Your Nonprofit’s Annual Fund: Everything You Need to Know

When it comes to fundraising, campaigns for specific programs and projects usually take the spotlight. For example, an organization focused on literacy might raise money to add to its collection of books. Or, a nonprofit dedicated to senior care might launch a capital campaign to renovate its facility.

But while these flashier, one-time campaigns often require most of a nonprofit’s attention, there’s an ongoing fundraising campaign that often operates quietly in the background while still playing a critical role: the annual fundraising campaign.

In this guide, you’ll learn all about nonprofit annual funds and the campaigns that make it possible to reach annual fund goals. Here’s everything we’ll cover:

• Annual Fundraising Essentials
• The Annual Campaign Timeline
• 7 Annual Fund Best Practices

If you’re ready to make progress toward your nonprofit’s annual fundraising goal, this is the post for you. Let’s begin!

Annual Fundraising Essentials

Your nonprofit’s annual fundraising campaign is its biggest campaign of the year. As you plan your fundraising calendar, be sure to brush up on these annual fundraising essentials so your team can reach (or better yet, exceed) its goals this year.

What is an annual fund?

The term “annual fund” refers to the money set aside to cover essential operational costs of your organization and supplement other ongoing campaigns.

Gifts to your annual campaign are considered “unrestricted funds,” meaning that your nonprofit can apply these gifts to any expenses you have. That makes finding annual fund supporters high on the priority list for nonprofits of all shapes and sizes.

What is the difference between an annual fund and annual giving?

As you learn more about annual funds, you may also come across the term “annual giving.”

While “annual fund” refers to the specific fund or campaign that is used to cover operational expenses, “annual giving” is a broader term that covers all of the general fundraising activities your organization conducts throughout the year (including campaigning for your annual fund).

It’s also important to note that annual giving focuses on givers of all sizes, not just those who have the capacity to give major gifts.

How do you grow your nonprofit’s annual fund?

Because givers often consider your annual fundraising campaign to be less “urgent” than your other, more targeted campaigns, securing the supporters you need to grow your annual fund can be a real challenge.

Luckily, when your nonprofit applies an expert-level understanding of annual fundraising with a well-thought-out annual fund campaign plan, there’s nothing stopping your team from securing the gifts you need and building lasting relationships with supporters. (More on this below!)

Why are annual fund campaigns important?

Although reaching your annual fund’s goal is an essential factor in covering the operational expenses of your cause, many nonprofits fail to give annual fundraising the same attention they do for other high-impact campaigns, like capital campaigns.

The fact of the matter is, though, that annual fundraising makes carrying out your nonprofit’s mission possible. Better yet, your annual fund campaign calendar gives your team ample opportunity to strengthen relationships with supporters while building fundraising capacity. Not only does that set your annual fundraising campaign up for success, but it also lays the groundwork for future fundraising achievements.

Some other benefits of robust annual fundraising include:

• Building recognition of your cause and organization
• Learning more about what inspires your givers
• Testing out new solicitation and stewardship strategies
• Boosting your giving retention rate
• Introducing new supporters to your cause

Finally, what’s the best reason to give more attention to your annual fundraising efforts? Reaching your annual fundraising goals is a sure-fire way to prove to givers that your organization is worthy of their support. Without that level of basic trust, soliciting gifts for other campaigns will be an uphill battle.

How does annual giving break down?

Just as your nonprofit would plan a gift range chart for any other high-impact fundraising campaign, your team should outline what gifts you’ll need for your annual fund and who will provide them so you can plan your annual fund appeals.

Here’s how your annual fundraising goal should break down:

• Major Giving. When planning your annual fund’s gift ranges, 60% or more of your goal should be provided by major gifts. Depending on the scale of your organization, what qualifies as a major gift will differ. About 10% of the total number of gifts you’ll acquire will fall into this key giving category.
• Mid-Range Giving. For your nonprofit’s middle-of-the-road supporters, you’ll need to solicit between 15-25% of your annual fund’s goal. These mid-range gifts should account for approximately 20% of the total number of gifts to your annual fund. Consider this your fall-back tier: for those who turn down a major gift, counter with a mid-range gift.
• Lower-Level Gifts Finally, the lowest level of giving to your annual fund will account for the largest proportion of gifts on your gift range chart. While only 15-25% of your annual fund’s goal will be supplied by low-level gifts, nearly 70% of all gifts made to your annual campaign will fall into this tier.

How do you manage an annual fund?

Managing your organization’s annual fund effectively will generally require your nonprofit to do two things:

• Set clear goals ahead of time. In order to use your annual fund to pay for what it’s intended to pay for, you’ll need to set clear goals ahead of time and make an actionable plan for using your money wisely. Identify your regular operating expenses, make a schedule for paying your bills, and stick to it. Also identify other campaigns or initiatives that your annual campaign can supplement, prioritizing the most important projects first.
• Be transparent with your community. Sharing about how your nonprofit is using the money in its annual fund will not only help to build trust between you and your supporters but will also hold you accountable for using your annual fund wisely.

