Social Science Series #7: Fundraising for
Non-Governmental Organizations

What is fundraising?

Fundraising is defined as the process of seeking and gathering voluntary financial contributions from businesses, engaged individuals, charitable foundations, or governmental agencies. Most non-governmental organizations (NGOs), such as Jacinto Convit World Organization (JCWO), are reliant on the generosity of donors for some or all of their funding. Such funding remains essential, as without these funds, an organization will cease to exist or will not effectively serve the communities it has been set up to serve. Fundraising began in the United States around the turn of the century. Remarkably, one of the first vastly successful campaigns began within an organization known as the YMCA. Through the years, charities, schools, and causes have developed innovative ways to raise funds and promote other lifestyle changes.

(Sources: Scott Cutlip (1965), Fundraising in the United States, its role in America’s philanthropy, Rutgers University Press; The National Council of Nonprofits; YMCA of the USA)

Types of fundraising

Fundraising traditionally occurred by requesting for donations through face-to-face meetings, such as door-to-door solicitations and holding special events. However, recent technological advancements have made it easier for NGOs to publicize their fundraising campaigns online or through reformed forms of grassroots fundraising. These use a wide range of methods to attract donors, including but not limited to:

  • Direct mail
  • Events
  • Online donations
  • Door-to-door solicitation
  • Phone solicitations
  • E-mail marketing
  • Text-to-give
  • Crownfunding
  • Partnerships/ sponsorships/ grants
  • Peer-to-peer fundraising
(Sources: Scott Cutlip (1965), Fundraising in the United States, its role in America’s philanthropy, Rutgers University Press; Donorbox: A Guide to Different Types of Fundraising: Pros and Cons)

Fundraising strategies

Fundraising is key to the success of any NGO and it can be carried out through a variety of approaches. However, the appropriate method and strategy must be chosen in order to raise money effectively. The following 5 strategies are used by most organizations:
  • Growth-method: aims to increase the NGO’s donor base
  • Involvement: aims to strengthen relationships between NGOs and donors
  • Visibility: consists of a plan to increase an NGO’s public recognition
  • Stability: aims to ensure an NGO’s long-term viability
  • Efficiency: allows an NGO to raise money while keeping costs low
Each NGO should determine what strategy best meets its needs, then it must develop a concrete plan for pursuing such plan. The organization can do this by:
  • Reminding the donors of the NGO’s mission, such as by including the mission statement at the top of solicitation letters or emails
  • Creating objectives for the NGO and explaining to donors how their gifts contribute to the objectives
  • Building a team to help reach the objectives
  • Financing options for different types of donors; for example, an NGO can conduct an online raffle for a few dollars per person for smaller donors
  • Utilizing new marketing techniques, such as social media apps, to send out fundraising materials
  • Using past fundraising campaigns as a guide to help choose a fundraising strategy that has proven effective in the past
  • Starting online fundraising
(Sources: Mal Warwick (2000), The Five Strategies for Fundraising Success: A Mission-Based Guide to Achieving Your Goals, Jossey-Bass Inc.; Donorbox: The Ultimate Guide on Creating a Strategic Fundraising Plan for Nonprofits)

Types of donations

When it comes to types of donations that donors can make to NGOs, the possibilities are nearly endless. However, most organizations accept 5 types of contributions from donors:
  1. One-time donations: occurs when a donor gives a specific amount to an organization, once.
  2. Recurring gifts: when a donor decides to commit to a consistent recurring donating schedule.
  3. Stock donations: Rather than selling or liquidating appreciated securities, donors can donate long-term appreciated securities such as stocks, bonds, and mutual funds. A transfer authorization form must be filled out by either the donor or the donor’s broker.
  4. Planned gifts: the donor arranges to contribute a major gift allocated at a future date. Examples are gifts of equity, life insurance, real estate, personal property, and cash.
  5. In-kind donations: gift of goods, services, time, or expertise. (Source: Common Bond Communities: A Guide to Types of Donations to Nonprofits)
(Source: Common Bond Communities: A Guide to Types of Donations to Nonprofits)

