2.2 The Target Population
Once the motivations and behaviors involved with donating are understood, the nonprofit is able to begin soliciting donations. There are four main groups nonprofits can target for solicitation. The first group is individual donors, which accounts for approximately 81% (INDEPENDENT SECTOR (2001) of total annual donations to nonprofit organizations. The second group nonprofits can target is corporations. Although corporate giving amounts for only 10% (INDEPENDENT SECTOR, 2001) of total annual donations, the size of their gifts relative to the nonprofit’s budget is typically much larger than that of individuals. Small businesses are the third group of givers. Small businesses, with usually one or two main decision makers, tend to behave more like individuals than corporations. Charitable foundations are the last group that can be targeted for donations.
Soliciting gifts and donations from individuals is a time consuming process. Organizations can obtain an inventory of suspects (Table 2.2) from mailing lists, information from public documents or personal referrals. Suspects are people who are completely unknown to and unfamiliar with the organization doing the soliciting. The organization sends information and requests to all suspects. The suspects that show interest in the organization or respond to the request now become prospects.
Once the prospects (Table 2.2) become known, the asking process can begin with the cultivation of a solicitor-donor relationship. Communication in the form of telephone calls, newsletters, invitations to fundraising events, etc. continues to develop the relationship. The information gathered in these communications determines which of the prospects will move
Source: Mixer, 1993, 44
on to become donors. The act of asking for the funds is a just as much an art as it is a science (White, 1995). There are several methods for asking for funds. Face-to-face meetings are the most personal and time-consuming act, therefore tend to yield the greatest result. These meetings entail several stages of dialog directed at building an interpersonal relationship. Then a precise description of the needs to be met and the satisfactions the donor will receive immediately precedes the actual asking of a specific dollar amount. The organization then officially recognizes the gift and thanks the donor. This completes the social exchange cycle for this stage of giving.
Donors tend to develop deeper personal interest in the survival of an organization they support than an organization not receiving their funds. A donor is more inclined to pledge a yearly gift if they feel their previous money was put to good use. Regular positive follow-up with all donors will tend to result in yearly gifts. This upgrading (Table 2.2) of donations is likely to continue. If a donor becomes more involved in the organization, their gift giving will increase exponentially. As long as the experience remains positive and the donor receives additional tangible and intangible assets from their giving, the cycle will continue. The donor may, on occasion, contribute substantially larger one-time gifts in addition to a scheduled yearly pledge. The yearly pledge will often continue until the death of the donor, at which time a planned gift (Table 2.2) of the donor’s estate may be made.
Corporate giving is also an important concept for nonprofit organizations to understand. Corporations and nonprofits engage in social exchange in ways similar to what has already been presented (see Table 2.1), except the motivations are far more tangible. Corporations donate to nonprofit agencies because they provide the health, educational and cultural services that corporate employees rely upon; they also benefit from the positive public image created from donating to a charitable cause. In addition to financial needs, nonprofits depend on corporations for personnel and management services. Nonprofits not only receive monetary donations from corporations, but also equipment, supplies and property. Corporations are not legally obligated to donate. But if they do, they are permitted to deduct charitable contributions totaling no more than 10% of their pretax income (Mixer, 1993).
Small business giving is sometimes overshadowed by the large contributions from corporations. A 1990 study of seventy-five small businesses in San Francisco found that 95% of the businesses made contributions between $2000 and $10,000 each year (Mixer, 1993, 79). Because small businesses usually are closely knit and have only one chief decision maker, nonprofits can solicit to them in the same manner they solicit individuals. A small business is more likely to identify with the causes of nonprofits than a corporation. Like nonprofits, small businesses are grounded in the community and have personal interest in local issues.
Foundations are entities that exist because their founders want to protect their assets from taxation and government control and/or because they feel they need to supplement a society that does not adequately provide for all its citizens (Mixer, 1993). The social exchange theory holds for foundations as well as for corporations and individuals. Foundations provide grants to nonprofits to carry out the specific goals of the foundation’s managers. “Foundation grants work to improve social situations that concern the foundation founders, thereby satisfying their intrinsic personal and social motives” (Mixer, 1993, 83). The mission of foundations is closely linked to the mission of nonprofits: to do social good. This makes them obvious choices for solicitation by nonprofit organizations. Foundations are obligated by law to donate 5% of their net investment assets to nonprofits, although they can exceed that minimum.
Fundraising is an unavoidable activity for most nonprofit institutions. Fundraising can be done by the nonprofit organization itself, through joint fundraising campaigns or through a hired third-party. By carefully choosing the appropriate target market for the particular organization’s mission and goals, nonprofits can easily learn to minimize the time and money spent on raising money and assets and to maximize the overall use of the funds. The process of asking for funds is a skill nonprofits must cultivate and polish. “Philanthropy, after all, is the product of persuasion, not of logical demonstration” (Payton, 1989 in Mixer, 1993, 42). Vigilant follow-up of donors, no matter the size of their contribution, lays the groundwork for future donations. Nonprofit employees can help secure the survival of their organization by learning to skillfully and artfully manage the solicitation of funds.