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§ 2.2 METHODS OF FUNDRAISING

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Critical to an understanding of government regulation of charitable fundraising is an understanding of fundraising itself.46

Every charitable organization is entitled to receive and, indeed, welcomes support in the form of contributions. Contributed funds can be used only to support the goals and objectives that are consistent with the organization's stated mission—usually, to engage in one or more forms of charitable activity recognized in law. When goals, mission, and public benefits are communicated to the public as institutional needs, they can stimulate gift support. Replies are acts of philanthropy that are motivated by numerous factors, including a sincere concern and a willingness to help others, to improve quality of service, or to advance knowledge. Such voluntary responses, whether of time, talent, or treasure, uplift the human spirit because they are directed to a charitable organization.

Requests for contributions are conducted by one or more fundraising methods. Fundraising is, in itself, a unique form of communication that “promotes” and “sells” the product (cause) and “asks for the order” at the same time. There is a common perception that there is a single type of activity called fundraising and that all gifts are made in cash. Most regulatory approaches seem founded on this perception, as are public attitudes—both positive and negative—toward charitable solicitations. In fact, charitable organizations employ several methods and techniques to solicit contributions. Gifts can be in several forms (such as cash, securities, personal property, and real estate), all of which are embraced within the term fundraising. The one feature shared equally is the objective—to ask for a gift that benefits someone else.

Asking is simple. There were traditionally only three ways to fundraise: by mail, by telephone, or in person.47 Mail solicitation has been found to be 16 times less effective than personal contact, yet most fundraising uses this most impersonal of approaches. Organizing institutions and agencies to perform fundraising is much more complex and requires the careful, and sometimes simultaneous, application of many individual methods of solicitation by volunteers and employees working together. Each method of fundraising has its own characteristics regarding suitability for use, public acceptance, potential or capacity for success (gift revenue), and cost-effectiveness. Likewise, the reporting and enforcement aspects of regulatory systems—to be fair—should distinguish between the varieties of fundraising technique and their performance.48

The methods of asking are best understood by dividing them into three program areas: annual giving, special-purpose, and estate planning. The “pyramid of giving” (see Exhibit 2.1, later in this chapter) illustrates how each area functions to perform individual tasks and to aid the progression of donor interest and involvement leading to increased gift results for each chosen charitable organization. Fifteen methods of fundraising are encompassed within the three program areas.

The Law of Fundraising

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