Do you want to start a fundraising company? If YES, here is a complete guide to starting a fundraising business with NO money and no experience.
Okay, so we have provided you an in-depth sample fundraising company business plan template. We also took it further by analyzing and drafting a sample fundraising company marketing plan backed up by actionable guerrilla marketing ideas for fundraising companies. In this article, we will be considering all the requirements for starting a fundraising business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Fundraising Company?
There are a lot of worthy causes that depend entirely on fundraising in order to exist or run. These organizations can range from charity organizations looking to reduce poverty, fight a deadly disease or protect the environment. Asides from charity organizations, there are also communities that need the help of fundraisers in order to take part in school games or any other event, and so fundraisers are indispensable because they help organizations to further their cause. If you are looking to start a fundraising business, there are several things you must know about.
It is necessary that you have good people skills before intending to start a fundraising business as you must be able to not only communicate well with others but also work well in groups as well as lead teams. Asides from good verbal communication skills, having good writing skills will also be seen as a plus.
Also, you must be very organized in terms of contacting people, planning a fundraising event as well as keep track of all the financial aspects of the business. You must also be honest, have integrity and run a transparent organization as this will allow not only those you intend to help raise funds to trust you, but also those that will donate money to the cause.
What is a Fundraising Professional?
A fundraising professional is one that helps nonprofit organizations, charities, groups, schools and political campaigns raise money for the specific purpose they need. As a fundraiser, there are several ways you can plan a fundraising event, which is by calling on donors or increasing the marketing efforts necessary to promote the cause.
However, before you can successfully run your fundraising business, it is essential that you determine what niche you intend to specialize in as this will help you not only focus your marketing efforts on the niche chosen but you will also raise more credibility for your organization. This however does not mean that you cannot become a generalist fundraiser as long as you are able to achieve all the set goals of your clients.
Once you have decided to either be a generalist or specialist, it is then time for you to know your market. You can conduct a thorough market survey that will allow you know the market you are going into. The market survey should answer questions such as what opportunities exist for your organization in this market, who your customers are, how to create the necessary awareness that will get their attention and how your organization will grow and sustain itself. It is pertinent that you source for data through various sources such as through those that are running a similar organization to yours or via a questionnaire.
Writing a comprehensive business plan is very necessary as it will help you coordinate and outline what plans you have for your organization. Even though you intend running a business that will raise funds for others, you will need to work out how your own business will be sustained via the revenue model you prefer to generate for your company, which is why having a business plan is important.
Starting a Fundraising Company – A Complete Guide
- Industry Overview
Patterns in donations have been undergoing a tremendous change due to the challenges and opportunities that have cropped up which have allowed fundraising organizations to change their approaches as regards approaching donors, engaging them, retaining them and also restricting their revenue generation goals.
One of the factors to note is the changing demography of donors within the United States. Millenials that are considered wealthy for example are likely to donate to causes that will create a social impact as compared to the older or baby boomer generation. This has led to a change in trends especially as regards donations in the industry.
Another factor that has been shaping the industry is the diversity of the population in the United States. In the Millenial group, four in ten individuals are non-White. In the generation Z group, nearly 50 percent are non-White. Asides from the racial and ethnic diversity, religion has also played a huge role in how donations are being obtained by fundraising companies. The growing LGBTQ community has also created an impact in the industry. The shifts in the demography structure are also coinciding with changes in the economy as well as in the political landscape.
Even though the general economic landscape in the United States has been seeing a bit of stability, statistics has it that not all households in the country are experiencing the same rate of recovery financially. According to a 2015 report, those that had median income and wealth, which comprise of the largest segment of U.S households, have since the early 2000s fallen dramatically. Households in regions such as the West North Central, Middle Atlantic, West South Central and the East South Central are among those that were experiencing difficulty in bouncing back financially.
The complexity regarding the industry can also be traced to the political landscape as there have been several congressional battles regarding tax policies on nonprofit and charity organizations thereby leading to several changes in the donor environment.
Fundraising companies have had to make use of several means to raise funds for their clients and this includes making use of social media platforms as well as technological innovations such as bitcoin to enable more donors give to their cause. This technological innovation has had the most impact on fundraising organizations between the last five to ten years.
It is expected that between 2016 and 2017, total donations is expected to rise by an average growth of 4.4 percent which will surpass a 10 year historical growth as well as a 25 year average rate of growth. Some of the factors that will therefore lead to an increase in donations include the above average growth in corporate companies, growth in personal income as well as an above average growth in net worth of households and nonprofit organizations. More than 71 percent of the donations within this period are expected to come from individuals and households, followed by foundations, estates and 5 percent from corporations.
