Case Study: How One Non-Profit Moved from Grants to Individual Giving

by Joe Garecht

Case Study

Recently, I had the opportunity to work with a great social service non-profit doing phenomenal work.  My objective for the project was to help them strengthen their development organization and write a three-year fundraising plan to guide their efforts.

Very early on during the research phase, one thing became strikingly clear:  this non-profit was relying far too heavily on grant-writing to fund its work.

Now, don’t get me wrong… grants have a place at the development table.  For many organizations, grants can and should provide a significant source of funding.  But a majority of funding?  Almost never.  Few and far between are the non-profits that should be making the majority of their revenue from grant-writing.

Why Being Grant-Heavy is a Bad Thing

I’m sure you’ve seen the statistic before, but it bears repeating: in the United States, over 70% of all charitable contributions are made by individuals.  Many other nations boast similar numbers.  This means that of the billions of dollars available to non-profits each year, the vast majority is given out by individuals, not foundations.  Shouldn’t you cast your net where the fish are?

Building a strong and ever-growing individual giving operation is crucial to your success because it provides security, in several different ways:

First, individual donors are far more loyal and far less fickle than foundations.  Grant-making foundations often change priorities, and most have fairly arbitrary rules that are subject to change at any time.  Individual donors tend to stick with a non-profit until the organization either does something to offend them or something to bore them, both of which are, to a large extent, within the control of the organization.

Second, if you have a strong base of mid-level and above individual givers, you won’t have to close up shop if one or two of them stop giving.  On the other hand, if one or two of your major foundation supporters stop giving, it may mean significant trouble for your organization.

On the other hand, if your non-profit is “protected” from this scenario because you’re getting most of your funding through dozens or hundreds of $2,000 and $5,000 grants, chances are you’re spending way more time on grant writing than you would have to on an individual giving program of the same capacity.

Rapidly Growing Individual Giving: The Plan

Once I convinced the Executive Director and the board of the organization that they were far too grant-heavy, they agreed that they needed to spend more time growing a strong and sustainable individual giving program.  We didn’t end the grant program, on the contrary – grants remained in integral part of the organization’s fundraising mix.  However, we did drastically increase the time and resources spent on the individual giving side.

The plan we came up with for rapidly growing that program was as follows:  First, put the necessary infrastructure in place.  Second, utilize our existing connections to build our network.  Third, put a scalable system of cultivation opportunities into action.

1: Put the Necessary Infrastructure in Place

Because the organization I was working with did not have a large individual giving program in place, they didn’t feel that they needed to do a lot of donor communication, other than doing meetings once or twice per year with each of the foundations that supported them.  I told them, however, that in order to succeed with individual fundraising, they would need to have a donor communications plan in place.

We developed a donor communications plan that included donor newsletters, e-updates, an annual “thank you dinner,” and several open houses for donors and prospects.  We also put a donor funnel in place that indicated the correct sequence of communications and asks for prospects that entered our universe.

2: Utilize Our Existing Connections to Build Our Network

Hands down the best way to grow an individual fundraising program is to build fundraising networks.  (For more information on how to do this, read: Building Fundraising Networks).  So, we pulled together our board, key donors, strong friends and committed volunteers and began the process of building new fundraising networks.

Because we had a large number of young professionals who came to our annual black-tie dinner, we also decided to put together a “Young Friends Of” affinity group to grow our connections in that demographic.

3:  Put a Scalable System of Cultivation Opportunities into Action

Finally, in order to help our supporters introduce us to their connections, as well as move friends into donors, we launched a series of cultivation opportunities, including non-ask events, volunteer opportunities, and a small seminar series highlighting the organization’s mission in the city.  These functions were placed onto a year-long calendar to allow time for planning and marketing.

The Result: New Donors Galore

As a result of this new plan, over the course of the past six months, this non-profit has added over 300 new prospect names to its database, has held three packed open house events, and since launching the “ask” phase of the program has brought in almost 50 new individual donors to the organization, a significant percentage increase over past efforts.

Is your non-profit “grant-heavy?”  What can you do to launch (or re-launch) your individual giving program?

 

Photo Credit: Flood

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{ 13 comments… read them below or add one }

Dan Blakemore July 19, 2012 at 7:07 am

Joe,

Thanks for this great post! I’ll definitely be sharing this post with the organization whose board I just joined.

Joe Garecht July 20, 2012 at 1:13 pm

Thanks Dan! Glad you found this case study useful!

Patty E. February 18, 2014 at 1:15 pm

Joe, thanks for sharing this post. We are planning on hosting an open house at our organization, do you have any ideas? A timeline would be of great help. What will i need, etc. Thanks again for your time.

