Guides

A Complete guide helps you to

start investing and to raising funds.

What is Investing?

Investing: The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit. Legendary investor Warren Buffett defines investing as “… the process of laying out money now to receive more money in the future.” The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time. What is investing? Investing is really about “working smarter and not harder.” Most of us work hard at our jobs, whether for a company or our own business. We often work long hours, which requires sacrifice and adds stress. Taking some of our hard-earned money and investing for our future needs is a way to make the most of what we earn. Investing is also about making priorities for your money. Spending is easy and gives instant gratification—whether the splurge is on a new outfit, a vacation to some exotic spot or dinner in a fancy restaurant. All of these are wonderful and make life more enjoyable. But investing requires prioritizing our financial futures over our present desires. Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Investing is a means to a happier ending. Investing Vehicles There are many different ways you can go about investing, including putting money into stocks, bonds, mutual funds, ETFs, real estate (and other alternative investment vehicles), or even starting your own business. Every investment vehicle has its positives and negatives, which we'll discuss in a later section of this tutorial. Understanding how different types of investment vehicles work is critical to your success. For example, what does a mutual fund invest in? Who is managing the fund? What are the fees and expenses? Are there any costs or penalties for accessing your money? These are all questions that should be answered before making an investment. While it is true there are no guarantees of making money, some work on your part can increase your odds of being a successful investor. Analysis, research and even just reading up on investing can all help. Now that you have a general idea of what investing is and why you should do it, it's time to learn about how investing lets you take advantage of one of the miracles of mathematics: compound interest.

What Do Other Investors Know That You Don't?

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The Concept Of Compounding

Compounding is the process of generating more return on an asset's reinvested earnings. To work, it requires two things: the reinvestment of earnings and time. Compound interest can help your initial investment grow exponentially. For younger investors, it is the greatest investing tool possible, and the #1 argument for starting as early as possible. Below we give a couple of examples of compound interest. Example #1: Apple stock An investment of $10,000 in the stock of Apple (AAPL) that was made on December 31, 1980 would have grown to $2,709,248 as of the market’s close on February 28, 2017 according to Morningstar’s Advisor Workstation tool. This translates to an annual return of 16.75%, including the reinvestment of all dividends from the stock. Apple started paying dividends in 2012. Even so, if those dividends hadn’t been reinvested the ending balance of this investment would have been $2,247,949 or 83% of the amount that you would have had by reinvesting. While Apple of one of the most successful companies, and their stock is a winner year-in and year-out, compound interest also works for index funds, which which are managed to replicate the performance of a major market index such as the S&P 500. Example #2: Vanguard 500 Index Another example of the benefits of compounding is the popular Vanguard 500 Index fund (VFINX) held for the 20 years ending February 28, 2017. A $10,000 investment into the fund made on February 28, 1997 would have grown to a value of $42,650 at the end of the 20-year period. This assumes the reinvestment of all fund distributions for dividends, interest or capital gains back into the fund. Without reinvesting the distributions, the value of the initial $10,000 investment would have grown to $29,548 or 69% of the amount with reinvestment. In this and the Apple example, current year taxes would have been due on any fund distributions or stock dividends if the investment was held in a taxable account, but for most investors, these earnings can grow tax-deferred in a retirement account such as a employer-sponsored 401(k). Starting Early Another way to look at the power of compounding is to compare how much less initial investment you need if you start early to reach the same goal. A 25-year-old who wishes to accumulate $1 million by age 60 would need to invest $880.21 each month assuming a constant return of 5%. A 35-year-old wishing to accumulate $1 million by age 60 would need to invest $1,679.23 each month using the same assumptions. A 45-year-old would need to invest $3,741.27 each month to accumulate the same $1 million by age 60. That’s almost 4 times the amount that the 25-year old needs. Starting early is especially helpful when saving for retirement, when putting aside a little bit early in your career can reap great benefits.

