Eric Nee: In this first part of a two-part introductory course on fundraising planning from Craigslist Foundation, Scott Ullman, of the Foundation Center, explains how nonprofits can and must develop long-term plans to build multiple revenue streams and win loyalty from donors in the conversations networks social innovation channel.

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Alana Conner. : Hi, this is Alana Conner.

Eric: And I'm Eric Nee. We are your hosts on social innovation conversations. Welcome to the free podcast series of Craigslist Foundation's Nonprofit Boot Camps, which are designed to help people help people. To learn more about Craigslist Foundation, or the Nonprofit Boot Camp conferences, visit www.craigslistfoundation.org.

This series is funded by the community technology foundation of California, which helps underserved communities secure social justice, access and equality through the application of information and communications technologies.

Announcement: The conversations network is a 501(c)(3) nonprofit organization, and if you'd like us to produce new and even more exciting programs in the future, we need your help. For a tax-deductible donation of as little as $5 per month you can support this channel and the rest of the conversations network. So please visit conversationsnetwork.org to become a member and help us continue to bring our programs to the world for free.

Eric: And now here's our presentation from the Craigslist foundation.

Scott Ullman: How many of you have been to the Foundation Center before? More than half.

How many have taken previous classes with me? [pause] Only one person, so I can do the same jokes. That's a comfort to me.

The Foundation Center, for those of you who are new to it, is a nonprofit. It's considered the premier nonprofit in the United States that studies and promotes, in the nonprofit sector, knowledge about philanthropy.

We are here to help you as grant seekers succeed. To that end, we offer between 18 and 25 free programs, most of which are in San Francisco, some we bring to the east bay, south bay, and north bay each month, but most are in San Francisco. We have a database with over 86,000 funders giving away $35 billion away a year. It is updated on a weekly basis. To use it at home it will cost you around $180 a month. The cost at the foundation center is free, free, free, free.

We also have five libraries around the country, 290 cooperating collections - what you need to know about a cooperating collection, they are open at least 25 hours a week, and all the resources we have are free. There are two in the east bay, one at the CBO center, which is in Frank Gallo plaza in Oakland, right across from city hall, just directly north of city hall, and the Richmond public library. If you are from Memphis, Miami, or something else that starts with an 'M', you will find a library near you where you can get free access to our databases.

What else to tell you about the foundation center? I said the free part, right? OK, great. Let's start the class.

Introduction to fundraising planning is a class that's intended for people who are new to the planning process. So the first question I ask, how many of you have put together at least a one year fundraising plan in the past?

OK, for those who raised your hands, has anyone put together a three year or longer plan? You get to co-lead the class up here, come on up. For those who have had the experience of doing this, please share with the audience, your different experiences of putting together a fundraising plan.

This is not a workshop on talking about each fundraising strategy. Give me a couple of weeks. I mean, we specialize in grant writing and we do 14 programs around grant writing every month each lasting an hour to an hour and a half.

So please recognize if you want to know about individual donors, or planned giving, or how to do earned income, this isn't the place. What it is, is teaching you a process, a step-by-step process to think how you would put your fundraising plan together. Then you're going to take it back with your volunteers or with your board members, and hopefully the next step is putting together this plan.

I have to ask one other question, because I always make this mistake. How many of you currently have nonprofit organizations? Most of you. Sometimes nobody raises their hand, and then this doesn't quite relate the same way.

What I would like to walk through today is a five step process of how to put together a fundraising plan. What you would have at the end of this process - try to visualize running across the wall here a gigantic piece of butcher paper, and on the butcher paper we have the 12 months.

At the start of it, we have the fundraising strategies, who is going to take leadership in conducting that strategy, when it's going to start, when it's going to be implemented, and what follow up is going to come from that fundraising strategy.

A good fundraising plan should be calenderized out where there's a clarity of when you need to start to put together that special event. It has to have follow-up. A lot of people say to me, "I don't know where we can get donors." A lot of times you do activities where you can acquire donors, but you don't think about using it.

Such as, how many of you have ever put on a raffle? Do you take the names and addresses off the back of that and send a mailing to your new prospect members of donors? Very simple.

In fact, if you looked at this butcher paper across, the way to think about this is that you should not separate your fundraising strategy from your program and service strategies. They need to be integrated.