Growth in Gross Domestic Products (GDP) is largely influenced by an expanding economy and so the projected increase in the country’s GDP in 2015 and 2016 are expected to positively influence donations from individual/households.
Giving in this segment is mostly comprised of contributions from those that itemize the deductions of their donations to charities on income taxes and those that do not. Figures for those that itemize is expected to see a slight increase for 2016 and 2017, a percentage which according to data, is slightly higher than that which was donated for 2014 and 2015.
While new dollars are becoming more available to organizations that need donations, it is essential that the industry continues to be watchful as regards certain areas that might influence the industry such as collaborations and new partnerships with organizations of different types so as to broaden support networks that will be used in achieving set goals and objectives. Also, it is essential that fundraising companies incorporate new technologies and innovations in order to reach new donors while retaining current donors.
Starting a Fundraising Company – Market Research and Feasibility Studies
- Demographics and Psychographics
When looking at the psychographic and demographic composition of a fundraising company, it is safe to say that those that will be demanding the services of your organization are individuals, charity organizations, nonprofit organizations, groups, communities, schools as well as political campaigns.
Therefore, if you are looking to define the demography of your fundraising business, you should look towards making it all encompassing by even looking to raise funds for colleges and universities as well as for such organizations that deserve it but are not within the United States.
List of Niche ideas Within the Fundraising Business That You Can Specialize in
When looking to start your fundraising business, it is important that you know the industry well enough as this will help you determine if you intend to run your business as a generalists – raising funds for all kinds of industries, or if you would like to be a specialist – concentrating on one or two industries.
It is important that you only choose what you will be able to handle so as not to disappoint your clients. While large fundraising companies usually can handle more than one niche, smaller companies usually stick to handling just one or two.
Below therefore are some of the niche areas that you might consider exploring when looking to start your own fundraising company;
- General Fundraising
- Specialist Fundraising
- Public Relations Specialists
- Meeting, Convention and Event Planners
- Advertising, Marketing and Promotions
The Level of Competition in Fundraising Industry
The level of competition in the fundraising company is such that the success of your business is not dependent on your location especially as most fundraising organizations can operate from any part of the world due to the internet and still compete effectively.
What most clients look out for when it comes to a fundraising business is an organization that is honest, has integrity and deals transparently with all parties involved. Asides from these attributes, once the organization has a good track record and has always achieved success during its fundraising campaigns, then clients will be willing to work with such an organization.
The fundraising industry is huge and therefore has a lot of fundraising companies scattered not only all over the United States but also all over the world as well. Therefore, if you are looking to start your fundraising company in the United States of America, you will meet stiff competitions not only within the country but outside it as well. You should however note that the industry trend is determined by larger fundraising companies and so you must be prepared to compete with them.
List of Well – Known Brands in the Fundraising Industry
In every industry there are always brands that stand out due to the level of activity that they engage in and this industry is no different. Well known fundraising organizations have become so due to the level of transparency they exhibit during every fundraising event, their marketing and promotional campaigns, their length of time in the industry, and many other factors.
Knowing these well-known brands will enable you use them as a measure towards which you can attain your own level of success. Below are some of the well-known fundraising companies in the United States of America and globally as well;
- Time Inc
- United Way Worldwide
- Great American Opportunities
- A Little Help
- Task Force for Global Health
- Feeding America
- Salvation Army
In all industries, organizations are often seen as profit or nonprofit, which means that while one part makes all the profit, the other part is always short of cash and it is therefore necessary that those that make profit seek to act responsibly by donating to organizations that are nonprofit in nature. This is where fundraisers turn to when looking to raise money for their clients.
Due to the fact that organizations are always looking to raise more donations, it is projected by the Bureau of Labor Statistics (BLS) that the employment of fundraisers is expected to grow by 9 percent between the periods of 2014 to 2024, which is at an average faster than the average of other industries.
The economy is one of the major factors that has an impact – either positively or negatively – on a fundraising business. This is because the recession which was experienced in the United States between 2007 and 2008, saw individuals and corporations hesitant to donate or increase their donations till about 2009, thereby causing a huge blow to the industry. However, as the economy improved, so have donations.
Another factor to note when it comes to getting organizations or individuals to contribute is the fact that most want to feel a personal connection to the organization they are contributing to. Most people donating usually do so because either they or a loved one has been personally affected by the problem.