Knowing Yourself

No one investing strategy or approach fits all. Every investor has different reasons for investing, different goals, different time horizons and varying degrees of comfort with investing. It’s important to define and articulate you own parameters. Goals What are your objectives for the money that you will be investing? Is safety of principal with some level of return sufficient? Are you trying to accumulate money for a longer-term goal such as a college education for your kids or perhaps a comfortable retirement for yourself? You might even have different investments for different goals. The point is that before you decide to invest any money it is important to understand why you are investing and the end result that you are seeking. Goals and objectives should not be created in a vacuum. You also need to know your risk tolerance and time horizon as part of the goal-setting process. Risk tolerance Risk can mean a lot of things, but in the context of investing it means the risk of losing money. In other words, the risk that the amount of money invested will decrease in value, possibly to zero. All investing involves risk in one way or another. Stocks can and often do go down in value over certain periods of time—in 2008, the S&P 500 dropped by 37%. While this decline in the stock market was one of the worst in history, less severe market corrections are not uncommon. How much of a drop in value for your investments can you stomach? Your risk tolerance will likely be in part a function of when you need the money—known as your time horizon—which is usually a function of age. Someone in their 20s or 30s who is saving for retirement shouldn’t give too much thought to fluctuations in the value—known as the volatility—of their investments. In contrast, someone in their 60s likely will and should have a lower risk tolerance if for no other reason than they don’t have the time to fully recoup a major loss in the value of their investments. Your investments should be aligned with the time horizon in which you will need the money, especially if some or all of your investments are targeted for a specific goal. For example, if you are young parents investing for your newborn’s college education, your long time horizon allows you to take a bit more risk in the initial years. When your kid gets to high school, you might adjust the investment mix to help ensure that you don’t suffer any major losses in the years leading up to the start of college. Trading Frequency How long will you stay in one particular investment? Legendary investor Warren Buffett rarely sells a stock he owns and doesn’t get rattled by market fluctuations. This is generally known as a “buy-and-hold” strategy. At the other extreme are traders who buy and sell stocks on a daily basis. This is fine for professionals, but rarely a good idea for the average investor. Nobody is advocating that your need to hold an investment forever, and in fact things change and you should be reviewing your individual holdings periodically to ensure they are still appropriate for your situation. Knowledge and comfort Some investment vehicles require sophisticated knowledge and monitoring, while others are more set-and-forget. Your investment decisions should be based on your comfort level and your willingness to devote time to researching your choices. An easy route is to choose a variety of low-cost index funds that cover various parts of the markets such as bonds, domestic stocks and foreign stocks. Another alternative to consider are professionally managed vehicles such as target date mutual funds, where the manager allocates portfolio over time. These funds are designed to gradually reduce their exposure to equities as the target date of the fund gets closer Investors with more knowledge and experience might consider actively managed mutual funds, individual stocks, real estate or other alternative investments. Understand what you don’t know It is important that investors understand what they do and don’t know. They should never be talked into investing in something that they don’t understand or are uncomfortable with.

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How Technology Has Changed Investing

Technology has had a profound impact on most every aspect of our lives. Investing is certainly no exception. In fact, technology has democratized investing in the last several decades and also exerted significant downward pressure on fees. Buying and selling securities Years ago, if you wanted to make a trade you would need to call your stockbroker and place an order. The commission rates to buy or sell stocks was pretty much fixed and high due to a lack of information and alternatives. Investors wouldn’t know how their investments were faring until they received their account statements in the mail. Today investors can search the web to see which brokerage firm has the lowest transaction fees and buy and sell securities themselves at the click of a mouse. Fidelity started a new price war in the cost of trading stocks and ETFs by lowering their transaction costs to $4.95 per trade. Schwab quickly lowered their price to match Fidelity, while TD Ameritrade also reduced their trading commissions. Many brokerage firms and other custodians offer apps to allow investors to track their investments using their phones. Alerts can be established on various holdings and so much more. Technology has also armed both individual investors and investment advisors with the tools to perform cutting edge research and analysis on investments and to help manage portfolios. Robo advisors One of the biggest innovations of the past ten years has been the advent of the robo advisor. Firms like Betterment, Wealthfront and others have used technology to allow them to construct and manage client portfolios using algorithms. Most robo advisors invest in low cost ETFs. Taking the human element out of the investing equation can drastically lower the cost of investing. Robo advisors have been adding additional services as well. Both Betterment and WealthFront offer tax loss harvesting for taxable accounts. Betterment offers a 401(k) product and has a version that partners with financial advisors as well. Bigger players like Schwab, Vanguard and Fidelity have taken notice and have started their own robo services, sometimes augmented with human advisor. This technology promises to continue to revolutionize the investing landscape in the years to come.

Preparing For Contradictions

An important fact about investing is that there are no indisputable laws, nor is there one correct way to go about it. Furthermore, within the vast array of different investing styles and strategies, two opposite approaches may both be successful at the same time. One explanation for the appearance of contradictions in investing is that economics and finance are social (or soft) sciences. In a hard science, like physics or chemistry, there are precise measurements and well-defined laws that can be replicated and demonstrated time and time again in experiments. In a social science, it's impossible to "prove" anything. People can develop theories and models of how the economy works, but they can't put an economy into a lab and perform experiments on it. (To learn more, see Is finance an art or a science?) In fact, humans, the main subject of the study of the social sciences are unreliable and unpredictable by nature. Just as it is difficult for a psychologist to predict with 100% certainty how a single human mind will react to a particular circumstance, it is difficult for a financial analyst to predict with 100% certainty how the market (a large group of humans) will react to certain news about a company. Humans are emotional, and as much as we'd like to think we are rational, much of the time our actions prove otherwise. Economists, academics, research analysts, fund managers and individual investors often have different and even conflicting theories about why the market works the way it does. Keep in mind that these theories are really nothing more than opinions. Some opinions might be better thought out than others, but at the end of the day, they are still just opinions. Take the following example of how contradictions play out in the markets: Sally believes that the key to investing is to buy small companies that are poised to grow at extremely high rates. Sally is therefore always watching for the newest, most cutting-edge technology, and typically invests in technology and biotech firms, which sometimes aren't even making a profit. Sally doesn't mind because these companies have huge potential. John isn't ready to go spending his hard-earned dollars on what he sees as an unproven concept. He likes to see firms that have a solid track record and he believes that the key to investing is to buy good companies that are selling at "cheap" prices. The ideal investment for John is a mature company that pays out a large dividend, which he feels has high-quality management that will continue to deliver excellent returns to shareholders year after year. So, which investor is superior? The answer is neither. Sally and John have totally different investing strategies, but there is no reason why they can't both be successful. There are plenty of stable companies out there for John, just as there are always entrepreneurs creating new companies that would attract Sally. The approaches we described here are those of the two most common investing strategies. In investing lingo, Sally is a growth investor and John is a value investor. Although these theories appear to contradict one another, each strategy has its merits and may have aspects that are suitable for certain investors. Your goal is to be informed enough to understand and analyze what you hear. Then you can decide which theories fit with your investing personality.