Joe Garecht February 19, 2014 at 11:14 pm

Patty –

There is a timeline template in our e-guide How to Hold Great Fundraising Events: A Step-by-Step Guide, which is available for free when you sign up for the free Fundraising Authority Newsletter (go here to sign-up: http://www.thefundraisingauthority.com/fundraising-newsletter/ ). If you’re already a subscriber and can’t find your copy, send me us an e-mail using our Contact page ( http://www.thefundraisingauthority.com/contact-joe-garecht/ ) and we will send you another copy.

Thanks,
Joe

Kami July 31, 2014 at 2:01 pm

I’d love more guidance on setting up an effective infrastructure. We are growing our individual giving program and it has been more difficult than I anticipated keeping track of where everyone is in the process.

Joe Garecht August 1, 2014 at 5:07 pm

Kami,

Thanks for your question — one of the best ways to keep track of individual donors and where they stand in your cultivation process is with a donor database system that includes a “moves management” module. Are you currently using a donor database that is designed for non-profits?

Joe

Kami August 4, 2014 at 1:08 pm

Yes, I’ve got Raiser’s Edge. The Actions function is quite bulky and I haven’t been able to get a good process going.

Joe Garecht August 4, 2014 at 3:24 pm

Kami,

Unless you have more than a couple of hundred people you are trying to track, another option is to simply do it on a spreadsheet – not ideal, obviously, but it can be done. The key is that you need to know where each person is in the process: Prospect (No Meeting), Prospect (Already Had 1st Meeting), Cultivation, Ready for Ask, Ask Made, Donor Stewardship. You also need to be able to track when the last contact was made for each donor, and what the next step is for building the relationship.

Joe

Marina February 4, 2015 at 3:00 pm

Hi Joe,

Thanks for this! I’m commenting very late, but on the off-chance you’ll see this, I wanted to ask –

What kind of fundraising staffing and board capacity do you recommend for the process where the organization is ramping up its individual giving program, while slowly but surely reducing reliance on grants? I’d imagine that for the first year or so as individual giving starts to grow, grants would still be a big priority as the org “bridges” to the more balanced strategy. Thanks!

Joe Garecht February 6, 2015 at 11:02 am

Marina,

Thanks for your question. You definitely don’t want to give up on grants (or events, or whatever your current strategy is) before you have the income replaced by individual fundraising methods. AND, you don’t need to give up on grants completely, just trim them back to 20-30% of your revenue, at the maximum. Your board will be important in the process of building an individual giving program, as will your staff. If all you have right now is a grantwriter, consider hiring a Development Director to head up your individual giving program full time — you’ll need someone to do meetings, make calls, and build relationships. Otherwise, the Executive Director will need to do it until you can hire a full-time individual fundraiser.

Thanks,
Joe

Marina February 6, 2015 at 11:42 am

Thanks for your response, Joe. This is good advice. Our fundraising staff right now is just a development director now (me), and I manage all our grants, small individual giving program, operations, etc. As you noted, I don’t have a ton of bandwidth for lots of relationship building with donor prospects, so it makes sense that that would be something the ED and board should play lead roles in. Any tips for getting the ED to buy into this, when it may take a few years for the ROI to be really high?

Joe Garecht February 6, 2015 at 11:47 pm

Marina,

Your best bet is to explain that the vast majority of charitable giving in the United States (70%+) is given by individuals, not foundations or corporations. Print out the charts in this report and circulate them at your non-profit:

http://nccs.urban.org/nccs/statistics/Charitable-Giving-in-America-Some-Facts-and-Figures.cfm

You can find more here:

http://www.charitynavigator.org/index.cfm/bay/content.view/cpid/42#.VNWYLy5Gf9M

and here:

http://www.philanthropy.iupui.edu/news/article/giving-usa-2014

If 70%+ of all giving is from individuals, then you should be spending 70%+ of your time fundraising from individuals, otherwise your organization is missing out!

That being said, I know that sometimes it takes time for boards and EDs to come around — that’s ok. Be gentle with them, they really do have the best of motives. But you and I both know that eventually, your non-profit will need to focus most of its time on individual giving. Start slowly…

Joe

Tracy Nichols November 25, 2016 at 1:47 pm

Thanks for the information. It gave me hope again, as it relates to my mentoring program. I currently contract my services out with the courts and the Department of Juvenile Justice system and now I want to do more for the youths, but I’m limited to the funds that I have to spend per kid. I just sent off for my 501c3 non profit paper work 4 weeks ago. My goal is to get private donors as well as grants. However, I’m with a program now where I teach classes 3 nights a week under a grant and sometimes it’s brought to our attention, if we aren’t doing it straight by the book, we could lose the grant and not have money to continue. I would prefer working with individual donors, because I believe they can see the progress being made through the program and kids, instead of focusing on everything being done perfect. How can I get donors to donate to my program and should I wait until my 501c3 status comes in?

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