You should also carefully document where each dollar in your annual fund is going. This will help you spend your annual fund on things that truly matter and help you plan your annual giving activities for the future.

The Annual Campaign Timeline

One of the biggest factors at play when it comes to reaching your annual fund’s goals is successfully carrying out the timeline of your campaign. When preparing for your annual fundraising campaign, keep in mind these key benchmarks to be aware of.

The Planning Phase

During this phase, your team will convene to plan out your annual fundraising campaign and lay the necessary groundwork to carry it out over the next year. This typically will begin several months before your annual fund campaign actually launches.

Here’s how the first phase of your annual fundraising campaign should occur:

• Assemble your team. Everyone at your organization will have a hand in annual fundraising success. Seek out experienced team members to lead key parts of your annual fundraising campaign, such as seeking out major gifts. Also, plan to regularly communicate with your team throughout the process and celebrate achievements as they come.
• Partner with a fundraising consultant. Fundraising consultants can provide your team with wisdom and an outsider’s eye that will prove crucial to effectively planning your annual fund campaign. Your consultant should be among the campaign planning leadership to ensure their voice is heard.
• Develop a preliminary annual fundraising campaign plan with your team. Set your initial fundraising goal and compile a list of prospects for giving. Create assets like a case for support, gift range chart, and solicitation plan. Be sure to involve staff members, volunteers, important givers, your board, and other key stakeholders.
• Conduct a fundraising feasibility study with your consultant. Your consultant will interview stakeholders in your organization and ask them how they feel about your preliminary campaign plan. After the study, you’ll incorporate their feedback as you finalize your nonprofit’s annual fundraising plan.
• Create a marketing plan. In order to encourage giving to your annual fund, you’ll need to be strategic about marketing your campaign. Take the time to analyze your different target audiences (major givers, mid-range givers, smaller givers, volunteers, etc.) and their needs. Next, develop core messages about your campaign and how your annual fund relates to your larger mission. Then, you’ll begin developing marketing materials to be used on the various channels your audience uses.

The Implementation Phase

Once your annual fundraising plan is finalized, your nonprofit will begin implementing it. The second phase of your annual fundraising campaign will be the longest and account for the bulk of your solicitation, engagement, and fundraising efforts.

Here’s how this second phase should shake out:

• Promote your campaign. Working off of the marketing plan you developed in the planning period, begin spreading the word about your annual fundraising campaign. Monitor the level of engagement and response you’re seeing on each of your marketing channels, and adjust your strategy as you see fit to ensure as many supporters as possible are aware of the giving opportunity.
• Cultivate and steward your supporters. During the planning phase, your team should have developed a stewardship plan and calendar to follow. Whether you send fundraising letters, make personal calls, or meet face-to-face with key givers, successfully implementing your stewardship strategy requires careful attention and a high level of personalization.
• Solicit annual fund gifts. Once you’ve strengthened relationships with new and returning givers, your nonprofit may begin making official solicitations. Your gift range chart will be your guide when extending annual fund asks. Our tip? Since annual fund campaigns have lengthy calendars, don’t be afraid to ask supporters for a second gift.

The Closing Out Phase

During the last few months of your annual fundraising campaign, you’ll need to be aware of some necessary final steps. The following guidelines will help your team ensure that your goal is met and that the givers you’ve connected with will come back for your next campaign.

Your nonprofit should end its annual fundraising campaign by following these steps:

• Follow up with givers. After your nonprofit has received a gift, immediately follow up with a thank-you call, email, or face-to-face meeting. If your members are a major source of support, make sure your membership software allows you to directly message them. Especially with annual fundraising campaigns, it’s essential to supporters that their gifts are meaningful and necessary to achieve your mission.
• Promote matching gifts. Did you know that as much as $4-7 billion in nonprofit gifts is left on the table every year by individuals who are unaware of how to secure an employer-matched gift? Promote corporate matching gifts to your supporters throughout your campaign to maximize annual fund gifts.
• Run a year-end fundraising initiative. The last months of the calendar year are some of the most successful for fundraising. Between Thanksgiving and New Year’s Eve a large portion of your supporters will make charitable gifts, so be sure to steer them toward your annual fundraising campaign for a last-minute fundraising boost.
• Send final appreciation letters. Even if you’ve already thanked your supporters for their gifts, near the finish line of your annual fund campaign your team needs to send out a final appreciation letter. This serves the dual purpose of showing thanks to givers as well as reminding them of your ongoing campaign.

7 Annual Fund Best Practices

Now that we’ve reviewed the ins and outs of planning and implementing your annual fundraising campaign, it’s time to take a look at some of our top strategies for making your annual fund campaign a big success.

