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How to Write an Annual Fund Plan for Your Nonprofit in 7 Steps


Instrumentl team



September 4, 2022

If your nonprofit doesn’t have a strategic annual fund plan, your organization is missing out. Crossing your fingers and hoping revenue trickles in randomly is never a good idea.

In this post, we will explain what an annual fund plan is, why it’s important, and seven vital steps to create a powerful and effective plan for your nonprofit. Let’s dive in.

Annual Report Template for Nonprofits

What is an Annual Fund Plan?


A strategic annual fund plan gives you and your team a roadmap to follow throughout the year to make sure you raise the needed unrestricted revenue to run your nonprofit’s day-to-day operations, programs, and services.

This unrestricted funding, or general operating support, is especially vital given that many large donors restrict their giving to a particular operation, building, or program.

Just as you wouldn’t enter a capital or endowment campaign without a plan, neither should you forgo creating a detailed and comprehensive annual fund plan.

An annual fund plan helps you keep track of and plan for fundraising activities throughout the entire year, including special appeals, direct mail drops, Giving Tuesday, donor newsletters, donor stewardship, and care, as well as other opportunities unique to your nonprofit.

Why Do You Need an Annual Fund Plan?


You need an annual fund plan because you need your annual fund to be running at the top level. Your annual fund provides the money your organization depends on for its day-to-day operations, freeing you up to create other campaigns that are program specific.

An annual fund plan is essential to keep you disciplined and your entire team on the same page. Last-minute decision-making based on an unplanned idea rarely works well.

Rather than one frantic push at year-end, a strong annual fund plan will help you disperse your outreach efforts to donors throughout all 12 months of the year as well as help you keep your donors informed about your activities—including how their investment in your cause has made a tangible impact.

Without an annual fund plan, your nonprofit may find itself lurching from funding crisis to funding crisis. Planning and calendaring your activities to boost your annual fund is essential to your year-end and overall financial success.

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7 Steps to Writing the Best Annual Fund Plan


We’ve outlined the following steps to help you and everyone on your team create an effective and comprehensive annual fund plan for your nonprofit.

1. Review last year’s annual campaign.

Review last year’s results. Consider the following:

  • Did the number of donors go up or down?
  • What percentage of donors gave?
  • How many donors did you retain?
  • How many did you lose?
  • What messaging seemed to resonate the most with givers?
  • Did you meet last year’s fundraising goal or exceed it?
  • What was the average cost to raise a dollar?
  • Which channels had the highest response? Direct mail? Online? Phone-a-thon? Email solicitation? Special events?

By answering these questions, you’ll be able to determine the most successful and effective ways you raised money previously. This will help guide your planning and assist you in developing the best strategy for how to draft an annual fund plan for the coming year.

2. Conduct a data audit

Having clean, correctly formatted data is an important key to a high-performing annual campaign. Before embarking on improving data hygiene, be sure to make a backup copy of your database.

Follow these steps to conduct an audit of your organization’s data prior to creating your annual fund plan:

  • Define your major giving threshold. This will vary between organizations. One small nonprofit might consider $1,000 as a major gift, while a large university might consider major giving starting at $50,000.
  • Define who a “current donor” is. Is it someone who gave during the last fiscal year? The last calendar year?
  • Define who is considered a “LYBUNT” (donors who gave Last Year But Unfortunately Not This.)
  • Define what a lapsed donor is—is it someone who hasn’t given in the past two years? The past five?
  • Make sure your data is consistent and correct. In fact, consider creating a data style guide so that all data is input consistently rather than haphazardly. To help do this, you can access the U.S. Postal Service’s postal addressing standards guide.
  • Misspellings should be corrected. (Yes, spell check is available in Excel and other spreadsheet programs.)
  • A National Change of Address (NCOA) report should be run by the U.S. Post Office or your data vendor of choice. This will cut down on returned undeliverable mail and boost your campaign’s ROI.
  • Missing data should be verified and added, if available.
  • Some vendors also can run a search of the Social Security Death Index (SSDI). If your vendor does so, this is an important step to take out of respect for your donors.
  • Finally, be sure your executive director and chief financial officer are on board with your definitions and thresholds.

As part of your data hygiene efforts, utilizing a wealth screening service should also be considered. This will help you in identifying “hidden gems'' in your database and allow you to segment out your major gift prospects and donors from your mid-range givers and everyday givers. It will also help you customize realistic ask amounts that are personalized for each constituent.

3. Set your fiscal goal and your campaign budget

Part of setting your goal involves deciding what your campaign budget will be. It costs money to raise money. Determine all your annual campaign expenses throughout the year, including printing, paper, design, postage, events, travel, and other incidentals.

By comparing what your givers responded to last year, how much you raised, and calculating the ROI (money expended vs. money raised), you’ll be able to set a reasonable, yet ambitious fundraising goal to meet.