Fundraising benefits for individuals

Individual contributions to NGOs can create a broader impact in society and help to accomplish the goals and mission of an organization. Some of the benefits for individuals that donate include:
  • Giving back to the community: Contributing to NGOs will help benefit more people by adding value to the NGO’s work. An individual can donate time and skills to help an NGO’s team reach its objectives sooner and easier, as well as give back to the community more effectively
  • Publicity and marketing: when contributing to an NGO, supporters can request referrals to send to clients or post online. Exemplifying and promoting their voluntary contributions and funds raised towards a particular cause enables individuals to better market their personal services, as it increases their credibility and improves their reputation.
  • Showcasing values: contributors will be able to showcase the experience and contributions in their professional field, demonstrating their dedication to social initiatives.
  • Leadership opportunities and skills development: Through this experience, donors will gain a greater level of client exposure and improve their ability to undertake more responsibility for pro bono cases. It is a great opportunity to expose oneself to new skills, take charge and get involved in a new area of work.
(Sources: Charities Aid Foundation: Five Reasons to Give to Charity; Deb Mallgrave (2014), The Hidden Benefits of Pro Bono, American Bar Association)

Fundraising benefits for corporates

The benefits of fundraising for companies are vast. Among these benefits include:
  • Societal impact and community involvement: by participating in philanthropic efforts, corporations can make a positive impact and benefit their surroundings, society, and community.
  • Better brand image and marketing opportunity: corporations often seize the opportunity to involve in social initiatives by publicizing their community involvement and requesting references from NGOs to share examples of their work on their platforms.
  • Increased employee satisfaction and engagement: corporates can demonstrate their core values, create a sense of community within the organization, and build trust among the employees, leading to an increase in employee morale, attitude, and workplace culture.
  • Encouraging professional and personal growth of employees: fundraising culture indirectly impacts society, as such behaviors promote individual volunteerism and encourages employees to participate in philanthropic causes.
  • Increased client loyalty: companies can either attract more clients or gain the trust of existing ones by donating their time or skills.
  • Increased creativity through expanding social initiatives: the expansion of these initiatives encourage and empowers employees to become more creative and innovative through developing new social involvements for the corporate.
(Sources: Michael Porter and Mark Kramer (2002), The Competitive Advantage of Corporate Philanthropy, Harvard Business Review; Law Practice Today: Pro Bono Carries Benefits Beyond Any One Case)

The impact of COVID-19 on fundraising

Due to the COVID-19 pandemic, NGOs and corporations have dealt with turbulent changes and waves of uncertainty. Consequently, these organizations have adjusted by implementing strategies like virtual fundraising in order to maintain their services despite forced closures, months of remote work, and inconsistent reopening plans. 

When the COVID-19 pandemic hit, all industries experienced a shift towards remote working and the cancellation of many in-person events. To combat this, NGOs continued to strategize ways to make virtual communication more effective by adapting to these new conditions.

Those successful NGOs heavily used digital marketing and fundraising tactics during the pandemic, switching their efforts to social media and email campaigns. Many in-person fundraising events became virtual events.

(Source: Wealth Engine: The Impact of COVID-19 on Nonprofits and the Outlook for 2021; AFP Global: 2021 Fundraising Slightly Ahead of 2020 Figures, Buoyed by New Donor Retention)

Regulations and laws regarding fundraising in the USA

Registered organizations put a large sum of their earnings into supporting their work and programs due to state and federal regulations and tax exemptions. Laws governing NGOs can be complex, and non-compliance can result in hefty penalties. These laws in the USA fall into four types of regulations:

(Source: IRS: Charitable Contribution Deductions; IRS: The IRS Encourages Taxpayers to Consider Charitable Contributions; IRS: Exempt Purposes – Internal Revenue Code Section 501(c)(3); WildApricot:5 Nonprofit Fundraising Laws You Should Know About; Labyrinth, Inc.: Fundraising Legal Requirements)

How does JCWO raise funds?

Our fundraising is carried out through direct mail, online donations, phone solicitations, e-mail marketing, crowdfunding, partnerships, sponsorships, grants and peer-to-peer contact. Among these, the most common strategies used by JCWO are:

  • Grant applications: more than 200 applications submitted yearly;
  • Pro-bono services: alliances established with companies for corporate legal, intellectual property and accounting requirements of the organization;
  • Donation requests: more than 1,000 letters sent annually to companies and individuals;
  • Online donations: registered in 25 fundraising sites, including transparency, shopping, direct donation and crowdfunding platforms;
  • Ad-honorem collaborators: continuous volunteer agreements with field experts to assess our programs.

The support of corporations and individuals remains essential to sustain JCWO´s cause and mission. We strongly believe in the power of teamwork over individual efforts, valuing the key of having a multidisciplinary team, supported by multiple allies, donors and collaborators, to achieve all goals.

JCWO invites private, public, and non-profit entities, as well as professionals and individuals who wish to join this cause, to contribute through any of the available channels specified above and on our website. When donating, contributors can claim a receipt that describes the amount of funds or goods gifted and its value, which can be used for tax deduction purposes, in accordance with the law.

 

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