The Annual Fund: The Cornerstone of All Fundraising
Background on the annual fund
What is an annual fund?
The difference between an annual fund and a membership campaign
Why the annual fund is “the cornerstone” of all fundraising
How to get started
Tips for creating effective solicitation letters
The basis for all fundraising for libraries and every institution should be raising funds from individuals. Nationally, contributions from individuals constitute about 75% of all philanthropic giving in the United States. Only 25% of philanthropic giving comes from foundations and corporations. (source: Giving USA, 2010)
Therefore, it makes sense for libraries to focus much of their fundraising efforts on individuals within their community who are capable of making charitable contributions to the library. If a library conducts no other type of fundraising activities, an annual fund that solicits individuals in the community should be the first aspect of a fundraising program that can be implemented easily.
An annual fund is a solicitation of individuals that asks for unrestricted support for the library and its programs. It is carried out through a combination of direct mail pieces (usually solicitation letters and, if available, brochures) and one-on-one individual solicitations between a volunteer for the library and the individual being solicited. The annual fund is typically conducted in October, November or December, when individuals are giving more consideration to year-end contributions. An annual fund solicitation will typically highlight the good works that the library or support organization (Friends or Foundation) has accomplished during the year. It will also specify that all gifts to the annual fund will be unrestricted, that is, eligible to support any of the library’s activities.
Note: If your library has a Friends group or a Foundation, and they conduct an annual membership campaign, ask them to do that in mid-year rather than at year-end to ensure that donors are not receiving library solicitations over too short a time period.
Another note: Your annual fund doesn’t have to be limited to individuals. You can include businesses in your community too. In that case, address your solicitation letter to the individual who owns or manages the business and/or who is known to one of your volunteers.
Many Friends groups and Foundations conduct membership campaigns throughout the year. Membership contributions can be solicited from individuals anytime during the year. Most individuals think of a membership contribution as a fairly small gift; most memberships are in the $10 to $50 range. Most donors who give a membership contribution don’t think very much about that gift constituting a charitable (tax deductible) contribution, but rather view it as a small token that provides an affiliation between the individual and the institution.
An annual fund contribution, however, is made at the end of the year and does feel like a tax deductible contribution to the giver because that is the time of year when people are thinking about doing just that – taking advantage of a last chance to lower their taxes. As a result, people are usually more generous with their annual fund contribution than with their membership contribution; thus, the annual fund has the potential to bring in large amounts of revenue.
The annual fund carries this distinction for three reasons:
1. It keeps donors loyal and invested in your work by keeping them informed every year of what the organization has accomplished. In other words, the annual fund keeps your organization “front and center” and reminds donors of all the good work you do.
2. It allows for flexibility. Because the dollars an annual fund raises are unrestricted, those dollars can to be spent wherever they are most needed.
3. It can become an individual’s stepping stone to a higher level of giving. From the annual fund, individuals can progress to becoming “major” gift donors (however your library defines this) and, finally, to planned giving, leaving a gift to your library in their will or estate plan.
If you’ve never done fundraising for your library and no annual fund is currently in place, you can easily begin your first annual fund with just a little bit of time and effort on the part of one or two library staff members and a few volunteers.
- Begin with a brainstorming session. Gather a group of library insiders like key staff, Trustees and volunteers. Ask each individual present to write down the names of five to ten individuals whom they know and are willing to send a letter to, soliciting an annual fund contribution. Ask one person to gather all the names and remove duplicates. Create a very simple database with those individuals’ names and addresses. Add columns that will indicate whether or not they respond to your solicitation letter and the amount of their gift if one is given.
- Draft a compelling one-page letter. See “Tips for creating effective solicitation letters” below and a sample solicitation letter (PDF) .
- Track your donations in the database you have created. Continue to add names and addresses to your database whenever you can. Building your database throughout the year will give you a strong start for your next annual fund campaign.
- Thank your donors immediately. Timeliness is so important. Send a thank you letter as soon as each gift is received. Whenever possible, make a thank you phone call too. When donors feel appreciated, they will be motivated to give again.
The solicitation letter is your library’s single opportunity to make your case for support, and it’s important that you do it well. Here are seven guidelines for writing effective letters:
1. Develop a letter that is just one-page long. Donors don’t want to wade through three pages. Too many words will cause them to skim your letter and finally to put it down. Don’t let that happen! Take the time to write a short letter that goes straight to the point. Use bullets to list your accomplishments. Make your ask clear and direct. See the sample solicitation letter (PDF) .
2. Whenever possible, personalize your letters. If one of your volunteers knows the individual to whom a solicitation letter will be mailed, have that volunteer write a personal note on the letter. It can be as simple as, “Liz, I know you use the library. I hope you can help us out! (volunteer’s name),” or even, “Thanks, Liz! (volunteer’s name).”
3. Include a response card and self-addressed return envelope. You want to make giving as easy as possible for your donors. Don’t make them search for paper and an envelope! The response card should be simple and clear so that anyone can fill it out in less than a minute. See the sample response card (PDF). Note: You should not put postage on the self-addressed return envelope.
4. Use real stamps for your solicitation letters. Some people won’t open envelopes that are obviously part of a bulk mailing. (These have bulk mail stamps or indicia.) Take time to purchase and apply postage stamps to the envelope that holds your solicitation letter, response card and return envelope.
5. If possible, have volunteers hand-address envelopes. Yes, this is a little work, but research shows that hand-addressed envelopes are more likely to be opened than machine-addressed ones. Hand-addressing adds an element of personalization to your mailing.
6. Personalize your envelope too. People give to people. If the solicitation letter is signed by an individual who is known to the recipient, add the signer’s name as part of your return address on your mailing envelope. This will increase the likelihood that the letter will be opened and read.
7. Take personalization to the next level. Whenever possible, when a volunteer signs a solicitation letter that is being mailed to someone they know, ask if they will make a follow-up phone call or even a personal visit to encourage a gift. This will increase the likelihood that you will receive a larger gift than you would have without the extra personal touch.
An annual fund is one of the easiest ways to incorporate private fundraising into your library’s overall operations. Once an annual fund has been in place for several years, individuals will typically begin giving larger amounts as they recognize that the library is an institution which needs – and deserves – ongoing charitable contributions.