The Power of Multi-Year Pledges
Updated: Feb 1
The Secret to Exponential Growth
From the desk of Rolando D. Rodriguez, CFRE
Many non-profits are far too reliant on annual fundraising to maintain their mission and operations. Whether secured through individual gifts, grants, or events, the immediate need always seems to be survival fundraising. While advising many organizations – even those that have been around for decades - I have found tremendous opportunities for expanding multi-year giving.
In fact, they often overlook revenue opportunities that are hidden before their very eyes. I will share just two examples below.
Multi-year pledges are paid over an agreed-upon period of time. So instead of asking for $10,000, you request $50,000 over a three to five year period. And the entire pledge can be immediately booked on your financials.
By focusing on pledges, not only do you immediately increase your revenue, but you also encourage donors to stay engaged with you for years.
As a young man, I remember sitting with a great Miami philanthropist, R. Kirk Landon, as he explained that pledges were the best way to ask for gifts during tough financial times. He suggested that I ask - "Do you think times are going to get better later?". Most often you will get a yes. So then you ask for a pledge!
A good thought to keep in mind right now.
I recently worked with a great organization that typically asked board members for a yearly gift. As I spoke to one of their board members, he said: “actually, I already plan to give a major gift every year for as long as I can, so I see no reason why I wouldn’t commit to a 5-year pledge right now”!
Then we carefully approached others on the board, and beyond. Their revenue soared. They needed to switch their thinking.
Here are some other reasons to switch . . . . .
Maturity and Planning
Pledge giving is often a major factor used by grantors and sophisticated donors when assessing whether the organization is sustainable. They’ll look at the financial statements to review future revenue. And if they see few pledges, they’ll pass.
You probably won’t realize an opportunity was lost.
How about an entry-level pledge group? I once led the launch of a new support group at $5,000, payable over 5 years. They began with only three wonderful women - and using a few proven growth processes they grew to
hundreds of members who have now raised and given millions of dollars!
Reduce Your Budget-Based Blood Pressure
I led an organization that raised approximately $6 to $8 million a year. And at the beginning of each fiscal year, we were at that anxiety-filled starting point of $0. But in reality, when we started the year we already had $3 million + in pledge payments booked.
Imagine starting out the year with at least half of your budget supported through existing pledge payments!
Find a donor champion or board member to show others the way. Create an entry-level pledge group. Whatever it takes, make the switch from annual fundraising to more sustainable giving.
There are endless ways to make it work for you.