Your Annual Fund: A Definitive Guide to Boost Your Strategy

Every year, your nonprofit takes on different projects and campaigns to deliver your mission to your beneficiaries. For example, you might launch a capital campaign to remodel your museum or start a new program to offer more financial assistance to business owners in developing nations.

But while you’re carrying out these specific projects, you still need money to keep your nonprofit’s doors open—money to pay your staff, maintain your facility, and cover other general operational expenses.

That money comes from your annual fund! Your annual fund makes it possible for your organization to continue running its operations while you take on other special projects, which means that building up that fund should be a top priority for your team.

But prioritizing annual fundraising can sometimes be easier said than done. To help, we’ve created this comprehensive guide to fine-tuning your approach to raising money for your annual fund. The information in this guide will empower you to go into your annual fundraising campaign with confidence, armed with the fundraising strategies that will get your community excited about giving.

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Frequently Asked Questions About Annual Funds

What is an annual fund?

An annual fund is a catchall term that refers to all of the money a nonprofit raises on an ongoing basis throughout the year.

Donations to your annual fund are unrestricted funds, which means that your organization can use the money as it sees fit. This also makes it a little more challenging to gather donations from your supporters, as it can be harder to demonstrate the need for their gifts.

Your annual fund is generally used to cover the costs associated with your nonprofit’s day-to-day functions. This empowers you to continue running as you promote other campaigns for specific projects and events.

Why are annual funds important?

Apart from covering a nonprofit’s operational costs, one of the main goals of annual fundraising is to deepen existing donor relationships.

A large part of annual fundraising is therefore focused on strengthening ties to existing donors so that they will give again.

This is why a strong donor stewardship strategy will be mission-critical as you set out to improve your annual fundraising efforts.

How do you grow your annual fund?

Nonprofits raise annual funds through annual giving campaigns. These can be especially effective during the year-end giving season. After all, year-end giving research shows that 28% of nonprofits raise between 26-50% of their annual fund during this time!

These campaigns consist of various fundraising efforts, all centered around targeted donor solicitation and stewardship to meet your larger annual fund goals.

Setting Up Your Annual Giving Campaign Strategy: 8 Steps

Step 1: Organize your team.

Why It’s Effective:

Your annual giving campaign is perhaps the largest effort your organization will execute regularly. You won’t be able to do it alone!

It’s important to have a competent, cross-functional team on your side as you work to pull off your annual fundraising campaign.

Having a dedicated team in place will help ensure that you assign each campaign component equal weight and that you don’t stretch your resources too thin.

As the saying goes, two (or three, or more) people are better than one.

Using a team approach not only spreads out the workload, but it also lends fresh perspectives to improve your campaign further.

How It Works:

At the least, most annual fund campaigns consist of three major components: outreach, direct asks, and fundraising events.

Appoint experienced staff members to plan out and manage these efforts to ensure they are effective. Additionally, ensure they are familiar with your donor data and software platform.

Make sure you have a team committed to your annual campaign from the start, so it runs smoothly.

Additionally, create a plan for who will take over certain responsibilities in case anyone managing them leaves in the middle of the annual fund campaign.

Key Takeaway

Gather a reliable and experienced team to help you manage the many moving parts of your annual fundraising campaign.

Step 2: Conduct prospect research.

Why It’s Effective:

Major gifts will make up a large proportion (likely about 60%) of the funds you’ll raise during your annual campaign.

The rest of your funds will come from several smaller gifts (low-tier and mid-tier) from your donor base.

Thus, a big part of your annual campaign should be centered around discovering the gift sizes your donors are able to make.

Prospect research will help your organization focus on those who have the financial resources and philanthropic drive to be major gift donors.

That way, you can target your annual campaign efforts and allocate your resources toward cultivating these prospects, which will help you reach your annual fund goals.

How It Works:

You’ll want to find those in your base with the capacity to give a large gift and the greatest affinity for your organization. Turn to your donor database and study the data you have on file.

