Sunday, October 12, 2008

Write An Annual Appeal Letter To Raise Relatively Quick Funds

Raising grants is not a fast fundraising method. Since our economy is tough right now, I am going to provide your with a free fundraising method consultation, right here. Convio just released a survey that discovered that 70% of Americans are planning on donating this holiday season. Mailing out letters to raise donations is a fast and effective way to raise money. I suggest that whether your organization has before, or not, you use an annual appeal mailing to raise a bit of cash this quarter. An annual appeal letter is a written request for a donation that is usually sent once a year, at the same time every year, to people, families, and local businesses who have donated to your organization before AND to households and businesses who haven't given yet, but are likely to donate to it. Traditionally these letters are sent by thousands of American nonprofits to its donors (and to potential donors) in the final quarter of the year. We are in the first month of the final quarter, right now. Whether your organization has sent an annual appeal letter before or not, it is something that you can do to raise money in these tough times, and again, year to year, when our economy rebounds. It is one of many ways that any nonprofit can raise money.

Annual appeal letters come in many different voices, styles, and messages. For instance, some nonprofits send annual appeal requests that are many pages long. Others send an annual appeal letter with the message "update your annual membership now" or "annual appeal (for the coming year)" on the envelope. Some letters tell the donor/letter recipients about the dire situations that our community faces but explain how, through your donation, the situation can be bettered. Other letters provide the recipient with a list of the nonprofit's
accomplishments for the year, and then they explain their goals for the coming year (thereby describing where the donor's donation was spent last year and where it will be spent if they give, now, for the coming year).

The costs associated with using an annual appeal letter to raise money are the following:
__ Volunteer or staff member who will write the letter (time, skills, experience)
__ Word processing software or a typewriter to write the master draft on
__ Nonprofit's letterhead to copy the master draft of the annual appeal onto
__ Nonprofit's letterhead envelopes
__ A mode to get donors' names and addresses onto the envelopes (either printing each envelope, printing mailing labels and peeling and sticking them onto the envelopes, or hand writing each recipient's name and address onto the envelopes)
__ Folding and stuffing each letter into each envelope (including sealing the letters)
__ Postage
__ Dropping the mailing at the Post Office or a mailing service
__ Software, such an Access Database, an Excel file, or recipe cards, etc. to record and track all donations received. This IS really important. Donors are a critical asset to any nonprofit - and any who gives to your nonprofit at all, ever (including people or companies who give items) should be noted and considered valuable. Track which fundraiser a specific donor gives to and any other preferences that they share or request and follow through with them. These folks are demonstrating their interest and support in YOUR organization when they give. Approach them, again, next year via the fundraiser they gave to this year, at the very least. These folks are your nonprofit's investors. Any donor may give more next year than they give this year. Treat them VERY well (no matter the value (high or low) of the contribution they make). What organization can afford to pick and choose its donors? None.
__ Thank all donors (providing a legal receipt to the donors for their tax records) Again, this isn't' optional - this is critical. In order for a donor to give again, they must be recognized and they must be asked to contribute, again, at least annually. This is the nonprofit's minimum fundraising job in its relationship with any donor. You may send each donor a thank you e-mail (which is cheaper in office supplies and more environmental) but only works if you have the donor's current e-mail address. You can phone donors to thank them but this can be time consuming and costly if your donors are long distance. Traditionally a letter is sent and this will require more letterhead paper and envelopes; someone's time, and more postage. These costs can be considered investment in future donations received. All thanks should be sent to any donor right after the donation is received. Do not fail to acknowledge any and all support that your organization receives - it is one small way to increase the chances that the donor will give again to your nonprofit.

Optional:
__ Donation remittance envelopes (with the nonprofit's name and address pre-printed onto the envelope). Some include postage on the remittance envelope, for the donor's convenience, and some do not. The donation remittance envelope goes into the envelope with the letter for the donor to send the contribution in.
__ Official Nonprofit Postal Permit from the United States Postal Service (which is a reduced price for bulk postage and any 501(c)(3) nonprofit can apply for). If yours' is an official nonprofit and you do not have a permit, yet, and your organization sends bulk mailings (more than a minimum number of pieces of mail at once) apply for one. It saves money!
__ Printing service that will receive the final draft of the annual appeal letter and will print the letter, onto your organization's letterhead (including your envelopes), and do everything from printing the letters to also printing the envelopes, folding and stuffing the envelopes, including a remittance envelope, sealing all envelopes, stamping all envelopes, and getting the mailing into the mail, itself.

