fundraising

Funders Who Reward Capacity Development

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Creative and sustainable nonprofits are drawing more and more funding from "investors" while the pool of feel-good "donors" is shrinking.

You can trace much of how nonprofits operate back to the source of their funding.

The majority of nonprofits have a Development Director whose key role is not development of the organization, but development of funds for the organization. They are in charge of writing grants, reporting on grants, courting foundation contacts and major donors, managing fundraising campaigns, and basically asking for money.

In my experience, very few nonprofits see "development" beyond the role of asking for money, over and over and over again.

If we trace this back, it's easy to see the reason for this reliance on repetitive fundraising.

Historically, many foundations and donors demanded that the greatest possible percentage of their funds be invested in direct program services. In other words, donors have demanded that nonprofits spend donated funds right away, with no investment in the future.

This idea was set in stone by organizations like the Better Business Bureau Wise Giving Alliance, Guidestar and Charity Navigator; sites whose profit model was based on giving donors solid information about the nonprofits they were considering donating to, but whose lack of concern or awareness of genuine indicators of mission efficacy resulted in a long era of comparing nonprofits based on one major indicator: their "overhead".

In fact, many states (including Utah) still publish the percentage of donations invested in direct program services on charitable solicitations permits - requiring these permits to be displayed on location and making such information available online, as if it were a genuine indicator of impact that was comparable across mission focuses.

This hyper-focus on a particularly meaningless percentage has resulted in enormous pressure to pay as little as possible for everything, from space to supplies to talent. Nonprofits are expected to get everything donated and to attract bleeding hearts who will work hard in crumbling offices on the bad side of town for less money and terrible health insurance.

I was talking with several talented employees of a local nonprofit that I admire a great deal for their forward-thinking revenue models last week. I was amazed to learn that because of their location, they are approached daily by drug dealers and have to watch their young clients deal with the same interactions as they come and go from classes.

A for-profit arts school would absolutely never subject their clients to this type of environment; it's bad for business. This organization is catering to the same clientele with unique and important STEM education, yet they have not made it a priority to move to a better location. Why? Almost certainly because it would increase their overhead.

While many nonprofits are responding to opportunities for sustainability and internal revenue creation, they continue to sacrifice in ways that ultimately lead to poor performance of those initiatives, or outright failure.

However, the nonprofit culture is shifting, albeit slowly.

Family foundations are now being run by a younger generation, a generation characterized by entrepreneurship and impact. More and more corporations are investing in nonprofit grants and awards that reward sustainability and innovation. And thanks to technology, we are witnessing nonprofit and for-profit startups that are making a splashy impact, while giving 100+ year old nonprofit in the same niche a run for their money.

With this shift, those big three online nonprofit rating services finally backed away from this percentage as an indicator of mission performance with an open letter in 2013 and a follow-up letter to nonprofits in 2014.

The days of doling out $10,000 checks for feel-good programs are petering out and it's a good thing.

While I've witnessed many nonprofits deny this shift and struggle to incorporate better business models into their long-term mission strategy, the process is leading to stronger, more accountable, and increasingly sustainable cause organizations who may very well multiply their impact on homelessness, domestic violence, animal cruelty, addiction, and every other mission focus.

And much of this credit comes back to funders and donors who are willing to invest in the long game, who are looking beyond the percentage of donations invested in one-time services and reinforcing the importance of internal capacity.

Eide Bailly's Resourcefullness Award is just one example of a funder that sees the bigger picture, investing a total of $15,000 in nonprofits with creative and sustainable revenue generation initiatives in Utah, Arizona, Colorado and Minnesota (applications are due August 12th).

Here in Utah, our Community Foundation just held it's third Social Investors Forum, curating a community-wide dialogue around the importance of funding unique, innovative, and sustainable nonprofit initiatives while bringing new funders to the table who are more comfortable with "investing" rather than "donating".

Our state Arts & Museums Division invests up to $2,500 in arts organizations each year specifically to aid them in developing their capacity.

These focus changes are critical to creating long-term impact. In effect, these are genuine investments that multiply the impact of the funders. They trigger and support internal capacity development and revenue generation programs that allow the nonprofit to further its reach and its mission, year after year.

That's a donation check I want to write.