Types Of Investments

There are many types of investments and investing styles to choose from. Mutual funds, ETFs, individual stocks and bonds, closed-end mutual funds, real estate, various alternative investments and owning all or part of a business are just a few examples. Stocks Buying shares of stock represents ownership in the company and the opportunity to participate in the company’s success via increases in the stock’s price plus and dividends that the company might declare. Shareholders have a claim on the company’s assets. Holders of common stock have voting rights at shareholders’ meetings and the right to receive dividends if they are declared. Holders of preferred stock don’t have voting rights, but do receive preference in terms of the payment of any dividends over common shareholders. They also have a higher claim on company assets than holders of common stock. Bonds Bonds are debt instruments whereby an investor effectively is loaning money to a company or agency (the issuer) in exchange for periodic interest payments plus the return of the bond’s face amount when the bond matures. Bonds are issued by corporations, the federal government plus many states, municipalities and governmental agencies. A typical corporate bond might have a face value of $1,000 and pay interest semi-annually. Interest on these bonds are fully taxable, but interest on municipal bonds is exempt from federal taxes and may be exempt from state taxes for residents of the issuing state. Interest on Treasuries are taxed at the federal level only. Bonds can be purchased as new offerings or on the secondary market, just like stocks. A bond’s value can rise and fall based on a number of factors, the most important being the direction of interest rates. Bond prices move inversely with the direction of interest rates. Mutual funds A mutual fund is a pooled investment vehicle managed by an investment manager that allows investors to have their money invested in stocks, bonds or other investment vehicles as stated in the fund’s prospectus. Mutual funds are valued at the end of trading day and any transactions to buy or sell shares are executed after the market close as well. Mutual funds can passively track stock or bond market indexes such as the S&P 500, the Barclay’s Aggregate Bond Index and many others. Other mutual funds are actively managed where the manager actively selects the stocks, bonds or other investments held by the fund. Actively managed mutual funds are generally more costly to own. A fund’s underlying expenses serve to reduce the net investment returns to the mutual fund shareholders. Mutual funds can make distributions in the form of dividends, interest and capital gains. These distributions will be taxable if held in a non-retirement account. Selling a mutual fund can result in a gain or loss on the investment, just as with individual stocks or bonds. Mutual funds allow small investors to instantly buy diversified exposure to a number of investment holdings within the fund’s investment objective. For instance, a foreign stock mutual might hold 50 or 100 or more different foreign stocks in the portfolio. An initial investment as low as $1,000 (or less in some cases) might allow an investor to own all the underlying holdings of the fund. Mutual funds are a great way for investors large and small to achieve a level of instant diversification. ETFs ETFs or exchange-traded funds are like mutual funds in many respects, but are traded on the stock exchange during the trading day just like shares of stock. Unlike mutual funds which are valued at the end of each trading day, ETFs are valued constantly while the markets are open. Many ETFs track passive market indexes like the S&P 500, the Barclay’s Aggregate Bond Index, and the Russell 2000 index of small cap stocks and many others. In recent years, actively managed ETFs have come into being, as have so-called smart beta ETFs which create indexes based on “factors” such as quality, low volatility and momentum. Alternative investments Beyond stocks, bonds, mutual funds and ETFs, there are many other ways to invest. We will discuss a few of these here. Real estate investments can be made by buying a commercial or residential property directly. Real estate investment trusts (REITs) pool investor’s money and purchase properties. REITS are traded like stocks. There are mutual funds and ETFs that invest in REITs as well. Hedge funds and private equity also fall into the category of alternative investments, although they are only open to those who meet the income and net worth requirements of being an accredited investor. Hedge funds may invest almost anywhere and may hold up better than conventional investment vehicles in turbulent markets. Private equity allows companies to raise capital without going public. There are also private real estate funds that offer shares to investors in a pool of properties. Often alternatives have restrictions in terms of how often investors can have access to their money. In recent years, alternative strategies have been introduced in mutual fund and ETF formats, allowing for lower minimum investments and great liquidity for investors. These vehicles are known as liquid alternatives.

