How to Solicit Gifts From Individuals

Tuesday, February 24, 2009, at 12 noon, U.S. Eastern time

As government, foundations, and companies cut back on their grants for charities during the recession, many charities are altering their fund-raising strategies to appeal more to individuals.

In some cases, charities are starting formal efforts to seek money from individuals after years of focusing almost exclusively on soliciting foundation and corporate money.

Join a panel of fund-raising experts to learn how best to appeal to individuals and get practical tips and strategies to help your organization learn techniques to attract money from individuals in these challenging financial times.

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The Guest

Sam Prince is director of development for Legal Aid of Northwest Texas, in Dallas. He has also worked as a philanthropy consultant to nonprofit groups throughout Texas.

A transcript of the chat follows.

Peter Panepento (Moderator):
Welcome to today's live discussion on individual giving. With the economy struggling, many nonprofit groups are looking to become more efficient with their fund raising efforts. For some groups, that means finding ways to expand their individual giving programs. For others, that means creating new individual giving programs to complement their other fund raising efforts.

Peter Panepento (Moderator):
Today's discussion will address what your group can do to start and build an effective individual donor program -- and we'll be taking your questions and comments on that topic for the next hour.

Peter Panepento (Moderator):
Two development experts with long careers in the nonprofit world will be taking your questions today. They are:

Sam Prince, director of development for Legal Aid of Northwest Texas, in Dallas, and Mark Publow, vice president of strategic initiatives for Childhelp, in Scottsdale, Ariz.

Peter Panepento (Moderator):
To ask a question -- or to share your thoughts -- please feel free to click on the "ask a question" link on this page at any time. This page will refresh every minute with the latest questions and answers -- and we'll offer a full transcript of the discussion at http://philanthropy.com/live once we're done.

Peter Panepento (Moderator):
Now that we've laid the ground rules, let's get started, shall we?

Question from LP , low-income housing nonprofit:
Hi, I just started a fudraising/grantwriter position at a medium-sized low-income housing nonprofit. The organization acquires and renovates old hotels downtown and then turns them into supportive housing units for the individual homeless. While they do have a website, their donor "database" consists of the ED's rolodex. Do you have any traditional and/or non-traditional strategies or suggestions for me in terms of attracting new individual donors (e.g., web-based/enews appeals, special donor reports, the dreaded direct mail)? I should mention the organization has retained a PR firm to assist them in planning their upcoming 20th anniversary scheduled to coincide with the opening of a new residence). Thank you.

Sam Prince:
1 - Commit to memory every conceivable thing you can about the recently passed stimulus legislation. Keep good stats on any increases in homelessness or evictions and foreclosures. I am hoping you are an active member of your city's HUD - Homeless Continuum of Care. That is the local body through which all HUD homeless / housing assistance flows. And they will have anywhere from 150% to 250% of their more recent HUD Homeless Assistance grants between now and September 30, 2010.

2 - In addition to HUD (and any local government funding), you should begin now building relations with anyone who has wealth and an interest in revitalizing older neighborhoods. If you can't find anyone like this, find out if you have a local office of Trammell Crow - a commercial real estate company located in Dallas. Their former CEO - J. McDonald Williams (Don) is THE guy in Dallas building multiple foundations and other non profits to revitalize the entire southern sector. Ask your Trammell Crow person if they would mind putting you in touch with Don Williams, their former CEO, about trying to do in your city what he has done and is doing in Dallas.

Peter Panepento (Moderator):
For those new to this format, this is a text-based discussion. The page will refresh every minute with the latest content. Thanks.

Question from Malcolm Sproull, Oxfam:
At what level of giving (what size of gift) would you consider it's appropriate to start making face to face appeals to individuals?

Sam Prince:
That depends on two factors:

One, what the major gift standard is for an organization like yours; two, what the capacity is of your prospect to turn around and get others to give at or above his/her level.

If you have someone, say an arts teacher in a local school or university, who can only give you $250.00 per year but she could turn around and help you solicit a dozen foundations for 5 and 6 figure gifts, that teacher deserves a face to face meeting.

On the other hand, if you have a local billionaire who recently sent you a check for $100 just because one of his friends was honored at one of your events, although I would try to get a meeting, I wouldn't be holding my breath for anything exciting unless I had knowledge that my organization or my cause fit in with what that billionaire is interested in.

It really depends on individual circumstances. As a professional, you have to be able to project two things - whether what you are doing is worth your time in terms of the amount of cash your employer expects you to produce; and whether the individual can help you make a dent in your fund raising goals.

