Last Updated:
January 20, 2023
Published:
October 6, 2022
Especially if you’re a newer nonprofit, the process of fundraising may seem a bit daunting. Perhaps your organization relies on a small group of generous donors or a monthly giving program.
However, broadening and diversifying the ways you raise money can mean more funds and a greater service footprint for your nonprofit. In this article, we’ll look at why raising funds is so important and provide 9 different ways to raise money for nonprofits.
Raising money is vital to a nonprofit’s well-being.
First and foremost, if you don’t generate revenue, your nonprofit won’t have the ability to serve those you wish to have an impact on. No revenue = no go and no growth.
Nonprofits change lives every day. Without funding, a nonprofit can’t positively impact the lives of the people it serves. Whether it’s providing victims of domestic violence a safe haven, sharing the arts with the community, feeding hungry people, or caring for the sick, the world needs nonprofits—and those nonprofits need funding.
Money doesn’t grow on trees, so to raise money, you have to embrace the notion of asking for money.
Below we will help you learn how to raise money for your nonprofit using 9 different techniques.
There are a number of ways to raise money for your nonprofit organization, some of them more effective than others. It’s good to bear in mind which methods have the best return on investment (ROI) so you can focus your attention on the channels that have the most impact.
In rank order, from lowest to highest, the average cost to raise a dollar (or cost per dollar raised) for the following activities is:
Clearly, focusing on your largest givers, followed by grants and existing direct mail donors is optimal. That’s why donor retention is so important. So is having a legacy, or planned giving program.
Special events, on the other hand, can sometimes require significant investment but are great for generating goodwill, raising awareness of your organization's cause, networking with others, and sometimes acquiring new donors.
In general, the most difficult method of nonprofit fundraising is purchasing a list of names and attempting to convert them into donors. This usually has a response rate of 1% or even less.
With ROI and cost to raise a dollar in mind, let’s dive into some of the various methods of nonprofit fundraising.
Grants are sums of money given to a nonprofit without the expectation of repayment. Grant funders can be corporations, foundations, donor-advised funds, and even government agencies.
Most grant funders have requirements that they direct you to follow in your application, or grant proposal. These often include providing an executive summary, your organization’s mission, history, the problem you seek to address, the grant narrative, and a statement of need.
Different funders have different interests and specific application requirements. Make sure your organization and the funder’s interests are a good match. If you’re unsure, email or call the foundation.
Keep in mind that decisions about who is funded can take quite a long time. Most funding decisions are made at the board level. Depending on the funder, the board may only meet quarterly, or even once a year.
New to nonprofit grant writing? No worries. You’ve come to the right place. Check out Instrumentl’s free resources, including our grant writing for beginners blog post, as well as our free webinars. We have all the tools you need to help you succeed at nonprofit grant writing.
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Explore More GrantsWhether major or more modest gifts, individual donations are the lifeblood of nonprofits.
According to Giving USA 2022, 69% of all charitable giving during the year came from individual donors. Here are some tips to help your nonprofit maximize donations of all sorts.
In order to maximize individual donations to your nonprofit, the biggest tip is to make it as easy as possible for people to give.
That’s why you should make sure you have a stand-alone “Donate” page on your website, as well as a “Donate” button on your landing page’s menu. Don’t make potential donors have to search through many web pages to find how to give—that’s a sure way to lose out on donations.
Wild Bear Nature Center’s donate page provides a good example of a well-thought-out donation page. Note the “Donate” button that’s front and center, as well as links to other ways to give.
The tactics for soliciting funds from existing donors vary by the type of donor.
Cultivating individual major donors takes time as does building genuine relationships with them. This requires a number of “touches” or reach-outs to the donor, be it a personal visit, a phone call, a hand-written note, a site visit of your facilities, and the like.
One of the best ways to segment your donors and get a handle on who has the capacity and inclination to make major gifts is by investing in a wealth screening service such as Donor Search.
The wealth screening vendor will take your giving data and search through publicly-available records and uncover information about found assets, business associations, wealth, and more. This process provides deep insight into who should be asked for what and helps you to segment your database into “buckets”, including major gift potential, mid-level gift potential, and everyday givers.
In other words, wealth screening helps you focus on the best possible prospects and donors. In turn, this will streamline your fundraising efforts and allow you to raise more money.
Donor retention is an ongoing issue for nonprofits, even large and recognized organizations.
The Association of Fundraising Professionals (AFP), in its Fundraising Effectiveness report for 2022, found that so far, 2022 has seen a 6.2% decline in retention. And 2022’s decline in donor retention is most likely explained by the drop in COVID-related giving.