Portfolios And Diversification

An investment portfolio is a collection of investments. Ideally these investments were chosen to work in harmony to help the investor achieve their goals and also to provide a certain degree of diversification so that you are not putting all your eggs in one basket. An investment portfolio is a combination of asset classes such as stocks, bonds and cash. The portfolio might be further divided into sub-asset classes like large cap stocks, mid-cap stocks, small cap stocks and international stocks. On the bond side you might have some short-term bonds, intermediate-term, tax-exempt municipal bonds and foreign bonds. Each asset class and sub-asset class can be further sub-divided. Investment vehicles used might include mutual funds, ETFs, individual stocks and bonds and others. You might view all of your investment holdings across various types of accounts as a single overall portfolio, or you might segment certain portions of your holdings as separate portfolios. For example your account for college savings might be one portfolio and the money earmarked for retirement might be managed as another. Ideally a portfolio consists of a variety of investments, not all of which are highly correlated to each other. Let’s look at a simple example using three Vanguard index mutual funds: Vanguard Total Stock Market Index (ticker VTSMX) – A market cap weighted fund replicating the total U.S. stock market. Vanguard Total Intl Stock Index (VGTSX) – A market cap weighted index fund covering non-U.S. developed and emerging market stocks. Vanguard Total Bond Market Index (VBMFX) – A market cap weighted fund largely replicating the U.S bond market. Over the five years ending February 28, 2017, these funds were correlated to each other as follows: Vanguard Total Stock Vanguard Total International Stock Market Vanguard Total Bond Market Vanguard Total Stock 0.79 -0.12 Vanguard Total International Stock Market 0.79 0.08 Vanguard Total Bond Market -0.12 0.08 Source: Morningstar A correlation of 1.00 between two investment vehicles mean that their performance is perfectly tied to each other, while a correlation of zero means there is no relationship between the two investment vehicles being compared. At 0.79, the Vanguard Total Stock Market fund and the Vanguard Total International Stock Market fund are highly, but not perfectly, correlated. But a correlation of 0.08 between the Vanguard Total Bond Market Fund and the Vanguard Total International Stock Market fund means that there is very little relationship in the performance of these two funds. The correlation of -0.12 between the Vanguard Total Bond Market Fund and the Vanguard Total Stock Market Fund means that there is actually an inverse relationship. Here is a look at the risk and return of three portfolios using combinations of these three funds. These results are via Morningstar Advisor Workstation’s hypothetical portfolio tool. The simulation assumes: · Investments were purchased on 4/29/1996 with results through 2/28/2017. · There are no taxes on the portfolio, as if held in a tax-deferred account such as an IRA. · The portfolio was rebalanced back to the original allocation semi-annually. · An initial investment of $50,000. Conservative 40/60 · Vanguard Total Stock Market 30% · Vanguard Total International Stock Market 10% · Vanguard Total Bond Market 60% Moderate 60/40 · Vanguard Total Stock Market 45% · Vanguard Total International Stock Market 15% · Vanguard Total Bond Market 40% Aggressive 80/20 · Vanguard Total Stock Market 60% · Vanguard Total International Stock Market 20% · Vanguard Total Bond Market 20% Here are the comparative results for these model portfolios: Growth of $50,000 Cumulative % return Loss in Value 2008 (%) Loss in Value 2002 (%) % of variability in return compared to S&P 500 (last 10 years) % of modeled return compared to S&P 500 (last 10 years) Conservative 40/60 $193,435 286.87% -14.03% -2.26% 44.25% 72.80% Moderate 60/40 $211,527 323.05% -22.78% -7.81 63.86% 78.19% Aggressive 80/20 $222,267 344.53% -31.02 -13.56 84.84% 80.81% Source: Morningstar Advisor Workstation As you would, expect, the conservative portfolio had the smallest loss in 2008 of 14.03%. This compares to a loss for the S&P 500 Index of 37.00% that year. As you would also expect, this portfolio had the smallest rate of growth over the time period with an ending value of $193,435. The aggressive portfolio had the largest decline of the three in 2008 with a loss of 31.02% for the year. This portfolio had the largest increase in value over the period with an ending value of $222,267. The point is that combining different investments in various allocations will have an impact on both the growth of your portfolio and the downside risk over time.

Getting Started…

Fundraising is one of the biggest challenges facing voluntary and community groups. All groups need some money to carry out their services and activities or to fund new projects. So, although you’d probably rather be getting on with the ‘real’ work of your group and delivering those all important services and activities, you also need to spend some time planning and preparing your fundraising activities so that you can carry on this work well into the future.

Planning and Preparing for Fundraising

It is important that you spend time planning and preparing for fundraising. Your group needs to have a clear idea about how much money is needed, by when, how it’ll be raised, and what the funding will be used for. Fundraising can be time-consuming and demanding. It is a good idea to form a fundraising sub-group so that the work load can be shared. Many skills are required for successful fundraising: communication, organisation, enthusiasm, confidence and commitment. Working as a group you’ll be able to draw on the skills, experiences and ideas of a number of different people.