Does that answer your question?

Comment from LP , low-income housing nonprofit:
Thanks, I will do that. I should have added that my organization is located in Los Angeles and adopt a similar 'housing first' approach as you have in Dallas.

Question from Sean Sanchez, Hispanas Organized for Political Equality.:
In the cultivation process when is the best time to make an initial ask?

Sam Prince:
It depends on what you are asking for (the amount) and who your prospect is.

I once knew a fundraising consultant who did feasibility studies for major campaigns and included initial asks in each of his interviews. Normally, consultants wil go through an entire pitch with a study prospect and then leave before asking for money. This guy believed that, since he was already there, and he would be coming back to ask anyway, rather than asking the prospect whether they MIGHT consider making a gift of $XXXXX, he just went ahead and asked.

In any event, you should be able to find out what giving level your prospect is interested in. BUT, if you are just starting out in a city, and you have very little in terms of leadership and donors, it might be best to get your prospects to agree that they will make a gift (this year or in a certain amount of time) but that you will come back at a later date to ask them. That way, you can be working them and develop a much deeper interest in them for your organization (and therefore a bigger gift potential).

Question from Ruth Anne, International Environmental Organization:
What is the best way to identify individuals interested in your cause, and (in our case) interested in giving internationally.

Sam Prince:
1 - By previous giving patterns; 2 - By their business. If they are involved at all in International business or trade, then like it or not, they might have to exhibit some interest in supporting causes outside their own home town. 3 - If they are involved in anything having to do with your underlying cause - in this case the environment. That means you should be prepared to talk to people that are damaging the environment as well as those who work to improve it. Those creating environmental problems have PR and practical business reasons for supporting your work. You simply have to find a way to articulate them. 4 - Those who create products that eventually lead to waste disposal problems. Like anyone in the electronics manufacturing or distribution\sales business. This is now a big issue and everyone knows about it. You can offer such businesses some positive PR to counterbalance potential negative PR that could affect their reputation and, eventually, their business.

Comment from Hispanas Organized for Political Equality (HOPE):
Thank you for answering my question.

That was very helpful. My position is newly created and our organization is just starting to cultivate its donor base.

Question from Katie, George Eastman House:
What are some good tips for soliciting second gifts from major donors whose pledges have been completed?

Sam Prince:
They should already be integrated into your program operations. Such individuals need to have entire campaigns built around them. You start by outlining a process to get the first gift. As soon as you get that gift you should already have some idea of how you are going to maintain contact with them, continue cultivating them, and soliciting them a second time.

In the course of building your relationship with them, you need to find out what all their interests are. Your relationship with them should be as close as you can get it. Involve them, their family, key business associates, key employees, etc. - anyone that might have influence over them or that they might influence.

The more your organization is integrated into their lives, the easier it will be for you to begin discussions about future giving.

Harold Simmons, local billionaire, gave the local Med School over $40-million in 1988. At the press conference he said he gave the money to two medical specialties - arthritis and cancer because he had one and he didn't want the other.

That means the Med School had him as a patient, was periodically meeting with him or getting him to show up at small cultivation events to educate him about different aspects of their operation, and the CEO of that medical school made it his business to see his donor on a regular basis - just to check in or visit with as a person.

Peter Panepento (Moderator):
I wanted to extend my apologies for the slower than normal pace for today's discussion. One of our guests was unexpectedly not available. But Sam Prince is working through your questions. We appreciate your patience.

Question from Elizabeth Marum, Yellowstone Park Foundation:
Now, any time you call an individual for an appointment or to introduce yourself or your cause, people know exactly why you are calling and are more hesitant to hear you out. Do you have any suggestions for "breaking the ice" in particularly difficult financial times?

Sam Prince:
First of all, you should have instant credibility. Try taking the approach that you are asking so and so for his/her advice on an important matter related to either the park or the foundation.

Then, make something up that at least sounds plausible. You would be surprised at the people who will give you free advice (and their time). While asking for their advice, you can also feel them out for present or future giving.

But, if you get them hooked on helping you solve a problem that doesn't involve them writing a check, you have usually insured yourself of a check - the only question is how much and when.

The advice thing really works. Try it.