Every good part of fundraising should have an educational component. Every educational aspect of your work should have a fundraising component. The problem with most organizations is that you want to put people on the outside doing fundraising. You feel like you're lucky to get some volunteers, we give the fundraising to those suckers until they burn out.

Or you hire a staff person to do the development. Does anyone know how long is the average time for a fundraiser development person in the bay area to last with an organization? 18 months. Why? Incredibly unrealistic expectations. The board says, "All right we don't have to do any fundraising", and the volunteers say, "OK we can do service and program, we don't have to do fundraising".

There is no fundraising plan that does not integrate your volunteers, your staff, and your board members. You can't simply do it, raise a major amount of money, if you're going to isolate a few people or even one individual to do fundraising.

So please separate out, when I say a butcher paper across the wall here, and integrating both your education services, and your fundraising. How can you create a fundraising plan if you don't know when your major services or educational programs are going to be done? How can you select priorities if you do one piece in isolation of other pieces?

So that's one of the main lessons for those that are new to this process, I wish you to take away, is the integration of it, the five steps. You start a fundraising plan by the strengths of your organization, your leadership, your volunteers. You do fundraising strategies where they have the skill, the background, the experience, and you go from the strengths of the organization. Many of you who are not doing fundraising strategies or are solely relying on one fundraising strategy, you'll probably walk away and say "We should be doing this, this, and this." The issue is, you need to actually find out what skills are on your board within your volunteer base, what interests and excites them?

If you have board members who are reluctant to give or get donations, we do a class every month. There's also an online version on our website, FoundationCenter.org, which is called "Your Board and Fundraising." It's a class to gently entice your board members to become involved in fundraising. How many of you can say you have 100 percent of your board members involved with fundraising? Raise your hand. OK, it looks like under five or six, with about 125 people in the room. Sad. So that may be another class you wish to take.

We have a lot of classes on the research process, to find out the process to change 86,000 potential funders into the three, the five, the 10, the 20 funders who make the best long-term partnerships, be they family foundations, corporate giving programs, company-sponsored foundations. You move from your strengths, and we're going to use a case study in your packet that's called Youth for Community Action -- YFCA. YFCA is actually based on an East Bay organization which I am part of. You get 50 brownie points if you guess the right organization to me before I depart. The case study was based on my actual experience with this group five years ago.

You now need to take all those strengths and make a case statement. This is a basic piece of literature that you hand out to anyone who wants to learn about your organization? This is something that gives the ideas of what you are about, the strengths. It is different from a grant proposal, and I will make some of the distinctions of what a case statement is. A way to think about a case statement: think about a general brochure you would hand to somebody. It would go with that grant proposal, it would go with that description of a special event as an additional overview piece.

You then need to set realistic fundraising goals. I'm talking about the income side of the budget. There's a number of different ways you can do this and approach this. I'll give you several possibilities. One of the key elements of this workshop, in the long-term, for sustainability and being a viable nonprofit organization: you need to diversify your funding base. You need two, three, five, or more fundraising strategies.

A funder that sees that you're solely funded by government grants, or family foundation grants, or special events -- I don't care what the fundraising strategy is, if you're solely relying on one strategy be it special events or selling product or fee for services, you are very vulnerable in the long run. Most sophisticated funders, both individuals and institutional funders like foundations will deeply worry about your business model. So you need to diversify.

I could spend hours here talking about the strengths and weakness of every fundraising strategy. I don't care what it is, if you're relying on it solely, you're in trouble in the long run. Yes, you can start off and get grants to move you forward. I have seen groups move from one fundraising event to the next, until the people burn to a little crisp organizing fundraising events. So it can last for many years, and a lot of people feel, because it's lasting, it will do so forever. It's very rare.

Now the last part I'm going to talk about is putting together a calendar. One will be the actual budgetary figures, and we're going to break down each fundraising strategy. This is in your packet. I had never done this class with more than 20 people, so this is an interactive class. This should be fascinating with over 100 people in the room. We're going to look both at the plan itself and the calendar as two examples of what you should take out when you do this process with your nonprofit organization. There are handouts on the back table, that's the last time I going to say that. There's also the survey form.

