The Fund-Raising Process

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The Fund-Raising Process
A Step-by-Step Guide To Generating Resources for
Community Development Organizations

Launched in 1982 by Jim and Patty Ro u s e ,
The Enterprise Foundation is a national,
nonprofit housing and community d e ve l o p-
ment organization dedicated to bringing lasting
i m p rove m e n t s to distressed communities.
Copyright 1999, The Enterprise Foundation, Inc.
All rights reserved.
ISBN: 0-942901-64-9
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for nonprofit organizations dedicated to revitalizing and
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offers industry - p roven information in simple, easy-to-
read formats. From planning to governance, fund rais-
ing to money management, and program operations to
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About This Manual
What is fund raising?
Fund raising consists of finding and creating positive relationships
with funding sources appropriate for your organization. Good
resource development is closely coordinated with an organization’s
business plans and strategic objectives.

The Fu n d - Raising Pro c e s sis designed for board members and staff of
n o n p rofit community development organizations who want to improve
the organization’s ability to raise funds. In this manual, you will get an
ove rv i ew of the process and how you work through it to create re s o u rc e s
Table of Contents
for your nonprofit from several types of donors. The aspects of re s o u rc e
d e velopment included are :
Overview of Resource Development
s Understanding the different types of support and donors
The Fund-Raising Process:
s Understanding the fund-raising process
An Overview
s Preparing your case statement
First Stop: Preparing a
s Finding prospects
Case Statement
s Cultivating prospects
Second Stop: Prospecting for
s Soliciting donors
Potential Donors
s Stewardship
Third Stop: Cultivation
This manual is part of the Fund Raisingseries within The Enterprise
Fourth Stop: Solicitation
Foundation’s Community Development Library™. This series provides
detailed information on all aspects of fund raising — from developing
Fifth Stop: Stewardship
resources to managing a fund-raising campaign. Manuals in the series
provide information to help you:
Appendix A — Creative Research
s Stage successful special events.
on Individuals
s Organize your office for successful fund raising.
Appendix B — Corporate, Foundation
s Develop a relationship with a local federated campaign.
and Individual Profiles
Appendix C — Research References
3 2
Appendix D — Sample
Telephone Script

Appendix E — Sample
Door-Opener Letter

Appendix F — Sample Thank
You Letters


Overview of Resource Development
Nonprofits need resources to do their work.
Resources “buy” the tools (personnel, supplies,
space, telephone, computers, etc.) that make it
Support for your organization will come in dif-
possible to provide services. They come in two
ferent forms and will meet different needs. It
forms: cash and non-cash. Raising, accessing
can often be pulled together under the auspices
and using these resources requires a strategy
of a campaign with a goal, a set of strategies and
that is integrally linked to your organization’s
a time frame. Some donors like to feel as though
mission and organizational goals.
they are contributing to a larger goal and that
their funds are being leveraged to attract others.
Your fund-raising efforts secure the resources
Because of the shifting focus of donors, the
necessary to achieve the goals of your strategic
growing interest in leveraging funds and the
plan. It is an ongoing process.You make stops
benefits of cultivating new relationships, non-
along the way and revisit them over time.
profits should look to raise different types of
Sometimes you may feel you are stuck at
support, such as:
one destination and other times you will fly
s Unrestricted grants: The funds can be used
through a stop. But if you stick with the
for any purpose. They are often the hardest to
journey, you will create opportunities for
get because donors often want their money
more resources, ultimately helping more
spent on a specific project. But, unrestricted
people in your communities.
giving provides the most flexibility on how to
use the funds.
There are six fundamentals to keep in
mind while going through the resource
s Restricted grants: Restricted funds are limited
development process:
to specific purposes as outlined in the proposal
or otherwise specified by the donor.
s People give to people, not organizations.
Fund-raising success is built on your ability
– Program or project grants support
to develop relationships with key individuals
a specific program, usually with
and to know what their priorities and needs
measurable outcomes.
are so that you can meet them.
– Seed money is for experimental, innovative
s Philanthropy, or giving resources, is an
or start-up projects (pilot or demonstration
opportunity for the donor to make an
programs). Depending on initial outcomes,
investment in something worthwhile —
funding may be renewable. Seed funding is
to make a difference.
attractive; it enables an organization to “test
the waters” and prove its viability in order to
s Your case must demonstrate clarity and
attract or leverage funding from other
strength of purpose. Be prepared to make your
case by substantiating a compelling need and
by establishing your organization’s capability.
– Capital grants are earmarked for principal
projects to meet future service demands,
s Resource development is an ongoing process.
such as purchase, construction or renovation
Success happens over time — you have to
of a physical facility, land acquisition or
keep working on building new relationships
major equipment purchase.
and nurturing existing ones. Continuity is
important to the process.
– En d owments are grants providing for a n
o r g a n i z a t i o n’s future security. En d ow m e n t
s Good resource development requires good
funds are invested to provide annual
information. Be creative and do your home-
income, usually as a percentage of income
work about your potential and current donors.
e a r n e d .
s Follow-through and accountability are criti-
cally important. Your job is to responsibly
use the resources given to you.