Legal Considerations

Before you start applying for money, you will need to consider whether you need any of the following: 1) A written constitution; 2) Registered charity status; 3) A bank account; 4) A steering committee or governing body; 5) Last years annual review and accounts (if applicable) 6) Insurance. 7) any particular policies such as Equality and Diversity It is always good practice to ensure that you offer equality of opportunity and access to all of your services. Is access available to everyone in your community? Some funders will ask to see an equal opportunities policy.

What you need and why

Before you approach the funders you need to turn your initial ideas into a project proposal. This doesn’t have to be a long process and the written proposal should fit onto one or two typed sides of A4 paper. The proposal should contain the following: • Evidence - A clear description of the problem, need or issue (with facts, figures or research to back up your case) • Description - A list of all the things your organisation wants to do to meet this need • Method - How your organisation will go about doing these things • Evaluation - How you intend to measure the success of your proposal • Skills and resources ¬- Why your organisation should be trusted to do the job well – have you got the experience, people, skills and resources to carry out this project? You will then need to research which funders will fund the type of project you are trying to do. Trust funds are sometimes very specific about what they will fund and even where they will provide funding for.

How much will it cost?

You will need to create a budget that sets out exactly how much your project will cost. When working out how much things will cost: • Make sure your figures are accurate • Don’t under cost the work • Don’t forget the ‘hidden’ costs (e.g. maintenance, insurance, repairs and rent) • Be clear on whether your costs are one-off capital items like equipment or expenses like rent and salaries. NB: Your budget is also there as a guide to your spending. You should compare your budget each month with your expenditure to ensure you have enough money later on to do what you planned.

Developing a fundraising plan

Once you have your written proposal and a budget, you need to plan how you will actually raise the money. You will need to think about: • Which funders are most likely to be interested in your work? • What resources are needed to meet each objective? • When you need the money by? (it might help to draw up a timetable) • Do you have the skills, contacts and time to concentrate on fundraising? • How have other groups with similar aims raised the money? • Could you raise some or all of the money yourselves?

How Anyone Can Be a Superstar Fundraiser

Fundraiser. Rainmaker. Event Chair… For most people, those words conjure up a certain amount of mystique, awe, and fear. Everyone has certain issue they care about, and certain groups they are involved with. Most of those groups and issues are always looking for more money to carry out their mission. If you’re like most people, you wish you could help your favorite non-profit, church, or school raise more money and do more good work… you wish you could be the superstar fundraiser or rainmaker, or the top-flight event chair, who brings in the resources that the non-profit you love needs. But, if you’re like most people, you’re also a little bit scared of fundraising… how does it work? Will people say yes? Why would they say yes to me? How do I ask someone for money? The Antidote to Fear: Knowledge and Practice Fear in the face of fundraising is understandable. Most people don’t like talking about money, and with fundraising, well… there’s no way around it. Anytime you do something for the first time, it’s a little it awkward, and a little unsettling. It’s the same way with fundraising. The first time you make a fundraising call, or send out a letter, or try to sell tickets to an event, it seems a little weird – perhaps, even a little frightening. That’s ok! Everyone else felt that way too… all those people at the charity you are working with who are fundraising superstars? They felt the exact same way during their own first calls. What’s the difference between you and them? What takes someone from feeling awkward about fundraising to being completely comfortable making fundraising calls and asks? The answer is: knowledge and practice. People have been fundraising for a long time. Over that time, people have learned what works, and what doesn’t. Fundraising professionals have tested methods, strategies, and tactics, and seen what helps organizations raise money – and what just wastes time and resources. Likewise, experienced fundraisers have made hundreds, if not thousands, of asks. They know what succeeds in getting a donation, and what just turns the other person off. When you start out fundraising… you don’t need to reinvent the wheel! Instead, study the basics of fundraising: how to make an ask, how to hold an event, how to find prospects and build a fundraising network. Study what works, and what doesn’t, and learn from those who have been there before. That’s why I started the Fundraising Authority… because I want you to be successful in your fundraising efforts, and I know the best way to make sure that you are is to arm you with the knowledge that I have learned in over a decade of professional fundraising… and with resources and tools gleaned from the best fundraising minds in the world. Don’t Forget the Practice! Once you read through the information on our site, and understand the process of fundraising, the next step is to practice… to run through the material in your head, then out loud… and then to practice fundraising with other people. Ultimately, you’ll need to actually get out there and do some real fundraising: make some asks, write some letters, hold some events. The best way to learn fundraising is by doing it. Yes, you will feel a little unsure and awkward in the beginning, no matter how well-prepared you are. But armed with the knowledge you gain from this site (and other sources), it won’t be long before you will be fundraising like a real pro. You CAN Do It! I know that you can do this – that you can become a better fundraiser, learn best practices, and raise more money for your non-profit organization, church, or school. How do I know? Because I have seen countless others who were frightened by the mere prospect of fundraising – unwilling to send even one e-mail asking for money – become money-raising superstars simply by studying the basics, practicing, and getting out there and giving it a shot. You can too – just keep reading this site, and keep practicing, and one day soon, you’ll be one of your organization’s own fundraising superstars.

