What Would You Call the Annual Fund?

megaphone with the words we want your feedback - annual funLast week I wrote about two words that I think are misused: prospect and annual (as in annual fund). If you haven’t read that post, read it now before continuing.

In that post, I essentially said that we object to using the word “prospect” when someone talks about a donor, because a donor is not a prospect. She is a donor. It is wrong to label her a prospect. And the use of the word “prospect” to describe a donor reduces that donor to an economic unit.

Then I talked about the word “annual” as in “annual fund.” I wrote that, again, the use of this word reduces the donor to an economic unit. These words describe an annual institutional activity whereby we set an expectation that a donor will “do their annual thing” with us. The focus is on an annual transaction. And this focus also reduces the entire donor experience to a transaction. Plus it actually suppresses giving, since a donor is usually asked to give only once, while they are giving to other organizations 2, 3, 8 and as much as 15 times in a given year.

We have had some interesting and thought-provoking comments from our Passionate Giving family, all of which we welcome and appreciate.

Julia wrote, asking: “What phrase do you suggest instead of ‘Annual Giving’ or ‘Annual Fund’? I’m asking as a Manager of Annual Giving. We certainly don’t limit our asks to just once per year (unless a donor has specifically requested to be solicited in that way), but I have always thought of the Annual Fund as the fund that provides the most reliable and predictable source of income year after year (annually). Would love to hear what you suggest!”

Jaclyn wrote: “When I say prospect, it’s in the context of ‘major gift prospect,’ and never externally! If the donor has given a $25 gift, of course they are a donor! But do they have the capacity, affinity, and philanthropic tendencies to give more? If so, that’s a major gift prospect! I don’t think this is incorrect, do you?”

Danielle said: “I agree! Words have power and are so important. It’s why we teach little kids to name their emotions to help them understand and deal with what they’re feeling. You hit on two of my pet peeves! For Annual Fund — I encourage the organizations I work with to name their fund. Instead of Annual Fund, it’s the XYZ (name appropriate to organization) Fund. Then, when it was described, it was something along the lines of ‘gifts given to the XYZ Fund support the overall work of our organization. These funds allow us to operate on a daily basis, covering everything from keeping the lights on while we work to providing the basics to allow us to serve.’ Obviously, I’d tailor it a lot more to the organization, but I hope you can get the general idea.”

Rebecca wrote: “You are conflating the donor and their gift. They are connected, but they are not the same. When I use the word ‘prospect,’ I use it to indicate a prospective gift, not a person. So if my portfolio of donors is primarily people who give at the hundred-dollar level, I will identify those donors who might give at a higher level – and those gifts would be prospective gifts. Likewise with annual fund. That is the description of a sum of money, not of a group of donors. There are donors who of course give annually, in response to annual appeals. The term annual fund is an internal accounting for gifts term, not a label for donors.”

Excellent input. And I am going to limit my comments to the annual fund because, no matter how you slice it, Jeff and I believe you should never call a donor a prospect.

First, a short list of what we have observed over the years that relates to this subject:

  • We have done analysis of hundreds of donor files of organizations large and small over the years. Those organizations that run their fundraising with an annual fund philosophy quantifiably have donors who give less frequently. We can and have measured this.
  • On the qualitative side, we hear donors of all types talk about “giving their annual gift” or “I gave my annual gift” or “I don’t know why they asked me again, I gave my annual gift.” The organizations whose donors are saying this have trained those donors to expect a request to make their annual gift.
  • We have sat in scores of development planning meetings and been asked to create strategic plans for hundreds of organizations where the internal conversations and the planning itself, by the “insiders,” is all structured around the expectation that they expect the donor to give “an annual gift.” I have never heard anyone say, as Rebecca noted in her comments to us, that the use of the word annual fund is nothing more than an internal accounting term for the sum of the gifts given in response to the “annual appeal,” which itself is a descriptor of an annual event – the annual
  • We have talked to scores of development professionals who, once they see the numbers and process the concept of looking at donors as all-year-round partners rather than sources of cash, actually change the way they are doing things. Just last week I talked to the president of a major east coast charity who, when presented with these thoughts and analysis said: “we need to change this, and I am going to make it happen.”