Starting Your Fundraising Business from Scratch vs Buying a Franchise
Starting your business from scratch or buying a franchise is one decision that is important when looking to start any business venture. And so while each option has its pros and cons, it is necessary for you to understand that whatever decision you choose has to be one that aligns totally with your overall goals and objectives as a fundraising company.
When buying a franchise, you are also looking to buy the mentorship that comes with starting a business and so it is important that you conduct a thorough investigation on the franchises available and their capabilities and prices and how they will best align with your goals and objectives.
Starting this business from scratch is very important as it will allow you understand the business from the ground up and allow you to grow the business as your pace. This is why writing a business plan is very necessary as this will allow you understand the business you intend going into and how the business is likely to turn out.
It is very necessary that you make a thorough survey and get verified data that will allow you to write out a business plan that you can rely on. You should note that all the actions and decisions that you will make during the course of running your business will be influenced by your business plan.
Possible Threats and Challenges You Will Face When Starting a Fundraising Business
When starting a business as an entrepreneur, it is important to know that you will face many threats and challenges that will crop up during the course of starting and running your business and you should therefore be prepared for them. While certain threats and challenges can be effectively handled, you should know that some cannot be and when this happens you should remain optimistic.
Some of the threats and challenges that you will therefore face during the course of starting and running your fundraising business include; having to source for clients and getting them to trust you; having to compete with already existing fundraising companies, having to source for donors in order to meet your deadlines, having to compete with new fundraising companies.
Starting a Fundraising Company – Legal Matters
- Best legal entity to use for this type of business
Whatever business you are looking to start in the United States of America, one of the most important decisions that you will be making is what kind of legal entity to use for your business and this is because the legal entity you choose to run your business with will have an impact on how the business can grow in the short or long run.
The fundraising business is one that comes with several risks; therefore it is best to choose a legal entity that will protect you. You will need you to study each legal entity to know which will be the best for your fundraising business.
While there are up to five legal entities available for anyone looking to start a business in the United States, not all legal entities are considered helpful in this kind of business. It is therefore important that you engage the services of an attorney who will know which legal entity will be suitable for your fundraising business, depending on the state where you are operating from.
When choosing a legal entity, there are several factors that you will need to take into consideration and they are, the level of liability that comes with the legal entity, the taxation structure, the ease at which the legal entity can be set up and then controlled by the owners. While the sole proprietorship and partnership kind of legal entity might be simple enough to startup, they aren’t considered very suitable for a fundraising business.
Some of the legal entities that you will need to take into consideration when starting your fundraising business are; S Corporation, C Corporation and Limited Liability Company (LLC). In an S Corporation, the company by law is seen as a separate legal entity from the owners, which therefore means that should anything go wrong during the process of starting and running the business, the owners cannot be held personally liable. The C Corporation is a bit similar to the S Corporation in terms of liability but setting up this kind of legal entity is considered more difficult and the taxation structure is different because owners are taxed twice.
The LLC is another legal entity that is similar to that of the S Corporation in terms of liability and taxation structure. The only difference is that the number of people required to start an LLC is less compared to that of an S Corporation.
Catchy Business Name Ideas Suitable for a Fundraising Business
When starting any business, it is essential that you establish it legally before you can run the business without any sort of trouble from the law. One of the ways by which you can establish and run your business is by ensuring that you give your business a catchy business name that will allow you to stand out and allow your target market to easily identify you. Choosing a business name that is unique might not be so easy but you can check with popular ones and use them to have an idea of what to call yours.
Below are some of the catchy business names that you might need to consider when looking to start your fundraising business;
- Yough Fundraisers
- Quizbrook Inc
- Moneysavers Inc
- Awake Fundraisers
- Mythic Fundraisers
Whatever business you are looking to start in the United States, you should note that it is important to have insurance policies so as to remain protected from having to personally pay for incidences that might crop up during the process of starting or running the business. It is important that you set aside a budget with which to acquire your insurance policies and if you do not know what policies to purchase, you might need to approach an insurance agent or broker to help you choose which insurance policies will be most appropriate for your fundraising organization.
Below therefore are some of the insurance policies that you should look towards purchasing when looking to start your fundraising business in the United States of America;
- General Insurance
- Liability Insurance
- Professional Liability Insurance
- Business Owners’ Policy
- Errors and Omissions Insurance
- Cyber Liability Insurance
- Health Insurance
- Auto Insurance
- Workers’ Compensation Insurance
- Payment Protection Insurance
- Fidelity Bond Insurance
- Directors and Officers (D&O) Liability Insurance
Intellectual Property Protection/Trademark
The fundraising business is a service oriented business, where a business helps another to get donations from various sources in order to be able to meet its goals and objectives. Therefore, acquiring intellectual property protection might not be seen by some entrepreneurs as being very necessary.
