New study highlights value of annual funds for nonprofits

A brand new study by the Nonprofit Research Collaborative reveals that organizations are much more likely to reach or exceed their yearly fundraising goals if they operate an ‘annual fund’. While that information could be considered somewhat intuitive the report that the NRC have produced sheds interesting light on the overall value of annual funds in relation to meeting funding objectives.

An annual fund is a planned and structured method to obtain donor gifts on a consistent yearly basis to provide funding for the running costs and activities for a charity. Most frequently these funds are raised via direct mail campaigns, telephone fundraising or lottery fundraising. It is the very nature of the annual ‘drive’ and subscription process that helps develop long-standing donor support and in tandem with that many nonprofits also employ member benefits to help encourage support or in the case of lotteries also provide the opportunity to win significant prizes.

Released this week, the new report provides data about how annual funds are operated and their overall contribution to fundraising success. It takes data from a large sample size of almost 950 nonprofits operating in Canada and the United States.

The most telling part of the report is the major advantage held by nonprofits with an annual fund drive actively in place. In such cases these organizations are reaching their total fundraising goals on a more frequent basis – at a rate of 77 percent compared with 57 percent for those charities without an annual fund. Important to note is that this net difference occurs regardless of the size of the nonprofit. Also, the largest organizations are even more likely to reach their nonprofit fundraising objectives (83 percent) if they provide a gift club program.

The report also found that 42 percent of nonprofits offer donor benefits that range from the very popular option of invitations to special events for donors only through to special privileges, small gifts, newsletters, meetings and exclusive inside access to the nonprofit and related activities.

In terms of annual funds by sector, as the graphic below illustrates; nonprofits for Arts, Religon/Faith and Human Services were the most likely to operate programs whereas Public Society Benefit, Environmental and International organizations had the lowest rates.

data courtesy ‘The Nonprofit Research Collaborative

Two other key findings related to renewals and upgrades from donors in terms of annual funds. In general organizations are most likely to reach fundraising goals if renewal rates remain higher than 50 percent (and/or) upgrade rates are above 5 percent.

Naturally the likelihood of a charity orchestrating an annual fund is greatly tied to their overall size due to the need for resources and administration to effectively manage such programs. For large nonprofits an annual fund is part of daily life while for smaller operations it may not seem feasible. I strongly believe that with the many major developments in technology, social media and fundraising services now available that the option to commence even a modest annual fund plan is now more achievable than ever for many small to medium nonprofits. At the very least it is something that should be properly evaluated and considered, especially, as this study shows, as it can ultimately lead to such improvements in fundraising.

The entire report is definitely worth taking a look at and can be viewed or dowloaded here via the Nonprofit Research Collaborative. We’ve shared some fantastic studies from NRC in the past and this report is a welcome addition to the valuable information that they provide.

About the Nonprofit Research Collaborative: “We study charitable fundraising at nonprofit organizations and the factors that drive success and growth. As a collaborative effort, we aim to reduce the survey burden on charities by combining our originally separate studies to send fewer requests for survey participation”

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Miratel Solutions is a Toronto call centre, eBusiness, and letter shop mail house specializing in professional fundraising services including inbound telephone fundraising, outbound telephone fundraising, online fundraising, lottery fundraising services, donation processing and receipting and direct mail fundraising services. We are committed to our CSR business values in all our business decisions  and advancing the missions of the nonprofits we proudly serve.