So, whether your making a personal donation, a grant award, or a creating a corporate giving program, consider reaching out to nonprofits within your mission focus area and finding out which ones are making this leap.

Invest in the long game, not low overhead, which is too often an indicator of low growth, unsatisfied employees, high turnover, and ultimately, low impact.

And for you nonprofits, invest in talented, creative minds that can challenge your status quo, and brag about how you are positioning to make a difference for now, and for the future.

How to Score During a Give-A-Thon

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Utah is in the midst of our annual day of giving, Love Utah, Give Utah. Founded and hosted by the Community Foundation of Utah, 400+ nonprofit organizations are working to score new donors, exposure, and prizes. What factors set apart the winners from the less lucrative campaigns?

1. Cultivate Community

The nonprofits who really stand out during give-a-thons have an established community of fans, both live and online. They don't wait until a week before or the day of the event to blast their mailing list with an appeal. Instead, they curate ongoing communication and opportunities for interaction. Just like on social media, you want to communicate for the purpose of engagement at least five times for every appeal.

Lacking this foundational component and its already the day of? You can still improve your results.

2. Invite Interaction

Spy Hop Productions, a youth media nonprofit

Some donors have reported having received more than 15 email appeals from different organizations just today. That's a crowded field, especially when you consider the dozens of work-related emails that demand attention.

Beyond the obligatory email appeals (which you should ensure include a photo or two of your purpose in action), the frontrunners have created opportunities for hands-on interaction with the mission. Some organizations are running open houses, some are having parties, and others are running telethons. Some great examples:

If you can interact in person with community members who are interested in your cause, even strangers who weren't aware that their hobbies or activities aligned with your mission, you'll generate more buzz and potential new donors.

Not sure if you can command enough participation to come off as a success? Team up with other organizations who share your donor base.

3. Seed Momentum 

The real trick during a give-a-thon is to convert strangers into fans during the event. This is an incredible feat as people are generally wary of donating to organizations or causes they aren't familiar with. However, if you can generate a lot of momentum and excitement, you are much more likely to attract unfamiliar visitors to your campaign.

Consider Noble Horse Sanctuary, a nonprofit that operates on a total budget of $58,000 and has already attracted $9,000+ from 158 donors.  This small organization has outraised 197 other small nonprofits (as of 5 PM, there are still 7 hours to go). Their results are so compelling that many of us at the headquarters for the event have talked about their mission, visited their campaign page, and checked out their website.

How do you build momentum?

  • Find vocal corporate partners to make matching grants, especially those with a large employee base and an eager marketing team ready to take advantage of the sponsorship.
  • Cultivate scheduled donations early so that you start off at midnight with a bang.
  • Task your evangelists with spreading the message on your behalf throughout the day, multiplying your network reach, online and offline.
  • Don't just communicate at your community. Spur an online Instagram and video campaign to stand out from the crowd and create online interaction.

Utah Film Center

4. Fearlessness

Finally, there is a fearless quality among many of the nonprofits who have capitalized on the day. They volunteered to stand in front of the cameras for the stream-a-thon, they joined in the honk and waves, they asked local celebrities to hold up their sign for a photo opp, and they reached out to real celebrities on social media for a retweet.

When it comes to standing out during a free-for-all fundraising campaign, a little bit of an edge helps.

Good luck to all the Utah nonprofits and those of you with your own community give-a-thons coming up. If your community or state lacks an annual day of collective philanthropy, team up with your local community foundation and make it happen!

Community First, Then Marketing

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I think it's safe to say that the vast majority of mission founders or directors are lacking marketing experience. It's just not a typical precursor to starting an organization to feed the hungry or distribute clean water. But we can all agree that sharing our message is paramount to fulfilling our mission. The more people who care about our cause, and associate us with the solution, the more donors, volunteers, and talented team members available to scale our impact. Marketing is a bit of an intimidating word. It's often associated with advertising, events, radio and television interviews, published articles, and slimy people who launch a lot at bad jokes and drive black BMWs.

It's also easy to pigeon-hole ourselves in comparison to bigger, well-funded players. When you're relying on word-of-mouth or a few hundred printed brochures from Vistaprint, those tear-jerking American Cancer Society ads can make anyone feel inadequate.

How do you stay grounded in what you do best, while effectively spreading your message, so that you can grow your impact?