However, applying for intellectual property protection is not only for those who have inventions as you can apply to protect your company name, logo, domain name, production materials for jingles and any other thing you deem necessary. You might need to engage the services of a lawyer who has experience of trademarks and copyrights to help with applying for an IPP with the USPTO.
Is Professional Certification Needed to Run a Fundraising Company?
The fundraising business is one where fundraisers organize events in order to raise money and other sorts of donations for organizations by engaging in promotional campaigns in order to increase awareness of their client’s goals as well as financial needs. Even though there are a lot of procedures regarding starting and running a fundraising company, having professional certification isn’t one of them.
However, even though certification isn’t mandatory, some fundraisers usually acquire it in order to be able to exhibit a level of professional competence. The CRFE International offers a certified Fund Raising Executive Designation for interested fundraisers. However, you must have at least 5 years work experience and must have attended the necessary conferences and classroom education, and for the certificate to remain valid, it must be renewed every three years.
List of Legal Documents You Need to Run a Fundraising Business
When looking to start any business in the United States of America, it is important that you have all the necessary legal documents in place so that you will not run into any problems with the law. The fundraising business is a sensitive one and so it is necessary that you are legal so that donors, charitable, nonprofit, government agencies and other organizations can trust you enough.
If you do not know what documents you would require, it is best to engage the services of a lawyer who know what documents you will need. Below are some of the documents you will need in order to run your fundraising business legally in the United States of America;
- Certificate of Incorporation
- Operating Agreement for LLCs
- Business License
- Business Plan
- Insurance Policies
- Employment Agreement
- Employer Identification Number (EIN)
- Federal Tax Identification Number
Financing Your Fundraising Business
Every business depends on revenue to not only start off but to continue to run and the fundraising business is no different. While this is a business that will require you to source for funds from sources on behalf of your clients, you will still need revenue with which to start your business and get it running till you begin to generate revenue from the various fundraising events you organize. This is why having a business plan is necessary as it will help you determine where you would source for start-up funds for your business.
Below are some of the financing options that are available to you when you are looking to start your fundraising company in the United States of America;
- Sourcing for part of your start-up capital from personal savings or sale of stock
- Sourcing for soft loans from friends and family members
- Donation from government agencies
Choosing a Suitable Location for your Fundraising Company
One important decision that you will need to undertake is where you intend running your fundraising company from as the location you choose for your business will determine how much you get to generate as revenue. Your decision has to take into cognizance your target market and where your donors are as well. When starting out, you can either choose to run this business from home or lease a commercial facility.
If your aim is to work from home probably because you are starting the business either on a low scale or a strained budget, then you might need to work harder than those who are in a commercial facility to get your business noticed. A website is important for you at this point and you should deploy some SEO strategies to ensure that your website ranks tops in search engines.
If you are however going to lease or rent a commercial facility, then you must ensure that you do not lease something that is large in size and in budget than what you require; which is why having a business plan is important as it will allow you know exactly what you need.
You must ensure that the facility is not so obscure that clients that are looking to visit have a hard time finding you. Getting a facility that is not easily visible might lead you to engage in more publicity than necessary in order to increase awareness for your company.
Starting a Fundraising Company – Technical and Manpower Details
One thing with starting a fundraising business is that the business is one that can be run from home as you do not need to rent a commercial facility especially if you have one or two clients that you are handling and you are starting off on a strained budget.
The fundraising business might not be one that is technically inclined but it is a business that requires that you have certain skills such as being a people person and having negotiation skills. If you do not have these major two attributes, you will find it hard to be a success in this business.
Some of the equipment you would need to run your fundraising company efficiently and effectively are; computers, phones, printers, fax, software (accounting and database) and the internet.
One of the key aspects of starting a fundraising company is in building a solid business structure that has people that are not only proficient and have the necessary persuasive skills, but also those that are committed to helping the organization achieve its intended goals and objectives.
Therefore, some of the people that you will need to employ when starting your fundraising company include; Chief Executive Officer (CEO), admin and human resource manager, accountant, business development and marketing executives, front desk officer, IT consultant and security. This therefore means that you will need at least 7 people in order to start and run your fundraising company successfully.
The Service Delivery Process of a Fundraising Business
The fundraising business can be described as one where a company helps another achieve its set goals and objectives by securing donation from various individuals and organizations for a fee. Fundraising companies are seen as indispensable because of how important they are to various industries.
