The Real Reason Your Annual Fund Matters

Tactically, and even strategically-speaking, the Annual Fund for most non-profit organizations is credited with serving 2 purposes.  The Annual Fund:

  1. Provides important (often-times budget relieving) annual gift income to fund current organizational priorities, and;
  2. Serves as a (hopefully expanding) pool of future major donor prospects for the organization.

While these purposes are important, they are not the real reason why your Annual Fund matters.

Instead, your Annual Fund is critical to your organization’s long-term success because it is the primary giving channel to affirm and champion the cause of consistent giving at your institution.

To understand how crucial this purpose is, we must remind ourselves that giving is good.  In fact, giving is a fundamental good.  Non-profit organizations regularly refer to themselves as being in a state of “community.”  A robust giving culture makes that “community,” more compassionate, more other-centered, and stronger.  Being a regular giver encourages us to be more invested in concerns bigger than our own.  Individually and collectively, we become better when we give.  As Thomas Plante, professor of psychology at Santa Clara University states,

“Giving to others is adaptive in community living. As social animals, we survive as a species when we cooperate with others and care for those in need. Thus, from an evolutionary and socio-biological perspective, we are wired to help others within our community, and doing so helps all of us survive and thrive.”

Today, more schools, more non-profits, more healthcare institutions are discussing seriously a future without the Annual Fund.  While different funding approaches are being discussed, most all of the scenarios involve the organization becoming more transactional and business-like and less cooperative and caring.

In other words, students will pay full tuition at schools, fees for various services will be increased at non-profits, etc.  The idea is to have less financial need for an Annual Fund.  But, again, I’m not at all convinced that organizational financial need is the primary purpose of a thriving Annual Fund.

When we misunderstand the fundamental purpose of the Annual Fund – an important component of the non-profit enterprise – we run the risk of making decisions that injure the very specialness of the non-profit enterprise itself.  Non-profit leaders should be careful when making decisions based on perceived short-term, financial needs.   Getting rid of the Annual Fund is one of those decisions.

Ultimately, if we strive to reduce the centrality of annual giving within our organizations, we will debilitate the longer-term, qualitative distinctions that make our organizations important to our shared human experience.  We need the Annual Fund.  And not always for the reasons we think.



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