Fundraising Isn’t Evil!

O.k. – let’s dispel these myths once and for all: Fundraising isn’t evil. Fundraising isn’t bad. People who fundraise aren’t slimy, smarmy, or shady. Organizations that fundraise aren’t only concerned with a quick buck (usually). Why is it necessary to dispel these myths? Because many people have become cynical about fundraising. Many people see fundraising campaign ads on TV, get direct mail letters at their homes and workplaces, get asked to buy tickets to events, and to participate in walk-a-thons, and they get jaded and cynical. You’re here at this website because you are raising money, or thinking about raising money, for a cause that’s near to your heart. You may be a little shy about fundraising, though, because you may be worried that fundraising is somehow unseemly… that people who fundraise need to take advantage of others, or “con” people into giving. Nothing could be further from the truth. (Assuming, of course, that we are talking about reputable fundraisers raising money for a reputable cause). So, what’s the truth about fundraising? Without Fundraising, We’d All Die Alright – maybe that’s taking it too far. But the truth is, fundraising enables hundreds of thousands of organizations around the world to serve – literally – billions of people. Fundraising lets homeless shelters stay open, funds cancer research, keeps schools, churches, hospitals and jobs programs afloat, and makes life better for billions of people on this Earth. Think about the group you are fundraising for. What is their mission? Why do they exist? Why do they need the money? (If you can’t answer these questions – ask the charity. If these answers don’t inspire you, you’re working for the wrong group). Isn’t that mission worth pursuing? What would happen if that charity went out of business today, never to return? If your mission matters, then how can you not raise money to support it? Non-profits can only exist through fundraising. Every donation, whether $10 or $10 million, keeps charities working, and doing, and helping. Far from being evil, fundraising for the right organization can be serving the greater good – and in many cases, it is not fundraising that would be the evil, because it would prevent your fellow humans from being served. Fundraising Matters – And So Do Fundraisers The next time you feel awkward about fundraising, or the next time someone gives you a cynical comment about fundraising for your organization, remember – fundraising is the lifeblood of your group. Without fundraising, you wouldn’t be able to carry out your mission. Without fundraisers, there would be no fundraising. Fundraising matters – and if you’re raising money for an organization that does good work… so do you.

What is a Fundraising Ask?

Not Every Ask is for Money The first thing to remember about making an ask is that not every fundraising ask is for money. As you peruse your list of fundraising contacts, you will likely see some people on that list who are ready to be asked for a donation. You will also likely see lots of people who know nothing about your group, and who will need to be educated about the organization you are fundraising for before they give. For these people, the best ask might be an ask to come to an informational event, or to look over a newsletter, or to come to a seminar. These “non-ask asks” are still asks… instead of asking someone for money, you are asking them for time and effort. Asking someone to come to an event or listen to a speaker is often a really great way to get a prospect’s feet wet with your non-profit, and can lead to bigger and more numerous financial rewards down the road. What Makes a Good Ask? A good ask is an actual question inviting a person or company to take a specific concrete step on behalf of your organization. Let’s break that down: First, an ask has to be an actual question… meaning that it starts with words like, “Will you…” or “Would you be willing…” When you talk to someone but don’t actually ask a yes or no question, it’s not really an ask. Saying things like, “I hope at some point you will consider…” or “I’d really like it if you would…” is not an effective way to make a fundraising ask. Second, an ask invites a person to take a concrete step. That step need not be writing a check, it could be to come to an event, pass out fliers, whatever. It just needs to be a concrete step. Asking someone to, “think about your role with our charity” is not a concrete ask. Lastly, an ask should be specific… that means, you should ask for a specific amount, or attendance at a specific event, or volunteer hours for a specific project, etc. Asking, “Would you contribute $500 to our school?” Is at least twenty times more effective than asking your prospect, “Would you make a contribution to our school?” Likewise, asking your friend, “Will you come to an event sometime?” is not nearly as effective as asking, “Will you come to the Chili Cook-Off on January 21st?” When people are asked for a specific amount, or to take a specific action, they are much more likely to give, and are much more likely to give at a higher level.

