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Elements of Nonprofit Development

Managing a community organization requires more than a commitment to a worthy cause. Becoming an accomplished nonprofit manager requires strategic thinking, financial acumen, and knowledge of the tools you'll need to build your organization's capacity. Without strong sources of funding, your organization's mission is largely a statement of intent. Strong and reliable sources of funding transform that mission statement into a plan of action.

How do nonprofit managers build and sustain relationships within the philanthropic community? What methods and mechanisms do nonprofit managers use to increase community involvement in achieving their organization's goals? Most importantly, how can nonprofit managers conduct their fundraising efforts in the most socially responsible manner? Louisiana State University Shreveport's online Master of Science in Nonprofit Administration program offers its degree candidates the option to specialize in Nonprofit Development. On this track, students gain real-world knowledge of the three major fundraising activities conducted by leaders in nonprofit management: annual giving, planned giving and capital campaigns.

Annual Giving

Annual giving is something of a misnomer. Annual giving campaigns are not conducted just once a year. Annual giving actually occurs year-round. What sets most annual giving apart from other nonprofit development strategies is the purpose for which its funds are collected. Funds donated through annual giving support the organization's general, day-to-day operations -- in other words, they pay salaries, cover insurance and otherwise keep the organization solvent. Annual giving forms the foundation of the nonprofit's fundraising efforts. With these essential expenses covered, the organization can then develop and implement other, more targeted fundraising efforts.

However, nonprofit managers face distinct challenges with respect to maximizing the effectiveness of their annual giving campaigns. Donor loyalty is a high priority. From year to year, the organization wants to know that it can depend upon the support of key individual donors. Simultaneously, fundraisers work under near-constant pressure to bring in new donors. Organizations have traditionally turned to direct mail and phone banks for the purposes of donor outreach. But, as Devin Mathias, the former director of annual giving at the University of Michigan, points out, advances in technology and consequent changes in social behavior have forced nonprofit managers to pivot and recalibrate.

As Mathias further notes, good donor stewardship remains vital to any annual giving campaign. And good donor stewardship can be expensive. Donors want to be thanked for their gifts, no matter how modest, and they appreciate seeing how their gifts advance the organization's cause. Digital forms of communication -- from text messaging to social media engagement -- also provide organizations with many new and convenience-optimized options for communicating with their donors. In summary, perhaps more so than with any other fundraising campaign, annual giving demands that nonprofit managers also be marketing managers.

Planned Giving

Put simply, planned gifts are donations that are arranged in advance. Funds promised as part of a planned gift are only transferred to the organization at some agreed-upon future date. In the vast majority of cases, this future date falls sometime after the donor's passing, and funds are transferred to the organization under the terms of the donor's will.

Planned giving is an ethically, legally and financially complex practice. In some cases, donors make outright bequests, delivering a lump sum to the organization. However, that bequest may take the form of cash, investments that must be managed, or physical property that the organization may or may not wish to liquidate. Additionally, terms and conditions may accompany these bequests, and organizations may not be permitted unrestricted use of the funds donated. In other instances, gifts are made via a trust or annuity. Under such arrangements, the organization must fulfill other financial obligations (e.g., to the donor's surviving family) using the endowment before taking the remainder as a charitable donation. Finally, gauging the actual size and scope of a planned gift can be a complicated affair. Because the planned gift only realizes its full value in the future, a variety of factors (e.g., inflation, changes in tax policy) can cause that value to fluctuate.

In establishing a planned giving program, nonprofit managers will rely upon their expertise in estate planning, finance, accounting, organizational theory, public relations and reputation management. Planned giving initiatives may carry more initial costs, and its intricacies may even necessitate the hire of a planned gift officer. But the yearly benefits an organization can accrue from planned giving are potentially quite substantial. The latest statistics collected by The Giving Institute indicate that charitable bequests account for nearly $32 billion (or 8 percent) of all contributions to nonprofits.

Capital Campaigns

Capital campaigns are focused precisely on that: raising large sums of money. How large? Some capital campaigns have funding goals in the hundreds of millions of dollars. Capital campaigns are often referred to as "brick-and-mortar" campaigns because those liquid assets have been earmarked for new construction, structural renovations, the purchase of important equipment, and the like. Such capital campaigns have become an essential aspect of college and university development efforts. Hospitals have also made extensive use of capital campaigns in order to expand their services and keep their facilities as up-to-date as possible.

However, capital campaigns are not exclusively focused on obvious tangible needs. As long as the organization's need is substantial, concrete and relatively immediate, it can be the impetus for a capital campaign. In fact, three things truly define a capital campaign:

  1. Explicitly and specifically targeted. Donors to the campaign know in advance exactly what their donations will be funding.
  2. Capital campaigns must reach their funding objectives within a carefully outlined time period.
  3. Capital campaigns are both private and public fundraising efforts. In the private or "quiet" phase, fundraisers solicit major gift commitments from a relatively limited population of very wealthy donors. Typically, at least half of the capital campaign's targeted funds are raised during this quiet phase. During the public phase, fundraisers open the campaign to the general populace and work to achieve the campaign's remaining benchmarks via smaller gifts.

Although capital campaigns can significantly increase an organization's capacity, they can also put a tremendous strain upon the organization's existing resources. A capital campaign will flourish or falter based not only on how compelling its purpose is but also on the meticulousness of its design. According to fundraising consultants and industry authorities Andrea Kihlstedt and Gail Perry, to successfully lead a capital campaign, a manager should do the following:

  1. Identify a select few private donors and cultivate meaningful relationships with them.
  2. In campaign messaging, frame the organization's needs in terms of how fulfillment of those needs will benefit the community.
  3. Make the campaign a complete team effort, from support staff to board members.
  4. Invest in training and professional development. All fundraisers working on behalf of the campaign should be well-versed in "the art of the ask."
  5. Build accountability into every goal and every deadline.

Learn more about how LSUS's unique curriculum can help you make a real difference as a nonprofit manager by visiting the Master of Science in Nonprofit Administration online program page.


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Sources:

GuideStar: Capital Campaign Magic: Revealing Five Secrets of Success

The Giving Institute: Giving USA: 2015 Was America's Most-Generous Year Ever

Association of Fundraising Professionals: Four Current Annual Giving Trends and How to Incorporate Them Into a Fundraising Plan


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