The fundraising companies help the recipient focus their attention on other matters as sourcing for funds can be very distracting and not all organizations can handle it or have the funds or human resources to do so.
The major way by which fundraising companies gain awareness to the plight of their customers is to organize events and engage in other promotional and marketing activities so as to bring the attention of people to the cause of their clients.
Starting a Fundraising Company – The Marketing Plan
- Marketing ideas and strategies
When starting a business, one of the aspects that you would need to plan for is how to generate a steady stream of income that will sustain and grow your business and one major way by which this can be achieved is via marketing. Marketing is a very important part of any business because it allows you to understand the needs of your market and then work on this need to be able to provide them with what they will need. Marketing is a very delicate aspect of a business because without marketing, your business might wither and die and you will have to start all over again.
Asides from creating the needed revenue that will grow and sustain your business, marketing also ensures that you create the necessary awareness that will allow you penetrate your intended market, and not only get a fair share of the market but also compete favorably against your competitors.
Before you can however create the necessary marketing strategies that will be considered effective for your business, it is important that you first conduct a thorough market survey so as to understand the market that you intend focusing on by identifying their characteristics and knowing what to expect from them as well as what they should also expect from you. Your market survey should also allow you to identify who your competitors are and how best you can beat them.
Whilst just starting out, it is necessary that you engage the services of a marketing consultant that understands your kind of industry thoroughly to help you create the initial marketing strategies that will allow you market your fundraising company before hiring in-house marketing executives.
Below therefore are some marketing ideas and strategies that can be used in advertising and promoting your fundraising business;
- Ensure that you write an introductory letter that contains your services, your rates and your contact number to your intended clients and other stakeholders in the industry
- Empower your marketing and business development executives to physically meet with intended clients
- Place adverts regarding your fundraising business on radio and television stations as well as in newspapers and magazines
- Install billboards and flexi banners in various strategic locations
- Participate in community programs and events in order to raise awareness for the business
- Using social media platforms such as Facebook, Twitter, Google Plus, Instagram and Linkedin to promote and advertise the business
Possible Ways to Increase Client Retention for your Fundraising Company
According to research, while it is very important that you create strategies that will initially attract customers, it is considered more expensive for a business to continue attracting customers. Businesses that saw a high retention of their customers usually spend less, because most of their customers usually help to spread the word about the business, thereby advertising on behalf of the company for free.
There are several reasons why a company usually loses its customers to its competitors and one of the reasons are that they are not dealing transparently with their customers nor have integrity. Even though anyone starting a fundraising business is supposed to be filled with true motives, several have turned it into a money making venture and have instilled sharp practices.
Customers also leave a brand for another if the brand is not able to meet its overall goals and objectives. If the goal is to raise funds and a fundraising company cannot do this repeatedly, then a client might be forced to try another.
Strategies to Boost Your Fundraising Company Brand Awareness and Create Your Corporate Identity
One of the most important aspects when it comes to starting and running a business is how to boost your brand and create a corporate identity for your business. Brand boosting can be very arduous because this is how you can stimulate your target market. If you are starting your fundraising business and have no means to push your brand in order to be recognized by donors and prospective clients, then you might as well be running a business that will not remain long in existence.
The importance of promotion and publicity is why businesses do not mind setting aside a huge sum of money monthly or annually in order to create awareness for their business because they know that the awareness they create will help generate revenue that will grow the business. Therefore, if you want to be able to compete with already existing fundraising companies, then you should invest in publicity and be consistent with it.
As with any major step that you will be taking during the course of starting and running your business, it is necessary that you conduct a thorough study on which publicity campaign will be best for your business especially as you will be competing against big names in the industry.
Most new fundraising companies usually engage the services of a publicity consultant who has experience in their kind of industry to craft creative and effective publicity strategies that will align with the overall goals and objectives of the organization. It should be noted that while some strategies might cost you money, there are those that would not.
Below therefore are some of the publicity strategies that will be very effective for your fundraising business;
- Ensure that you create a website and use this to promote your fundraising activities
- Distribute handbills and fliers in various strategic locations all around the area where you will be operating from
- Place adverts in local and national newspapers as well as on radio and television stations about your fundraising company
- Make use of your social media platforms such as Facebook, Twitter, Linkedin and Instagram to promote and advertise your business
- Send a press release about your new fundraising business to the press
- Create customized tee shirts and brand your official vehicles in order to create the necessary awareness for your business