What Is Nonprofit Fundraising?

nonprofit fundraising

Donations are the lifeblood of any nonprofit organization. Nonprofit fundraising allows your organization to fund its mission, pay overhead costs, develop educational programs, and make improvements that will benefit future clients who utilize your services. 

No matter how big or small your nonprofit is, fundraising is an essential component to your business model.

So, what exactly is nonprofit fundraising?

Nonprofit fundraising defined

Nonprofit fundraising is the ongoing process of soliciting donations or voluntary funds to help your organization grow and meet the needs of the community you serve. Your fundraising network can consist of both businesses and individual donors.

How do nonprofits fundraise?

Thanks to modern technology and the ability to reach potential donors on a global scale, the fundraising methods and possibilities available these days are endless. Not so long ago, nonprofits could only really reach out to solicit donations by calling donors, sending out donation forms and envelopes, and hosting in-person fundraising events. 

Now, however, the world has changed dramatically. Here is a look at some of the most popular types of fundraising that nonprofits utilize today.

Virtual fundraising

Virtual fundraising just means that your fundraising event is held in a virtual setting, such as over a Zoom call, Facebook Live, or by some other means. A virtual fundraising event can be as complex as hosting a virtual gala or concert to something simpler in nature, such as a trivia game night.

Online fundraising

Online fundraising is as simple as posting a fundraising campaign on your nonprofit’s website, doing some advertising about said fundraising event, and watching as the donations start coming in. This type of fundraising is easy for donors with busy lives as they can make a financial contribution when they think about it while at home or on the go. 

Event fundraising

When it comes to event fundraising, you’ll first want to determine what type of event you would like to hold (i.e., a bake sale, rummage sale, a concert, picnic, dinner and entertainment evening, etc.). Typically, guests RSVP for the event and pay a ticketing fee to reserve their spot. At the event, you can solicit additional funds through games and ticket drawings, silent auctions, and other activities you come up with. 

Auction fundraising

Auction fundraising is an excellent way to solicit donations while giving your donor something valuable in return. Often, for-profit businesses will donate a service to your auction. This could include something like a massage or free night’s stay at a resort or expensive items like jewelry or fine wines. 

Peer-to-peer fundraising

Thanks to social media, nonprofits now have some unique fundraising opportunities. One of those is peer-to-peer fundraising. Peer-to-peer fundraising happens when individuals raise funds from their peers and then donate all the proceeds to the nonprofit. 

Major gift fundraising

A major gift is usually defined as a single donation of $1,000 or more. Often, these gifts can make up the bulk of what is donated to a nonprofit organization each year. Major gifts can take the form of legacy donations, corporate gifts, and individual donations. 

Recurring donation fundraising

Recurring donations are donations that are made on a regular basis. These can help your organization forecast for budgeting purposes. 

Merchandise fundraising

One popular form of fundraising is through the sale of special merchandise. The proceeds from the sale of goods goes toward funding the mission of the organization.

If setting up a physical store is not feasible for your organization, you can also set up an online shop on your website and sell your merchandise there.

How do you collect donations with nonprofit fundraising?

Here’s a look at some of the most common donation types and how to go about collecting each. It’s important to note that no matter what type of donation your organization receives, each donation should be recorded appropriately in your nonprofit’s CRM for accurate reporting purposes.

  • Cash. Cash can be donated in person or by mail. Your nonprofit should outline specific guidelines on how cash is handled once received. Be sure your donor receives a receipt for their gift.
  • Check. Checks can also be donated in person or by mail. As with cash donations, your nonprofit should have specific guidelines for how checks are handled.
  • ACH. ACH stands for Automatic Check Clearinghouse. This allows donors to do an electronic check draft for payment of goods and services. The donor can input their checking account information into your online payment processor and have donations deducted from their checking account without writing a check.
  • Wire transfer – A donor can use a service like Western Union to have money transferred from their bank account into your organization’s account.
  • Online donations. The easiest and most convenient way for donors to give money is directly on your website. 
  • In-kind donation. This is a non-cash donation in which someone can donate their time (volunteering) or provide something material to your organization to help it operate.
  • Merchandise – This is merchandise you can sell to raise funds for your nonprofit.

How does my nonprofit keep track of all of these donation types?

nonprofit fundraising
Source: QuickBooks

The best way to keep track of all your nonprofit fundraising efforts is with an integrated CRM software system and financial software system like QuickBooks. Your CRM keeps all of your donor and donation information in one convenient place so you can look at historical information, run reports, and plan future fundraising events.