SVG File-02

Guide to the Fundraising Cycle (The 5 Key Stages)

Author: Adie M.

Fundraising is essential for many organizations and projects. You may have heard of the fundraising cycle before, but have you used it to make the process more effective? 

Fundraising can be a big challenge. If you do it right, though, the rewards and the impact they make could be huge. 

Below, we’ve taken a deep dive into the 5 key stages of the fundraising cycle so that you can enhance your fundraising strategy. 

What Is The Fundraising Cycle?

The fundraising cycle is a concept that can help you to make the most out of the fundraising process. There are 5 steps involved that can help nonprofit organizations improve their interactions with donors. 

These steps (identification, qualification, cultivation, solicitation, and recognition) will help you to identify where a donor is in the fundraising cycle and guide you on how to move them into the next phase. 

Donors are motivated by different things, and understanding more about them can help you in your operations. 

Your fundraising strategy needs to be well planned for it to be effective. So, taking the fundraising cycle into account is crucial! 

The Five Stages Of The Fundraising Cycle

1. Identification

The first step of the fundraising cycle is identification. This is when you begin to seek out potential donors and opportunities. It is important to understand who you will be asking for donations. 

However, it is equally important to plan what you will be asking for from each prospective donor. For this reason, having set goals to work towards is a must. 

New donors are critical, but not the only option you have. Keeping an up-to-date list of all people who have donated to your cause is essential. When you’re on the lookout for new donors, don’t forget to review your database and consider consistent and passionate donors. 

Conducting wealth screenings of those in your database can be helpful in setting goals and deciding what to ask for. 

In this step, you need to consider all potential donors. Keep in mind that donors on your list may decide not to donate. This needs to be planned for by creating a list of potential donors that is much longer than you need. 

This step might take some time, depending on how much support you currently have and how much you have predicted you will need. However, think of this as building a solid foundation for the rest of the process.

2. Qualification

Qualification goes hand in hand with identification. Think of it as a more in-depth version of the first step. 

Qualification requires you to carefully look over all the donors on your list, and define them clearly. Basically, you need to conduct research on each potential donor you have identified.  

This means that you should note down how much they may be capable of donating, who they may know in the community, and their areas of interest. This information will help you with developing personalized strategies for each donor that can be used in the next steps. 

Two business people shaking hands
Two business people shaking hands

3. Cultivation

This step of the fundraising cycle involves strengthening the relationships you have with the people or organizations on your donor list. This is so that you have a foundation to work from when you decide to ask for a donation. 

When building a relationship, you want to involve potential donors in different aspects of the project or your nonprofit organization. Think about offering them volunteer opportunities, inviting them to various events you’re a part of, and including them in meetings. 

Plan out this period in advance and as it can take up to a year. It is important to have completed the qualification stage to the best of your ability as it is important to know where the donor interests and passions lie. This knowledge can help tremendously with getting donors interested in your operations. 

Offer your potential donors a range of engagement opportunities they could get involved with, or keep them included and up to date in your operations. This ensures new donations, as well as sustained support. 

Making sure you keep donors continuously engaged will aid in the sustainability of your project. 

4. Solicitation

This stage of the fundraising cycle can be your make or break - it’s time to ask for donations. 

If you’ve put in the work for the previous steps, you should be working from a strong foundation. There are many strategies that can be used to ask potential donors for their support, be it face to face or digitally. 

Personalize the way you ask each donor for support, depending on factors such as their preferences and the potential size of their donation. For example, you may send a simple email to people who you believe will donate small amounts but would put in some more effort with top donors. 

You also need to think about how frequently you’re going to ask each group of prospective donors.    

5. Recognition

Recognition, otherwise known as stewardship, is the step in the fundraising cycle where you show donors your appreciation. Although this is the last step, it is an important one to revisit multiple times throughout your efforts. Showing gratitude regularly is a good way to retain your support system. 

There are a couple of great ways to express your thanks after a fundraising effort. Celebrating your successes online, calling donors to thank them for their support, and sending personalized thank you gifts or notes can make donors feel appreciated. 

Recognition is about maintaining a good relationship and connection with each of your donors after the fundraising process. Recognition could be public or private - perhaps even a little bit of both.


Final Thoughts 

The 5 steps of the fundraising cycle can help you to succeed in your fundraising journey. Remember that this cycle is not static. Rather, you need to decide where you are in the cycle and be aware of any elements that change. 

If your fundraising efforts are continuous, you may have different donors in different stages. Keeping track of this is important. The fundraising cycle is a critical element when seeking donations. As such, it's important to prioritize it in your strategy.