s Challenge (matching) grants: Restricted or
a n d a re the result of a we l l - p re p a red strategy
unrestricted grants may be made in the form
i n volving re s e a rch, cultivation, solicitation
of a challenge to the organization to raise an
a n d s t ew a rd s h i p.
equal or specified amount from other sources.
s Events may be a way to get regular amounts
The grant is contingent upon the matching
of support each year. More important, though,
funds being raised.
events help potential donors learn more about
s In-kind support: No cash is given with in-
and become emotionally involved in the orga-
kind support. Organizations or individuals
nization. Individuals or companies can buy
may be able to provide you with products or
one ticket or a block of tickets. Companies
services that you need to do business. A
can also sponsor the event for additional bene-
graphic designer might donate time to design
fits and exposure. Their support can help you
and produce your newsletter or organizational
defray the costs and keep the ticket prices
brochure; a local corporation might be able to
affordable. (See Staging Special Events,another
provide a loaned executive to help you with a
manual in the Fund Raisingseries.)
specific issue; or a local hardware store might
s Annual gifts are usually modest cash gifts
donate paint or other building supplies. Be
under $500 that an individual gives every year,
sure, however, that you want and can use the
often increasing the amount each year. They
products they can provide. You do not want
can be unrestricted or earmarked for a particu-
to have to warehouse 100 cans of paint if you
lar use. Developing lists of names and
cannot use them.
addresses of potential donors of these gifts is
very important; the nonprofit can start by ask-
ing each board member to give 10 names and
addresses of people they think might support
Support can be garnered through a variety of
their work.
means. By following the process outlined in this
manual, an organization should be able to iden-
Di rect mail is often the most efficient way of
tify what is the best way to ask for support from
asking individuals for such annual gifts, but yo u
all types of donors — individuals, businesses
must evaluate whether the return on the inve s t-
and foundations. Is the prospect, or potential
ment of time, direct costs (printing, postage,
donor, likely to give a major gift through a
etc.) and staff effort is worth it. Because it takes
multi-year commitment? Do you need to orga-
years to build a list that may be useful for r
a i s i n g
nize an annual giving incentive to attract indi-
funds, direct mail should be attempted only by
vidual donors on a yearly basis? Do you need to
organizations with money to risk.
organize fund-raising events to get donors
involved and invested in your organization? Is
s Planned gifts are securities or monetary or
your organization mature enough to attract
property gifts made by a donor for future or
planned gifts? You can use all or some of these
sometimes current use by a nonprofit. Most
options when deciding how to ask for support.
often, planned gifts are part of what an indi-
vidual gives of their wealth when they die.
s Major gifts from foundations, corporations or
Individuals who have a very strong relation-
individuals are large sums of restricted or unre-
ship with a nonprofit are the ones most likely
stricted money or pro p e rty with value (stocks,
to give planned gifts. They can be made
bonds, jewe l ry, land or houses). Major gifts
through wills, life insurance, property, trusts,
usually are given by individuals who have a
annuities and other mechanisms.
ve ry strong relationship with the nonprofit and
want to support a special activity or pro j e c t .
The major advantage of raising funds thro u g h
Often these donors are individuals or large
planned giving is that you are securing future
organizations who have been giving annual
s u p p o rt for your organization. The disadva n t a g e
s u p p o rt for at least a few years. In s t i t u t i o n s ,
is that the funds are typically deferred and do
like businesses or foundations, may not be
not pay current expenses. You also must devo t e
annual givers but may only give when the non-
significant re s o u rces to planning, implementing
p rofit has a major gift or capital campaign.
and maintaining a planned-giving effort .
Major gifts are possible only for nonpro f i t s
Ge n e r a l l y, only mature nonprofit organizations
well-established within their communities
a re in a position to manage this type of effort .

