Fundraising 101: The Fundraising Cycle

Fundraising 101: The Fundraising Cycle

ROI Solutions | The Fundraising Cycle

Fundraising is an essential function of any nonprofit organization. Simply put, it is the process of soliciting and gathering voluntary contributions of money or other resources from individuals, corporations, charitable foundations, or governmental agencies to support the mission.

To succeed, it is crucial to understand the fundraising cycle and its stages. This article will explore the six stages of the fundraising cycle and how they can help your organization achieve its fundraising goals. Six stages? Yes. Many models stick to five steps or stages, but there are more to consider if your goal is to maximize your constituent relationships proactively.


What is the Fundraising Cycle?

The fundraising cycle is a continuous process that involves identifying prospective donors, cultivating relationships with them, soliciting donations, and stewarding them. It is a cyclical process because it is ongoing and requires constant effort to maintain and grow relationships with donors.
The fundraising cycle, known as donor-cycle fundraising, focuses on building and maintaining relationships with donors to secure their support for your organization’s cause.


The Fundraising Cycle Diagram

ROI Solutions | The Fundraising Cycle

The Five Six Stages of the Fundraising Cycle

ROI Solutions elevates the five stages of the fundraising cycle into six stages. Each stage plays a crucial role in the success of your fundraising efforts. Let’s take a closer look at each stage and its significance. What do you think of the six stages?

Of course, you need a way to help you automate and monitor the cycle, so ROI Solutions’ high touch fundraising KPIs help fundraisers and managers prioritize and manage the process.

1. Identification & Qualification

The first stage of the fundraising cycle is identification. This stage involves identifying and qualifying potential donors likely to support your organization’s cause. To identify potential donors effectively, it is essential to have a clear understanding of your target audience and their interests.

There are various ways to identify potential donors, such as conducting donor research, analyzing your current donor database, and leveraging your network and connections. Next, to qualify potential donors, fundraisers analyze the data, perform wealth screenings, and target potential donors with the capacity and inclination to support your cause based on wealth, philanthropic interests, past giving history, and connections to the organization. The key is to focus on individuals or organizations aligning with your mission and values.

ROI Solutions makes wealth screening easier by allowing fundraisers to research a donor’s wealth profile and retrieve and save wealth profile data directly onto the ROI constituent record. Prospect researchers can better understand constituents’ wealth, liquidity, and assets and begin building profiles of high-touch prospects.

As you determine the strategy for your donors, particularly those in the major or transformational gift categories, you need the tools to assist you with pipeline and portfolio management.

2. Cultivation

Once you have identified potential donors, the next stage is cultivation. This stage involves building relationships, sometimes at scale, with potential donors and educating them about your organization’s cause and impact. Cultivation is crucial as it sets the foundation for a long-term relationship with donors.

ROI Solutions’ Revolution CRM was designed for fundraisers by fundraisers for fundraising development. Revolution CRM helps fundraisers rise above the spreadsheet and efficiently identify and manage relationships. 

Cultivation can take various forms, such as hosting events, sending personalized communications, and providing opportunities for donors to get involved with your organization, such as volunteering, attending events, or joining committees. The goal is to engage donors and connect them to your cause.

ROI Solutions’ ‘Push to Social‘ technology allows you to define audiences in Revolutions CRM and automate the data push via API to social ad platforms to spread your reach.

3. Solicitation

The solicitation stage is where you make the “ask.” A well-planned and strategic approach to soliciting donations is essential. It involves understanding the donor’s interests, motivations, and capacity and tailoring your ask accordingly. Fundraisers develop a compelling case for support that clearly articulates the fundraising campaign’s need, impact, and urgency.

There are various ways to solicit donations, such as direct mail campaigns, online fundraising, and personal asks. The key is to make the ask in a way that resonates with the donor and makes them feel like they are creating a meaningful impact.

At ROI Solutions, we follow a detailed five-step path to manage large, sophisticated, multi-channel marketing campaigns

4. Stewardship

Stewardship is the process of thanking and recognizing donors for their contributions. It is a crucial stage showing donors their support is valued and appreciated. Stewardship also helps build and maintain long-term relationships with donors.

There are various ways to steward donors, such as promptly acknowledging their contributions by sending personalized thank-you notes, providing updates on the impact of their donations through your website, newsletters, emails, and phone calls, and publicly recognizing them to make donors feel essential to your organization’s success.