You’ll want to look at:

  • A donor’s previous giving history with your nonprofit and other organizations
  • The donor’s personal background (values, interests, hobbies, etc.)
  • Wealth indicators (such as the amount given in previous donations, real estate and stock ownership, etc.)
  • If the donor is philanthropically-motivated in other ways (for example, if they frequently volunteer with nonprofits or have served on a board of directors)

Integrate a robust wealth screening service with your donor database for the deepest insights. For instance, DonorSearch locates data across a variety of wealth databases, providing you with robust insights into your donors’ real estate ownership, political contributions, business affiliations, and more.

Key Takeaway

Conduct prospect research on your existing donor base to get an idea of donors’ giving capacities and to locate potential major gift donors.

Step 3: Invest in the right fundraising software.

Why It’s Effective:

With the right fundraising software resources, your nonprofit can empower your annual fund campaign to reach more donors than ever before.

Fundraising software allows your organization to create customized giving forms, enable text-to-donate functionality, set up crowdfunding and peer-to-peer giving pages, identify donor prospects, and much more.

What’s more, because fundraising software allows your team to accept digital donations, you can collect and track donor data as your annual fund campaign progresses.

This means that throughout the campaign, you’re able to see when it’s necessary to course correct. Once the campaign closes, you’ll also have a wide-ranging view of which strategies worked and which need improvement next time.

How It Works:

There are many types of fundraising software solutions that your team can take advantage of to launch your efforts forward.

The term “fundraising software” comprises:

  • Prospect research tools
  • Online giving page building, customization, and curation
  • Social media sharing
  • Email and text-to-donate solutions
  • Mobile giving page optimization
  • And more!

No matter what your nonprofit wants to accomplish, there’s a fundraising software solution out there for you. Be sure to find the right ones for your team as you plan your annual fund campaign!

Key Takeaway

Your nonprofit should adopt fundraising software during your annual fund campaign planning.

Step 4: Craft a calendar.

Why It’s Effective:

Your annual giving campaign will consist of a diverse set of fundraising efforts and strategies, each with several moving parts.

As a result, they’ll require some strategic timing.

To help you track what is happening and when, you should design a campaign calendar that clearly outlines when you will be implementing each piece of the larger puzzle.

Creating a calendar is also important because it will help your organization ensure it has enough staff and resources to allot to each campaign effort.

If you know exactly when you will roll out each phase, you can ensure you have everything you need beforehand instead of scrambling at the last minute.

Additionally, laying everything out in a calendar will give you a bigger-picture overview of your campaign and help you figure out where you may need to focus more attention.

How It Works:

Remember, every nonprofit is different, and the calendar that works for one may not be ideal for another.

Therefore, it’s best to first discuss with your team what they feel the best timing strategies are for your particular nonprofit.

Some important items that should be on your calendar include:

  • Campaign start and end dates
  • Fundraising event dates
  • Important administrative dates, such as tax deadlines
  • When each phase of your marketing strategy begins and ends

It might also be useful to include holidays or other broader movements that you might be able to tap into on your calendar.

For example, suppose you run an environmentally-focused nonprofit. In this case, it’s probably a good idea to highlight Arbor Day and Earth Day on your calendar so you can make sure to incorporate them into your outreach.

Key Takeaway

Coming up with a campaign calendar helps streamline and organize all of your annual fund campaign’s moving parts while also helping your team ensure they are fully prepared.

Step 5: Map out your marketing strategy.

Why It’s Effective:

To give to your annual fund campaign, your supporters have to hear about it!

As such, you’ll need to have a plan in place regarding how you are going to market your campaign. Plan ahead to figure out what assets you’ll need and what technologies or avenues your marketing strategy will use.

The best approach is to use a multichannel marketing strategy, incorporating both web-based and traditional marketing channels into your approach.

To make sure you’re using the channels that resonate with your community, segment your list of donors into different groups based on what you know about them. For example, you can segment by communication channel preference, donor type, or demographics like age or location.

You’ll thank yourself later as your annual fundraising campaign garners lots of attention!

How It Works:

Take time to think through the ways you’ll spread the word about your campaign and inspire people to get involved.

