As state, corporate and foundation giving decines, non-profits need to realize importance of individual giving for long-term success. 

From Perla Ni in her opinion post – and my response. Both can be found here Stanford Social Innovation Review : Opinion Blog : Your Fundraising Needs to Change Now (May 12, 2009) 

Thank you to Ava Newbart from SHALVA for sharing this this post!

State incomes have declined and social services are being cut to meet budget gap. Foundations lost $150 billion last year – that’s more than foundations gave out in the last four years combined. Many of the biggest corporate givers–Citigroup, JP Morgan, Wells Fargo–are in financial distress. Giving by high net worth individual giving is down because their assets are down. This is a dire snapshot of the fundraising market nonprofits face. 

The only giving that is expected to remain unchanged is giving by individual donors who give from income. Individual giving has increased every year despite recessions. 

These were some of the key points made by Curtis Chang of Consulting Within Reach, at his seminar I attended yesterday with nonprofits and funders in the Silicon Valley area. Nonprofits are facing an ecological shift in donors. To survive, nonprofits need to lessen their fundraising focused on state, corporate, foundation and high net worth individuals giving, said Curtis. And they need to increase their on development staff and marketing appeals to target middle class individuals. 

This requires a whole new set of capacities that need to be built to reach individual donors. Curtis shared this graphic with us:

State/Corporate/Foundation Fundraising Model
Appeal: innovation/social impact
Content: hard data
Communication: grant writing
Tracking: annual
Key Contacts: program officers

Individual Fundraising Model
Appeal:  brand experience
Content: emotional stories
Communications: marketing
Tracking: continual
Key Contacts: social connections

I agree with much of Curtis’ points, especially the need these days to focus on individual donors. I think there is one missing piece in this, which is to cultivate volunteers as well as individual donors. Research shows that 50 percent of volunteers end up donating to the nonprofits as well. This is a spectacular conversion rate and much better than any direct mail or facebook solicitation. If nonprofits can convey the stories, the emotional experience and rewards of being part of their cause, donations will follow.

 Perla Ni, founding publisher of the Stanford Social Innovation Review, is the founder and CEO of GreatNonprofits. She is also a cofounder of Grassroots.com.

As I have posted previously about diversifying revenue and importance of individual giving. I felt compelled to comment on Perla’s post as follows:

Thank you for your post and sharing what you learned. It is right on target.  Diversified income is fundraising 101.  Unfortunately, the brass ring for non-profits are the big, one shot deals of large pots of money (I won’t call them gifts) they can obtain through foundation and corporate giving. Yet we all know this accounts for less 20% of all charitable giving in the US. 

I would contend the shift should have been made long ago but the “big” money is seen in some ways as easier to obtain. And I get that. But this recession has only brought home the point of needing to diversify income sources in case one large donor walks away.

Your comment about volunteering is right on as well. People are volunteering their newly found “free” time in record numbers. If anything this is where new capacities for non-profits need to be built.  We have to offer  great volunteer experiences, cultivate them like any potential donor and solicit appropriately. Typically it is the cultivation and solicitation piece that is left off the table or not discussed between staff. (See my post on engaging volunteers and cultivating them to give more than time.)

On the other hand individual giving does not require new capacities at a non-profit.  Annual and major giving should be part of every fund development plan.  However, it is the cultivation between the asks that might be need some tweaking.  In this economy, if a non-profit has not been reaching out to donors regularly when not asking for money – needing help now – fast – does not resonate with donors and prospects.  Those organizations who have a systematic donor cultivation program in place are able to dialogue with their donors effectively about programs, money and impact of the  recession without whining.

Better to start now than never, but the times we are in are testing all of us.  Priorities are be realigned for donors and organizations.  For an organization to remain top of mind, a consistent message shared consistently is required.

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