How to Start Your First Annual Fund

An Annual Fund is an organized effort to obtain gifts on a yearly basis to support, at least in part, the general operations of a nonprofit organization.  These unrestricted funds are typically raised through a combination of special events, direct mail, grant writing, and direct solicitation.  The donor does not receive any tangible benefit – it is a true philanthropic process.

An Annual Fund:

• Generates reasonably predictable funds to pay for ongoing operating expenses
• Creates a solid donor base of supporters who give year after year
• Provides opportunities to cultivate donors and build relationships for the future
• Creates a pool of potential volunteers
• Educates your audience about your organization and your mission

In order to implement an Annual Fund, you need to be prepared to make an initial investment in some long-term infrastructure.  You’ll need staff time to manage, plan and implement the annual campaign each year, and good donor-tracking software to maintain adequate records.  You must embrace the philosophies of philanthropy and stewardship that provide the basis for a successful Annual Fund along with ethical practices.

The success of the Annual Fund is directly related to the support it receives from the leadership of the organization, both from the Executive Director and Board of Directors.  Having 100% giving from your Board will help ensure the success of the campaign in the community.  Some donors may choose not to give if they think your Board isn’t fully supporting the campaign.

To conduct a successful Annual Fund, you need to have a good reputation in the community, a compelling case for support, and a base of donors to support your organization.  Add a written plan of action and you’re well on your way to fundraising success!

Many small nonprofit organizations start out fundraising with grass-roots activities like bake sales and car washes.  At some point, the organization must graduate to more sophisticated fundraising techniques to survive and grow.

A more formalized fundraising program includes establishing an annual fund and raising money from donors who give because they believe in the work you are doing, not because they get something in return.  Here are some things you can do to find those first donors:

1. Ask your Board members to write letters to people they know asking for a donation to the organization.  This can play out a couple of several different ways.  They can each do their own thing or you can write the letter for them and they supply the addresses.  Fundraising is based on relationships, and these should be some of the strongest relationships you have.
2. If you have volunteers in your organization, add them to your list of names.  Some volunteers will give money and some will not, but when you’re starting from scratch, this is another good source of names.
3. Every time you’re speaking to a group or just representing your organization in a group of people, ask for those who’d like to be on your mailing list.  Even if you only get a few takers, it’s worthwhile.  That’s a few more names you can add to your list.
4. Be creative.  Think about places where your best prospects are likely to gather and then get in there with them.  I worked with a domestic violence shelter once and we exhibited at a women’s expo.  We gave out information and signed people up to volunteer or to be on our newsletter. We came away from a two-day event with several hundred new names.

Once you have people on your list, take good care of them because you don’t want them to leave. Don’t inundate them with appeals. Make sure to respond to gifts promptly with sincere appreciation. Invite them for a tour of your organization and be purposeful in building relationships with your new donors.

Written by guest blogger, Sandy Rees, CFRE.  Sandy is a nonprofit fundraising coach and speaker who shows small nonprofit organizations how to raise more money, gain more supporters, and strengthen their Boards. Want more practical tips and ideas for successful fundraising? Get her twice-monthly “Bright Ideas for Fundraising” at https://www.getfullyfunded.com.