Fundraising

Non-profit organizations also raise funds through competing for grant funding. Grants are offered by governmental units and private foundations/charitable trusts to non-profit organizations for the benefit of all parties to the transaction. Charitable giving by foundations in the U.S was estimated to be $66.90 billion in 2017.[5]

Charitable giving by corporations in the U.S was estimated to be $20.77 billion in 2017.[5] This consists of corporate grants as well as matching gift and volunteer grants. 65% of Fortune 500 companies offer employee matching gift programs and 40% offer volunteer grant programs.[6] These are charitable giving programs set up by corporations in which the company matches donations made by employees to eligible nonprofit organizations or provides grants to eligible nonprofit organizations as a way to recognize and promote employee volunteerism.

The donor base (often called a file or simply "constituents") for higher education includes alumni, parents, friends, private foundations, and corporations. Gifts of appreciated property are important components of such efforts because the tax advantage they confer on the donor encourages larger gifts. The process of soliciting appreciated assets is called planned giving. Charitable giving by individuals in the U.S. was estimated to be $286.65 billion in 2017.[5] Stock giving is the fastest growing form of donations. It was up 62% year over year to $21.07 billion, compared to the 1.5% for all of charity fundraising activities.[7]

The classic development program at institutions of higher learning include prospect identification, prospect research and verification of the prospect's viability, cultivation, solicitation, and finally stewardship, the latter being the process of keeping donors informed about how past support has been used. When goods or professional services are donated to an organization rather than cash, this is called an in-kind gift.

A number of charities and non-profit organizations are increasingly using the internet as a means to raise funds; this practice is referred to as online fundraising. In addition, crowdfunding has begun to be used as a method to engage small-donation donors for small, specific opportunities.

While fundraising often involves the donation of money as an outright gift, money may also be generated by selling a product of some kind, also known as product fundraising. Girl Scouts of the USA are well known for selling cookies in order to generate funds. It is also common to see on-line impulse sales links to be accompanied by statements that a proportion of proceeds will be directed to a particular charitable foundation. Tax law may require differentiating between the cost of an item versus its gift value, such as a $100.00 per person dinner, for a $25.00 cost meal. Fundraising often involves recognition to the donor, such as naming rights or adding donors to an honor roll or other general recognition. Charity Ad Books are another form of donation for recognition, sponsorship or selling of ads often in an event related program or group directory.

A fundraising event (also called a fundraiser) is an event or campaign whose primary purpose is to raise money for a cause, charity or non-profit organization. Fundraisers often benefit charitable, non-profit, religious, or non-governmental organizations, though there are also fundraisers that benefit for-profit companies and individuals.

Special events are another method of raising funds. These range from formal dinners to benefit concerts to walkathons. Events are used to increase visibility and support for an organization as well as raising funds.[8] Events can feature activities for the group such as speakers, a dance, an outing or entertainment, to encourage group participation and giving. Events can also include fundraising methods such as a raffle or charity auction. Events often feature notable sponsors or honoree. Events often feature a charity "ad book" as a program guide for the event, but more importantly, as another fundraiser providing members, supporters and vendors to show their support of and to the group at the event by way of placing an ad-like page, 1/2 page, 1/4 page, stating or showing support. Events and their associated fundraisers can be a major source of a group's revenue, visibility and donor relations.

One specific type of event is the "ad book" fundraiser, where those who wish to give funds to a fundraising group do so through the sponsorship or statement within a book of advertisements.

Online fundraising pages have become very popular for people taking part in activities such as a charity. Those pages facilitate online payments in support of the charity.

Popular charity fundraisers in major American cities include lavish black-tie gala benefit dinners that honor celebrities, philanthropists, and business leaders who help to fundraise for the event's goals through solicitations of their social and business connections.[9]

Often called donor cultivation, relationship building is the foundation on which most fundraising takes place.[10] Most fundraising development strategies divide donors into a series of categories based on the amount and frequency of donations. For instance, annual giving and recurring gifts represent the base of a fundraising pyramid. This would be followed by mid-level gifts, planned gifts, major gifts, and principal gifts.

