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From Wikipedia, the free encyclopedia
Fundraising or fund raising (also development) is the process of
soliciting and gathering contributions as money or other
resources, by requesting donations from individuals, businesses,
charitable foundations, or governmental agencies (see also crowd
funding). Although fundraising typically refers to efforts to
gather money for non-profit organizations, it is sometimes used
to refer to the identification and solicitation of investors or
other sources of capital for-profit enterprises.
Fundraising is a significant way that non-profit organizations
may obtain the money for their operations. These operations can
involve a very broad array of concerns such as religious or
philanthropic groups such as research organizations, public
broadcasters, and political campaigns.
Some examples of charitable organizations include student
scholarship merit awards for athletic or academic achievement,
humanitarian concerns, disaster relief, human rights, research,
and other social issues.
Many non-profit organizations take advantage of the services of
professional fundraisers. These fundraisers may be paid for
their services either through fees unrelated to the amounts of
money to be raised, or by retaining a percentage of raised funds
(percentage-based compensation). The latter approach is
expressly forbidden under the Code of Ethics of the Association
of Fundraising Professionals (AFP), a professional membership
Many non-profit organizations nonetheless engage fundraisers who
are paid a percentage of the funds they raise. In the United
States, this ratio of funds retained to funds passed on to the
non-profit is subject to reporting to a number of state's
Attorneys General. This ratio is highly variable and subject to
change over time and place, and it is a point of contention
between a segment of the general public and the non-profit
It should be noted that the term "professional fundraiser" is in
many cases a legislated term referring to third-party firms
whose services are contracted for; whereas "fundraising
professionals" or development officers are often individuals or
staff at charitable non-profits. Although potentially confusing,
the distinction is an important one to note.
Equally important are fundraising efforts by virtually every
recognized religious group throughout the world. These efforts
are organized on a local, national, and global level. Sometimes,
such funds will go exclusively toward assisting the basic needs
of others, while money may at other times be used only for
evangelism. Usually, religious organizations mix the two, which
can sometimes cause tension.
US President Barack Obama's campaign team orchestrated a
record-breaking fundraising effort in 2008 Fundraising also
plays a major role in political campaigns. This fact, despite
numerous campaign finance reform laws, continues to be a highly
controversial topic in American politics. Political action
committees (PACs) are the best-known organizations that back
candidates and political parties, though others such as 527
groups also have an impact. Some advocacy organizations conduct
fundraising for or against policy issues in an attempt to
While public broadcasters are completely government-funded in
much of the world, there are many countries where some funds
must come from donations from the public. Pledge drives commonly
occur about three times each year, usually lasting one to two
weeks each time. Viewership and listenership often declines
significantly during funding periods, so special programming may
be aired in order to keep regular viewers and listeners
Organizations in the United States established for charitable
purposes are allowed to raise funds from many sources. They are
given a specific designation by the Internal Revenue Service
(IRS), commonly noted as 501(c)(3) organizations. Other
nonprofits such as fraternal associations have different IRS
designations, and may or may not be eligible to raise funds.
Financial information on many nonprofits, including all
nonprofits that file annual IRS 990 forms is available from
Many non-profit organizations receive some annual funding from a
financial endowment, which is a sum of money that is invested to
generate an annual return. Although endowments may be created
when a sizable gift is received from an individual or family,
often as directed in a will upon the death of a family member,
they more typically are the result of many gifts over time from
a variety of sources.
Non-profit organizations also raise funds through competing for
grant funding. Grant (money) is offered by governmental units
and private foundations/ charitable trusts to non-profit
organizations for the benefit of all parties to the transaction.
A capital campaign is when fundraising is conducted to raise
major sums for a building or endowment, and generally keep such
funds separate from operating funds. These campaigns encourage
donors to give more than they would normally give and tap
donors, especially corporations and foundations who would not
Special events are another method of raising funds. These range
from formal dinners to benefit concerts to walkathons. Events
are used to increase visibility and support for an organization
as well as raising funds.
Fundraising in the online sphere allows a variety of approaches.
Examples can be found at Better The World, Network for Good,
Google Checkout and MissionFish (donations), Justgiving (online
sponsorship), the Facebook "Causes" application (social
networking), and The Big Give (matched funding).
While fundraising often involves the donation of money as an
out-right gift, money may also be generated by selling a product
of some kind, also known as product fundraising. Girl Scouts of
the USA are well-known for selling cookies in order to generate
funds. It is also common to see on-line impulse sales links to
be accompanied by statements that a proportion of proceeds will
be directed to a particular charitable foundation.
When goods or professional services are donated to an
organization rather than cash, this is called an in-kind gift.
A number of charities and non-profit organizations are
increasingly using the internet as a means to raise funds; this
practice is referred to as online fundraising. For example the
NSPCC operates a search engine which generates funds via Pay per
click links, and Better The World operates tools allowing funds
to be raised via members viewing ethical ads on a browser
sidebar and/or blog widget.
Some of the most substantial fundraising efforts in the United
States are conducted by colleges and universities. Commonly the
fundraising, or "development" / "advancement," program, makes a
distinction between annual fund appeals and major campaigns.
The donor base (often called a file) for higher education
includes alumni, parents, friends, private foundations, and
corporations. Gifts of appreciated property are important
components of such efforts because the tax advantage they confer
on the donor encourages larger gifts. The process of soliciting
appreciated assets is called planned giving.
The classic development program at institutions of higher
learning include prospect identification, prospect research and
verification of the prospect's viability, cultivation,
solicitation, and finally stewardship, the latter being the
process of keeping donors informed about how past support has
Often called donor cultivation, relationship building is the
foundation on which most fundraising takes place. Most
development strategies divide donors into categories based on
annual gifts. For instance, major donors are those that give at
the highest level of the organization's fundraising scale and
mid-level donors are in the middle. More sophisticated
strategies use tools to overlay demographic and other market
segmentation data against their database of donors in order to
more precisely customize communication and more effectively
target resources. Research by Peter Maple in the UK shows that
charities generally under invest in good marketing research
spending around a quarter of what an equivalent sized for profit
company might spend.
Donor relations and stewardship professionals support
fundraisers by recognizing and thanking donors in a fashion that
will cultivate future giving to nonprofit organizations. The
Association of Donor Relations Professionals (ADRP) is the
first community of stewardship and donor relations professionals
in the United States and Canada.
Recent research by Adrian Sargeant and the Association of
Fundraising Professionals' Fundraising Effectiveness Project
suggests the sector has a long way to go in improving the
quality of donor relations. The sector generally loses 50–60% of
its newly acquired donors between their first and second
donations and one in three, year on year thereafter. The
economics of regular or sustained giving are rather different,
but even then organizations routinely lose 30% of their donors
from one year to the next.
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