Fundraising

# Fundraising

**October 6, 2022**

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# Plan for today

.box-8.medium.sp-after[Why do people give money away?]

.box-1.medium.sp-after[Where does nonprofit money come from?]

.box-4.medium[How should nonprofits get money from people?]

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layout: false
name: altruism
class: center middle section-title section-title-8 animated fadeIn

# Why do people give money away?

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# Public goods

.box-inv-8.medium[Non-excludable]

.box-8.small.sp-after[Not possible to stop others from using the good or service]

.box-inv-8.medium[Non-rivalrous]

.box-8.small[One person using the good or service doesn't prevent anyone else from using it]

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# How are public goods paid for?

.box-inv-8.less-medium[Taxes]

.box-8.small.sp-after[Forced payments]

.box-inv-8.less-medium[Pooling]

.box-8.small.sp-after[Voluntary taxation]

.box-inv-8.less-medium[Altruism]

.box-8.small[Ask for donations]

???

Pooling examples: a group of people build a clubhouse for a neighborhood; a group of people pay for a fireworks display

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# Altruism

.box-inv-8.medium[Evolutionary concept]

.box-8.sp-after[One sacrifices for another to promote the species]

.box-inv-8.medium[Hard to understand though!]

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# Adam Smith

.pull-left[
<figure>
 <img src="img/07/adam-smith-1.png" alt="Adam Smith on altruism" title="Adam Smith on altruism" width="100%">
</figure>
]

.pull-right[
<figure>
 <img src="img/07/adam-smith-2.png" alt="Adam Smith on altruism" title="Adam Smith on altruism" width="100%">
</figure>
]

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# Types of altruism

.box-8.small.sp-after[Giving without any personal benefit]

.box-8.small.sp-after[Giving with a "warm glow" benefit]

.box-8.small[Giving with the expectation of future gain]

???

- Pure altruism - giving without any personal benefit (not even to get warm fuzzies) - when someone dives in front of a car to save someone - it's an instinctual reaction - no time to think about it - once you think, you start thinking about reasons
- Impure altruism - giving with a warm glow benefit
- Enlightened self-interest - giving with the expectation for future gain - making contributions to a church to secure spiritual blessings, for instance

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# Altruism and free-riding

.box-inv-8.sp-after.small[Public goods always create a potential for people to become free riders]

.box-8.small[There are few pure altruists; most are impure altruists]

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.pull-left[
<img src="07-slides_files/figure-html/fundraising-1-1.png" width="468" style="display: block; margin: auto;" />
]

.pull-right[
<img src="07-slides_files/figure-html/fundraising-2-1.png" width="468" style="display: block; margin: auto;" />
]

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# Make contributions feel important

.box-8.smaller[People start donating because they feel they can be useful]

.box-8.smaller[Get a seed donation for a campaign to signal that it's legitimate]
]

.pull-right.sp-after[
.box-inv-8[Matching]

.box-8.smaller[We're strongly influenced by what we think others do]

.box-8.smaller[Telling people their donation will be matched signals that other people approve of the cause]
]

???

Like Nancy and charity:water - nobody donated until Marie made the first big move - people hold their position until they think they can improve it - people jump on the bandwagon because they think they can be useful

Fundraising - before you start a campaign, get a seed donation first to signal that it's a real thing, upset the Nash equilibrium, get more people on board.

We're strongly influenced by matches - magnitude doesn't matter, just the presence of the match (NPR telling people to hurry so they don't lose a match - people step in)

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layout: false
name: nonprofit-revenue
class: center middle section-title section-title-1 animated fadeIn

# Where does nonprofit money come from?

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.medium.center[

Which of these is the largest source of revenue for nonprofits?

- Private contributions and donations
- Earned income
- Government grants

]

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.medium.center[

Which of these is the largest source of revenue for nonprofits?

- Private contributions and donations
- .color-6[**Earned income**]
- Government grants

]

.box-1.small[72% from earned income!]

???

Fees from government sources (primarily Medicare and Medicaid) alone account for 24.5% of nonprofit revenue.

Private giving only accounts for 13% of nonprofit revenue.

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# Revenue sources

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# Private fundraising

.box-inv-6.small[Highly volatile; depends on individuals]
]

.box-inv-6.small[Strong; large donors can drive the goal]
]

.box-inv-6.small[Push for formalization: donors might require that the nonprofit evolves]
]

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# Government sources

.box-inv-6.small[More stable, but can switch because of politics]
]

.box-inv-6.small[Only really happens at the beginning]
]

.box-inv-6.small[Tons of bureaucracy involved]
]

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# Commercial activities

.box-inv-6.small[Generally less volatile; markets more stable]
]

.box-inv-6.small[Not much]
]

.box-inv-6.small[Requires more business-like methods]
]

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.center[
<table>
 <tr>
 <th></th>
 <th class="color-6">Volatility</th>
 <th class="color-6">Goal displacement</th>
 <th class="color-6">Structure effects</th>
 </tr>
 <tr>
 <td class="color-1">Private fundraising</td>
 <td>High</td>
 <td>Strong</td>
 <td>Formalization</td>
 </tr>
 <tr>
 <td class="color-1">Government sources</td>
 <td>Low then high</td>
 <td>Initial</td>
 <td>Bureaucratization</td>
 </tr>
 <tr>
 <td class="color-1">Commercial activities</td>
 <td>Moderate to low</td>
 <td>Weak</td>
 <td>Business-ization</td>
 </tr>
</table>
]

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# Competition and nonprofit revenue

.box-inv-1.less-medium.sp-after[How do you convince someone to give to your nonprofit over another nonprofit?]