You can always expect some donor attrition due to a variety of reasons, including lack of proper donor stewardship—thank donors early and often, make sure donors’ wishes and communication preferences are honored and provide a gift receipt at year-end for tax purposes.
Finally, another great donation strategy is to educate your donors about the power of matching gifts.
Many corporations offer matching gift programs as a benefit to their employees. So if John Smith makes a gift of $500, his company might match his gift to your nonprofit, essentially doubling his giving. Different companies use different ratios—some match dollar for dollar to a certain cap, others may offer a 2:1 match for company executives.
There are several software packages available to allow potential donors to search and see if their company does matching gifts; consider integrating one into your website and watch your revenue grow.
If you're looking to start building your own donation sponsorship setter and nonprofit donation receipt, get started quickly by using our Donation Sponsorship Letter Templates and Nonprofit Donation Receipt Template. The template is made in Canva, an an easy-to-use creative design tool. You can jump right in, change colors, add your logo, and adjust the copy so it fits your brand.Why start from scratch when you can use one of our templates?
Nonprofit crowdfunding can be tricky, but it can also yield great results when done appropriately.
Crowdfunding is a peer-to-peer fundraising technique conducted 100% online. And choosing the appropriate crowdfunding site is key.
For instance, a nonprofit wouldn’t want to use sites like IndiGoGo or Kickstarter, both of which raise capital for novel tech products that aren’t yet in the mainstream. GoFundMe is designed for individual efforts, rather than nonprofits. But you might want to use Fundly Pro or Fundrazr, both of which are nonprofit-specific.
Typically, the most successful nonprofit crowdfunding schemes are project-specific or tied into Giving Tuesday or another local or regional giving day. The fun part about nonprofit crowdfunding is the peer-to-peer effort, helping you acquire new donors.
If you choose crowdfunding, be sure to market it across all your channels, especially social media.
Special events are great as a cultivation tool, but require significant time, staff overhead, and money expended to create the event.
If your nonprofit doesn’t have the capacity to pull off a large event, smaller events can be easier to execute and less costly, while also helping to build warm relationships.
For example, a breakfast get-together with a small group, a lunch, or even a happy hour can be a great way to cultivate relationships with your donors. Events such as these can be seen as “friend-raisers.”
In-home events can also be very effective. These are often quite useful during the course of a capital campaign, using your board’s sphere of influence to invite their peers to socialize and learn about your nonprofit’s work.
Events don’t always have to be “ask events.” In fact, not asking for money can impress a prospective donor, who will see the occasion as more of an educational experience.
Virtual events are also popular, thanks to the use of Zoom and Google Meet which exploded during the height of the pandemic. Since people are now accustomed to using these tech tools, doing a virtual event can cut down costs significantly.
Of course, athletic events remain a popular fundraising strategy that can also attract corporate sponsorships (see more about that topic below). These events are even more effective if each participant engages in peer-to-peer fundraising for the nonprofit.
For instance, the annual Walk to End Alzheimer’s is held nationwide and raises hundreds of thousands of dollars for the Alzheimer's Association. And remember how 2014’s Ice Bucket Challenge went viral and raised $115 million for the ALS Association?
Sponsorships are another way nonprofits can boost their fundraising revenues.
Sponsorships are a win-win both for sponsors and for nonprofits. For instance, a sponsor’s logo may appear on event swag like t-shirts or caps, in a printed program, in audio-visual presentations, or on your website with a reciprocal link back to the sponsor’s website.
The example above shows how the San Francisco-Marin Food Bank has secured a sponsorship from Delta Dental, where the dental insurance company is matching individual donations dollar for dollar. Not only does this boost the food bank’s donations, but it makes Delta Dental look like a company that genuinely cares.
Often corporations use their marketing budget for sponsorships, rather than granting funding through the company’s foundation. Think of sponsorships as cause marketing—both your nonprofit and the sponsor’s brand are being boosted.
So, if you have a special event coming up, take a look at your existing corporate donors and find those that have alignment with your cause to pursue sponsorship from.
If you don’t have any corporate donors, it’s time to look at your organization’s vendor list. Your nonprofit is paying money for the vendor’s goods and services. Often, if asked, the vendor will reciprocate with a sponsorship.
If you have several events a year, consider putting together a “menu” of sponsorship opportunities your vendors and corporate partners can choose from. This will make it easy for a sponsor to choose how they can support your nonprofit more strategically and also help your organization save money and time by avoiding frequent requests for funding.
What object is beside you every day, whether in a pocket or on your desk? Easy—it’s your mobile phone.