If you followed step 1 above, you’ll already know how much you raised last year. Can that amount be matched or exceeded? Have you acquired new donors since last year’s campaign?

Make sure your plan utilizes SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound.)

For instance, “We will raise money by Dec. 31” is a much weaker goal than “By utilizing email, direct mail, our website, and social media, we will raise $50,000 by Dec. 31.”

Likewise, saying “We will retain more donors” is vague. Instead, saying “We will retain 80% of our previous donors by Dec. 31” gives your team a measurable, specific and time-bound goal to press for.

4. Create a gift chart

Gift chart

Utilize the power of a gift chart, or table of gifts. Most often, gift charts are used for capital campaigns, but they are also a great tool to help manage an annual fund campaign. They can also help you avoid the dilemma of your board coming up with an unrealistic goal for the year.

The basic philosophy behind using a gift chart is that your organization will very likely raise the most money from a small percentage of donors who have the ability and affinity to make a large gift. It also takes into consideration the fact that not everyone you ask for money will say “yes.” The sample chart above assumes that it will take five prospects to achieve one gift or a 5:1 ratio. It also surpasses its goal of $500,000 because of rising costs.

A gift chart helps you stay focused on your overall goal and be more disciplined with any personal asks that will occur during your annual fund campaign. You can easily create one using this free tool. Simply plug in your total goal and your gift chart will be populated.

5. Determine what channels you will use to market your campaign—and when.

An annual fund campaign is much more than a year-end bulk drop of direct mail. Your messaging needs to “drip” throughout the year. That’s why you should create a 12-month calendar for the year’s activities.

To market your campaign, we recommend utilizing a multi-channel approach. Grandma may not be on TikTok, but your millennials and Gen-Z donors sure are. And social media can help you raise awareness about not only your nonprofit, but your fundraising goal.

Using complementary messaging via email, phone banking, direct mail, social media, and even advertisements can help drive home your message and boost interest (and giving!) throughout the year.

Another tip: create a separate website page focused on your annual fund campaign. Make sure all the messaging ties in with your social media, email, direct mail, and other channels you may use. And make it easy for your donors to give.

6. Delegate activities.

Gather your team and delegate campaign tasks—copywriting, graphic design, event planning, management, social media, etc. Doing so helps ensure your team’s buy-in and enthusiasm for your annual fundraising push.

And don’t forget to include your board members—they can write personal solicitation notes to their family and friends, as well as give themselves. Does their company match employee gifts? If so, encourage them to apply for a match any time they give to your organization.

7. Steward your annual donors properly.

Finally, good stewardship of your annual donors is essential. Prompt acknowledgment of their gift, personalization of correspondence and emails, and a genuine expression of gratitude go a big way in keeping donors loyal and engaged.

Be sure to include a stewardship plan in your overall annual fund plan. Part of good stewardship is investing in a robust software program to manage each touch or move within your entire donor universe.

And don’t forget, some of your most faithful annual donors may include foundations and corporations.

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3 Successful Annual Fund Plan Examples


To help you as you embark on drafting your own annual fund plan, we’ve included three examples of the best annual fund plans we could find.

1. Best Annual Fund Plan—Data-Driven

The Data-Driven Annual Fund

A sample annual fund plan is included in Part I of The Data-Driven Annual Fund, Part I: The Building Blocks, a workbook. The series, authored by Nevada-based consultant T. Clay Buck, CFRE, is available on the Silo Tips website and goes into specific detail about how to craft an effective annual fund plan using data analytics as its foundation.

The plan details various activities and target audiences and provides a suggested year-long timeline.

2. Best Annual Fund Plan—Classic

Association of Fundraising Professionals sample annual fund plan

The Association of Fundraising Professionals offers a sample annual fund plan as part of its former curricula for beginning fundraisers, the AFP First Course in Fundraising.

Now offered as a two-day online course called “Fundamentals of Fundraising”, the course is one of many trainings offered to both AFP members and non-members. This example is a solid plan that showcases year-over-year growth over three years.

3. Best Annual Fund Plan—Comprehensive

The Timothy Group three-year annual fund plan template

The Timothy Group, a consultancy serving faith-based organizations and nonprofits, offers a three-year annual fund plan as a template. This sample annual fund plan is made up of SMART goals and is ambitious in setting up strong growth.

We like how they segmented their plan first by constituent groups and how they did their homework as far as wealth screening.

Wrapping Up: How to Write an Annual Fund Plan for Your Nonprofit in 7 Steps


Are you ready to tackle writing a strategic and SMART annual fund plan? We hope so.

Remember: audit your data, always use SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound), involve your board and your team, delegate tasks, and track your ROI. If you follow these tips, you’ll be one step closer to meeting—and surpassing—your annual fund goals, keeping your nonprofit’s operating revenue flowing throughout the year.

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