Nonprofit

Management

Chapter 11: Philanthropic Fund-Raising

Importance of Gifts to Nonprofit Organizations

Charitable or philanthropic giving is an important

source of revenue for many nonprofits, though
relative importance varies among subsectors
Health services organizations -- low reliance
Educational institutions and civic, social, and
fraternal organizations -- medium reliance
Religious organizations and human services
organizations -- high reliance

Unrestricted private giving can often be used to

address organizational priorities
Core operations
New initiatives that lack paying customers or
grants

Charitable Giving in Canada

84% of Canadians aged 15 and over (about 24

million Canadians) donated to charitable and
nonprofit organizations.
Donated $10.6 billion, for an average donation
of $446 (average for religiously active donors
is $1,004)
Highest donor rate by province is 92% (NL)
Highest average donation by province is $562
(AB)

Charitable Giving in Canada by type

of charitable/nonprofit organization

Type of Organization

Percentage
Distribution
(2010)

Percentage
Distribution
(2007)

Religion

40

46

Health

15

15

Social services

11

International
organizations

Hospitals

Grant-making,
fundraising, and
voluntarism promotion

14

13

Other

Source: Statistics Canada

Legal Distinctions

NPOs are not necessarily charitable

organizations
Half of Canadian nonprofits registered as
charitable organizations with the Canada
Revenue Agency (CRA)

Charitable organizations must fall into one of

four categories:

Poverty relief
Education advancement
Religion advancement
Beneficial to community as a whole, including health

Key advantages:
Donors have access to tax incentives for donations
5
Organizations have access to funding from charitable

Charitable Foundations

Registered charities are classified by the CRA as being

charitable organizations, public foundations, or private
foundations
Depends on its structure, source of funding, and its
operation
Private foundations controlled by a single donor or family
(where majority of board members are NOT at arms
length)
Public foundations governed by board where majority of
members ARE at arms length (e.g. Flames Foundation)
Grant-making foundations (private or public) are
registered charities that make grants to other Canadian
charities or qualified donees (such as amateur athletic
or arts service organizations, low-cost seniors housing
corporations, municipalities, universities)
Grant-seeking foundations are established to raise funds
that are given to a single charitable organization (e.g.

Definitions and Distinctions

Charity and philanthropy

Charity giving to meet immediate human needs
Philanthropy -- giving to develop institutions that serve
human needs or enhance human development over the
long run

Fund-raising, development, and institutional

advancement

Fund-raising -- an activity undertaken with the goal of

eliciting charitable or philanthropic giving
Development encompasses fund-raising, but involves
a more comprehensive approach to the long-term
growth of an organization or institution
Institutional advancement -- encompasses fund-raising
and development, along with the related activities of
communications, marketing, and other programs for
constituent relations

Motivations for Giving

Corporate philanthropy
Forms of giving

Direct gifts versus foundations

Cash gifts versus gifts-in-kind
Partnerships

Enlightened self-interest
Strategic philanthropy

Foundation giving
Tax-exempt status and minimum giving requirement
(3.5% in Canada, averaged over two years)
Activities generally reflect the interests of the
founders

Public
Private: Individuals or families

Motivations for Giving

Individual donors
Motivations are often more complex and less
calculated than those of corporations or foundations
Altruistic and egotistic motivations for giving

Motivated by individuals nature to help others and

improve the human condition
Motivated by individuals desire to obtain some
benefit for themselves (e.g., recognition, social
position, or control)

Motivational types (Prince and File, 1994)

Communitarians, devouts, investors, socialites,

altruists, repayers, dynasts

Controversy over tax incentives

Fund-Raising Process

Identifying priorities and developing the case

Priorities as a product of strategic planning
Case statements answer the questions:

Why should I give to this organization?

Why is this cause more important than others
that also ask for my support?

Identifying and qualifying prospects

Prospects offer a better-than-average chance of
giving

Financial ability or capacity to give

Linkage to and interest in the organization

Prospect research

Fund-Raising Process

Cultivating prospects
Developing a relationship before moving to solicit a
gift

Scale of potential giving as a key factor in the

amount of time and attention spent on cultivation

Moves management systems

Soliciting the gift

Ladder of effectiveness (Rosso & Associates, 2005)
Crowdfunding

Fundraise.com, CauseVox.com

Considerations in choosing a method of solicitation

Level and type of support that the organization

needs
Costs and benefits of different methods
Resources available to the organization

Fund-Raising Process

Acknowledging and recognizing donors

Promptness
Individual tailoring

Stewarding the gift and the relationship

Past donors are the best prospects for future
gifts
Two meanings of stewardship

The activities that the organization undertakes to

keep the donor informed and engaged
The organizations responsibility to manage the
gift according to the donors intention

Individual Donor Life Cycles

Fund-raising pyramid
Dunlop's three types of gifts
Regular gifts
Special or stretch gifts
Ultimate gift

Criticism of the fund-raising pyramid

Entrepreneurial donors
Relevance to smaller nonprofit organizations

Planned giving
Bequests
Charitable remainder trusts
Charitable gift annuities

Friend Raising

Friend raising:
Hildy Gotlieb Author of Creating the Future
YWAM
Bearing one another's burdens
Mutual love and sharing
Generosity
Communication
Prayer with promises