You may be surprised to learn that many small nonprofits are making waves on social media. A Nonprofit Technology Network article by Susan Gordon highlighted a interesting comparison:

Following the major earthquake in Japan in 2011, quite a large number of diverse nonprofits put out fundraising campaigns. In looking at those on the crowdfunding platform, Causes, the Japanese Cultural and Community Center of Northern California, a relatively small organization with just over a million in annual revenue, had raised more than $400,000. Comparatively, the American Red Cross, an organization with more than $3 Billion in annual revenue, pulled in $322,540.

The most successful mission-driven organizations have built loyal and motivated communities.

Social media and online platforms simply provide an efficient (and inexpensive) method to mobilize your community (and their community) around your cause, even if your cause doesn't have cute pictures of babies to post on Facebook.

Social media can seem intimidating and ineffective at first. Most companies have tasked low-level interns to post inspirational italicized quotes on backdrops of flowers every few days.

Unlike this giant waste of time, organizations who engage in activities that build their direct community and then connect regularly with that community online through stories and relevant information take advantage of social media as an amplifier. An example:

A 45-year old banker who regularly gives $20 to various charities loses his 19-year-old son to an accidental overdose. Having previously distanced himself from substance abuse, "those are bad kids whose parents weren't around", suddenly finds himself personally connected to how insidious even a little experimentation can be. He becomes heavily involved over the next year with a local organization that offers prevention, treatment, and support services to his community.

The banker and his wife are now donors and volunteers for the cause and the organization is doing a great job engaging them in their mission. The wife connects with the organization via social media and invites her local church group and a dozen of her friends to donate with a few clicks. They do because they know the family well and are equally horrified at the loss of their son, a young man the same age as many of their children.

A social media ask is a lot easier to swallow for many of us. There is social approval involved in being associated with a good cause and the visibility of our association online can attract others in our network without even an invite. Many stories are so compelling that they go viral, enlisting thousands of unknown supporters in spreading the message and contributing to the need.

You can't duplicate this effect with a direct mail appeal or an event. We don't share the postcard with the hungry kids on the front with our neighbors, coworkers, and family. We also don't often talk about our charitable contributions or affiliations.

While a case can certainly be made that the older members of our communities may prefer a traditional appeal, on a human level we are all more interested in being part of a community, rather than an address on a list. It's not about the ask, it's about whether you provide a compelling space to interact and connect. Even if you engage on social media with stories, if you lack a genuine community on the ground, the few strangers who retweet you or like your page are likely never going to get more involved than that.

If you're struggling with concept of social media:

Instead of looking for strangers in the dark recesses of the internet, step back and evaluate your genuine followers. You may have a list size in the thousands, but do those people have a real connection to your cause and are you providing opportunities to interact? A few small changes in this realm may make all the difference, with the bonus of social media evangelists praising your work to all of their friends online.

Get More Donors That Give More

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Do you remember baby Jessica? It was 1987 in Midland, Texas. An 18-month-old Jessica Morales fell 22 feet down a well just 8 inches wide. Lodged in the pipe for 59 hours, the story drew near-continuous coverage on every major network until the toddler was pulled to safety. The sheer impact of the highly visible and horrifying story of this little girl's ordeal on the American public is quite remarkable. The White House held a reception, ABC made a tv movie, and thousands of donors generated an estimated $700,000 in support.

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Pew Research ranks her story 8th in media interest over the past 20 years, USA Today identified her as the 22nd most impactful person on our lives, and CNN coverage totaled more than that of the 1994 genocide in Rwanda, where 800,000 people, including many babies, were brutally murdered in just 100 days. That's an average of 8,000 people per DAY.

The Identifiable Victim Effect

Dan Ariely is a behavioral economist with MIT and the author of The Upside of Irrationality, a wonderful and intriguing book that I just finished and highly recommend. Ariely sheds light on why we give to some causes, and not to others, illustrated by a simple study:

First, random participants were given $5 and offered the opportunity to donate some or all of their newfound money to a charity in response to a food shortage in Africa. Half of the participants received disturbing statistics. The other half received a personal story about a little girl, Rokia: "Your gift will change her life..."