Weigh the annual appeal fundraiser cost/benefit ratio; what will the costs be to your organization and how much could you realisticly raise using this method? In other words, if you add up what it would really cost for your organization to send an annual appeal letter to every local individual, family, and business who's contributed to your agency over the last two years plus others who are likely to give but haven't yet, let's say; and then estimate how much would be raised (it is usually safe to expect a 5% - 10% response rate from a letter request - depending on how often your organization has used the fundraiser in the past). A fundraising method that is repeated annually, and includes the people who contributed to it last year; will likely increase revenue year to year after the third year, or so; on average. There is an upfront cost to beginning a new fundraiser which is fine as long as that cost is expected and paid for, in three years, when the event or method will begin to raise a net profit. So, hypothetically for instance, let's say that we're going to mail 100 letters because we have the names and addresses of 50 local people, families, and businesses who have donated to our organization in the past; plus you and I came up with 50 other local businesses and households who we think cares about the cause that our organization serves; so we're going to add them to our mailing. Let's say, too, that we have estimated that it will cost $50, total, to create a 100 count annual appeal mailing (this means we're mailing 100 annual appeal letters); and we expect a 5% return rate because we've never used an annual appeal before to raise money (and the 5% return rate is a conservative but fair response rate estimate), then we will receive 20 donation responses to the mailing (5% of 100 donation requests (letters)= 20 donations received in response). You may react to receiving 20 donations as "nothing" or "not worth writing an annual appeal letter' but stick with me. Let's do some more math. We haven't figured out the "benefit" of our "cost/benefit analysis" yet. To figure out the benefit of our hypothetical mailing, let's estimate that 5% of the responses will be $5 donations or less, that 10% of the donations will be $100 or more, and 85% of the donations will be between $20 and $50; we will raise ( 5% of 20 response donations =1 donation in response; so we'll just estimate $5) +(10% of 20 responses = 2 donations; so we'll estimate 2 x 100 = $200) + (85% of 20 donations in response = 17; so we'll estimate 17 x $20 = $340) our hypothetical "benefit" of mailing out an annual appeal is that we've estimated that we will likely raise at least $5 + $200 + $340 = $545! Now...we have estimated a fair and realistic cost/benefit ratio for our hypothetical 100 pieces annual appeal mailing; we estimated that the nonprofit would spend $50 and we have conservatively estimated that we'd raise $545! Could we receive more $5 donations than we estimated, and less $20 donations than we have guessed? Of course. We could also raise more $100 donations and less $20 ones, than we estimated, too. It would be worth investing the $50 to raise a likely $545, and find out! Remember, too, that as long as the nonprofit sends another annual appeal letter this time, next year, and again the following years; we'll likely increase what we raise, year to year. Let's write and mail our organization's first annual appeal letter...

For everyone who has written annual appeal letters before there is a different way to write one. My advice is as follows:

__ Write a one page letter that is easy to read and easy to scan. Imagine that the recipient just picked up their mail after a long day at work. Imagine the recipient opens the envelope and just scans your annual appeal letter for content (because he/she is tired). This means, when you can use less paragraphs to list accomplishments, for instance, and list accomplishments as bullet points or highlight accomplishments stated in paragraphs by bolding them, etc. Set the critical information off from the other type.

__ Be clear, succinct, and informative. If you write a first draft and took a paragraph to say 'we have decreased costs and increased services during 2008' then cut the paragraph and get to the point by replacing the paragraph with a short sentence or phrase in a paragraph or in a bullet list.

__ Use visuals if you can. Excel allows equations or tables to be converted into pie charts that can be copied and pasted into Word documents (or letters). Charts of any kind, if data is entered to them correctly, can be very informative and easy to learn from, in a small space.

__ Tell the truth. If your organization has accomplished two out of three of its goals for the year - discuss the two successes. If your organization is threatened with being closed because of the economy - tell your donors. These folks can dig deeper into their wallets, this year, if they believe in your organization and support the work that it does. If they aren't told the truth they can't support your organization's true financial situation.

__ Tell a short, clear, honest story that demonstrates how your organization achieved its mission statement's goal this year. It is absolutely fine to use a current client's success story (as long as you either get their permission from the client to divulge what you are going to, or change their name to protect one's privacy). You could also simply list all successes in bullet points format. Just be honest but don't be afraid to share successes. Donors are investors, in effect, and should be told how their money achieved success in the community!

__ I am of the mind, and others will differ with me here, that in this economy especially it will be better to make a request based on your organization's: recent and current successes, goals for the coming year, and the clear explanation of what the nonprofit uniquely does and serves in the community that no other nonprofit does. Provide all three points to the potential donor. I do not think that more "the sky is falling" predictions, or dire negative predictions about the cause your organization serves makes the case why a donor should give, well at all, but this year especially. Americans are worn down by the economy, the split in the nation by politics, and the dire warnings about climate change. What Americans need is a positive message. For instance, if yours' is an animal welfare group and it sends an annual appeal request asking for donations because "1,000 dogs and cats will starve to death in our city in 2009 if you don't give" - it may be true, but the donor can be asked to assist those 1,000 animals in a less bullying or dire way. For instance, the message could be turned around to speak to the organization's successes and its unique capabilities by stating in this hypothetical letter, "Our Town for Animals is the only nonprofit in our city that increased how many dogs and cats were saved from starvation during 2008. In 2009 Our Town for Animals has planned and budgeted to save the number of cats and dogs that we did in 2008 PLUS another 1,000 cats and dogs, at least. Your contribution will be spent to provide this life saving program for our community's dogs and cats." As long as what you state is true, you are giving your donors something specific to expect, plus you're providing the excellent track record, and you're sharing that there has been planning and budgeting for this program. You are raising donors who can clearly expect specific outcomes for 2009, from whatever they contribute now.