The 10 Steps to a Successful Fundraising Event

Fundraising events are a popular form of fundraising. While they can be great money makers for an organization, they can also be time consuming and expensive. The success of events depends on careful planning. (Yes, you should have a written event plan for every event you hold!) To help you ensure that your fundraising event is a winner, here are ten major components that you must incorporate into your event plan: 1. Purpose: Before doing anything else, you must decide what the purpose of your event is. Is this truly a fundraising event? Or does it have other goals? Perhaps your organization may be hoping to raise money at the event, but the main function of the event is to gain publicity, or reach out to a new network. Many charitable events have more than one goal. Figuring out the details for your event will depend on knowing what goals you are trying to achieve. 2. Fundraising Goal: In conjunction with the event host committee, organization staff, and key fundraisers, you must decide what amount of money you plan to raise at the event. If this is truly a fundraising event, then everything in the event plan will be geared to raising this specific amount of money. The amount you choose should be what you hope to net, that is, the amount you plan to raise after expenses are deducted. 3. Budget: Every fundraising event plan should contain a complete budget listing all of the expenses that will be required to hold the event. Your budget should include staff, invitations, space rental, catering, entertainment, transportation, security, utilities, and anything else that will be required to make the event a success. Your budget should take into account your fundraising goal, ensuring that you raise that amount above and beyond all expenses. Be sure to leave a little extra room in your budget for unforeseen costs. 4. Leadership: As part of your fundraising efforts, your event will most likely have a “host committee” and one or more “host committee chairpersons.” These people are responsible for contributing substantial amounts to the event and encouraging others to do the same. The host committee is generally composed of wealthy donors, business leaders, or local celebrities. The host committee and chairpersons are not responsible for actually running the event, but are integral to ensuring that you reach your fundraising goals. 5. Target Audience: Who is the target audience for your event? Is this a general fundraiser where everyone will be invited? Or is this event geared towards a specific group like business people, parents, or young professionals? In short, you must decide whom you will invite to your event. 6. Set – Up: Your event staff should plan the event set-up well in advance. The set-up includes all of the particulars of the actual event: Where will it be? Will food be served? Will there be entertainment? What kind of dress will be required? What is the itinerary for the event? 7. Marketing: Just like a new product, your event needs to be aggressively marketed to your target audience. You need to convince your supporters that your organization and event are worthy of their time and money. Draw up an entire marketing plan for the event. Possible methods of “getting the word out” include: using your non-profit’s fundraising network, mailed invitations, direct mail, phone banks, word of mouth and the event host committee. 8. Sales: Once you market your event, there must be a procedure in place for making the actual ticket sales, or accepting donations for the event. You must decide whether there will be different contribution levels for the event (such as a flat ticket charge, an extra charge to be invited to a V.I.P. reception in addition to the event, etc.). You must decide who will sell the tickets, how they will be shipped or delivered, and who will be responsible for organizing the incoming information. 9. Practice: While you probably won’t need a full run-through of your event, it is essential that everyone who is working the event know, ahead of time, what their responsibilities are, where they should be during the event, and how the event is going to “flow.” If you are having a large or unusual event, the key event staff may want to have a practice run to make sure that your operation is running smoothly. 10. Thank – You: One of the most oft heard complaints from contributors to charitable fundraising events is, “They never even said ‘thank-you.’” Ditto for your event volunteers. Make sure that the organization takes the time to send thank-you notes to everyone who is involved in your event, including contributors, volunteers, staff and vendors. Keep your donors happy… you’re probably going to be asking them for another donation sometime down the road. Facebooktwittergoogle_plusreddit

Building Fundraising Networks

While most non-profits, schools, and churches utilize some form a fundraising network, few know that they do, and even fewer know how to deliberately build a fundraising network from scratch. Strong and sustainable fundraising networks are one of the biggest keys to becoming a super-successful fundraising organization. What is a fundraising network? A fundraising network is a group of people who have committed to raise money on behalf of an organization or charity. Some common examples are finance committees, development committees, or young professional’s fundraising groups. Many organizations have multiple… or even dozens of… fundraising networks working for them, all of which combine to form one gigantic network that raises a lot of money on behalf of a charity. Why are fundraising networks important? Fundraising networks are important because they allow you to multiply your fundraising efforts. Instead of asking just one person for just one donation, by building a fundraising network you can ask one person to fundraise on your behalf, thus turning one ask into several, or even into hundreds, depending on the skill of your network members. How do I set up a fundraising network or networks? At their most basic, a fundraising network is simply a committee of people who agree to raise money for you. You build your first network by calling your contacts, just like you would if you were calling to ask for money, but instead of asking for a donation, you ask them to join your group / network. Before making calls and forming your committee, there are three key questions you need to answer. First, how much will you ask each person to raise? Second, what type of committee is this? Is this a general finance or development committee, open to everyone who agrees to raise money on our behalf? Or is this a specialized group, such as Seniors Supporting the SPCA, Real Estate Developers for the United Way, or the Young Professionals Committee of the Catholic Charities Campaign? Who should be on my fundraising committees? Remember – the purpose of a fundraising network is to raise money. You’ll want to ask people who you suspect have relatively large contact networks (“big rolodexes”), and who are willing to introduce those contacts and open up those rolodexes to your non-profit organization. As you make your calls and invite your prospects to join, make it clear that this is a fundraising committee, and that each person will be asked to take a leadership role in the non-profit’s fundraising efforts. What should I offer members of my network? While people who agree to serve as part of your fundraising network will generally do so because they either believe strongly in the organization or want to support you personally (or both), it is often a good idea to offer a “benefits package” to your committee members, just to let them know how important their work is. Such benefits can include tickets to events, special lapel pins, regular seminars or meetings with community leaders, a special e-mail newsletter, recognition in your organizations annual report, etc. What can my fundraising networks do for me? The answer is… a lot! The members of your fundraising networks can raise money, hold events (both ask and non-ask “get to know us” events), send out fundraising letters, sell tickets to your organization’s large events, find new members for your network, generate publicity and buzz, and lots more. In short, building good, relationship-driven fundraising networks is a key task for any charitable organization, school, church, or other group that is looking to raise money to support its activities.

