First, You Need a Plan
As with so many other parts of running a successful historical organization, the first step is to create a fundraising plan. Network for Good offers many resources for first-time fundraising, including this model, which includes a “gift grid,” and this 7-step fundraising plan. The blog of the American Association for State and Local History offers this useful post on Ten Fundraising To-Dos for small historical organizations.
AASLH also publishes a useful guide (a downloadable pdf) called 101 Ideas for New Revenue at History Organizations.
What is Development?
Sending out membership letters and getting donations is fundraising: it is a kind of transaction, albeit one that serves a good cause (yours). Development, on the other hand, is about building relationships with prospective donors over time, with the goal of long-term support. Development requires several steps: prospecting (identifying a prospective donor), cultivation (educating the donor about your organization’s work over a period of time), asking for support, and stewardship (building an ongoing relationship so that the donor will want to continue giving to you). This blog post from Classy, a business that creates online fundraising platforms for nonprofits, explains what all staff need to know about development. This article from Nonprofit Quarterly asks boards to get real about the fact that raising money takes money.
While many of the other areas of development are open-ended, capital campaigns focus on reaching a specific funding goal for particular projects. These projects tend to be related to the building in which the organization is housed – buying new computers, building repairs, funding a new wing, etc. Make sure to take time to develop a list of donors in advance of conducting a capital campaign. “The Basics of a Capital Campaign” by The Nonprofit Partnership briefly outlines important characteristics and phases of capital campaigns.
More and more often museums are turning to Kickstarter to raise funds for projects. Kickstarter was designed for funding creative projects. It allows backers (friends, fans & strangers) to support your project by pledging contributions. You can set an amount goal and deadline while tracking the funding progress. Kickstarter now has a #Museums tag where you can view other museum funding projects.
An alternative to Kickstarter is IndieGoGo. This brief article from Idealware compares Kickstarter and IndieGoGo and will help you consider which platform is the better option for your small museum fundraising project.
Donations (Individual, Annual Fund, and Major Gifts)
Donors can be courted individually, through an annual fund, or through a major gifts program. Individual donations are built upon relationships between potential donors and the people operating and working at the museum. Develop these relationships through regular contact – options include but are not limited to meetings with museum board members and staff, personal walk-throughs at the museum, private events for certain donors, and opportunities to witness how the museum used the donation. With individual donors, follow-up is key.
Distinct from membership drives and direct contact with individual donors, your organization may benefit from holding annual fund appeals regularly. The money collected for the annual fund is unrestricted and can be used as needed within the budget. Donations for the annual fund can be collected through individual meetings, special events, or annual fund drives throughout the year.
A major gifts program, meanwhile, targets donors who seek to make a larger contribution. The lower limit of these donations is at your discretion – $500, $1000, and $2500 can all define the minimum donation amount that counts as a major gift for your organization. Major gifts have much in common with individual donations – face-to-face interactions and developing relationships with major gifts donors are the cornerstones of this form of fundraising.
Templates for donation requests:
- Writing appeal letters is nothing short of an art. Check out these pointers for improving your next letter.
- This Nonprofit Quarterly article provides a template for “The Donor-Centric Pledge,” part of a strategy to communicate clearly and maintain relationships with donors.
- Although the basics of fundraising are typically constant, fundraising strategies differ based on the size of the organization. Blackbaud has created a video aimed at smaller organizations, “The Secrets to Fundraising Like the Big Boys.”
- It is a great idea to actively look for opportunities to reach out to your donors. Here are 10 Reasons to Contact Donors other than to ask for money.
- The Fundraising Authority also offers fundraising tips for organizations with small, even one-person, development teams.
- Sandy Bradley of The Grantsmanship Center produced this useful guide on how to get donations for a fundraising auction.
Templates for thank-you letters:
- Looking for ways to show your appreciation? This article gives tips for thanking donors on a dime.
Sources on donor management strategies and software:
- Having trouble keeping track of donor information from year to year? Check out this guide to donor management software.
- Interested in prospect research? We created a sample donor profile, with the types of information you will want to collect.
- Prospect research is an important but time-consuming task. This article contains the basics of prospect research. It is written with libraries in mind, but translates well to museums.
