Some Thoughts on Fundraising

Posted by @ 11:00 am on October 25th, 2010

This morning I backed three fantastic literary projects over at Kickstarter. I am a fundraiser by trade, and watching all those fundraising videos kind of raised my ire. All three of the fundraising campaigns I backed had huge problems with the structure, arguments, conception, and tone of their videos and accompanying text. I thought: Why can’t these people fundraise right? Then I thought: Because no one’s taught them. (To be clear: these three projects are all worth funding. Very worth funding. I urge you to back all three of them.)

The campaigns: The first is The Understanding Campaign, a soon-to-hopefully-be nonprofit which is being put together by Justin Sirois and Haneen Alshujairy to promote cultural empathy between Western and Arab cultures by teaching everyone in the world to read the word Fhm (pronounced Fuh’hem, it means “understanding”) in Arabic. (When I backed it, The Undertsanding Campaign had $6,047 of $10,000 pledged.)

The second is the Knee-Jerk Magazine campaign to raise funds for their first annual print issue.  Knee-Jerk is a Chicago-based online magazine, and their print issue is clocking in at over 200 pages. (When I backed it, Knee-Jerk had $515 of $1000 pledged.)

The third is a project to fund Pop Serial #2, the second issue of the literary bomb that is Stephen Tully Dierk’s editing genius on paper.  #1 was hand-bound with ribbon. #2, given all things go well, will be perfect-bound. (When I backed, Pop Serial had $160 of $1000 pledged.)

I backed all three of these projects because I think they’re all worthy. I backed them all at the same level ($15), and I strongly urge you to do so as well.

During the day I work as the Director of Resource Development at Growing Home, a nonprofit in Chicago.  I’m responsible for a budget that’s just under $1,000,000 this year, and should reach that much in 2011. I go to business lunches, write grants to foundations and to the federal government, and beg corporations for sponsorship. I regularly ask rich people to their face for donations of $10,000 or more.

I explain this because it makes me hopefully look less like a douchebag for what I’m about to do, which is to offer a list of fundraising concepts that the lit world desperately needs to understand.

What follows is a list of eight general concepts that might whet our communal appetite for getting good at fundraising. Fundraising isn’t hard, and the fact is: good fundraisers raise more funds.

1. Know your audience

Although a huge portion of the indie lit world is hard at work grading rhetoric and composition papers, when it comes to raising money for our pet projects, we can’t seem to remember to address our actual audience.

In the lit world of writer-editors, it’s easy: you’re addressing an audience of people almost exactly like yourself. Are you busy as hell? Make your pitch short. (The Knee-Jerk video is funny, but awful long. I skipped to the end and was glad to see Casey Bye had stopped doing that accent part of the way through.) Do you love good design? Make it look hot. Are you impressed by a general sense of pretension? Do  you like to have things no one else can have? Do you think fart jokes are funny? And so on. (It’s crucial to be honest here about what will actually be appealing to your audience, and what you hope will be appealing.)

A great example of a magazine totally ignoring its audience in a pitch (to disastrous results) was the “$10 Campaign” from Narrative Magazine. Who thought this – “Won’t you join us in awakening hearts and minds around the world to the power of literature?” – was going to work on the cynical minds of writers? Perhaps Narrative’s magically got an audience made up only of appliqued-Halloween-sweatshirt-wearing Hallmark-card-buyers, but I doubt it. HTMLGIANT’s own analysis of this fundraising campaign is here but can be summed up by the following comment: “A bowl of dicks.”

This campaign didn’t work because it came off as insulting, partially through its language, but also because its fundraising needs were so opaque. (See “Show me the money.”)

2. Churn and Retention

In fundraising, “churn” is the failure to create a long-term relationship with a donor (or supporter), and that donor’s replacement with a new donor. Retention is the opposite: the creation of a long-term relationship with a donor or supporter.

So: say you had 100 donors in 2009. In 2010, you also had 100 donors. 90 of those donors in 2010 were also donors in 2009. 10 of the 2010 donors were brand new. This means  you had a churn rate of 10% between 2009 and 2010: the 10 donors who gave in 2009 but not in 2010 disappeared. They churned.

Some churn is expected. Some churn is ok. Someone subscribed to your magazine but didn’t like it? They’ll opt out of a subscription for next year. Screw them anyway. Their taste was terrible.

But it’s way easier to keep supporters than find new ones. Plus, all the fundraising research I’ve ever read shows that donors increase giving over their lifetime (lifetime = the length of time they’re affiliated with the organization). So: you make more money by reducing your churn rate, and you reduce your churn rate by maintaining good relationships with  your donors (or buyers).

Good relationships equal (practically): good customer service, subscription renewal reminders, etc.

3. Why people give

There are very few people who give donations out of the “goodness of their hearts.” I can think of literally one person who I know personally who consistently gives out of the goodness of her heart. It ain’t me.