So the “evidence” that this is a real situation is compelling and real, supported by the numbers and the comments of the donors and development professionals themselves.

Most of the input we are getting on this subject is that development professionals, once they have considered all the pros and cons, and once they’ve seen the analysis and are given a choice to do something about it – they agree that they would pick different words to describe their fundraising.

But what would those words be? And what would you call someone who manages the program?

As Jeff and I were processing this, we came to somewhat the same conclusion as Danielle. We had five points:

  1. We said that if the organization needed to have a fund, why not have the name be cause-driven? Take the cause of your organization – not the name of it, unless it has the cause in it – and attach those words to the fund. Back during the boat people crisis, when millions of Vietnamese fled their country on boats, we came up with the “Save The Refugees Fund.” And it was a wildly successful fundraising strategy. For a wildlife conservancy organization it could be the “Wildlife Fund.” Or for a medical facility it could be the “Good Health Fund,” or for an animal rescue organization it could be the “Save The Animals Fund.” You get the point. But get more creative than I have been here. Make it cause-driven, action-oriented, emotion-laden. Make it a name that is compelling and demands a response.
  2. Secondly, do not use a “frequency” word, like annual, in it. There is no need to do that. The fund should be an every day, every week, every month, all-the-time fund.
  3. Use language that tells donors that this is an every day, every week, every month, all-the-time effort. If you are in a University or Educational institution, you aren’t “doing the education thing” one time a year or during a certain season. It is all year round, and it has many “faces.”
  4. Package your program into multiple donor offers – and by multiple I mean 10-15 core offers – maybe more. We have seen the number of offer categories reach 20 and 30. For very complex organizations there could be more. You want to break down what you do for donors into all the categories of the program that match your donors’ interests and passions.
  5. Give your donors frequent opportunities to express their concerns through their giving by asking and asking again. Focus on helping donors fulfill their interests and passions through their giving, rather than worrying about the frequency of asking.

This is how we would approach renaming the annual fund.

And then, if you are the manager of that fund, re-do your title to match the name. You are the Manager of NAME OF THE FUND.

This just makes way more sense to Jeff and me than the words “annual fund.” But tell us what you think. We would like to hear from you.

Richard

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8 Comments

  • Erica waasdorp says:

    Hi, I love this discussion as it’s an important one.

    I’ve worked at and with numerous organizations for years and had never heard the term annual fund until I started working with educational and hospital organizations. That’s where it seems to be prevalent to use that term.

    You will not see it with animal organizations, religious or many human service groups. They just tell a story, explain the need and ask for money without ever talking about annual fund.

    Whenever I present a webinar on direct mail or monthly donors, I ask the question, how often do you appeal to your donors and many a time, organizations only ask once a year, sometimes twice or four but rarely more than that. Those that don’t ask more than once are leaving a ton of money on the table. it also has an immediate impact on your donor retention. How can you get that important second gift from a donor if you only ask once a year?

    Here’s a simple way to look at it: What’s your cost to raise a dollar when you send an appeal for money to your existing donors.

    If it’s $0.20 or lower, you can absolutely do several more appeals and you’ll be making a lot more money and retaining more donors.

    Please note, I did not see look at the cost of the appeal. I said look at the cost to raise a dollar because so many organizations still only look at the cost and that means nothing when you compare it to how much money you’re raising with that (small) investment.

    Will you get some donors who say, I only want to give once a year? Yes, of course you will. You’ll need to flag them in your database and send them your year end/holiday appeal. All other donors, send them a few more appeals a year and see what happens. You’ll retain a lot more donors and raise more money to support your mission!

    and oh by the way, did i say that DIRECT MAIL STILL WORKS!!?

    thanks!