Some ideas include:

  • Social media posts: Shout out your campaign on Twitter and Facebook.
  • Email blasts: Include a reference to the campaign in your email newsletter.
  • Direct mail promotions: Send pamphlets or brochures explaining the campaign.
  • Traditional print ads: Take out an ad for the campaign in your city’s newspaper, or create a billboard or bus stop ad.

Don’t forget to include a link to your annual giving campaign’s website! Even on physical marketing materials like a brochure, it’s beneficial to redirect donors to your online giving page.

Key Takeaway

Be fully prepared to segment your donor base and market your campaign with a comprehensive, multichannel marketing strategy.

Step 6: Make a personalized ask at the right time.

Why It’s Effective:

Your annual campaign is all about forming more meaningful relationships with donors.

When you get to know donors and connect with them on a personal level, they’ll feel valued by your organization.

Therefore, make sure that when you ask for donations, you demonstrate that you know and care about your donors. They’ll be more likely to give and even to become recurring donors.

Take the time to get to know your donors before making an initial fundraising ask. This will require diligent research and multiple interactions but will pay off as your donors will feel like people instead of ATMs when you make your ask.

How It Works:

For this step, you’re really going to want the help of a donor database!

Because you’ll track all donor data in one place, your data sources can inform each other to give you the most detailed insights into your donors.

You can then use these insights to better personalize your outreach.

Always use donors’ names (spelled correctly!) in your correspondence, and include other personal information if possible.

For example, let’s say you have a note in your CRM that one of your donors made a donation around a certain holiday last year. Knowing this, you can reach out to them around that holiday this year to thank them for their past support and ask if they’d be interested in contributing to your cause again.

Key Takeaway

Taking a personal approach to donor solicitation demonstrates that your nonprofit values its donors as more than just sources of funding, which will ultimately help you raise more in the long run.

Step 7: Show your gratitude.

Why It’s Effective:

“Thank you” is a phrase that will never go out of style.

Not only is thanking your donors an integral part of the stewardship process, but it’s also just plain old common courtesy.

Thanking donors is yet another way to make them feel valued and strengthen your relationships with them, which is a primary goal of an annual giving campaign.

Additionally, providing donors with donation receipts is good practice and often required by law.

Many donors will want to claim their charitable donations as tax deductions, and donation receipts are the best proof of charitable giving.

How It Works:

Craft some thank-you note templates before the campaign to help you streamline the acknowledgment process.

If you’re using a donor database with online donation capabilities, most platforms will automate sending out thank-you letters and donation receipts right after a donor has contributed.

You’ll probably still want to follow up by sending a more personalized thank-you note, but at the very least, no donations will go unacknowledged.

For both offline and online donors, make sure you send acknowledgments out no later than two days after receiving the donation.

Key Takeaway

Aside from being a common courtesy, thanking your donors goes a long way toward making them feel cared for and appreciated.

Step 8: Evaluate your campaign data.

Why It’s Effective:

One of the biggest missteps that a nonprofit can make is failing to use the valuable data they collect during their annual giving campaigns.

Just like your more targeted fundraising projects (such as capital campaigns), your annual giving campaigns are great opportunities to collect and apply informative data to help your organization hone its fundraising strategy.

When it comes to knowing your community, this starts by putting into practice prospect research methods, monitoring the success of your campaign as it progresses, and conducting A/B testing of communications channels, among other strategies.

How It Works:

Evaluating the data your nonprofit collects isn’t just something that should take place after the campaign closes. Your team should monitor your data during the planning phase, once your campaign kicks off, and after the end of the year.

Keep in mind a few of these key annual giving data evaluation strategies:

  • Maintain a clean CRM so your data remains accurate.
  • Evaluate data at benchmark periods over the course of your campaign.
  • Recruit a nonprofit consultant to help your team understand fundraising data.

Above all, your nonprofit should take data evaluation seriously! Without heeding annual giving data, your fundraising efforts will amount to basic guesswork rather than an informed strategy.