Our real reasons for giving:

Because we want to assuage guilt

Because we’ve been promised something in return

Because we will (or think we will) receive social status or social capital

Because we want to belong to a social group

Because we want to “own” part of a brand (see above two reasons)

Because we are taught that giving will make us feel good, and we want to feel good

These reasons are okay! Don’t feel bad! It doesn’t matter! As a fundraiser, I have come to terms with the fact that I am basically tricking people into following the base instincts we all learned in middle school. Keep these reasons in mind when you craft your ask.

4. Salesmen don’t sell

Go in a store. There’s a salesman. She wants to make commission. She’s trying to sell you something. Pants, or electronics, or a chair, or a car. It’s fucking annoying.

Go in a different store. There’s a salesman. He wants to sell you something. A dress, or a shoe, or a house, or a computer. You feel fantastic.

What’s the difference? The second salesman isn’t selling you anything, because he’s realized that the best salesmen don’t bother to try and sell. Instead, they make you want.

Fundraising is salesmanship. At its worst, it’s hackey and fake and makes you roll your eyes or want to projectile vomit. At its best, it makes you feel like you! Have! The! Power! To! Change! The! World! And! Don’t! You! Want! That!

5. Rule of thirds

I can’t remember where I learned this from, so it’s possible I made it up, but it pretty much always works. This is a rule about how to structure your “ask” (aka your “pitch,” aka whatever letter or video or whatever you’re using to get the word out).

1/3 of your ask should be an explanation of what you need money for. This should include who you are and what you do.

1/3 of your ask should be an explanation of what you need and why you need it. Usually this is money, but sometimes it’s something else.

1/3 of your ask should be an explanation of why people should give you what you want. Sometimes this can be implicit. If you’re selling your brand, it’s implicit that people want to buy into your brand, for example. Sometimes this is an explanation of the premiums, or gifts, you’re offering, or an explanation of how totally fucked you’ll be if they don’t help. Here, appeal to one of the base reasons why people give.

6. Show me the money

Transparency! One of the main reasons the Narrative ask fell so flat was that the accounting behind it was totally opaque. They wanted $10 from EVERY reader to “sustain a lean staff of technicians, editors, and copyeditors, plus pay the authors, artists, and cartoonists who make every issue possible.” But how much does it actually cost to sustain that staff and pay those authors? If I gave $10 (which I did not), what tiny fraction of success could I call my own?

Although The Understanding Campaign is an extremely worthy cause, I’d like to see an actual accounting of what they’ll do with the $10,000 they’re likely to get. $10,000 is a not-insignifcant amount of money. Their campaign page says they want to apply for nonprofit status, which costs $750 for the IRS application,plus other incidentals tallying about $250 or so, at least in IL. But what are “cross-cultural, Arabic-English literary projects?”  I support them! But I’d be more likely to fund at a higher level if I knew exactly what I was supporting.

7. When you should ask for money

There are two types of money in most nonprofit operations. General operating costs, and program costs.

General operating costs (or gen op) are the “overhead” costs: electricity, stamps, paper napkins, toner for the copier, salaries for the administrative assistant and fundraising staff. The stuff you need to keep chugging along without doing anything special.

Program costs are just what they sound like: the costs for individual programs like going on tour, printing a special edition or issue, hosting a reading series, etc. The cool stuff, basically.

No one wants to pay for gen op. No one cares about gen op costs. They’re not interesting or sexy. Ask for money for programs, instead. If you can’t print your issue on subscriptions and elbow grease, you probably just shouldn’t print it.

8. Stretch giving

“Stretch giving” is the trick of getting people to donate just barely beyond their preferred comfort zone. They want to give $10? Find a way to convince them to want to give $15, or better yet, $25. Anyone who can donate $500 can donate $1000. On Kickstarter, that means offering intermediate levels that seem manageably close together ($10, $25, $40) but that have increasingly awesome premiums attached. What you want is for someone to say, “For only $15 more, my

You can help people stretch by not giving too many options. (See: Paradox of choice)

Scroll down on this page to see a fantastic bit of analysis on Kickstarter projects that looks at pledge tiers and how to organize them. Channel people into “buckets” that make them stretch just beyond their means to get an extra cool premium. For an example of too many choices, check out the Pop Serial Kickstarter page. (I’ll make your choice easier: donate $25, but do it at the $10 level. You’ll get a copy of Pop Serial #2, and not have to read the rest of the confusing options.)

This is simple but powerful stuff, and using it will make our business interactions with each other less boring and irritating (Narrative, I’m looking at you), and make us all more likely to attract new supporters when our old ones churn away. We may as well take advantage of the research and analysis that’s available.

I’ve toyed with a few ideas of how to make myself useful. I do this stuff every day, all day, and I find it compelling. (There’s a reason I’m the managing editor of Artifice Magazine, and not the editor.) How can I help? Do y’all want another list? Or a panel on literary fundraising best practices? Help me help you.

(And if you’re a floundering lit nonprofit with the budget to hire me, I am of course, available to freelance.)

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