1. Handle the fundraising consultant hiring process with care.

The perspective and assistance of an experienced fundraising consultant will be crucial to annual fundraising success. But in order to partner with a consultant that will serve as a true partner to your organization, you need to handle the hiring process with care. Follow these steps:

• Identify your goals and the services you need. Taking into account your budget and your past annual fundraising success, determine what you want to get out of working with a consultant. You should also secure buy-in on consulting from your board members.
• Use your network. Reach out to colleagues in the nonprofit space to get recommendations for consultants to work with. You can also use tools like LinkedIn to discover mutual connections with consulting firms you’re interested in.
• Meet with your top candidates. Now that you likely have a list of top picks, meet with each consultant and get to know them. Pay attention to their communication style and consider how well they would fit into your organization’s working culture.
• Request proposals and check references. Next, request a proposal from the consultants you’re most interested in working with, giving them a few weeks to complete the proposal. Assess the proposals once you’ve received them. Remember to check your consultant’s references.
• Sign a contract. Once you’ve identified the consultant you want to work with, sign a contract and get to work! Make sure the contract lays out the time frame of the engagement, how much the consultant will be paid and at what rate, the responsibilities the consultant will take on, and the goals of the engagement and how they will be measured.

At Averill Fundraising Solutions, we understand the importance of working with a consultant who is invested in your organization’s annual fund success and helps you make real progress toward your goals. We also have years of experience and successes that prove the strength of our services. Interested in working with us?

2. Set an achievable annual fund goal.

With the guidance of your fundraising consultant, choose an annual fund goal based on what your organization can achieve, not what you’d like to achieve. This way, you’ll mitigate the risk of falling short of your fundraising goal and blemishing public perception of your nonprofit.

However, you don’t want your annual fund to remain stagnant each year. When you plan a new annual fundraising campaign, make sure you determine whether or not you have the resources to grow your goal from last year. In the long run, your annual fund should grow along with your nonprofit.

3. Focus on building lasting relationships.

More than any other fundraising campaign, your annual fundraising efforts are the perfect time to do all your team can to forge lasting relationships with supporters. Since annual fund campaigns put your mission first, you know these individuals are especially inspired by your cause.

Your team can ensure lasting support by promoting a membership program, adding a recurring gift opt-in field to your online fundraising forms, or upgrading returning supporters to the next giving level. Top membership management systems should offer plenty of customizable options like these.

4. Embrace a flexible fundraising plan.

When an organization hits fundraising roadblocks, there’s often an impulse to double down on your fundraising strategy. While snags in your fundraising plan are bound to happen, one of the keys to annual fundraising success is to always remain open to updating your fundraising plan.

As difficulties arise, confer with your fundraising consultant to determine how to change your approach. For example, if your team has trouble securing gifts at a certain level, you may need to revisit your prospect lists and do additional stewardship work.

Adapting to challenging situations has the added benefit of increasing your supporters’ belief in the trustworthiness of your organization. They’ll also appreciate your willingness to work for and with them to achieve your goals.

5. Strive to understand your supporters.

While every nonprofit needs a well-planned and actionable annual fund campaign plan, not every nonprofit needs the same plan! Your cause, location, community size, outreach capabilities, and volunteer base are all variables that can impact how you plan the most effective annual campaign possible.

Consider, for example, the way a healthcare organization would plan its annual campaign. This kind of organization would know that its primary support base will be previous patients and patient families. Therefore, the campaign plan could be tailored to maximize the impact that these patients and families can have in helping the organization achieve its campaign goals.

6. Invest in effective online giving software.

Because your annual fundraising campaign will take place over the course of a calendar year, you’ll need to have tools in place to process gifts no matter where or when your supporters choose to make their gifts. This means investing in an online giving platform is an absolute must.

Online giving software refers to the suite of digital tools you’ll leverage to collect gifts through traditional online fundraising forms, mobile giving forms, or even peer-to-peer fundraising pages. Use these tools to make it as convenient as possible for your annual fund supporters to give.

7. Leverage the year-end giving season.

As mentioned above, many of your supporters will be especially inspired to give around the year-end season. This is due in part to securing tax benefits before the end of the year and also due to many generosity-focused holidays celebrated in the fall and winter.

Use the year-end giving season to your advantage! Plan special themed initiatives to go along with the holiday season, or tap into the power of GivingTuesday. Whatever your year-end plans look like, make sure to emphasize the urgent nature of giving to your campaign.

One last tip: Start planning your year-end activities well before the season kicks off. This means setting aside time to iron out your strategy in late spring or early summer.

While it’s easy to get caught up in your other campaigns and initiatives, your annual fund is one of your nonprofit’s most important focus areas. It’s what keeps you in business!

Use this guide to strengthen your current annual fundraising strategy or to get a jump on planning for next year. And remember, working with a consultant will be key to success!

Want to keep learning about nonprofit fundraising? Check out these resources:

• Nonprofit Strategic Plan: A Rundown & How to Create Your Own. Your nonprofit strategic plan helps you determine your nonprofit’s future. Learn how to craft your own plan in this guide.
• Your Capital Campaign Case Statement: How to Write It. Gearing up for a capital campaign? Your campaign case statement needs to be as strong as possible. Learn how to write one.
• 7 Steps to Encourage Church Donors During Your Annual Appeal. Is your Catholic diocese or parish preparing for the Lenten giving season? Discover how you can encourage parishioners to give.