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What Would You Call the Annual Fund?

Posted: 2/1/2021

Click here to read on NonProfitPRO

by Richard Perry

Several blogs ago, I wrote about two words that I think are misused. If you haven't read it, I recommend you read it before continuing.

If you don't have the time, I explained why I object to using the word "prospect" when someone talks about a donor. The answer is simple: because a donor is not a prospect. He or she is a donor. It is incorrect to label them as a prospect, and the use of the word "prospect" to describe a donor reduces that donor down to an economic unit.

Then I talked about the word "annual" as in "annual fund." I wrote that, again, the use of this word reduces the donor to an economic unit. These words describe an annual institutional activity whereby we set an expectation that a donor will "do their annual thing" with us. The focus is on an annual transaction, and this focus also reduces the entire donor experience to a transaction. Plus, it actually suppresses giving since a donor is usually asked to give only once while they are giving to other organizations two, three, eight and as much as 15 times.

We have had some interesting and thought-provoking comments from that blog, all of which we welcome and appreciate.

"What phrase do you suggest instead of 'annual giving' or 'annual fund'? I'm asking as a manager of annual giving. We certainly don't limit our asks to just once per year (unless a donor has specifically requested to be solicited in that way), but I have always thought of the annual fund as the fund that provides the most reliable and predictable source of income year after year (annually). Would love to hear what you suggest!"

"When I say prospect, it's in the context of 'major gift prospect' and never externally! If the donor has given a $25 gift, of course they are a donor! But do they have the capacity, affinity and philanthropic tendencies to give more? If so, that's a major gift prospect! I don't think this is incorrect, do you?"

"I agree! Words have power and are so important. It's why we teach little kids to name their emotions to help them understand and deal with what they're feeling. You hit on two of my pet peeves! For annual fund — I encourage the organizations I work with to name their fund. Instead of an annual fund, it's the XYZ (name appropriate to organization) Fund. Then, when described, it's something along the lines of gifts given to the XYZ Fund to support the overall work of our organization. These funds allow us to operate on a daily basis covering everything from keeping the lights on while we work to providing the basics to allow us to serve. Obviously, I'd tailor it a lot more to the organization, but I hope you can get the general idea."

"You are conflating the donor and their gift. They are connected, but they are not the same. When I use the word 'prospect,' I use it to indicate a prospective gift, not a person. So if my portfolio of donors is primarily people who give at the hundred-dollar level, I will identify those donors who might give at a higher level — and those gifts would be prospective gifts. Likewise with an annual fund. That is the description of a sum of money, not of a group of donors. There are donors who of course give annually in response to annual appeals. The term annual fund is an internal accounting for gifts term, not a label for donors."

Excellent input. And I am going to limit my comments to the annual fund because no matter how you slice it, Jeff and I believe you should never call a donor a prospect.

First, a short list of what we have observed over the years that relates to this subject:

  1. We have done analysis of hundreds of donor files of organizations large and small over the years. Those organizations that run their fundraising with an annual fund philosophy quantifiably have donors who give less frequently. We can and have measured this.
  2. On the qualitative side, we hear donors of all types talk about "giving their annual gift," "I gave my annual gift" or "I don't know why they asked me again — I gave my annual gift." The organizations whose donors are saying this have trained those donors to expect a request to make their annual gift.
  3. We have sat in scores of development planning meetings and have been asked to create strategic plans for hundreds of organizations where the internal conversations and the planning itself by the "insiders" is all structured around the expectation that they expect the donor to give an "annual gift." I have never heard anyone say that the use of the words "annual fund" is nothing more than an internal accounting term for the sum of the gifts given in response to the "annual appeal," which itself is a descriptor of an annual event — the annual appeal.
  4. We have talked to scores of development professionals who, once they see the numbers and process the concept of looking at donors as year-round partners versus sources of cash, actually change the way they are doing things. I talked to the president of a major east coast charity who, when presented with these thoughts and analysis, said: "We need to change this, and I am going to make it happen."

This situation is very compelling and real, supported by the numbers and the comments of the donors and development professionals themselves.

The majority of the input we are getting on this subject is that development professionals, once they have considered all the pros and cons, and seen the analysis, and are given a choice to do something about it, agree that they would pick different words to describe their fundraising.

But what would those words be? And what would you call someone who manages the program?

As Jeff and I were processing this, we came to somewhat the same conclusion as one of the comments above. We had five points:

  1. We said that if the organization needed to have a fund, why not have the name of it be cause-driven? Take the cause of your organization — not the name of it, unless it has the cause in it — and attach those words to the fund. Back during the boat people crisis when millions of Vietnamese people fled their country on boats, we came up with the "Save the Refugees Fund." And it was a wildly successful fundraising strategy. For a wildlife conservancy organization, it could be the "Wildlife Fund." Or for a medical facility, it could be the "Good Health Fund." For an animal rescue organization, it could be the "Save the Animals Fund." Make it cause-driven, action-oriented, emotion-laden. Make it a name that is compelling and demands a response.
  2. Secondly, do not use a frequency word, like annual. There is no need to do that. The fund should be an every day, every week, every month, all the time fund.
  3. Use language that tells donors that this is an every day, every week, every month, all the time effort. If you are in a university or educational institution you aren't "doing the education thing" one time a year or during a certain season. It is all year around, and it has many faces.
  4. Package your program into multiple donor offers — and by multiple I mean 10 to 15 core offers, maybe more. We have seen the number of offer categories reach 20 and 30. For very complex organizations there could be more. You want to break down what you do for donors into all the categories of the program that matches your donor's interests and passions.
  5. Give your donors frequent opportunities to express their concerns through their giving by asking and asking again. Focus on helping the donor fulfill their interests and passions through their giving versus worrying about the frequency of asking.

This is how we would approach renaming the annual fund. And then, If you are the manager of that fund redo your title to match the name. You are the manager of [name of the fund].

This just makes way more sense to Jeff and me than the words "annual fund." But tell us what you think. We would like to hear from you.

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