Impact reporting helps fundraisers actively monitor how donor contributions are making a difference.

5. Retention

In the retention stage, you focus on retaining donors and encouraging them to continue supporting your organization. A donor retention strategy is essential to ensure that donors continue to help your cause.

Retention strategies can include providing exclusive benefits to donors, creating a sense of community among donors, and showing the impact of their donations. The key is to make donors feel like they are making a difference and part of something meaningful.

Fundraisers can improve their donor retention with engagement, maintenance, and feedback. 

  • Donor Engagement: Fundraisers can continue to engage donors through ongoing communication, involvement opportunities, and personalized stewardship efforts.
  • Relationship Maintenance: Fundraisers further nurture long-term relationships with donors by staying connected, expressing gratitude, and demonstrating the impact of their support.
  • Feedback Solicitation: Fundraisers seek feedback from donors to understand their motivations, preferences, and experiences, enabling them to tailor future interactions and solicitations.

And don’t forget that machine learning models, like those from MiLo Intelligence, can help you optimize your retention strategies.

6. Upgrading

Many models need to include this stage. It involves encouraging donors to increase their support for your organization over time. A strategic approach to upgrading donors is essential to ensure they continue supporting your organization at a higher level.

Upgrade strategies can include providing opportunities for donors to get more involved with your organization, offering exclusive benefits to higher-level donors, and showing the impact of their increased support. The key is to make donors feel like their increased support is making an even more significant impact.

Upgrade strategies can include donor segmentation, where fundraisers segment donors based on giving history, capacity, and interests to identify opportunities for upgrading.

Fundraisers can also tailor requests by developing targeted fundraising appeals to encourage donors to increase their giving, upgrade their giving frequency, or support additional programs or initiatives.

Fundraisers can continue personalizing cultivation to nurture relationships with donors, focusing on stewardship, engagement, and demonstrating the impact of increased support.

See ROI Solutions’ MiLo Intelligence product use case for Modeling Active Donors and Optimizing Ask Amounts.


How to Revolutionize the Fundraising Cycle for Your Organization

Now that we better understand the fundraising cycle and its stages, let’s explore ways to optimize it for your organization’s success.

Leverage Technology (like Revolution CRM)

Technology can significantly improve fundraising cycle optimization. Various fundraising software and fundraising tools, like Revolution CRM, can help streamline and automate different stages of the cycle.

For example, Revolution CRM can help you better identify, manage, target, and engage your constituents to manage deep relationships. We provide flexible constituent management, tools to offer exceptional donor servicerobust pipeline, and portfolio management for gift officers and fundraising executives, and the automation needed to process high volumes of transactions while maintaining high security. Our CEO, Gina VanderLoop, wrote a post on what to know about PCI security. See how ROI Solutions can help your organization’s security and compliance officers.

Personalize Communications

Personalization is key to building and maintaining relationships with donors at scale. Make sure to personalize your communications with donors at every stage of the fundraising cycle. Use their names, reference their past interactions with your organization, and tailor your messaging to their interests and motivations.

Focus on Donor Retention

Donor retention is crucial for the long-term success of your fundraising efforts. Ensure a donor retention strategy and focus on building and maintaining donor relationships. Show them the impact of their donations and make them feel like they are an essential part of your organization’s success. This is so important that we’ve addressed this with several of our MiLo Intelligence machine learning models that predict those donors most likely to remain loyal or reactivate.

Continuously Evaluate and Improve

It is essential to evaluate and improve your fundraising efforts continuously. Set measurable goals and track key metrics to understand what works and needs improvement. Use this data to make informed decisions and optimize your fundraising cycle for better results. Revolution CRM provides many standard reports, dashboards, visualizations, query methods, and role-based experiences that put data at your fingertips so you can steward your relationships. It’s more than just reporting; it’s information management.


Conclusion

The cycle of fundraising is a continuous process that involves identifying potential donors, cultivating relationships with them, soliciting donations, and stewarding your constituents. By understanding the six stages of the fundraising cycle and implementing best practices, you can optimize your fundraising efforts and achieve your goals. Leverage technology, personalize communications, focus on donor retention, and continuously evaluate and improve to make the most out of your constituent relationships.
If you can’t do this with your current toolset, we’d love to tell you more about what we offer at ROI Solutions. Let’s Talk!

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