Comment from LP , low-income housing nonprofit:
To HOPE, there was an informative article a year or two back on "diaspora philanthropy"--giving from citizens & residents in the U.S. to their countries of origin. The figures are staggering. Here's the link: http://www.tpi.org/tpi_services/strengthening_global_philanthropy.aspx

Comment from Hispanas Organized for Political Equality (HOPE):
To LP. Thank you for the link. I will check it out. Our main demographic is the professional Latina and with our organization in Los Angeles, CA we have incredible potential. Thanks again.

Question from Donna , fundraising consultant:
I am contracted to raise funds for a public school district and I have been going back and forth with the idea of setting up an alumni assoc. Most of the graduates have very successful careers. I am actually thinking of formulating the school district to parallel an institution of higher ed's foundation. I am currently working on a fundraising plan. I would appreciate your input and any successful examples you may be aware of. Thank you.

Sam Prince:
Find out who the local private schools are that successfully raise funds and begin adapting their operations. Their graduates are not that different from yours.

Identify who in that school district's geographic area owns a business, or has wealth, who went to public school. It doesn't have to be in your town. If they went to public school in Buffalo, N.Y. and now live in Los Angeles, they should want the LA public schools to turn out people as capable as they are to continue to build their community.

Business owners need public schools to work so they can provide future employment. The former CEO of Texas Instruments woke up one day to the possibility that in 25 years the local job market would not have enough qualified people for his company to employ. He started working with local school districts and became very active in Head Start as ways to influence how things worked so the local job market would be able to feed his company far into the future. That was 20 years ago. That company is still heavily involved in education related organizations - not just science and engineering, by the way.

If some of your alumni fit any of these profiles - all the beter. If not, you still need them involved to help you network into those key wealth distributors that you need.

Peter Panepento (Moderator):
I wanted to note that we have not one, but two, discussions on the docket next week. On Tuesday, March 3, Rosetta Thurman will join us for a discussion that will focus on the concerns of young professionals in the nonprofit world. And on Thursday, March 5, I'm pleased to announce that former American Heart Association chief executive Cass Wheeler will take reader questions on the recession, giving, and managing in difficult times. Both events start at noon Eastern time.

Comment from Jill M.E. King, nonprofit business consultant, MN:
To Elizabeth Marum: I have used the "I need advice" technique for prospective clients and networking, as well as individual giver initial contact. It is amazing how much happier business professionals are to help by sharing their experiences, and it is a fabulous way to start a relationship.

Comment from Donna, fundraising consultant:
Thank you for your response and guidance.

Comment from Mary Kay LeFevour, Nonprofit consultant:
I second Jill King's comment on asking advice from prospective donors and add that often I've found that in asking advice, I get support in ways that are as valuable as monetary donations!

Comment from Elizabeth Marum, Yellowstone Park Foundation:
Thank you for your help on this. I will definitely give it a try. I remember using the "can you educate me on this?" question before, and this is along that line.

Question from Anna, arts nonprofit:
We have had an individual giving program for several years, but no real cultivation of individual donors to increase their giving and involvement. What are strategies I can use right now to increase giving and secure gifts by June 30? (while also cultivating donors now for future major gifts)

Sam Prince:
I was once on the board of a local affiliate of Young Audiences. The most important thing the board did was to personally write notes on solicitation letters to individuals the two or three times a year that they were sent out. Start by instituting that kind of personalization in everything you do. These people are not so many pots producing so many flowers over the course of a given length of time.

They are people with heart wrenching stories of failure and success. Yeah it's a wee bit over the top - but you get the point.

THEN, take a handful of your most influential donors - those who, no matter the amount they can give, give up to their limit. Ask them to start soliciting a select group of your regular donors specifically asking them for a larger amount than they have given in the past.

When Ms. X solicits Mr. Y and asks for $25,000, if Mr. Y can say, "well if she's giving $5,000, I can give at least $50,000," you are on the right track.

I once heard one of a particular city's most successful entrepreneurs say that a person of modest means came to him and asked him for $25,000 and to chair their annual event. He said when he found out that this guy was giving $10,000, he was ashamed of only giving $25,000.

The actual amount a solicitation leader gives is not nearly as important as the perception on the part of others that your leader's gift is a stretch and that they can give more.

Question from Amanda, Out The Boat Ministries, Inc.:
I'm in the process of establishing a new organization, geared similarly to LP's org, except youth oriented. I am wondering, in the absence of 501(c)(3) status, how I can approach individuals to help raise startup funds for things like filing the 1023 and other administrative costs. I'm worried that these early donations aren't attractive because they're not tax deductible.