  • Marie Esposito says:

    I work at a private special needs school that, when it comes to fundraising, is a bit of a hybrid between an independent school and a nonprofit cause. The message we give parents, that is the same in almost every independent school and college, is give to the Annual Fund so we can achieve 100% parent participation. This demonstrates committment by the group most involved with the school and makes it possible to approach other philanthropists, corporations and foundations. We also have an Annual Fund goal as a line item in the budget that Advancement (i.e., ME!) is responsible for raising. We kick this off with a Direct Mail campaign in November, and from January to to June! 30 make direct asks (calls, emails, 1:1) to support the Annual Fund. This money is operational and the budget is set up to depend on it in this manner (by Business Manager and the Board Finance Committee). We are a very small school and I have been thinking of ways to change this messaging, but it is pretty ingrained in private school fundraising. Thoughts?!

  • Marie Esposito says:

    I work at a private special needs school that, when it comes to fundraising, is a bit of a hybrid between an independent school and a nonprofit cause. The message we give parents, that is the same in almost every independent school and college, is give to the Annual Fund so we can achieve 100% parent participation. This demonstrates committment by the group most involved with the school and makes it possible to approach other philanthropists, corporations and foundations. We also have an Annual Fund goal as a line item in the budget that Advancement (i.e., ME!) is responsible for raising. We kick this off with a Direct Mail campaign in November, and from January to to June! 30 make direct asks (calls, emails, 1:1) to support the Annual Fund. This money is operational and the budget is set up to depend on it in this manner (by Business Manager and the Board Finance Committee). We are a very small school and I have been thinking of ways to change this messaging, but it is pretty ingrained in private school fundraising. Any thoughts?!

  • Barbara Edelman says:

    Yes, yes, yes!!! Thank you for this follow-up article. The idea of using a caused-based name for our general fund — without any time-based (i.e., “annual”) descriptor — makes a lot of sense.

  • Elizabeth Craz says:

    I wholeheartedly agree. Also, categorizing donors into “annual donors” vs leadership donor or principle donors (even internally) diminishes the donor experience in subtle ways. They become “just annual donors,” second class citizens, when often these are the people who can least afford a big gift but find a way to give what they can, because they are so passionate about your cause. The value of their influence and advocacy, along with their loyal support (with modest annual gifts), can often exceed those of one-time leadership gifts counted from high-end special events or as one-offs.

  • Jennifer Ott says:

    In response to Marie: Why not call it the 2017 Campaign for Kids, internally and externally? It might be better to include a reference to the fact that they are special needs, but be careful to phrase it appropriately. You could also call it [NAME OF YOUR SCHOOL] CAMPAIGN FOR 2017. Or [SCHOOL NAME] MEETING SPECIAL (OR ALL) NEEDS–2017.

    Generally speaking it can also be helpful to name the fund after a founder or other “star” in your nonprofit’s arena, assuming enough people will know who s/he is and the person is much beloved. Please don’t think I’m putting an animal on a par with a human here, but possibly the name of a mascot would work (again, assuming most people will know what it is; otherwise you’d have to “introduce” it in every ask.

  • Anita E. Springer says:

    We received feedback from a donor that she did not want to give to anything called an “Annual Fund” because she feels it is a black hole that you pour money into. People do not get excited about giving to facilities maintenance and staff salaries. We renamed the fund “Program Support” and have received a good response. Donors now know that our programs (we are an arts organization) need funding every year to present what they appreciate so much and what makes us who we are. Of course the salaries and the building upkeep are all part of that!

  • T. Clay Buck, CFRE says:

    The term “annual fund” is significantly ingrained into our professional culture. When we – fundraisers – say Annual Fund we all, pretty much, know what we’re talking about: unrestricted, general operating support. So, we’re really talking about two things, here, that need renaming. First, what do organizations call it and, secondly, what do we in the profession call it. What is absolutely correct is that “Annual Fund” is not donor-centered. The Annual Fund isn’t annual at all – it’s ongoing, strategic, focused and never- ending. It’s also not a fund, really. While it may be a line-item in the budget, the monies raised in most Annual Fund (see? Technical industry term) go for many, many things in an organization – not necessarily program-restricted or capital-oriented, although Annual Fund dollars do also make both of those happen. So, why call it anything? Why does a general operating camping need to branded? Supporting the “Annual Fund” is supporting the org. It is supporting the mission. If anything, when we ask donors to make an unrestricted gift, let’s ask them to support the mission of XYZ which, in doing so, they will make A, B, and C awesome thing happen in our community.

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