__ Close the letter with a clear request for a contribution. You can suggest a donation amount but if you do, be certain that it is a reasonable but higher amount that the donor gave last time, and also realistic for the particular recipient. If you can't personalize each letter that will get printed, it is best to not request a certain amount because the donor may have had a larger amount to contribute in mind until they read that you suggested giving $20. Let the donor decide the amount, if you can't include a suggested, personalized, donation amount that is reasonably higher than what the donor gave recently.

__ Say "thank you". Whether or not the recipient of the letter gives or not, you want to convey to them that your organization appreciates them considering your nonprofit's request. Leave a door open by using the basics that your parents taught you; be polite.

__ I am not going to say that you have to include a remittance envelope, that you have to have the whole mailing printed by professional printers, or that the envelopes must be addressed by a computer/printer or with mailing labels. They're nice touches, but not one of them are necessary to be successful at raising donations through an annual appeal letter.

__ Plan out this fundraiser. You may think 'well, this isn't a golf tournament that we're doing, here' meaning this isn't a lavish event which requires planning; but it is a fundraiser, nonetheless. If you aren't clear about the involved expense, the estimated net earnings, the timeline, who is responsible for what and when, and if you don't track results; your nonprofit won't be able to review lessons learned and make appropriate changes to be even more successful next year. Help yourself, the organization, and the donors by giving this and each fundraiser the necessary (professional) due diligence, tracking, and responses that each should receive.

__ Plan to have the mailing done and into the mail by a specific date. The earlier that your organization can reach potential donors, the better. The end of the year is the time that nonprofits send annual appeals because it's when Americans are considering the write offs they'd like to be able to claim on their tax filings. Said another way, Americans receive a lot of annual appeals at the end of the year. This is OK because everyone supports different causes and different nonprofits. Still, it's all the more reason to set your organization apart and clearly state why the donor should give to your organization at all, by providing its successes, unique capabilities, and the reason that it deserves the donor's support; and to get your request out early. If your organization can get its annual appeal mailing into the mail before November 12th, this year, for instance; the letter will get to recipients earlier than many other organizations'.

You can see that the annual appeal is intended to be a one time a year fundraising method that injects the organization with a single large amount of money. Can you mail your potential donors and regular donors other letters requesting money, again, during the year? Of course you can - it's important though that each of all of the fundraising methods that your organization uses is clearly different so that donors don't feel overwhelmed, like just an AMT to your organization, or like they're being worked over. So, if you want to send another letter requesting a donation in six months, let's say - just be clear that it's another campaign such as your nonprofit's annual "help a child" campaign (if your organization serves children, for instance); or the annual "seed the birdcage" fundraiser if your organization assists birds or animals. If a nonprofit diversifies and increases the number of fundraising methods that it uses in a single year, each different fundraiser will reach various individual donors differently. You want to reach all different potential donors as they wish to be asked for a contribution. For instance, perhaps Mrs. Smith prefers to give to the annual dinner your nonprofit holds; but Mr. Jones like to give to the annual appeal letter each year. Each fundraiser (in this case, the annual dinner or the annual appeal letter) are equally viable and good methods. There are all kinds of donors (and potential donors) in your community who will have different tastes. If, hypothetically, Mrs. Smith enjoys the dinner that your organization holds because she and her family go each year with their next door neighbors; and Mr. Jones likes giving to the annual appeal letter each year because his schedule is too busy to be able to attend a social event (and give in that manner), he can rely upon being asked for a contribution (to a cause that he holds dear and from the nonprofit that he believes serves the cause the best (your nonprofit)) regularly and annually - he knows your annual appeal letter will keep him up to date in his contributions, year to year, but won't require his attendance at an event that he doesn't have time to go to.

The annual appeal letter is a relatively easy fundraising method that can raise a larger net donation amount quicker, the same time each year, than many other fundraising methods. In these tough times, easier and cheaper fundraising methods are going to be key to any nonprofit's survival.

2 comments:

Anonymous said...

Forgive me if I simply don't understand your math...but how does 5% of a 100 piece mailing equal 20 donations? Wouldn't it equal...5 donations?

Arlene M. Spencer said...

Dear Anonymous,
I mad a math error. It should read "5% of 100 donation requests (letters)= 5 donations received in response)". The important stuff in this post: the points made about organizing an annual appeal and managing expectations from an annual appeal mailing, are correct. Arlene