More sophisticated strategies use tools to overlay demographic and other market segmentation data against their database of donors in order to more precisely customize communication and more effectively target resources.[11] Research by Peter Maple in the UK[12] shows that charities generally underinvest in good marketing research spending around a quarter of what an equivalent sized for profit company might spend.

Donor relations and stewardship[13] professionals support fundraisers by recognizing and thanking donors, and demonstrating the impact of their donations in a fashion that will cultivate future giving to nonprofit organizations.

Recent research by Adrian Sargeant and the Association of Fundraising Professionals' Fundraising Effectiveness Project suggests the sector has a long way to go in improving the quality of donor relations. The sector generally loses 50–60% of its newly acquired donors between their first and second donations and one in three, year on year thereafter. The economics of regular or sustained giving are rather different, but even then organizations routinely lose 30% of their donors from one year to the next.[14]

A capital campaign is "an intensive fundraising effort designed to raise a specified sum of money within a defined time period to meet the varied asset-building needs of an organization". Asset-building activities include the construction, renovation or expansion of facilities (for example, a new building), the acquisition or improvement of land, equipment, or other items, and additions to a financial endowment. Two characteristics set capital campaigns apart from other forms of fund-raising activities. First, "the gifts solicited are much larger than those generally sought during an annual fund". Second, "pledges are emphasized as commitments payable over a number of years convenient to the donor or through the transfer of appreciated real or personal property".[15]

Various types of capital campaigns have been identified. The traditional "brick and mortar" campaign, focused on building construction or improvements, was considered a "once in a lifetime" campaign in the past because of the ambitious goals of the campaign. Today, however, organizations frequently schedule capital campaigns every five to ten years, and "the megagoals announced by large institutions often are the result of 'counting everything' during a five-to seven-year campaign period".[15]

A second type of campaign is the comprehensive, integrated, or total development campaign, which aims for a longer fund-raising program based on a long-term analysis of the organization's needs and direction. This form of campaign can wrap together capital projects, endowment and operating expenses as its purpose, and use a variety of fund-raising activities, such as annual gift drives, which are "slower-paced and lack the intensity of the traditional capital campaign".[15]

Some non-profit organizations demonstrate greater accountability by showing donors the direct impact of their fundraising efforts. This accountability may comes in the form of a vote, where the members select a specific program or charity that they would like their money to go to. Another example is put in place a mechanism which allows donors to contraint usage of funds toward a specific purpose and closely monitor/allow spending to ensure proper usage.

Many non-profit organizations take advantage of the services of professional fundraisers. These fundraisers may be paid for their services either through fees unrelated to the amounts of money to be raised, or by retaining a percentage of raised funds (percentage-based compensation). The latter approach is expressly forbidden under the Code of Ethics of the Association of Fundraising Professionals (AFP), a professional membership body.[16] However, by far the most common practice of American non-profits is to employ a staff person whose main responsibility is fund raising. This person is paid a salary like any other employee, and is usually a part of the top management staff of the organization.

Some non-profit organizations nonetheless engage fundraisers who are paid a percentage of the funds they raise. In the United States, this ratio of funds retained to funds passed on to the non-profit is subject to reporting to a number of state's Attorneys General or Secretaries of state.[17] This ratio is highly variable and subject to change over time and place, and it is a point of contention between a segment of the general public and the non-profit organizations.

The term "professional fundraiser" is in many cases a legislated term referring to third-party firms whose services are contracted for, whereas "fundraising professionals" or development officers are often individuals or staff at charitable non-profits. Although potentially confusing, the distinction is an important one to note.

Online and mobile fundraising had become a popular fundraising method over the last few years due to its accessibility. Fundraising organizations are using mobile and online fundraising providers to attract donors around the globe. Common online and mobile fundraising methods include online donation pages, text to give, mobile silent auctions, and peer to peer fundraising.

Since 2016, online giving has grown by 17% in the United States. In 2018, digital fundraising accounted for 8.5% percent of charitable donations and 24% of online donations were made on a mobile device in the United States.[18]