Fund raising is an essential component to any organization, whether it be a nonprofit animal shelter or a multinational corporation. Access to working capital is the lifeblood of any organization, as it provides the necessary funds for operations. While different types of organizations require different fundraising strategies, the desired end is the same: to raise the maximum amount of money in a defined, or possibly undefined, time period.
Direct Marketing Campaign
Direct marketing campaigns are advertising vehicles that are implemented to provide targeted advertising to a predefined audience. Direct marketing can involve direct mail (post office), email marketing and telemarketing. According to the Direct Marketing Association, direct mail produces a response rate of between 1.38 and 3.42 percent, depending upon the quality of mailing list. Email marketing produces an average response rate of 1.73 percent, with an email open rate of 19.47 percent. Telemarketing produces an average response rate of between 6.16 and 10.41 percent, depending upon the quality of calling list.
Stock Issuance
Issuing shares of stock is a means for organizations to raise funds by effectively selling part ownership of the organization in return for working capital. Issuing stock is an important, and potentially costly, means of raising money for an organization. Much consideration should be taken before using this method, as the chance of incurring substantial tax consequences is high. Organizations sometimes pay a dividend on the stocks that they sell, providing the purchasers of stock with either cash or additional stock based upon a percentage of the stock value.
Community Development Financial Institutions
Community Development Financial Institutions are community-based organizations that are able to lend money to organizations that are often considered to be unable to secure traditional bank financing. These organizations loan various amounts of money and have an average loan amount of $11.4 million with an average interest rate that is at least one-half to 3 percent higher than traditional bank loans according to "Entrepeneur" magazine. Community Development Financial Institutions operate with the interest of the community in mind. Organizations that seek funds from one of these institutions should develop a "second bottom line" approach of business, which, in addition to increasing the company's bottom line, seeks to improve the condition of the community where they are based.
Traditional Fundraisers
Fundraisers have been a mainstay in the nonprofit industry for years. The organizations raise funds for their operations by way of bake sales, car washes, golf outings and silent auctions. There are many ways for organizations, both nonprofit and for-profit, to utilize fundraisers to raise working capital. Each organization should determine which method of fundraising activity best suits its business model to produce the best results.
Tags: Community Development, Community Development Financial, Development Financial, Development Financial Institutions, Financial Institutions, response rate, working capital