The result? Participants gave twice as much to help Rokia - 48%, as compared to 20%. Why? Ariely pegs our empathy-or-apathy response to three psychological factors:

Closeness

The physical proximity and feeling of kinship you share with the victim. We feel much more for a family member whose home burnt down across the street from ours, as compared to a fire that takes out a village in Angola.

Vividness

How visible and tangible the need is. A picture of a bald, 4-year-old leukemia patient is vivid. A billboard that informs drivers that heart disease is the number one killer of women is not.

The Drop in the Bucket Effect

The faith in your ability to have an impact. We tend to shut down emotionally when we perceive the need to be so large that we cannot do anything of any real value.

How Can Causes Learn from the Baby Jessica effect?

Stalin historically said, "One man's death is a tragedy, but a million deaths is a statistic." Mother Teresa echoed the sentiment, "If I look at the mass, I will never act. If I look at the one, I will."

Some causes, like St. Jude's Hospital, have a very obvious face, but many do not. These missions aren't any less important and deserve strategic messaging to connect with a broader base of donors who give more:

  1. Find your baby Jessica. If you're lobbying for cleaner air, highlight Jane, who has asthma and missed 24 days of school last year. Connect your medical supply nonprofit to Joe, who received a knee replacement and was able to go back to work. It doesn't have to be a tear-jerker, but your donor needs to relate.
  2. Focus on a picture and a story. Seeing the face of your mission immediately makes it more personal. Pair that with a compelling and tangible story about their life, stirring an emotional connection. This isn't about being scammy. Your cause is IMPORTANT. Your work has meaning for people. Communicate that.
  3. Drop the statistics. It can be hard to completely delete the fact that there are a million Jessicas out there everyday, but the bigger the problem, the less likely your potential donor will try to help. You have a very limited window to capture their attention; don't turn them off with an impossible task.
  4. Empower the donor. Instead of making your donor feel helpless with depressing statistics, show the breadth of the problem by highlighting how many people were helped last year "by donors like you". Take a note from the Save the Children classic where donor could "sponsor" a child and even get updates on them. There's a reason they garner $600M in contributions a year. Make the smallest donation meaningful.

Review your website, brochure, social media pages, direct mail appeal letters, fundraising speeches, and any other vehicle for connecting with donors. You'll probably find a lot of statistics and very few pictures of real, genuine people and a clear message of how my $20 can make a lasting difference.

Step 1. Invest a day in crafting better messaging and images for your mission and then launch that messaging cohesively across all of your platforms.

Step 2: Put methods into place to identify and collect new images and stories from your work to consistently refresh your messaging and empower more donors to have an impact through your organization.

If you supply direct service partners, provide an easy process for them to funnel stories and pictures back to you. Even if you are layers away from the impact, find a contact on the frontlines and partner with them to tell the stories of those you help.

Don't wait, this is one of those important but not urgent tasks that will forever undermine your fundraising if you don't do it now.

10 Steps to Nail the 10 Minute Pitch

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Last Friday, the Community Foundation of Utah held their first annual Social Investors Forum, Shark Tank-style. They solicited both for-profits and nonprofits through a call for investments, narrowed the 150 applicants down to six, and then invited them to pitch in front of the judges, investors, and an audience...on Valentine's Day. Startup founders are well-versed in the pitch and many begin honing and refining their public speaking skills and story long before they are served up to the sharks. But, nonprofits haven't frequently been put through a publicized pitch event. Most fundraising goes on behind closed doors with grant applications or donation request letters.

Pitch-style events probably aren't going away. More and more large donors are starting to see themselves as investors and some are even looking for actual returns by investing in debt opportunities or for-profit social ventures. The opportunity to have a dialogue with the organizations you're considering is invaluable.

While it might be terrifying for introverted mission warriors to share their message from a stage, the platform has its benefits and, if harnessed, can stir up new donors, patrons, and supporters. It's time to embrace the pitch.

10 Easy Steps to Nail the 10 Minute Pitch:

1. Know your audience. Find out exactly who you will be pitching to. If they're traditional foundation directors, then stories about community impact will probably be critical. If the judges are potential investors or from the business community (as with most boards), they will want hard numbers and evidence that you know how to run your organization like a well-oiled machine.

2. Tell a story. It's critical that your audience connects with the application of what you do. We all too often rely on statistics, which are not only boring, they depersonalize the very real experience of the people who make up those stats. A story can be delivered in about a minute and can start your presentation off with a clear understanding of the why and the what, before you launch into the details.

