Aligning your fundraising with your financial model

When it comes to fundraising, one size simply does not fit all. Organizations that depend on annual giving for financial stability must adopt a fundraising model that fits this reality. Some organizations like higher education institutions and large medical centers have powerful fundraising models, but their financial models are different – they don’t typically rely on significant levels of annual gifts for stability. On the other hand, organizations that do depend on annual giving for financial stability - annual giving dependent (AGD) organizations - make a significant mistake when they adopt the fundraising model of organizations with fundamentally different financial models. 

How are they different?

AGD organizations are driven by the urgent need to raise a significant amount of money every year to balance their budget and maintain stability. The clock starts ticking on the first day of the new fiscal year. By necessity, the work of the development team is organized around renewing gifts, as well as generating sufficient new gifts, not only to offset natural attrition but to achieve year over year growth. The timeline is unrelenting and unforgiving. One-on-one donor engagement has to be tied in with the solicitation process; similarly prospecting must be carefully merged with asking. Broader high intensity engagement programs have to be highly efficient because the bulk of development resources each year must be focused on the solicitation process. For this reason, developing the effectiveness of your Board as fundraisers and the creation of an additional advisory group are essential.

The definition of a major gift is also different. For most AGD organizations five figure annual gifts are major gifts.  In smaller organizations, a major gift might well be $1,000. To ensure that annual giving growth meets the organization’s financial needs, a significant number of major gifts – including new gifts - must be secured every year.

However, for organizations that are not dependent on annual giving, fundraising looks very different. Six and seven figure gifts for endowment and facilities are the focus. Relationships with major donors are developed over longer timelines and follow an orderly progression. The development program is largely constructed around portfolios managed by major gift officers with a singular focus. The concept of seeking gifts annually may be nonexistent or used primarily as a prospecting and engagement tool as part of the process for a later major gift.

For organizations dependent on annual giving, it is vital to recognize that your fundraising strategies must be aligned with your financial model.