Sam Prince:
Speak to your local community foundation, Catholic foundation, etc. Those organizations can easily set up something to give tax deductible status to gifts while you are working on getting your tax business in order. You should be prepared to bring a member of your organization that the Community foundation knows and, preferably, already does business with.

Question from Stacey, Suburban Hospital:
A good number of our donors are individual donors that include grateful patients. I currently mail to our donors two times per year and for acquisition, four times per year. Our response rates are pretty good. However, the giving level has decreased. I also send out monthly e-newsletters with the opportunity for giving in there as well. However, the responses are quite low for on-line giving. During this difficult time, I want to know what else I can do to keep my annual fund donors to keep on giving and to obtain new donors and keep them involved/interested?

Sam Prince:
There is no easy answer to this. You have to use every tool you can possibly get your hands on. In terms of soliciting large groups at once through direct mail and newsletters, be aware that this is a very impersonal way to ask for money.

It is far more effective and far more difficult to reject when a live human being looks you in the eye and asks for support.

Absent that, telephone or IM - online chatting is number two. Then comes e-mail and paper mail. Newsletters are extremely low on the effectiveness scale. They should be designed, both paper and electronic, to stimulate a response. For this, you need professional help from people who know what they are doing.

Recently, I asked how I could get a bigger response out of mailings. A colleague suggested I take my letters, newsletters, and e-mails around to donors who had regularly given us money over a period of years. Ask them if they would respond to what you have. And if not, how does it need to change.

If your regular donors will tell you what it would take to get their attention, then lots more people will also be affected.

Comment from Amanda, Out The Boat Ministries, Inc.:
@ Anna: Sam's suggestion really works. I used to work at a local chapter of a national org. We implemented something similar: contact your donors, volunteers, board members, etc. & ask them to invite 10 other people to learn about your organization in an intimate setting. Your initial contacts then work in tandem with you to solicit donations and leads to 10 other people, and the cycle continues. In our first event, we raised something like $5M (including 5-yr pledges).

Peter Panepento (Moderator):
Because of the volume of questions, Sam Prince has agreed to stick around for a while longer to answer more. Thanks for your patience, everyone.

Question from Todd, community hospital:
Any suggestions on effective outreach methods to current major donors? We currently send them a monthly report from the CEO on latest hospital happenings and supplement that with a personal note from the president of the foundation attached to any recent key media articles.

Thank you.

Sam Prince:
Have board members call them at unusual times and say thank you. One of the greatest fund raisers of all time, Gerald Panas, tells the story that he forced a VP of development to call $100 donors one day and say thank you.

One of those hundred dollar donors was so impressed that the VP would call him, he gave them another gift (somewhere between $10,000 and $50,000 I think). This particular donor turned out to be the largest donor that institution had ever had when he eventually gave them a nine figure gift (as in over $100-million).

The personal contact with tiny donors from board members, your CEO, his chief of staff, etc., will get you places you could never even dream of.

Comment from Malcolm, Oxfam:
Thanks to you guys for organising this. It's been very helpful. The diaspora philanthropy information is brilliant. New Zealanders are globe trotters and it's opened up a new source of prospects for me. Thanks again.

Peter Panepento (Moderator):
We're just trying to thank all New Zealanders for giving us Flight of the Conchords.

Question from Beth Pickard:
What role do you think online fundraising can play in making person-to-person asks and getting the most out of fundraising through networks of supporters?

Sam Prince:
Each human being responds to different stimuli. The key is to have as many different stimuli out there so the greatest number of people will respond. My wife, who is in the advertising business, hates paper junk mail and has never responded to a blind mailing. But, she does occasionally respond to e-mail mailings from causes she knows of but has never given to.

Some people don't trust online giving. While you might catch their eye with something online, they need to be able to either give in person or through the mail.

You need someone who is adept at online networking to take charge of your online networking efforts. Just like personal solicitation, telephone solicitation, and direct mail solicitation all have their peculiar quirks that make them effective, so does online fund raising.

But don't ask me - because I'm lousy at it. I'm looking for the same help too.

Question from Caitlin - Arthritis Foundation:
With the state of the economy, so many companies are shutting their doors to charitable giving. Is there a certain avenue you suggest, such as driving home your mission or perhaps building on helping others as a positive force in negative times, when trying to secure sponsorships?