Example:

One of the groups on Friday was looking for seed funding for a youth game development program, expanding on existing media training they do with kids. The program would only initially benefit 10 teens, a sticking point that the judges hit on. Had they started out with the vivid story of "David" who comes from a low-income family and got involved in a video production team in elementary school, advanced to additional media training in junior high, and then received a full-ride scholarship to the award-winning game design program at the University of Utah...and he also happens to volunteer as a mentor for the students in the program now...well that might have answered some of the skepticism around the impact the funding would have.

3. Start with why. We often get stuck in the what too often. Start off in the why. Why does your organization exist and why are you uniquely qualified to deliver the solution you are presenting. The why can often be delivered succinctly in your story, just make sure you make a clear and compelling case for why your organization or project is needed.

4. Demonstrate optimistic confidence. Ever get irked when your kids whine about having nothing to do rather than coming up with an idea? The same reaction holds true for nonprofits, yet many of us still go to funders with a big whiny, statement about how hard things are. Would you invest in someone who comes to you for all the answers, or would you invest in their competitor who is coming up with the solutions?

If you're particularly resilient - brag about it. "Yes, we had a $20K funding cut from our government contract, but we immediately came up with several alternative funding solutions and then launched a social enterprise to bring in sustainable, ongoing funding while training our clients in marketable skills!"

5. Answer their biggest questions. By knowing your audience, you should be able to anticipate what questions they will be asking and what doubts they will have about you, your organization, and your project. If you can fill in the blanks before the Q&A, you'll invoke more confidence. Try out your pitch on someone who knows nothing about your project and have them grill you afterward to help you refine your content.

6. Demonstrate competence. While this shouldn't be a show about how great you are, you should quickly shore up any doubts about your ability to perform by documenting your team's credentials and a few examples of prior successes. Funders recognize that they are investing in people, not just a good idea.

7. Plan for sustainability. If you don't have some form of earned income or a sustainability plan, you are limiting your funding opportunities and losing ground. Highlight how you will leverage funding to create long-term impact, as well as how you plan to maintain funding for the project. A bicycle collective that pitched on Friday rightly bragged about the fact that 90% of their revenue is self-generated through tune-ups, repairs, and sales.

8. Storyboard it. When  you have identified the main components, draw out your presentation from start to finish, ensuring that you have a powerful opening and an equally compelling closing, with a logical sequence in between. Remember that even presentations need white space - if your script has you rushing to keep it to 10-minutes - make some strategic edits to deliver the information more succinctly. Tip: Your slides can help deliver content that you can't fit into the script.

9. Be creative and engaging. You aren't the only team pitching and if folks wanted to simply read your slides, they would have had you send them in rather than having you pitch. Make eye contact, use your hands, stand up straight, and don't read your slides. Take the time to get creative about how you deliver your most important message so that it leaves a distinct impression.

Example: 

One of the presenters was pitching for funding for a fruitshare program. Instead of delivering statistics about how much fruit is wasted and how many people are going hungry, he started his pitch by handing out an apple to each judge. He then shared a powerful statement about how those delicious-looking apples traveled more than 1500 miles and had likely lost half of their nutritional value. It was a simple, but smart attention-grabber that not only left an impression, it literally left an apple in front of the judges for the rest of the pitches.

10. Rehearse. Rehearse. Rehearse. Don't fly by the seat of your pants. You may know your organization inside and out, but a well-crafted and well-timed presentation will give a clear, aligned message from start to finish and demonstrate how motivated you are to secure funding for your cause.

On a side note, if you're an introvert (like me), the more prepared you are, the more likely no one else will recognize that you are WAY out of your comfort zone. During the mingling on Friday, I heard too many presenters complain about how terrible they were or highlight the problems in their presentation.

Nobody likes a self-deprecating complainer and it doesn't make any logical sense to draw attention to our mistakes, but for some reason we seek comfort in gouging ourselves before others can. Be cognizant of this and instead smile, accept the compliments graciously, and roll with the punches - even if you seriously fall on your face or your technology backfires.

Good luck!