Key Takeaway

Always collect and evaluate informative annual giving data throughout your campaign.

Annual Fund Best Practices To Keep in Mind

Set up child campaigns.

Why It’s Effective:

Child campaigns refer to a set of smaller, more targeted fundraising campaigns that flow into the larger annual giving campaign.

Because child campaigns have a more definitive goal, they can help your organization collect valuable data to be used in the annual fund campaign that will give you more granular insights into your donor base.

By hosting more targeted campaigns, you’ll get a better idea of each donor’s interests, their preferences, and which projects are most compelling to them.

You can then use this information to approach donors in the most relevant and engaging ways throughout your annual campaign.

How It Works:

Your organization is likely already hosting child campaigns, and you didn’t even know it!

To incorporate them into your annual fund strategy, think about how the goals you want to achieve with your child campaigns relate to the broader goals of your organization’s annual campaign.

As you’re hosting your child campaigns, collect all of the donor data you can. The easiest way to automatically track donor data and generate detailed reports is by using a nonprofit CRM.

After you host your child campaigns, take a good look at your donor data and use it to guide your annual campaign strategies.

Key Takeaway

Hosting specific, targeted child campaigns will give you ample opportunities to collect valuable donor information for use in your broader annual fund campaign.

Create a membership program.

Why It’s Effective:

A membership program rewards donors who join with special perks in exchange for their donations. Contributions are given in the form of membership fees.

Having a membership program in place can really incentivize donors to give.

Additionally, membership programs foster a sense of community and camaraderie among your supporters, since all members are working towards a common goal: helping your nonprofit succeed!

Finally, since your organization can set the membership fee, you’ll have more control over the quality of donations you’ll receive.

How It Works:

To create a membership program, first think of what perks you can offer to motivate donors to join.

The rewards you give your members don’t have to be big or expensive. For example, you could:

  • Offer members an email newsletter with first access to news about your organization or exclusive content.
  • Welcome members with a small packet of trinkets branded to your organization (like T-shirts, calendars, mugs, etc.).
  • Host a fundraising event exclusively for members or give members special perks at your other events (for example, free drinks and the best seats in the house at your annual auction).

The possibilities are endless. Just make sure to emphasize what rewards donors will receive when pitching your membership program, so they won’t be able to resist!

Key Takeaway

Setting up a membership program is a great way to create community among your supporters and motivate donors to give.

Create customized giving levels.

Why It’s Effective:

Not all donors are capable of giving the same amount. Thus, your organization should meet its donors where they are financially.

By offering donors multiple giving levels, you’ll enable more supporters to contribute, thereby increasing your funds.

Plus, when you let donors know that even the smallest contributions can make a difference, it shows them that your organization values all donations, regardless of size.

You can also suggest a gift size for donors to give, which can be a great strategy for making more directed asks.

Often, donors will have no idea how much they should give. Having a better idea of what’s expected from them might compel more of them to donate.

While not everyone will give the suggested amount (some might even give more!), when you know exactly how much you want to raise from each donor, you can better plan how you’ll reach your goals.

How It Works:

This strategy applies mainly to your online donation form.

As you create your form, feature multiple, preset giving levels and a field where donors can submit a custom donation amount.

It can also be helpful to tell donors exactly what each donation amount can do to further your cause. Telling donors how their funds will help your organization remain operational makes donations more tangible.

If you are asking for a specific amount from a donor, you’ll want to examine their wealth indicators and philanthropic motivations.

You’ll then be able to estimate a general capacity score that will help determine what quality of gift each donor can give.

Keep in mind: because they’re usually calculated from an incomplete set of data, capacity scores are by no means a perfect science. Instead, they’re rough estimations that can help you categorize your donors into different giving levels to better tailor your asks.

Key Takeaway

Customizing gift levels and asking for specific gift amounts gives donors a range of options for financially supporting your organization, enabling more donors to contribute and increasing your nonprofit’s funds.

Host interesting annual events.

Why It’s Effective:

It can be very beneficial for your organization to host the same annual event every year, because you can constantly improve your strategies and keep your donors looking forward to a tradition involving your organization.