How to Write a Successful Fundraising Plan

Many non-profits, particularly smaller charities and start-ups, operate without a fundraising plan. When someone has an idea for an event or a campaign, these organizations simply put together a host committee or volunteer group and go for it. They may send out a letter here and there, and do some donor meetings, and when the bank account seems to be low, they often go into “panic mode” and race around trying to find cash to keep the doors open. This is definitely not the best way to run your development program. Even if your non-profit is flush with cash, running an un-organized and un-planned fundraising operation is a recipe for stress, headaches, and ultimately… financial ruin. So, how do you avoid this fate? The best way is by having a written fundraising plan. No matter how small your church, school, or charity is, or how far along you are into your operations, your group needs a comprehensive, well-written fundraising plan. A written plan will allow you to focus your efforts, plan out your yearly fundraising calendar, and give you guidance on strategy and tactics when you are in the thick of events, mailings, and calls. In short, your fundraising plan will keep you sane in the insane day-to-day world of the development office. Your Plan: Who and When The first questions you need to answer are: who should write your plan, and when should they write it? I’ll answer the second question first… When should you write your plan? How about now! Seriously – if you are operating without a plan, it is worth your time to sit down for a week and write your plan. Ideally, you’ll write a plan every year, or will write a 2, 3 or 5 year plan and tweak it at the beginning of every year. As for who should write your plan, if you’ve got a development staff (like a development director), they should write the plan, in consultation with your charity’s CEO or Executive Director (E.D.) as well as the board. If you don’t have a development staff, then it is probably best for the E.D. or head person to write the plan, again, in consultation with the non-profit’s board of directors. You can also seek help from a qualified development consultant, many of whom specialize in writing fundraising plans. The Anatomy of a Fundraising Plan O.k., you know you need to write a plan, you know who is going to write it, and that person has consulted with all of the appropriate stakeholders and is ready to write. What needs to be part of the plan? 1. The Goal The best starting point for your plan is with the end point in mind: what is your overall fundraising goal? (Even better: what is your overall fundraising goal for this year, and for each of the next four years?). This number should not be drawn out of thin air. It should be based on the needs of the organization. How much money will your group need to raise in order to carry out the activities that you want to carry out? 2. The Mission / Your Message If the goal answers the question, “How much money do you need?” then the mission answers the question, “Why do you need it?” What is your organization’s mission? What do you plan to do with the money you raise? What is your operating budget, and why is it the amount it is? 3. The Tactics Once you know how much you need to raise and why you need to raise it, you need to figure out how you are going to raise the full amount. What tactics will you use to raise your goal amount this year? Next year? The year after? Go into detail here, and figure out a goal for each of the tactics that adds up to your total goal. (For example, if you need to raise $5,000 you may say that you will raise $3,000 through a major donor group and $2,000 through an event). Some common tactics include: Individual Giving – Asking major donors to make gifts to your organization. Major Donor Groups – May include board giving, a finance or development committee, etc. Events – Both large and small. Direct Mail Telemarketing Online and E-Giving Grants – Foundations, Corporate, Government Corporate Giving Programs United Way Fundraising Minor Donor Groups – Yes, they do exist! Participatory Fundraising – Like walk-a-thons and chili cook-offs Annual Giving and Multi-Year Giving Campaign When it comes to tactics, there are no shortage of ways to raise money, only a limited amount of staff and volunteer resources to implement your ideas. Try to include a good mix of fundraising tactics, and be willing to nix ideas that end up not working, and make up the lost revenue elsewhere. 4. The Timeline Many organizations stumble here – they come up with a solid budget, have a great mission, and draw up a plan that includes a solid group of fundraising tactics, but fail to set timelines, and thus never seem to get things done. Some development pros like plans that have only basic timelines: Hold an event in April, send out a mailing in September, run a board giving campaign in November. I actually prefer far more detailed timelines that list not only big picture goals, but also all of the small goals that go into making that big goal a reality (a management consultant might call this a “critical path.”) For example, instead of just listing that we’re having an event in April, I would also list when decisions on venue and entertainment need to be made, when sponsors will be solicited, when invitations will go out, etc. Which ever type of timeline you include, include one… it will force you to think critically through your fundraising decisions, and provide invaluable guidance on your activities as the year progresses.