.box-inv-1.less-medium[Should you convince someone to give to your nonprofit over another nonprofit?]

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layout: false
name: best-practices
class: center middle section-title section-title-4 animated fadeIn

# How should nonprofits get money from people?

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.box-4.huge[Ask!]

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# Fundraising considerations

.box-inv-4.medium[How much should you ask for?]

.box-inv-4.medium[Who should you ask?]

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# How much should you ask for?

.box-inv-4.small[Minimum amount to get nonprofit started]
]

.box-inv-4.small[Funds needed for a year of operation]
]

.box-inv-4.small[Amount needed to pay for anything the nonprofit wants to do]
]

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# Who should you ask?

.box-inv-4.medium[Government sources]

.box-inv-4.medium[Commercial activities]

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# Individual giving

.box-inv-6.small[Ready donor base]

.box-inv-6.small[Easily obtainable mailing lists]

.box-inv-6.small[Nonprofit mission makes it easy to appeal to donors]
]

.box-inv-1.small[Donor apathy]

.box-inv-1.small[Easily ignored]

.box-inv-1.small[NOBODY ANSWERS THEIR PHONE]
]

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# Individual giving

.box-inv-4.SMALL[Online giving]

.box-inv-6.smaller[Cheap, ready-made infrastructure .smaller[GoFundMe, Donorbox, etc.]]

.box-inv-6.smaller[Faster response]

.box-inv-6.smaller[Tap into online networks]

.box-inv-6.smaller[Target specific markets and demographics]
]

.box-inv-1.small[List maintenance]

.box-inv-1.small[Spam filters]

.box-inv-1.small[Needs exciting cause to go viral]
]

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# 2014 ALS Ice Bucket Challenge

.center[
<figure>
 <img src="img/07/ice-bucket-challenge.jpg" alt="2014 Ice Bucket Challenge" title="2014 Ice Bucket Challenge" width="70%">
</figure>
]

???

<https://commons.wikimedia.org/wiki/File:Mission_Accomplished_-_ALS_Ice_Bucket_Challenge_(14848289439).jpg>

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# 2014 ALS Ice Bucket Challenge

.center[
<figure>
 <img src="img/07/kim-kardashian-ice-bucket.jpg" alt="2014 Ice Bucket Challenge" title="2014 Ice Bucket Challenge" width="80%">
</figure>
]

???

<https://www.youtube.com/watch?v=zuFytc9YLDs>

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# Individual giving

.box-inv-6.small[Tradition]

.box-inv-6.small[Visibility and involvement]

.box-inv-6.small[Can provide first contact with donor]
]

.box-inv-1.small[Formal, stodgy, out of fashion]

.box-inv-1.small[Not usually cost effective]

.box-inv-1.small[Event has no connection with the cause]
]

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.pull-left.center[
<figure>
 <img src="img/07/melissa-sevy.jpg" alt="Melissa Sevy" title="Melissa Sevy" width="70%">
 <figcaption>Melissa Sevy</figcaption>
</figure>
]

.pull-right.center[
&nbsp;

&nbsp;

<figure>
 <img src="img/07/musana.jpg" alt="Musana International" title="Musana International" width="50%">
</figure>
]

???

- <https://www.how-to-help.com/home/resilience-melissa-sevy/>
- <https://twitter.com/melissa_sevy/status/567681366397947904/photo/1>
- <https://universe.byu.edu/2014/09/17/byu-graduate-empowers-women-in-uganda/>

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# Individual giving

.box-inv-6.small[Have a stake in the organization]

.box-inv-6.small[Expect to be asked for donations]

.box-inv-6.small[Have wealthy connections]
]

.box-inv-1.small[Nonprofit can become dependent on board donations and overuse them]
]

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# Donor relations

.box-4.small[Nonprofits must acknowledge contributions of $250+]

.box-4.small[Donor cannot take a charitable tax deduction without it]

.box-4.small.sp-after[Many nonprofits send this notice with a thank you note]

.box-inv-4.smaller[Many other requirements if you send donors things in exchange for their donation (see IRS Substantiation Rules on pp. 158–159)]

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# Planned giving

.box-inv-6.small[Large gifts]

.box-inv-6.small[Increasingly common with a wealthier, older population]
]

.box-inv-1.small[Legally complicated; policies change often]

.box-inv-1.small[You have to wait for people to die]
]

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# Umbrella fundraising groups

.box-inv-6.small[Stable funding]

.box-inv-6.small[Visibility]

.box-inv-6.small[Community endorsement]
]

.box-inv-1.small[Must meet accountability, program, and fundraising requirements]
]

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# Foundation giving

.box-inv-6.small[Sizable grants]

.box-inv-6.small[Increased credibility]

.box-inv-6.small[Catalyst for other grants]

.box-inv-6.small[Legally required to give away 5% annually]
]

.box-inv-1.small[Applications take a long time]

.box-inv-1.small[Money moves slowly]

.box-inv-1.small[Misalignment of priorities]
]

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# Government grants and contracts

.box-inv-6.small[Sizable amounts]

.box-inv-6.small[Credibility]
]

.box-inv-1.small[Paperwork and bureaucracy]

.box-inv-1.small[Slow]
]

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# Corporate giving

.box-inv-6.small[Easy to find related businesses]

.box-inv-6.small[Easy to involve business leaders on board]

.box-inv-6.small[Can get free in-kind products and services]
]

.box-inv-1.small[Business won't always provide what is really needed]

.box-inv-1.small[Business often do it to market themselves .small[(Reputation laundering)]]
]

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# Best practices