Small Businesses
You can get support from a variety of sources.
Small local businesses can be good supporters of
With the exception of government resources,
nonprofit organizations. Because they do not
you can use the fund-raising process detailed in
usually have lots of cash to give, they often con-
this manual to help you raise resources. Below
tribute in-kind products and services or buy ad
are some of these potential sources and some
space in newsletters or event programs. The
things to consider when working with them.
owners tend to make contribution decisions,
often giving to organizations that have either
I n d i v i d u a l s
touched them or their families’ lives personally.
Some owners may be more interested in donat-
Collectively, individuals give more money annu-
ing services if it can positively affect their busi-
ally than any other type of donor. Personal rela-
ness image in the community or, more directly,
tionships are crucial to successfully securing
increase sales.
money from them. The personal interest they
have in supporting your work also plays a role.
A personal relationship is very helpful in work-
For example, if a donor had a child or sibling
ing with small business owners, especially if
with a substance-abuse problem and saw the
your organization is approaching them for the
devastating effects on the family, he or she
first time. Consider putting a small business
might support a rehabilitation program for
leader on your board. Community development
substance abuse.
organizations may purchase significant services,
such as printing, construction materials and title
One of the biggest challenges is identifying
insurance from small businesses and may turn
the right individuals. Prioritizing and screening
to these vendors during fund-raising events.
your potential donors will be critical. Your
board members are the best place to start.
Issues for community development organizations:
(See the Prospecting section in this manual for
Nonprofits have an excellent opportunity to
more information.)
turn their existing relationships with small
businesses into true resource partnerships.
Large Corporations
Collectively, individuals give more money
annually than any other type of donor.

Big businesses with local branches, plants or
headquarters in your community may give cash,
Personal relationships are crucial to
supplies, equipment or products and volunteer
successfully securing money from them.
employee time. Though big businesses can make
large gifts, they may not give many of them.
Some businesses use foundations, tax-exempt
Besides hosting events and sponsoring funding
institutions designed to make their gifts, while
campaigns, opportunities to volunteer time and
others have a corporate giving or contributions
expertise may interest individuals in your orga-
program. Still other businesses will make some
nization. And, some of the most wealthy indi-
donations out of their marketing budget.
viduals in the community may be interested in
your group because of the possible tax deduc-
tions they receive for their contributions.
Issues for community development organizations:
Getting individuals to invest in community
d e velopment can be especially challenging.
Many potential donors are not directly affected
by the efforts of your organization. It is especially
i m p o rtant to build your case so that individuals
re c o g n i ze how your work influences them.

