The Complete Life Cycle of a Passive Fundraising Program

The Complete Life Cycle of a Passive Fundraising Program

Considering how involved, hectic, and complicated many fundraising campaigns can be, plenty of fundraising professionals would gladly welcome a fundraising idea that doesn’t involve recruiting dozens of volunteers or convincing your supporters to sell things for you. This is where passive fundraising programs can become a game-changer for your organization.

These effective fundraisers not only give supporters a chance to easily fund your cause but also offer you the opportunity to host an easy and ongoing fundraising initiative without straining your resources.

And to help you take full advantage of these powerful fundraising programs, we’ll cover each step of the typical “life cycle” of a passive fundraiser. From keeping donors informed about your campaign to marking your Form 990EZ deadline on your calendar, these key steps will ensure that you can raise (and keep!) as much revenue as possible:

  1. Plan and set up your annual program.
  2. Market your campaign
  3. Thank donors and maintain momentum.
  4. Prepare your annual tax reports.

Let’s dive in with an exploration of the program planning process.

1. Plan and set up your annual program.

In case you don’t already know, passive fundraisers are a style of fundraising where donors support your mission by performing actions that they were going to do anyway. Counted among the most effective fundraising ideas, some passive fundraisers even have the added benefit of being able to be held on an ongoing or potentially year-round basis.

In particular, one of the most popular passive fundraising ideas is online shopping fundraisers, and it’s this kind of fundraiser that we’ll use as our main example going forward.

Through a shopping fundraiser app or platform, your supporters can make their usual purchases and donate a percentage of their totals to your mission. This means that donors can raise money all year just by shopping exactly as they usually do, without spending an extra dime.

In order to plan your fundraiser, you’ll want to first get a firm understanding of the logistics associated with the budget, time span, staff hours, and responsibilities, as well as the overall objectives of your campaign. Unlike short-term campaigns or one-time events, passive fundraisers can run for long periods of time and benefit from a long-term perspective.

For instance, with an online shopping fundraiser, you’ll want to consider:

  • The companies or local businesses that will partner with your program
  • The period(s) of the year that your program will remain active
  • How many new donors and total donors you hope to engage
  • Your fundraising objectives

For best results, create a dedicated fundraising calendar where you can craft a strategy for the messaging, major financial benchmarks, budgeting expectations, and other important details over the course of your long-running campaign.

2. Market your campaign.

The term “passive fundraiser” sometimes gives off the impression that these are hands-off programs where you can just download an app or set up a fundraising page and money will roll in while you focus on other things.

While many passive fundraisers are fairly easy to set up, they will require dedicated promotion to succeed.

Let’s look back at the shopping fundraiser example. You have partnered with a good fundraising service, set up your account on their platform, and are ready for donors to start shopping for your cause. Now comes the tricky part: while donating to your campaign may be easy and essentially free, how do you get forgetful or apathetic donors to download the app and engage with you?

The answer is marketing. In particular, consider these tips to ensure that donors are informed and motivated to join your campaign:

  • Provide instructions and resources so donors understand how to participate.
  • Create simple, easy-to-complete fundraising pages branded to your cause.
  • Take a multichannel marketing approach, using email, social media, and your website.

Remember that consistent and effective marketing is the heart of any successful passive fundraiser, and it’s where the majority of your time and funds will be going.

3. Thank donors and maintain momentum.

As we mentioned, passive fundraisers often run on an ongoing, long-term basis, which makes it essential to keep donors engaged throughout the long lifespan of your program.

One important way to accomplish this is by thanking donors for their gifts. According to Re:charity’s article on donor relationships and retention, appreciation is a key factor in ensuring that donors of all tiers remain active with your mission, and some of the most successful acts of appreciation include:

  • Sending post-gift acknowledgments
  • Hosting appreciation events
  • Organizing public shoutouts and spotlights
  • Sending small gifts, such as merchandise

Additionally, consider gamifying your campaign with an online fundraising thermometer and other interactive widgets.

This will help you to maximize revenue, keep donors in the loop, and maintain engagement during your entire campaign—and even after it ends!

4. Prepare your annual tax reports.

Every year, on the 15th day of the 5th month after the end of your fiscal year, it comes time to complete one of the most fundamental tasks for your fundraising team: tax reporting.

While tax filing may seem like a chore tacked onto the end of the fundraising process, it’s an essential activity that enables you to avoid hefty fines, show donors that you are responsibly handling their gifts, and keep your tax-exempt status. And after working so diligently over such a long period of time to market, promote, and manage your passive fundraiser, don’t you want to keep as much of that revenue as possible?

So, to ensure that you’re able to retain the funds you’ve raised from your passive programs, you’ll need to make sure to keep clean and tidy records of your fundraising campaigns. In particular, the File990 guide to 990EZ for nonprofits notes some of the major fields you should expect to complete for Form 990EZ—the main tax filing information form for small to mid-sized nonprofits:

  • Your mission
  • Significant activities you’ve completed
  • Revenues
  • Expenses
  • Assets
  • Liabilities

Additionally, this resource sheds a bit of light on which Form 990 document you will be expected to complete, the standard Form 990 vs 990N vs 990EZ:

  • Form 990. Completed and filed by organizations with gross receipts exceeding $200,000.
  • Form 990EZ. Completed and filed by organizations with gross receipts between $50,000 and $200,000.
  • 990N Postcard. Completed and filed by organizations with gross receipts less than $50,000.

Understanding these documents, as well as the broader accounting process, will greatly help your organization in the long run, keeping you from incurring fines totaling up to $50,000 for incorrectly or belatedly submitting your reports.

Furthermore, if you’re on the lookout for software assistance to make the confusing and nerve-wracking tax reporting process a bit easier, consider investing in a dedicated e-filing provider. These systems offer a user-friendly, automated solution that quickly and easily completes the IRS filing process for you and guides you through the completion of your form.

Passive fundraisers have great potential to be one of your most convenient and profitable ongoing fundraising programs. As long as you invest in the right software and services, diligently manage your campaign, and understand how to report your earnings, you will be able to add a powerful new program to your fundraising arsenal.

And now that you’ve been equipped with these expert tips, tools, and essential steps, you should be ready to take full advantage of the financial and engagement potential of your own passive fundraising programs. Good luck, and happy fundraising!

About the Author

Mathew Tooker at File990

Mathew's expertise is in sales forecasting, goal setting, client growth initiatives and business development and analytics. When he is not laser focused on moving organizations forward, you can find him spending time with his wife, Lauren, and two dogs, Reagan and Teddy, running marathons and watching the Atlanta Braves and Auburn sports.

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