Why you do this: it helps you set priorities. If you are stuck on one fund-raising strategy and it's wearing out, it is very difficult, as you're in the crisis of the day-to-day fundraising, to keep your nonprofit afloat, to visualize when you're going to try other fundraising strategies. A fundraising plan, since it has a calendar, will visualize for you when you can put that effort to start, let's say and earned income stream selling product -- cookbooks, books, pamphlets. Because when you're completely engrossed in your day-to-day survival, it is difficult to see ahead, and that's what planning does.

It's a buy-in for your board. There should be lots of buy-ins for the board around financials, one of which is how are you going to get your board involved with fundraising if they actually do not approve a yearly plan that they haven't looked at and agreed, "This is how we're going to raise our money, this is who's going to take main responsibility in this single fund-raising strategy, this is how long it's going to take." And then you have the budget, which indicates how much you expect to raise from each of those strategies. They have to be part of that.

Your case statement: this is a communicative device that you have for the general public, that you hand out to people. How many of you have case statements? Raise your hand. How many of you have the board approve the case statement? Most of you who raised your hand, good. Here's another buy-in. Again, this is how we're representing ourselves. A board should be part of that process, and agree to this as our case statement.

It assists in diversifying your funding base by thinking of other strategies and when you can do them. If you're in a current fundraising crisis, please raise your hand. Sorry. Fundraising planning will do absolutely nothing for your current crisis. What it will do is help you in the next crisis, because if you have a plan and one fundraising stream is not working the way you planned out, you can then easily move into other fundraising strategies that you've already thought through, and maybe you can put more effort into.

So if only half your grants come in than what you projected was going to happen, and you know that six months into the fundraising plan, you can reorient your priorities to try to still raise the amount, but using a different fundraising strategy. And so if will limit the next crisis. If you're stuck in one, good luck. My prayers go with you.

For those of you who are new to this when you look at private sources of money, we're looking at a pie of about $260 billion. Giving USA since 1955 have been keeping track of private sector monies for nonprofits. They have consistently found, when you talk about sources, 80-85 percent come from individuals. Most people walking into this field think it comes from foundations and more so even from corporations. Please note you have 76 percent of $200 billion given directly by individuals. Another $17 billion through bequests to churches, nonprofits, charities, by individuals who have passed on. It equals over 83 percent of the pie. Corporate America is five percent of the pie. The number is spiked up for last year. Why?

Audience Member: Because of the Gates Foundation:

Scott: No.

Audience Member 2: Tax write-offs.

Scott: Well, that's true every year. Katrina. The tsunami. What we have found historically with corporations, they're great during the crisis. But we've seen these numbers decrease the farther away we get from the crisis. This does not become the new benchmark for them. It tends to decrease.

Another way to look at this is that there are more dead Americans giving to nonprofit than corporate Americans.

[laughter]

The way we ask you to visualize this. If you had multiple streams of income if one gets cut in half, this stool wobbles. No doubt about it. But it'll probably still stand. Try to visualize it with one leg, just one income stream. One, it's hard to visualize how it's standing, period. But even a little nick and it comes crumbling down.

I'll take five or six questions. Speak up loudly. You're being recorded for posterity.

[laughter]

Man 1: How do you deal with the percentages of government funding versus what you just went over with respect to the individual funding.

Scott: Overall, the pie is about $1.1 trillion. The biggest piece comes from earned income. It's now getting close to 40-45 percent. Fee for services, selling a product, running a nonprofit business as a revenue stream. Use of volunteers, in-kind contributions; meaning non-cash contributions).

Woman 2: Are you still on earned income?

Scott: I'm just saying that's in-kind contributions when I'm talking about earned income. Sometimes it's cash, sometimes its product, sometimes its people. Then the next largest is governmental. What we find is that these are resources usually very much open to the largest nonprofits and not so much to the smaller nonprofits. For nonprofits under a $500,000 budget, by far and away the number one source is from individuals. Does anyone have a guess of one of the top three nonprofits in California?

Audience Member: Lost Habitat?

Scott: No.

Audience Member: Red Cross?

Scott: No. Salvation Army, no. You're not thinking right.

Audience Member: University of California?

Scott: University of California! Number three! Where do they get their money? Fee and government grants and individuals. But still the majority comes from fees charged and grant money from the state and feds. Anybody have another guess in the top three?