However, nobody wants to attend the exact same event year after year. You don’t want to risk becoming so predictable that you bore your supporters to tears.

Introducing a surprise or twist is the best way to combat this problem while still reaping the benefits of holding an annual event.

This way, you can preserve the same overall event structure while maintaining the flexibility to incorporate new and novel components each year.

How It Works:

Think about your annual event and get your creative juices flowing during the planning process. What new twist can you put on it to keep supporters on their toes?

For example, if you always host a charity auction, you could surprise guests with a celebrity emcee or add a twist to your auction by making it a penny social.

Another option is to get creative with your auction items. Every year, you can switch up the theme to provide guests with something unique and different.

Ideally, you’ll want to think up a surprise so remarkable that donors will talk about it for years to come. Let your imagination run wild!

Key Takeaway

Switching up aspects of your annual events will keep things interesting and keep supporters coming back!

Encourage recurring giving.

Why It’s Effective:

Increasing donor retention rates is one of the main focuses of an annual fund campaign.

It’s much easier and more cost-effective for nonprofits to focus on cultivating relationships with donors who’ve already given to the organization than it is to build new relationships from scratch.

Think about it: If you’ve already convinced a donor to support your cause once, it will take less to persuade them to give again.

You’ll be able to skip the initial stages of the stewardship process, saving your organization time and money.

Plus, as mentioned earlier, recurring donors are much more valuable for nonprofits, because they give more over the span of their relationship with the organization than a donor could give if just contributing once.

How It Works:

When your organization encourages recurring giving, you’ll make a conscious effort to cultivate one-time donors into donors who give again and again.

So as you’re making your direct asks, emphasize recurring giving to your donors.

For the best chance of success, you’ll want to make setting up recurring giving as convenient as possible.

Make sure that you include a recurring giving option on your online donation form. You can even set something up like a monthly giving program.

Additionally, most nonprofit CRMs with donation processing tools will allow you to store donors’ credit card numbers and automate payments when it’s time to make a recurring gift. Just make sure to get the donor’s explicit permission.

Key Takeaway

Encouraging recurring giving will help you cultivate valuable and long-standing relationships with your existing donors while also bringing new ones into the fold.

Send an end-of-year appeal.

Why It’s Effective:

Sending end-of-year fundraising appeals is a smart idea for all kinds of fundraising campaigns, but it can make an especially powerful impact on annual fundraising campaigns.

Maintaining momentum during an annual fund campaign can be difficult since these campaigns need to make a case for donors to provide unrestricted gifts.

For this reason, your team should capitalize on the holiday spirit of year-end fundraising by sending out annual fund appeals during this fast-paced fundraising season.

End-of-year annual fundraising appeals are a great way to secure gifts from supporters who have been hesitant to donate earlier in the year.

They’re also an opportunity to secure a second (or third!) gift from donors who are feeling especially generous during the holidays.

Another way you can make a case for a year-end annual fund gift is to remind donors it’s their last chance to secure a tax deduction for the year via charitable giving.

How It Works:

When planning your annual campaign, make sure you have ample time and resources to put toward your year-end appeals.

Your organization will need to have:

  • A team dedicated to donor solicitation
  • The right communication tools
  • The ability to process many different types of donations
  • A plan in place for efficiently following up with donors

Your year-end appeal is your chance to remind supporters of how much your nonprofit has done over the past 12 months and inspire them to contribute to your efforts.

Make your appeal letters heartfelt by including a real story of how your organization has impacted the community you serve. A high-quality photo or a short campaign video can also help get your message across while engaging readers. Be creative!

Key Takeaway

Use your year-end appeal to steward donors and solicit gifts for your annual fund. Since many individuals already feel charitable during the end of the year, all you need to do is remind them why your cause is so important.

Have a pledging program in place.

Why It’s Effective:

Some donors will want to support your annual fund by making a monetary donation, but won’t be capable of giving at the time of your ask. A pledging program gives them more flexibility.