Sam Prince:
If you are chasing companies you either have to have a senior exec, preferably the CEO, or a number of their employees involved. Start with doing United Way presentations if you are a United Way agency. That gets you in front of line employees on a small group or large group basis. Eventually, if you do enough of them, you get to rub shoulders with United Way board members. And they have influence.

Find a way to work the media. Have a list of medical experts at your fingertips so that whenever a variation on your issue comes up, you can give reporters, who are in increasingly short supply by the way, a live person that actually knows something and is in your city.

Use your website to publicize key issues periodically - use blogs and online reading material in conjunction with video - whenever you can get it. We are talking one to four minutes here. A very brief statement from a recognizable face online in video and in print to drive people to your website can go a long way to getting you visibility.

And lastly, and this one you don't need me to tell you, find out who has arthritis and get to them. First as a prospect and then, if they fit into it, as someone you use to get the word out.

If I ever get my bow re-haired, I'll be able to play the violin I haven't touched in 10 years because my arthritis is under control. Try asking around at your local orchestra or music school. Find recognizable names - the concertmaster of an orchestra, the director of the opera or ballet, a famous musician who happens to live and teach in your city, and ask them for a two minute video on how Arthritis treatment and research has allowed them to continue to work, and not become homeless.

Question from Pam Szedelyi, Community Foundation:
Is there a guideline, in terms of time, that indicates how long a donor cultivation relationship might need to mature before receiving a major gift ($100,000 and up)?

Sam Prince:
That is all based solely on the individual. The only guideline is, make sure you have a relationship before you ask for a stretch gift. Warren Buffett is in a position to give away $100,000 a week to Salvation Army bell ringers if he wants to. But if you are asking a local business person for $100,000, and that person only gives at the $1,000 or $5,000 level, you had better have a long term relationship with that person or an outstanding project custom designed for him/her. Because that $100 grand is a huge stretch for that person and he/she might only do one of those once in his lifetime.

When I first started out fundraising, during the first Lincoln administration, my mentor told me to learn to say $1-million and DON'T SMILE. I've made a lot of others smile since then. If your prospect can give $100,000 but wants to be wooed some more, they'll let you know. If it is totally out of the question, they'll tell you that too.

Don't be afraid to ask - no one I have ever talked to threw me out because I asked for too much. They do, however, remain stuck at lower levels when you ask for too little.

Peter Panepento (Moderator):
Before we sign off, I do want to pass along a recent Chronicle report that offers 10 practical fund raising strategies for the recession: http://philanthropy.com/free/articles/v21/i09/raisingmoney.htm

We're getting a lot of great feedback on this piece.

Question from Terri Briant Booth, Visiting Nurse Home Care:
We are a regional ($4.5 million budget) nonprofit home care ‚Äì home health (everything but Medicare) agency who has not done a great deal of fundraising other than direct mail and small events in our twenty-five year history (I am a relatively new CEO). I would like to pursue more grants research and writing, but given the economy, our close-to-the-edge operational budget and our existing number of programs, I don‚Äôt want to venture out to create new programs. How should I frame my focus on securing new funds for established programs?

Sam Prince:
Most government grant funded operations find grant programs that broadly fit their current operations and then work the proposal to fit the RFP. This is just like doing a term paper or a take home exam. Believe me - if I can get government grants, you can too.

A couple of points though - be aware that every government grant comes with reporting requirements, audit requirements, and grant monitors. Your financial back office had better be well organized or your first grant will create havoc. And your program staff had better be able to do what the grant calls for, document their activities, and then report on them in the way your grant authority wants it. Or you won't have a very good time when it comes to grant monitoring visits.

Also, if you get a government grant, they usually come with requirements that you not simply replace an exisiting funding source with your new grant award - it's called supplanting. While I don't know of anyone who has ever been dumped by a government agency because of supplanting, I know more than a few that wouldn't enjoy answering questions about it under oath.

Make sure if you say you will hire additional staff for the XYZ program, that you can clearly demonstrate somebody got hired. You can promote from within and change funding sources for that employee. But you had better be able to demonstrate that you then filled that position with a new hire.

Take a very close look at the Stimulus package.

There is all kinds of junk in there that you might be able to mold to fit your operations.

Peter Panepento (Moderator):
We are out of time for now. Thank you to Sam Prince, who did yeoman's work today flying solo. Mr. Prince will attempt to answer some of the unanswered questions offline and we will add them to the transcript later this week.

You can find the transcript (and transcripts to all of our previous discussions) at http://philanthropy.com/live.

Thanks for joining us.