- Guidestar’s research study “Effective Fundraising for Effective Nonprofits” outlines trends of donor behavior and lists six recommendations to consider for your fundraising strategy.
Earned Income and Unrelated Business Income
Earned income from a museum can includes admissions fees, museum store profits, dining facilities profits, space rentals, and entry fees for workshops and special exhibits. Unrelated business income is defined by the IRS as “income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization’s exemption.” The IRS web page accessed through the link above will direct you to specific information defining “unrelated business income.”
Money donated towards an institution’s endowment may not be spent directly. Rather, these donations are invested and their earnings are available for use by the institution holding the investment. There are two different types of endowments – unrestricted endowment funds and restricted endowment funds. Restricted endowment funds are reserved for specific purposes whereas unrestricted ones are not. Your organization can hold an endowment fund drive to court donations to further invest for the museum. It is important to note that endowments are less prone to yearly fluctuation than donations and grants, making it an important source of income for institutions of any size.
Sources for additional information:
- This paper by Carol Norris Vincent is intended to serve as a guideline for museums which are considering providing for the stability of their futures through endowment funds.
- Here, Guidestar outlines how small nonprofits can establish endowments.
Grants are among the most restricted funds available for small museums and historic homes. Applied for directly through funding organizations, grants are designated for a specific purpose to be given at a specific time. Conferring organizations lay out the requirements for their grants, including the size, programs, and location of the organizations that they seek to fund. Don’t be afraid to get creative with the types of grants that you apply for! Matches may come from unexpected places and there are many different types of organizations – government agencies, state agencies, private foundations, family foundations, independent foundations, community foundations, corporate foundations, and national foundations – looking for organizations like yours!
- The NEH has Preservation Assistance Grants for Smaller Institutions.
- This webinar “Funding Opportunities for Collections Preservation” explores grants at AAM, IMLS, NEH, and NSF.
- Another good source for researching foundations is GuideStar. Create a free account, and get access to recent 990 forms.
- Smaller organizations often do well applying to family foundations. Here are some things to consider when approaching a small family foundation with a request.
- Fundsnetservices.com is an index for grants and fundraising for non-profits. The Arts & Culture Grants section provides a list of hundreds of grant opportunities for museums and cultural organizations.
Resources available when applying for grants:
- The Foundation Center offers information on hundreds of private philanthropic institutions and individuals throughout the United States. The website offers help with proposal writing, a searchable database of prospective funders, and training in grant writing in various locations across the country.
- In many cases the first step to approaching a foundation is writing a letter of inquiry (interest, or intent).
- Another good source is this video on grant writing from the New England Museum Association.
- The Nonprofit Quarterly also offers a helpful resource on the basics of grant and prospect research.
Paid membership is a central means of developing income for your organization. Before offering this opportunity, define the benefits of paid membership and their cost. Will paying members have unlimited visits to your institution for the year? Can they bring a guest? Do they have access to special events or early access to tickets? Does paid membership include regular emails or letters about upcoming events? How much will a potential member have to pay your organization for these benefits? Describe both the work that your organization does and the additional benefits that membership would provide for any interested parties. You should address the benefits that both the organization and the potential member receive from their collaboration. It is also important to keep in mind the cost to your organization for paid membership – mailings, special events, and discounted entry all come from your budget. If you decide to initiate a paid membership program, anticipate your costs when deciding the cost to members.
You can also increase your membership numbers through annual membership drives. These drives can offer the same access and benefits as currently paying memberships. If arranging a membership drive, collect or update your mailing list first through board members and their contacts, contact information from previous members, contact information collected at previous events, or other means. This process entails directly contacting people, often through snail mail, to court their visitation and potential membership with your organization.
Sources about building membership:
- How can small museums use research to build and diversify their membership? This article by Engaging Places LLC will show you how.
Resources for operating a membership program:
- Blue Avocado, an online magazine for nonprofits, lists eight strategic mistakes to avoid when operating a membership program.
- How can museums use digital technologies to grow their membership? This article by Allegra Burnette examines the Museum of Modern Art’s digital membership model.
Revising your membership program: