Will Donors Stop Making Unrestricted Gifts if They Join a Donor Circle?
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Posted by Molly Schar Oct 15, 2009 |
Cheryl Mendoza of Freshwater Future writes ...
I am the Associate Director of a small non-profit that supports the needs of grassroots environmental organizations throughout the Great Lakes region. Part of that support is a small grants program for community-based groups working on environmental advocacy issues. We are thinking of starting a quasi donor circle as a way to bring in much needed funding. I have been reading your articles on-line for guidance (fantastic by the way). In the model we are considering, we would start a donor circle where if a circle raises $5K for our grants program they can decide one group out of our bi-annual grant applications that they want fund/help. Some of that $5K would go directly to the group, some would provide staff (us) with resources for one-on-one consulting with that group, and a minimal portion would go to our administrative costs.
With what I have detailed above, we have one question I can't seem to find an answer to that is stopping us and I am hoping you might be willing to share some guidance. That question is -- how do we not lose our current funding from major donors, whose giving is considered "unrestricted" and critical to our survival, by possibly having them join a giving circle and then turn their donation into a "restricted" one directed at our grants program?
What a great question, Cheryl! This is a question that often surfaces when organizations are considering capital campaigns, and why organizations that conduct successful capital campaigns do feasibility studies. With a feasibility study, you gauge the capacity and interest in funding whatever is being proposed, but also talk with donors about whether they would be willing to give a campaign gift in addition to their regular giving. In most campaigns, by the way, there is an expectation that annual giving numbers will take a hit because some donors will inevitably choose to make a smaller annual gift or skip it altogether when making a campaign gift.
The benefits of giving circles are many: they can be a wonderful way for an organization to offer donors a way to be more involved in the organization's work (as you're describing with the chance for donors to be a part of the grantmaking process) and a way to attract new donors interested in the somewhat democratic process.
My best advice is this: ask your donors. Before you launch something like this, you want to talk with your donors anyway, even if it's not a full-blown feasibility study. Talk to the major donors you'd expect to participate in this giving circle and ask them if they would be willing to continue their level of regular giving in addition to this designated giving. Remember that old fundraising adage "Ask for money and get advice; ask for advice and get money."
My second best advice is to have a general case for support (for the capacity-building and undesignated funding all organizations want and need) and a case for support for this giving circle program so that donors can easily understand the difference and why it's important to give to both.
Thanks for the question! Keep them coming by emailing me at nonprofitmanagement@suite101.com.