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Top 3 Methods of Fundraising and Their Pros and Cons for Nonprofits


It is no longer a mystery as to how nonprofit organizations generate revenue for a cause that they support and promote. They depend heavily on raising funds through various online and offline means. Now, as a part of a nonprofit, if you think that the prospective donors have been identified and segmented and the goals are set, the next step is to find out the avenues for fundraising. There are various online and offline methods that you can explore. Each has its pros and cons too and this is what is discussed here in detail.


  1. Direct Mail

Donations can be through direct mail, usually in the form of checks. Generally, elderly donors who prefer a more traditional way of giving donations as opposed to the online methods prefer direct mail. Your target donor segment might very well have people who feel more comfortable in sending a check instead of making an online donation.


The primary advantage of using this fundraising method is that nonprofits can reach donor segments that online fundraising is difficult to reach. With an older donor pool, direct mail fundraising becomes highly effective. This method is typically useful for local nonprofits with stronger ties to their respective communities.


On the other hand, the disadvantage is that the process is quite expensive. Direct mail takes more time too as you have to write letters, hone the list, track the responses, keep everything updated, etc. Creating an impact with a direct mail is also a bit challenging especially when compared to email marketing.


  1. Peer to Peer Fundraising

This is an online fundraising method that has gained immense popularity in the recent days. It is basically a crowdfunding method where an organization’s donors’ existing network is utilized. In the peer-to-peer fundraisingmethod, every individual fundraiser or supporter creates a fundraising page where they accept donations. On this page, the fundraisers echo your organization’s message and the donations are ultimately received by the nonprofit. The fundraiser encourages supporters to further reach out to their peers such as friends, colleagues and family members, asking them to donate.


Peer to peer fundraisers help build social proof. The advantage of peer to peer fundraising is that reaching out to a pool of supporters, who would otherwise be inaccessible, becomes possible. It is also an efficient donor acquisition strategy as both the already existing base and their networks are being utilized.


The disadvantage of this method is that it takes a great deal of effort to teach and update the existing donors or fundraisers. Some of them might be absolutely new in the field and they need to be taught how to use the platform as well. Another disadvantage of this fundraising method is that it can be challenging, at times, to clearly articulate the nonprofit’s mission and values so that everyone is in the same line.


  1. Partnerships

Partnerships or sponsorships have always been a staple for nonprofits. Major donations find a way from corporate organizations partnering with the nonprofits with these. The relationship is, of course, mutually beneficial. While the nonprofits derive benefits from the resources the corporate offers, the companies benefit from being associated with a noble and charitable cause.


The primary benefit of sponsorship is that it can lead to a huge sum of money being donated. This money can be used in executing major projects, which is somewhat impossible with the other fundraising methods. Furthermore, being partnered with like-minded organizations increases brand awareness to a significant extent.


Partnership or sponsorship method of fundraising is not without any disadvantages. First, it is difficult to deal with the grant-giving organizations most of the time. These organizations traditionally have a bureaucratic structure, which implies that nonprofits have to invest a lot of time and energy to negotiate a deal and keep it running. In fact, gaining access to the funds is not an easy path to travel. It takes considerable time to master the skills of writing a winning grant and even more time to write a winning application in order to get the donation.


Also, the grants and sponsorships often have strings attached to them, which means that they come with certain terms and conditions. These conditions can relate to how exactly nonprofits can use the money and specific reporting requirements. That is why; as a whole, organizations find this type of fundraising a bit restrictive and cumbersome, in spite of its popularity and promise of a good amount of money.


While these are the three most common or popular fundraising methods with their share of advantages and disadvantages, nonprofits can consider many other online and offline methods based on their cause, goals, and objectives


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