should think more of "connector-types" in the sense of Malcolm Gadwell’s Tipping Point book.

Additional thoughts on civic leadership:

• Despite the wish many express for fully structureless organizations, successful ones need a person/people providing structure, content, and actively working to be the social "glue"
• Discovering these people is not as hard as it seems. Gift officers and engagement officers typically have a good sense of who these people are. A good rule of thumb is to start taking note of the names that repeat in multiple conversations. They'll sometimes have nicknames like XYZ person is "the mayor of ORG/GROUP"
• Sometimes the designated "leader" is not a leader according to the above definition, and vice versa
• This applies to any community I've worked with, orchestra volunteers, booster groups, parent associations, etc. I've found that a good heuristic for organizational health is to look at how much overlap there is between the "official leaders" and the de facto leaders
• Staff can serve as the leaders in this sense. There is an upper limit to how many groups a staff member can nurture. At some point, there will always be a need to develop volunteer leadership (in the sense above).

Q: There is Nothing New in Here? Successful Organizations Already do this with their Major Donors/Board.

Correct. Another way to look at this is extending the “major donor/board” citizenship experience to all our donors through judicious use of technology.

Q: Are Annual Funds Really Failing? Nonprofits Raise More Dollars Every Year.

My answer to this involves a preponderance of evidence. Please make your own decision.

1. The number of households giving to charity has fallen by a third in the last two decades (LinkedIn post by Stephen Rodriguez).
2. The Edelman Trust Barometer is showing declining trust in nonprofits. For the last two years, nonprofits were seen as less trustworthy than corporations.
3. Fundraising staff are experiencing high burnout and turnover (research compilation).
4. Yes, dollar amounts keep going on but giving as a percentage of the Gross Domestic Product hasn’t increased for decades (somewhere between 2-3%). Here is some analysis from Jay Love and here is some from Citi with a more optimistic perspective.

Q: How do We Create a Community from Scratch?

This article is reaching the LinkedIn limit. Please contact me (Louis Diez) for more materials.