Steps to creating an annual fund program:

STEP 1. Start with a list of your current individual donors during the past 365 days (or last year), including the donation date and amount.

This will give you a good sense of how you might divide your donation levels. What are the natural giving increments? For example, do you have lots of donors who gave around $50, another group that gave about $100, and then another group that gave around $250? The groupings will tell you the natural annual fund levels that will make sense for your organization.

A discussion of what to call these groupings, what benefits to offer, and other such issues will be discussed in a later post. The general goal is to create levels that would encourage a natural progression in a donor’s giving from year to year. A donor might donate $50 one year and then decide to donate $100 the next. That is a natural increment. A jump from $50 to $500, on the other hand, is less logical.

STEP 2. Once you have determined which levels you have, divide your current list!

If you are using excel or a similar spreadsheet, sort the list by donation amount, and then you can easily divide your list.

STEP 3. Once you have your list divided into levels, your next step will be figuring out where to notate each person’s level, membership term, etc.

This is where professional fundraising software comes in. A wide variety of programs exist for this purpose; in fact, they will not be discussed here because tomes could be written on the various programs available. In my experience, cost will be the most significant factor in your determination of which program works for your organization.

Whether you decide to use special software, or just to create your own database (even using a simple excel spreadsheet), here are the two pieces of information you will absolutely want to record:

i. Donation level.
ii. Expiration date. (Generally, the anniversary of the last gift.)
iii. A place to record whether you have solicited the donor for a renewal of the donation, and how many times and on what dates you solicited the renewals.

An example record (that includes some additional helpful fields) might be the following:

Donor: Johnson, James
Level: Friends Circle ($50)
Expires on: August 31, 2009
Renewal notice history: 1st Letter 5/1/09: No response
2nd Letter 6/1/09: No response

The renewal notice history allows you to see what solicitations James Johnson has received already asking him to renew his gift. This record shows that James Johnson received two letters – one on May 1 and one on June 1. The letters have been called 1st and 2nd letter. It’s a good idea to create a set 1st, 2nd and even 3rd renewal letter, each unique from the other. A donor won’t enjoy receiving an identical letter three times. Update these letters every three to six months so they remain relevant to your organization.

Once your database is set up, you will need to determine a way to see each month who is due to receive a solicitation, and which solicitation each person should receive (i.e. who needs the 1st letter, the 2nd letter, etc.).

I prefer to send people a 1st letter two months prior to their due dates. Those who do not respond receive a second letter one month prior to their due dates. Those who still do not respond receive a 3rd letter right around their due date.

Many people continue this pattern and send a letter each month until the individual responds. My preference is to stop at three letters. By that point, I feel that the people who still haven’t responded need another solicitation method, such as a phone call. I constantly seek the wire-thin line between soliciting people aggressively enough to illicit the highest number of responses, while not wasting resources on those individuals who are just not going to donate again. You must feel this out for your own organization and donor pool.


That is the simplest overview of creating an annual fund program. Since the annual fund is so often the staple food of earned income for an organization, I will post many more articles on this topic. I will just conclude with a list of the major advantages of having an organization annual fund program versus just soliciting all donors in the same manner at set points during the year.

Annual funds programs:

• lead to ongoing income, rather than just ebbs and flows at set points throughout the year.
• allow you to predict your cash-flow more accurately because you know exactly when you will solicit donors and for how much you will solicit them. Once you get a sense of your average return rate, you will have a pretty accurate cash-flow projections.
• make it easier to strategize your solicitations and target certain groups of donors to upgrade their donations each year.