That’s why you should start asking for donations via targeted and personalized emails and make sure your website is optimized for mobile devices.
Emails are especially important during the build-up to Giving Tuesday. Giving Tuesday 2021 raised a record-breaking $2.7 billion from 35 million adults. To compare, the previous year, Giving Tuesday raised $2.47 billion. That’s a 9% increase. You don’t want to miss your piece of that pie!
Email is also a great way to communicate with donors about what their gifts have done.
Here are some tips for creating the best email appeal possible:
Also, consider integrating text to give tools into your online fundraising arsenal. Of course, this requires donors to opt-in to receive your texts. Linking to Venmo, Cash App, Apple Pay, and PayPal can also make it quicker and easier for donors to give. Just be sure that your payment processor is PCI compliant.
An online auction can be a fun way to boost fundraising revenues without breaking the bank. Whether at an event with a silent auction, or a purely virtual event, online auctions can raise significant funds.
There are several free online auctioning tools available that can be integrated into your website or used by themselves after you’ve provided information about the items, pictures of them, and their opening bid price. Most tools also offer bidding by mobile as well.
Some of the most popular items for online auctions include:
Make no mistake—it can be hard work securing items for an auction, so some nonprofits choose to work with a consignment company. These are firms that offer you memorabilia or travel packages at a low price.
So for instance, if you offer a one-week Alaska cruise, its wholesale value would come in at about $4,100; so if your opening bid is $5,000 and the cruise closes at $6,750 your nonprofit keeps $2,650. If the consigned item isn’t sold, it’s returned to the consignor and your nonprofit pays nothing.
Believe it or not, you can raise serious money from well-vetted in-kind donations. In-kind donations are gifts of goods or services to a nonprofit organization.
Be sure to have up-to-date gift acceptance policies on hand before you begin to accept gifts in kind. These gifts can range from automobiles to a CPA volunteering her services for free or at a reduced rate. In-kind gifts can also be equipment, technology, building materials, decorating services for an event, or even real estate.
Nonprofits must be particular about what type of in-kind gifts they will accept. For instance, during a capital campaign, you might solicit an in-kind gift of HVAC equipment and installation. But you also must make sure the donated equipment is appropriate for your project, so always work closely with your internal project manager, as well as your architect and construction company to be fully aligned.
Likewise, you wouldn’t want to accept an outdated computer with 4MB of memory. And depending on the type of nonprofit you work for, you might even accept clothing and other personal items which another nonprofit would reject.
It is up to the donor to document an in-kind gift’s fair market value on the day the gift is given. Be sure to inform donors of this and refer them to the IRS’s Publication 561.
Last but not least, there’s the fundraiser’s old friend, direct mail. Believe it or not, some people still enjoy receiving direct mail appeals. So don’t believe the pundits who intone “direct mail is dead.” It’s not.
In fact, a 2018 study by the Office of the Inspector General of The U.S. Postal Service found that 33% of millennials enjoy receiving direct mail from nonprofit organizations.
That means that taking a personalized omnichannel approach to reach out to donors is still a sound idea. Strategically using the same messaging in emails, your website, your social media, and your direct mail will help result in a higher return on investment.
Having clean, accurate data for direct mail also boosts your ROI. Take advantage of the U.S. Postal Services’ low-cost solutions, including their Address Change Service, as well as their Address Element Correction Service to clean up your database.
You can also use their Informed Delivery Service to offer a free second electronic impression of your direct mail piece, whether a letter, a self-mailer, or an inexpensive postcard. More than 22 million households already use Informed Delivery.
Having the most accurate data available will decrease your returned mail and lower your postage costs, resulting in an immediate bump in your direct mail ROI.
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Grants can provide a huge boost to your nonprofit’s bottom line, but each proposal—whether a modest amount or a significant sum—takes lots of time and effort to prepare.
That’s why researching each grant opportunity carefully raises your chances for success.
So, if you are looking to boost your grant writing productivity and your grant proposal success, Instrumentl is a tool that can help you win more grants for your nonprofit.
Instrumentl helps you find more grant opportunities, peruse each funder’s IRS 990 form for more information, and track and manage deadlines and reporting dates.
See for yourself—get a free 14-day trial of our unique tool which combines the best of grant discovery and research, along with grant management—all in one place.
And there you have it—9 ways to raise money for nonprofits, ranging from individual donations to nonprofit grant writing, nonprofit crowdfunding, email and online asks, online auctions, in-kind donations, special events, and direct mail appeals.
Using a mix of these tactics that best fit your nonprofit’s needs will help you achieve more success at your organization and raise more money. After all, isn’t that what fundraising is all about?
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