Kaiser Permanente! Where do they get their money? Fees. What else? Fees in terms of their HMO. What's their second largest source of money? Governmental grants, social security, Medi-Cal, Medicare, things they can tap into from the state, federal, and city governments programs. Now you're getting an idea why it may be the biggest piece of the pie for earned income and for governmental grants but for many smaller nonprofits you're talking about a very difficult road with governmental grants. Next question?

Woman 3: You said earlier that sophisticated funders want to see that you're diversified in your strategy. If you've been around for a long time but you only have one or two strategies does that make any difference?

Scott: It will with some of the funders. Because they just, from their history of giving grants, have seen that it's less viable of a model. However, that doesn't mean if you're doing a proposal to a funder... A proposal is a projection. It's what you're going to do over the next year, next two years, and next three years. As such it's not just talking about where your funding's come from right now. It's also how you visualize it'll be coming in the coming years.

So you may be right now with two funding sources but you say over three years we're going to add membership fees and we're going to add a big special event. Then they can see how you're growing as a nonprofit and diversifying. Yes sir?

Man 4: So of the sources you're talking about, just starting out, which is your recommendation as perhaps the first one you want to attack.

Scott: It depends, the type of agency you have. If you're basically community-based I would look at municipal grants if that's possible, but they're very unstable because it goes very much economically-driven. A lot of programs start up with governmental grants and they keep up and then the rug gets pulled out from under them. They come to the Foundation Center thinking that they can get a one-to-one transfer of governmental grants and foundation grants. Sorry, we're talking about $300 billion given by government versus $35 billion by foundations. There's no way it's going to be a one-to-one transfer. If you're primarily working in communities, though, you probably want to look more strongly with individual donors.

The real answer to this is what are the skills, experience, and background of your leadership? What do they bring to the table? You start from your strengths and see what's there. So if there is grant-writing experience and interest, that's going to play a lot more weight than someone saying "Let's do a special event." Yes. I'll take two more questions, and then I'll continue on. Yes...

Female Questioner 5: Do you think a nonprofit that has an under $250,000 a year annual income could be applying to large foundations like Gates and Soros?

Scott: No. The question was, if you have a budget of $250,000 or less, can you apply to the Gates, the MacArthur's, the Ford's? The answer is no. You need to find grant-makers whose average grants make sense by how much you're trying to do with your program. So if you have a $200,000 program, one: probably no funder will give you 100 percent. Most won't give you 50 percent because it makes you too vulnerable.

So probably $200,000 and you're trying to raise it from grants. You're probably looking at three to five, six grants of $30,000, $40,000, $50,000, $60,000, which means that since it's not going to be a one-to-one, in your research you're probably going to have to find 10 funders to have a reasonable chance to maybe get four grants to equal the $200,000.

Most funders who give large grants also have a starting up range and its way different. Ford Foundations give grants from $5,000 to $250 million. I have groups walking into the Foundation Center all the time and they say who gives $10 million and larger grants? Well, the Ford does but they give the $10 million grants to agencies that they've had a history with, that they've built a trust relationship with, and they probably started off with a $50,000 grant and it was something that's going to occur as the relationship deepens with Ford. That's another reason even if they have the capacity to give, they're not interested.

Also, a lot of the larger foundations don't fund community-based organizations. They fund regional/national and international organizations primarily.

You look at the Gates Foundation. $1.4 billion. After the Buffet money comes into it, they'll be giving away $3 billion. Can you apply as an organization to be on the Gates Foundation?

Audience member: No.

Scott: No, unless you're in King County. They do give to community organizations. In fact, it's very difficult to apply to them period because they don't accept applications. They have over 100 employees that go out and look for groups that meet their initiatives. Although if you know somebody in your circle knows somebody in their circle, that's another way to do it, through networking of trying to get onto the Gates agenda.

All right. One more question. Ma'am.

Woman: What's the best avenue for operational money as opposed to the more touchy-feely money?

Scott: Touchy-feely money. Project money versus general operating. All of you want general operating, right? OK. Out of 86,000 funders we know of about 19,000 that will give general operating fund. The first part of your answer is look at those 19,000 funders that give general operating support. The vast majority give program support and the reason they do is if you have a $100,000 project and a $2 million agency, and their average grant size is $10,000 to $20,000, getting $10,000 on large, multimillion agency, they don't know what impact their grant money had had. Instead they're going to choose a program to see how many people benefited from that specific grant.

