Comprehensive Annual Giving – Roadmap to Creating Your Plan

By Amy Hines, Senior Vice President

Annual giving programs typically serve as fundamental revenue engines for nonprofit organizations and yet are notoriously knotty plans to put on paper. We need our institutional leaders, boards and staff to understand our plans. Making them understandable, measurable, achievable, and yet strategic and ambitious is part of the job of the chief development officer.  How best to do that?

What to include in annual giving?

By definition, an annual giving program encompasses solicitations that recur each year, and that should produce incrementally greater results over time, increasing the number of donors and dollars raised. The program should generate predictable cash income at targeted times in the year, based on when solicitation activities are scheduled to occur. Annual giving income addresses an organization’s need for current funds, largely, but not exclusively unrestricted.

Different types of annual giving programs meet the above criteria, not just the common “annual fund” mailings and online solicitations. Annual sponsorships and annual benefit events are included, along with grant-seeking for current operations. The work of developing strategic annual giving involves creating different ways to identify new donors and to improving participation and commitment among all types of existing annual donors.

How to build a plan?

Like an organizational strategic plan, the best annual giving plans are organized around both financial and qualitative goals and objectives, agreed upon as part of an overarching long-term vision for where the annual giving program intends to be in three to five years. How do you determine your goals?

Start with data. Using historic data about who gives, how often and how much to your organization, you can identify the strength of your donor loyalty, the robustness of your donor acquisition and the leadership levels of giving within your constituencies. You can spot weaknesses in retention, gaps in levels of giving, and potential vulnerabilities you want to address with your plan.

Set goals by donor source. For individuals: If you use a direct marketing firm to acquire new donors and solicit existing donors, review with them their plan for segmentation. If you are on your own, start with the number of individual donors who gave last year. Group them in naturally occurring segments starting with the top 3+ individuals at the high end of your previous year’s annual giving results. Based on strategies you create for deepening relations with these individuals, increasing retention and upgrading, set a realistic target first for increasing the number of donors at each level over last year. Determine the average gift for each group and multiply that amount by the number of donors targeted. Do this for each level of donor and you have your goal for individual gifts.

TIP! Don’t forget a plan/strategies to acquire new donors. Look for where in your organization contacts occur with potential new donors. Make sure to roll those individuals into a donor acquisition plan, including an outright solicitation.

For institutions: Set goals based on the actual foundation prospects you have identified and qualified. Similarly for corporations, other organizations, and government sources, if any.

Upgrade donors. Typically, annual giving by individuals can be increased through targeted requests, for example with leadership giving and lifetime giving programs. These approaches encourage people to consider lifting their sights to higher levels of annual support. Establish the highest level based on the amount of giving made in the last three years by the top three to five individuals who typically give each year. Establish additional thresholds and ranges for leadership giving based on the largest gap between donors at one significant level and the next, say between $1000 and $1250.

Recognize donors. Donor recognition is a critical part of the plan. If donor retention is less than the national average of 47%, be sure to address your donor appreciation, communication and recognition efforts to deepen their connection with you once they’ve made a gift. If you have a mature program that functions seamlessly already, consider putting in place new recognition for lifetime giving levels you identify in a similar manner.

What makes a successful plan?

In our experience, successful fundraising generally depends upon how well you integrate fundraising operating goals and strategies with other organizational elements that impact giving to the organization. These include:

  • A good story. Improving the story you have to tell about the value of your organization, the opportunity for donors and its impact on the people who are its beneficiaries. As described by my colleagues in the earlier blog on storytelling vs. statistics, find a balance between facts that provide evidence of impact and the stories that summon images and the feelings that inspire a desire to support of your work.
  • Confidence in the leadership. Larger gifts especially depend upon demonstrating the organization’s ability to carry out its mission effectively. A board with the skills, experience and diverse backgrounds relevant to your mission is an essential element of positioning your organization for success.
  • Donor sources. There must be an intentional effort to acquire new donors. Identify likely places where they can be found. Your natural constituencies may be self-identifying through volunteer activity. They may be alumni, employees, former trustees, people who come out to your events, people invited by others to attend benefit events, friends of current donors, etc. Wherever they are, put in place sustained strategies to invite their participation in your annual giving program.
  • Donor relations. For every donor source and segments within, the plan requires a set of communications and stewardship strategies. Opportunities to meet your donors improve the chances that they will renew and upgrade their giving. Identifying the most appropriate form of recognition ensures they feel their giving matters and increases the likelihood that they will respond to your next solicitation request.
  • Relevant channels for solicitation. Reaching your donor constituents effectively and efficiently is both art and science. For example, direct mail paired with email solicitations are shown to be more productive than just one or the other. You can test new inserts or eliminating a return envelope against prior mailing results. Segmenting appeals based on interests, giving history, solicitation amount requested, etc. enhances personalization. Adding leadership giving opportunities and using volunteer leaders as champions and signatories can increase your responses. For every type of donor, there are multiple ways you can consider approaching your solicitation.
  • Allocation of sufficient resources for fundraising. Once you have a plan, there needs to be staff and budget resources available to carry it out. Indeed, resource allocation is part of the plan. When you have a plan with multiple-year targets that shows growth, the justification becomes much clearer for investing in the effort.
  • Operating calendar with deadlines and accountability. Annual giving recurs every year and the activities that ensure donor identification, engagement, solicitation, stewardship and recognition must be repeated as a routine that can be calendared, with responsibility clearly assigned. Donors should hear from you in some fashion approximately every six weeks and receive at least two requests for gifts during the year. Policies and procedures must be documented and followed to ensure proper donor and gift tracking, gift receipting and acknowledgements.

How to communicate the plan?

Here are the steps to communicate your plan:

#1 State and show a graph of your overall objective for the plan. For example – Overall Annual Giving Objective: Increase annual giving to $1.3 million in FY20, representing an 18% increase over the previous year as part of a multi-year strategy to grow annual giving to $2 million in four to five years.

#2 State your objective along with two to three strategies for each donor source: individuals, foundations, corporations, organizations and government. For example – “Objective for Individuals: Increase the number of individuals participating in $1,000 – $50,000 level giving circles from 136 to 146 as part of multi-year strategy to increase the number to 200 people.” List two or three key action items to achieve this objective.  Show a table of specific targets:

#3 Finally, since annual giving is calendar-driven, make a summary annual calendar that can be viewed easily by the board, management and your staff team.

Individual staff assigned to each source should provide separate, more detailed calendars for their areas.

The dashboard: Don’t wait for the finance office to report!

Any plan is only as good as your ability to report out on progress made against the goals you have established. The simpler the dashboard, the better it communicates up to the board as well as among the management team and staff. Development offices that forget this step end up trying to explain numbers provided instead by the finance office.

Although there are many metrics that can be tracked year-over-year, such as fundraising cost ratios, retention rates and increases and decreases in giving – all of which should be part of the initial data analysis and year-end review, an easily-maintained dashboard is effective for use throughout the year of a plan’s implementation.

Always include last year’s actual results along with this year’s goals and results to date. Track the number of donors separately from the dollars. Include pledges if in writing, and footnote amounts that will not offset current year operations.

With this information and this roadmap in mind – you are ready to create your comprehensive annual giving plan!