With pledges, donors in this situation can essentially make a donation at the time of your ask, but won’t have to deliver the gift until they’re capable of doing so.

Without the ability to accept pledges, your organization might miss out on a good chunk of contributions. While donors might still want to give in the future, they’ll be much less likely to do so if your organization hasn’t established clear guidelines.

A pledge program establishes a set process for agreeing on the terms of the pledge and following up with supporters who have yet to make their gifts.

How It Works:

Your organization should appoint someone on your team to be in charge of pledge management.

This person may be responsible for duties like:

  • Setting the terms of the pledge
    • Pledges can either be unconditional (meaning they’re made by a set date) or conditional (meaning they’re made once an organization has fulfilled a certain condition)
  • Properly recording the pledge for accounting purposes
  • Following up with pledge donors to ensure they make good on their pledges
  • Processing received pledges

With a system in place for managing pledges from the beginning, you should be able to increase your fundraising results using this strategy.

Key Takeaway

Establishing clear guidelines for managing pledges will help your organization be more flexible in how it raises funds.

Promote matching gifts.

Why It’s Effective:

Did you know that there’s a way that your nonprofit can double the impact of your donors’ gifts without them having to donate again?

With matching gifts, donors who work for companies with employee matching gifts programs are able to see their charitable donations doubled or even tripled.

However, not everyone knows about these programs. And even if donors are aware that their employer matches gifts, they may not know how to get their gifts matched.

Luckily, with matching gift software, your supporters can easily research their matching gift status, details on how to submit their request, and the forms they’ll need to make their request to their employers.

How It Works:

Before your annual fund campaign begins, be sure to adopt matching gift software such as a matching gift database.

With these tools, supporters can:

  • Discover if their employer matches gifts
  • Find out the minimum and maximum donations allowed
  • Learn when they need to process their request

Your nonprofit can also use matching gift software to identify prospects for your annual fund campaign, allowing you to promote matching gifts to them directly.

Key Takeaway

With matching gift software, your nonprofit can boost annual fund giving by encouraging matching gifts among supporters.

Offer other engagement opportunities.

Why It’s Effective:

As mentioned before, fundraising will be a big component and goal of your annual giving campaign. However, it’s more important to view the campaign as an opportunity for building meaningful connections with your donors.

To forge the deepest relationships with supporters, offer them other opportunities to engage with your organization aside from making monetary donations, such as the chance to volunteer or take an advocacy action.

Offering other engagement opportunities allows you to reach out to donors without always asking for a gift, leading to better donor relationships.

Plus, some supporters might want to contribute to your annual giving campaign but won’t have the capacity to make a monetary donation.

With various engagement opportunities, these donors can still get involved with your organization, giving you a bigger and more diverse base of contributors to work with.

How It Works:

Think about other areas where your nonprofit can encourage supporters to get involved.

For example, you can call your supporters to take an advocacy action, like signing an online petition or writing to their local representatives.

Other ways to engage donors could include:

  • Encouraging supporters to volunteer at or attend your next fundraising event
  • Asking supporters if they’d like to participate in a peer-to-peer fundraising campaign
  • Requesting that supporters follow your pages on social media or subscribe to your email newsletter

Keeping donors engaged in multiple ways can result in even more donations in the long run. Options like fundraising events or volunteering are great opportunities to promote.

It can be helpful to analyze your donor database to get an idea of how your supporters have previously been involved. If you have an idea of your supporters’ interests and skills, you can better target your outreach by offering the engagement opportunities that will appeal to them the most.

Key Takeaway

Offer multiple ways for your donor base to engage with your organization to help foster deeper donor relationships.

Final Thoughts

Your annual fund plays a vital role in your nonprofit’s ability to continue moving its cause forward—it helps your organization keep its doors open while running other campaigns and programming! By following the steps and best practices in this guide, you can master the art of annual fundraising and meet your yearly funding goals.

Want to keep learning? Here’s some recommended reading curated by the DonorSearch team:

Click through to learn how DonorSearch can help your team raise more for your annual fund.

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