4 Reasons to Love Your Annual Fund

Image: digitalart at FreeDigitalPhotos.net

Image: digitalart at FreeDigitalPhotos.net

Does fundraising by way of an annual fund seem old-fashioned? Boring even? On the one hand, annual funds have been around for decades. On the other hand, annual fund longevity has occurred for good reason! 

To start, let’s get clear on what “annual fund” really means. According to About.com your annual fund is an organized effort to obtain gifts on a yearly basis to support, at least in part, general operations of your nonprofit organization. 

Funds are typically raised through mail or direct solicitation efforts, including special events. Annual fund solicitations happen at around the same time every year, usually between 1 and 4 times per year. 

Some smaller organizations rely on an annual fund as their sole fundraising strategy. But even for larger entities that implement an annual fund as one of several fundraising strategies in a given year, the annual fund remains a critical stream of unrestricted philanthropic income.

Hank Russo goes so far as to say that the annual fund is the building block for all fundraising. According to Russo, the primary objectives of an annual fund should be:

•    To solicit and secure a new gift, repeat the gift, and upgrade the gift
•    To build and develop a base of donors
•    To establish habits and patterns of giving by regular solicitation
•    To seek to expand the donor base by soliciting gifts from new prospects
•    To raise annual unrestricted and restricted money
•    To inform, involve, and bond the constituency to the organization
•    To use the donor base as a vital source of information to identify potential large donors
•    To promote giving habits that encourage the contributor to make capital and planned gifts
•    To remain fully accountable to the constituency through annual reports

Here are 4 reasons your annual fund will serve you well:

1. It helps you meet your fundraising goals

Recent research has shown that nonprofits with annual funds are more likely to meet annual fundraising goals. In fact, the difference is significant: Some 77 percent of organizations with an annual fund meet total fundraising goals as compared to just 55 percent of organizations without such a fund. 

2. It is a source of unrestricted funds

By definition annual funds are usually unrestricted income, a sought-after funding bucket for any nonprofit. Unrestricted funds are donations that can be used by your organization for any purpose and often go toward general operating expenses.

3. It provides opportunities to connect with your donors

Of course, I hope you are connecting with your donors in a variety of ways between asks. But the annual fund, with its predictable nature, is a great mechanism for staying in touch with donors at regular intervals. Even if your donors choose not to give, solicitation letters and brochures highlighting your good work are great touch points and help ensure that your organization stays top of mind.

4. It incubates major gift prospects

Do you ever wonder how organizations find major gift prospects? It’s often the annual fund!

Look back at your annual fund donors who have given consistently each year at the same level, or with a slight increase each year. Make a list of these folks and review your list with your board, staff and other volunteers to see if anyone knows them. Do a little internet research of your own. 

Major donors often start out making small gifts to an organization that is new to them – they test the waters. Handle these donors and their gifts well and, as your relationship grows, they may be very open to discussing a larger gift in the future.

Don’t have an annual fund? Now’s a great time to start! Especially for new nonprofits just ramping up fundraising, the annual fund is a logical first step.

Special gift for you: Conquer Your Fear of Asking for Money, a step-by-step guide, is available here (click). 

Do you have tips to share about building an annual fund? Please share in the Comments box below.