Have you ever wondered if all you can ask for is general operating support?  Or perhaps, you asked how you could offer different projects for your donors to support without creating restricted donations?

I recommend to my clients that they consider packaging their annual operating budget into a “Family of Funds.”

A Family of Funds allows donors to choose from a selection of broad groupings of approved budget line items.  This concept applies the funding needs of the organization to giving while appealing to donor-centric interests. A Family of Funds could include the following categories:  Exhibitions; Digitization and Technology; Publications; Youth Programming; and Area of Greatest Need.

A Family of Funds provides donors with an option of how their gifts will be used and provide “budget relief” to the organization’s annual operating budget.

Following are the steps to create an Annual Fund centered on a Family of Funds rather than on just general operating support.

#1:   The purpose of the Annual Fund is to obtain reliable, predictable and sustainable support that can be managed efficiently, used in meaningful ways, and compared across fundraising years.  This support allows the organization to continue to operate from year to year, which brings us to the next point.

#2:  The Annual Fund plays a vital role in the advancement of the organization by providing budget-relieving gift support.  These funds are often applied toward the operating expenses of the organization or to a particular project.  Unrestricted support can be used for this purpose.  So, what constitutes unrestricted versus restricted support?

#3:  Annual giving for nonprofits cannot use “Restricted Funds.”  Such funds are those that have an intended purpose, assuring the donor that their contributions are used in a manner in which they have directed.  Conversely, “Unrestricted Funds” are allowed and are those gifts that are not designated by a donor for a specific purpose.  This is an essential point because common industry practice allows Annual Fund gifts to be discretionary.  This means that donors can have flexible options when contributing to the Annual Fund.

#4:  Gifts in response to solicitations for the Annual Fund further secure this concept.  As long as the solicitation outlines the significance of the Annual Fund in the organization’s budget, then a gift that is made in response to that solicitation can be applied to the activity that is indicated.

#5:  A common, current approach is to package the annual giving into multiple donor offers.  These offers are tailored to match a donor’s interests and passions; hence, the Family of Funds recommendation.

So, if you think that just asking for “General Operating Support” is all that you can do via your Annual Fund, think again.  You have the opportunity to analyze all of your Annual Operating Budget and package your “budget relieving” items and activities into a Family of Funds that will provide multiple options for donors giving.  Essentially by doing so, you are relieving items in the Annual Operating Budget and thus meeting your annual operating needs.

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