Businesses may be partnerswith community
F o u n d a t i o n s
development organizations, especially housing-
related nonprofits that provide thousands —
Foundations have one purpose: to support
or millions — of dollars’ worth of business
nonprofit work. There are three types of grant-
annually to construction and related businesses.
making foundations: private (includes corpo-
Partners often expect to be asked for support.
rate), family and community. A few communities
This support can come in the form of money
h a ve collaboratives of foundations that act as one
or assistance during fund-raising campaigns.
grant-making body for specific intere s t s .
Additionally, financial institutions working
s National and private foundations often fund
in partnership with local nonprofits are an
through intermediaries, such as The Enterprise
excellent resource.
Foundation. Local organizations may receive
support from national foundations, but usu-
Large corporations may give in order to:
ally only as part of a longer-term program
s Increase sales.
initiated by the foundation.
s Boost employee morale.
s Corporate foundations are set up by compa-
nies as one of the mechanisms to channel
s Match employee interests (if the company
their contributions.
makes matching gifts or if there is an
e m p l oyee committee deciding where
s Family foundations typically have one or two
p h i l a n t h ropic dollars should be spent in
specificgranting interests. They are unlikely
the community).
to give to community development organiza-
tions, unless they have a personal stake in such
s Improve the community (which effectively is
development. Do some research before devot-
good for the company and employee).
ing a lot of resources to securing funds from
s Satisfy an executive’s personal interest.
such foundations.
s Community foundations pool contributions
Businesses that are more dependent on the local
from a variety of sources, often individuals,
political system for such things as regulatory
and then make restricted and unrestricted
approval (for instance, hospitals and utilities),
grants to programs. They usually provide funds
zoning decisions (real estate developers) or con-
to smaller, younger and more c o m m u n i t y -
tract approval (vendors to the school system or
based organizations. They rarely continue
city government) may be more interested in
operating support; rather, they help to launch
maintaining good community relations. Look to
an effort and then expect it to gain re ve n u e s
them for assistance during local funding drives.
i n other ways.
Issues for community development organizations:
s Operating support collaboratives have
View large corporations as partners and give
sprung up in a few dozen cities and counties.
them opportunities to demonstrate their good
These organizations aggregate funds from
will in the community. The most effective strat-
a few sources — often local and national
egy for asking big businesses for their support
foundations, corporations and public
depends on which part of the business you are
entities — and grant them to community
asking, where that business is and what you
development organizations.
want. Research the kinds of nonprofit programs
that a corporation has supported in the past to
Issues for community development organizations:
gain some insight into what investments it is
Community foundations are ideal partners
likely to make. Keep in mind that funds from
because they share similar priorities on a local
large corporations are often funneled through
level. All foundations have rules about their
national intermediaries, such as The Enterprise
giving interests and approaches. Nevermass
Foundation, and are then made available to
mail requests for support. Build a relationship
local organizations.
with a key player at the foundation beforeyou
mail any written proposal.

Federated Fund-Raising
Faith-Based, Civic and Service
O r g a n i z a t i o n s
O r g a n i z a t i o n s
Federated fund-raising organizations are non-
Faith-based, civic and service organizations often
profits usually structured along geographical
p rovide nonprofits with volunteers, cash and
lines for the purpose of raising charitable contri-
sometimes space or supplies. Locally, cash sup-
butions and distributing them to locally desig-
p o rt tends to be in the $500 to $10,000 range,
nated nonprofits. Their beneficiaries usually
depending on the organization and community.
reflect the values and beliefs of the organization’s
Non-cash support is much more available on the
governing bodies. The most common federa-
local level. Local civic and service organizations
tions are United Way agencies, faith-based fed-
a re particularly good sources of volunteers for
erations and alternative funds.
e vents, and these groups frequently like to
donate visible items that bear their logo. On the
s United Way agencies are fund-raising, allocating
national level, grants in the $10,000 to $50,000
organizations that support a variety of social ser-
range are not uncommon, particularly for faith-
vice agencies on the local level. They re c e i ve the
based organizations. All of these groups have one
bulk of their support from company employe e s
i m p o rtant thing in common: Members decide
who have been solicited at the workplace and
what the group will support .
f rom major companies through grants.
s Religiously affiliated federations are generally
Issues for community development organizations:
established by religious or lay leadership to raise
Faith-based organizations, in part i c u l a r, have
money from individuals in churches and syna-
access to large constituencies and potential part-
gogues. This financial support goes to organiza-
ners who can help you accomplish your goals.
tions that re p resent the social we l f a re and health
In vestigating these organizations’ priorities is
i n t e rests of a particular religious faith.
w o rthwhile. Having someone from your board or
staff as an active member of these organizations
Issues for community development organizations:
also is ve ry helpful in establishing a re l a t i o n s h i p,
Although the United Way usually bestows mem-
getting to know interests and asking for support .
ber agency status on nonprofits before qualify-
Except at the national level, asking for support
ing them for ongoing annual allocations, they
f rom these groups is usually ve ry informal.
still may be a possible source of funding support
for community development organizations.
Some United Way agencies make grants for
special projects as well as for general operating
expenses. If you are addressing a problem that is
of broad interest in your community, it might
be possible for you to get some support from a
local federated fund-raising organization. (For
more information about the United Way and
similar groups, see Establishing a Relationship
With a Federated Campaign
in this series.)

