Organizations have three financial needs: the money they need to operate every year, not surprisingly called annual needs; the money they need to improve their building or upgrade their capacity to do their work, called capital needs; and a permanent income stream to ensure financial stability and assist long-term planning, the source of which is an endowment or a reserve fund or sometimes both.
Most organizations spend most of their time raising money for the program needs of the current year. This kind of fundraising is often referred to as the “annual fund” or the “annual drive” or, to cover all tracks, the “annual fund drive.” The annual fund uses several strategies, such as online fundraising, direct mail, special events, phoning, and personal visits. The purpose of the annual fund is to acquire new donors and to encourage current donors to give again and, if possible, to give bigger gifts.
Because the overall purpose of fundraising is to build a base of donors who give you money every year, it is helpful to analyze how a person becomes a donor to an organization and how, ideally, that person increases his or her loyalty to the group and expresses that increased loyalty with a steady increase in giving.
In moving from having never given to a particular group to giving regularly year after year and sometimes several times a year, a person goes through three phases. The first phase starts when a person is ...