Small donation...MAJOR impact

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It's easy to become so overwhelmed by the enormity of the social problems we care about to become apathetic and do nothing. The amount we have to give seems too small to make any real difference. A mechanism that turns that mentality on its head is gaining increasing popularity across the nation: giving circles.

Giving circles bring everything together to make giving easy, informed, social, and impactful, which is how giving ought to be experienced. By 2007, there were at least 400 giving circles nationwide, engaging more than 12,000 donors, and having given nearly $100 Million.

The basic premise: Small donations collectively fund larger, more impactful gifts decided by members. The magic is in the connections to a community rallying around a cause. A 2009 study of giving circles revealed that members give more, give more strategically, and are more engaged in their communities.

Giving Circles create opportunities to network with people who share your values, learn more about your cause, and become informed on the diverse nonprofits working to create solutions. These organizations are often volunteer-run, ensuring that all, or very nearly all, of your donation goes to your cause.

Importantly for the nonprofits, a larger grant from a giving circle means more than just funding. They gain valuable exposure to individuals who give through the process of deciding the grant and have the opportunity to gain additional exposure through media coverage.

A Peek Inside:

I recently became a member of the Utah Women's Giving Circle. The concept simply made sense to me, but I never expected the experience to be so informative and meaningful.

This last Tuesday, we came together to vote to distribute $20,000, with a ballot of 12 nonprofit organizations. I am already embedded in the nonprofit sector in Utah, but I was completely unaware of several of the organizations on the list prior to the voting process.

However, the point where the awards were announced was what converted me into a lifetime advocate.

With representatives from the nonprofits present, the excitement and tension in the room was tangible. The response from these nonprofit leaders was an experience I will never forget.

2013 Grantees

These critical organizations in our community didn't have to go begging for these dollars and they didn't have to search out our group and complete a tedious application to receive highly restricted funding. We simply invited them to complete a one-page application and then join us for a party in their honor, where we would vote and award the grants live.

That set the stage for a powerful evening centered around community, rather than competition and scarcity.

The positive swell of excitement and appreciation provided enormous reinforcement as a donor, a thousand times beyond a thank you card following a check. I have no doubt that lifetime donors were created in those interactions. The physical connection to the people who are so passionate about our shared cause left an indelible mark.

Get Involved:

While women's giving circles are the most prevalent and could probably take credit for creating this movement around collective giving, a variety of diverse causes and groups have utilized the concept to make a major impact.

If there isn't a giving circle near you that addresses a cause you care about, you should consider starting one. All you need is a fiscal sponsor so that donations are tax-deductible (your local community foundation is a great option) and a few friends or family members who share your ideals.

It's literally that easy, which is why the giving circle movement is only going to continue to gain momentum.

Learn more via multiple reports and resources, including 10 Basic Steps to Starting a Giving Circle and tools for community foundations and nonprofits interested in hosting giving circles: Regional Associations of Grantmakers' Giving Circles Knowledge Center.

Do you need to switch your pitch?

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We've all heard of pitch competitions in relation to startups. The pressure is intense and these infant business ideas often have a small window to demonstrate their ability to sell their product (and their company) to would-be investors. But the pitch isn't new and it isn't limited to startups. Mission-driven organizations who have mastered the pitch are recruiting more dollars, volunteers, partners, and investors than those who haven't for the very same reasons: You have a small window to sell your cause.

Too often, a pitch looks like this:

 

We tell people what we do or recite our mission statement rather than sharing the impact we have.

The small nonprofit "provides free mental health services to low-income, uninsured adults" instead of "relieving debilitating mental health symptoms for those most at risk and most in need so they can get back to work and take care of their families".

The community foundation "pools donations and expertise through coordinated grants to improve the quality of life of Sunshine City" rather than "catalyzing ideas into action for good to change our neighborhoods, schools, and community for the better".

How much  more compelling is the following pitch?

 

How many mailings did you receive between November 1st and January 1st asking for a donation? Now consider the number of emails, tweets, websites, texts and other forms of media vying for the attention of your would-be donors.

If you don't think your in sales, think again. Mastering persuasive communication skills, especially in sharing your impact with potential donors, board members, or partners, is critical in this digital era.

Let's get the juices flowing with some ideas from Dan Pink, master of motivation and author of Drive and To Sell is Human:

 

Take the next step RIGHT NOW. Share your own fast pitch in the comments.