G o v e r n m e n t
indicate your interest. Also, write a formal letter
of intent and be sure to copy all correspondence
Developing good relationships with politicians
to locally or federally elected representatives,
is often a necessary part of building and main-
depending on whom the grant is coming from.
taining a successful organization. Government
(Note: The cultivation and solicitation process
grants or contracts will be hastened through
outlined in this manual may not directly apply
strong political ties with important decision
to raising resources through government
makers. Community-based organizations will
have the most success making connections to
the political system through their city- or
Issues for community development organizations:
county-council and state-legislature representa-
City, county, state and federal governments pro-
tives. Understanding how the levers of power
vide money for nonprofit purposes that meet
work in the jurisdiction you target will help you
government mandates. This type of money is
determine what to ask from representatives.
best thought of as a contract. Essentially, the
nonprofit is agreeing to provide services that the
Relationships with agency representatives will
public, through its government body, has
also aid your support efforts. There are lobbying
deemed necessary. Community Development
rules to be aware of, but by being a strong advo-
Block Grant (CDBG) funds are federal monies
cate for issues that match a particular govern-
given annually to all states and medium and
ment agency’s or by sending regular educational
large cities and counties. Through these govern-
materials, you can position your group for
ments, CDBG funds are available onlyto quali-
future support. The potential downside, how-
fying nonprofit housing developers, counselors
ever, is that relationships with government rep-
and managers who have been designated by
resentatives or administrators are often
their participating jurisdiction. These funds are
short-term, given the nature of elected offices.
usually for housing development but are often
(See Neighborhood Tours: Showcasing Results,
for operating support. Other federal funding is
of the manuals in the Communicationsseries, for
passed through national, regional and state
more information on reaching elected officials.)
intermediaries, such as The Enterprise
Foundation, for the operating support of local
Discretionary grants and block grants are the
community development organizations.
two primary types of support available from the
government. At the federal level, the purpose of
these grants is spelled out in government publi-
cations. This may or may not be true for state,
county or municipal grants, although their
requests for proposals (RFPs) do lay out very
specific grant interests and requirements.
Do not write proposals that are not requested.
Instead, send regular information about your
group to specific grant officers and local, state
and federal representatives. The most viable way
a nonprofit can secure government support is to
become recognized as the expert in the state.
When requests for proposals are issued, be sure
to attend the bidding or information session to

The Fund-Raising Process: An Overview
Re s o u rce development, or fund raising, is a
Many organizations lacking formal business
p rocess. T h e re are few quick fixes or instant
plans create implicit plans through annual
a n s wers to your re s o u rce needs. By follow i n g
budgets. Budgets are the fiscal re p re s e n t a t i o n
the process detailed in this manual, you will
of a business plan, enabling an organization
h a ve the map and the tools to develop needed
to have specific fund-raising goals. (Mo re
s u p p o rt for your organization. To achieve suc-
information on creating strategic and
cess, carefully craft your strategic fund-raising
business plans and budgets can be found
plan to meet the goals outlined in your busi-
in the Pl a n n i n g and Money Management
s e r i e s
ness plan.
in the Community De velopment Library. )
The Process of Fund Raising
Research &
& Outreach
Stewardship &
Donor Relations
(or decline)