In other words, general operating for many funders is not sexy enough. They don't want to fund the new toilets going in. They want to fund a service that so many people in the community got benefit from.

This is the complete 10-step process. It is gotten from this book. "Securing Your Organization Future." Yes, I have one for sale. This is a 700-page book; walks you through and talks about each of the fundraising strategies. It's an excellent book. We base a day-long workshop with Kim Kline doing it most times. Sorry she's not doing it in October. You get me again. But most times she does provide that day-long workshop and I can't go through each of these 10 steps. I wanted to make you aware that it does exist.

Man: How much-?

Scott: $34.95. Another book, "The Fundraising Planner," this is 170 pages full of templates. In your time framework of resources of time equals money, which book are you probably going to look at?

Man: That one.

Scott: So these are the steps. Another book that should be on your sheet that I didn't bring the book is "Fundraising and Marketing in the One-Person Shop." I bet there's a lot of you wearing lots and lots of hats including fundraising, and so I can give you all the strategy with the development team, but it may not be relevant to you.

These are fundraising strategies that are particularly for smaller nonprofits to think about and do.

It's called "Fundraising and Marketing in the One-Person Shop." I think. It should be on the bibliography. Come to our library. We have 23,000 items on fundraising and nonprofit management. If we can't overwhelm you, nobody can.

[laughter]

All right, let's look at some of these key parts. Presenting a strong mission statement. How many can recite your mission statement [pause with laugher from audience] off the top of your head? Raise your hand. All right, maybe 10 percent to 15 percent of this audience.

Funders fund mission-driven organizations. How can you explain yourself if you can't tell them what your mission statement is? It is a critical piece for funders. They actually look at, to see if there are words that match in the foundation's mission statement, goals, objectives, priorities with your mission statement, goals, objectives and priorities and, if they don't find a match, it goes in the reject pile with many funders.

So, please recognize a mission statement, one to two sentences, that give some clear imagery of your organization. It's the basic elevator pitch reduced. It's the first two lines out of your mouth when you talk to a funder or an individual on the other side, "We are so and so and we do this and this." If you don't know your mission statement, learn it. If you don't have one, get one. If you haven't seen it in 57 years, redo it. At the Foundation Center they have revised our mission statement three times in the five and a half years I've been there. It's not a static item.

The other thing they're going to be looking for, "Do you fulfill a unique, distinct niche in the nonprofit community? Are you highly relevant?" Look at it from the funder's perspective be it an individual who gives major gifts or a foundation or a small business. If they have a relationship with three girls' clubs and you're trying to start another girls' club in the region, why should they give you a grant since they don't know you? Only if you can say, "We serve people who are not being served by other nonprofits" and/or you can say, "We're doing it in a different approach and way." What that means is have to know your sister and brother nonprofits' missions, goals, priorities.

The basic question they're asking, "Should you really exist since there are 1.6 million registered nonprofits in the United States?" You'd better be ready to answer that. They're going to do it more subtly. I'm doing it more bluntly. [laughter] But they're going to actually think, if we fund this and we're funding this in fifteen years, is there a need for another organization? And, you have to answer that.

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Eric Nee: We hoped you enjoyed this free podcast from the Nonprofit Boot Camp series. Craigslist Foundation produces events and online tools that provide knowledge, resources and visibility to the next generation of nonprofit leaders. To learn more about Craigslist Foundation or the Nonprofit Boot Camp conferences, visit www.craigslistfoundation.org. This series is funded by the Community Technology Foundation of California, which helps underserved communities secure social justice, access inequality, through the application of information and communications technologies.

Announcer: The Conversations Network is a 501(c)(3) nonprofit organization and if you'd like us to produce new and even more exciting programs in the future, we need your help. For a tax-deductible donation of as little as $5 per month you can support this channel and the rest of the Conversations Network. So please visit conversationsnetwork.org to become a member and help us continue to bring our programs to the world for free.

The post-production audio engineer for this program was Henry Howard. Our website editor was Darusha Wehm. The series producer is Liz Evans.

Eric: My name is Eric Nee and I hope you will join me next time for another program from the Nonprofit Boot Camp series.