As a fundraiser, your success depends largely on the support you get within your organization. Yet the people who give that support — board members, chief executives, program staff members, and others — are often strangers to the world of fundraising.
This glossary of key fundraising terms and concepts is intended to help you educate the people who hold the purse strings in your organization, or whose collaboration you need to promote your charity’s work to donors.
Annual fund: This is the money raised each year for a charity’s operations, programs, and other expenses.
Campaigns: Multiyear fundraising drives help organizations raise money for buildings or other specific projects, as in a capital campaign, or for endowment. A comprehensive campaign, which can raise money for an array of projects or for endowment, counts every dollar raised and pledged during the period of the fundraising drive.
Campaigns usually consist of a quiet phase, when major supporters are asked to contribute toward the goal to help build momentum, and a public phase, when the broader community is asked to contribute. Most organizations have already reached a high level of their fundraising goals by the time a public phase is launched.
Bundling: Sometimes known as “bunching,” this is a practice some donors have adopted since the passage of the new federal tax rules in December 2017. In bundling, donors make a larger-than-usual donation in one year and none in the next year or two, to maximize tax benefits for their charitable giving.
Crowdfunding: Individuals and organizations raise donations, usually for a specific project, through websites like Kickstarter, GoFundMe, Razoo, Indiegogo, Facebook, and other platforms. These online minicampaigns are usually time-limited and depend on many small gifts to reach their goals. Crowdfunding is especially popular with younger donors.
Donor-advised funds: These accounts are becoming very popular with donors, and a very important source of support for charities. The funds are started by donors usually through commercial investment companies, such as Fidelity, Schwab, or Vanguard, or at community foundations. In a donor-advised fund, donors put money into their accounts, receive tax benefits, and then can direct money to a charity whenever they want. Donors are not required to donate any minimum amount per year.
Major gifts: These are the largest gifts a charity receives. The amount varies depending on the organization’s size and its donors. For some nonprofits, a major gift might be defined as a donation of $500,000 and up; for others, $5,000 and up. Major donors, while small in number, usually contribute the majority of revenue raised from individuals for a charity.
Midlevel gifts: The middle range for a charity’s donations depends on the organization’s size and donor base. Midlevel donors are sometimes neglected in comparison with major donors, but many are likely to give more generously if given attention. Many major donors to a charity often come from its pool of midlevel donors.
Peer-to-peer fundraising: Also known as social fundraising, peer-to-peer fundraising means supporters of a charity raise money from family, friends, and coworkers on the organization’s behalf. An example would be someone who gets friends to pledge support as “sponsors” for that person’s participation in a walkathon or other charity event.
Planned gifts: These are pledges to give in the future, usually after the donor’s death. The simplest kind of planned gift is a bequest or estate gift, which occurs when someone leaves money to a charity in his or her will. More complex planned gifts include charitable remainder trusts (in which income from a large donation invested as a trust is distributed to a beneficiary during his or her lifetime; when the beneficiary dies, the trust’s remaining money is given to the charity). As baby boomers age, planned-gift fundraising is becoming a greater priority for many organizations.
Recurring gifts: These are gifts made in the same amount on a regular schedule (usually monthly). Recurring gifts are desirable because donors who make them usually give more per year than supporters who give sporadically; the approach also provides charities with more predictable revenue.
Stewardship: Stewardship is essentially thanking donors, and maintaining relationships with them. Increasingly, stewardship involves communicating with donors regularly about the impact of their gifts. Some charities hire stewardship specialists, acknowledging that it’s cheaper and easier to keep a donor than to cultivate new ones.
