5 fundraising terms every new nonprofit should know

If you're new to fundraising, here are some terms you'll likely see along the journey. They might sound familiar, but in the nonprofit world, they have specific meanings.

This quick guide explains five common terms to help you start off with less confusion.

1. Pledge

A pledge is a donor’s promise to give a specific amount in the future – for example, “I pledge to donate $500 by year’s end” or “I’ll give $50 per month for 10 months.” It isn’t cash in hand yet, but it signals a firm commitment.

Pledges can be powerful: donors who pledge often give much more overall. In fact, one industry report found that pledgemakers (about 3.6% of donors) gave 158% more than average in their first year and about $7,655 over five years.

In other words, encouraging even small pledges can build long-term support. Don’t be shy to ask for them. A pledge shows the donor believes in your mission, and that confidence often leads to even greater generosity later on. Even a small pledge is a vote of confidence in your cause.

2. Annual fund

An annual fund is a nonprofit’s yearly giving campaign to cover day-to-day operations and programs – you can consider it as the drive that “keeps the lights on.” Gifts to an annual fund are usually unrestricted, so your team can use them where needs are greatest.

For a new nonprofit, an annual fund is also a chance to build relationships with donors. Many organizations use it as their first step in developing loyal supporters. Every donor who gives to your annual fund is saying, “I trust you to use my money wisely.” That trust lays the foundation for bigger gifts later on.

Even if your early annual fund looks modest, it’s the consistency that matters. Having 100 people give $20 each year is more powerful than one-time gifts you can’t rely on. Over time, that steady support creates stability and confidence for your nonprofit’s future.

3. In-kind donation

Not all gifts are cash. An in-kind donation is a donation of goods or services instead of money. For example, a local bookstore might donate books for your reading program, or a web designer might volunteer pro bono help on your website.

These gifts directly save your organization's expenses. In fact, in-kind giving is huge: U.S. donors contribute roughly $58 billion worth of goods and services to nonprofits each year, and over 80% of donors have given non-cash gifts at some point. That means many people and companies want to help with what they have, not just money.

Donated food, clothing, professional advice, or equipment can stretch your budget as much as an unrestricted check. Remember, every small gift makes a big difference!

4. Recurring gift

A recurring gift is an automatic donation made on a schedule, commonly monthly or annually. Donors set it up once, and their gifts automatically repeat, to give you a steady, predictable stream of support.

Recurring giving is growing fast: about 57% of donors are now enrolled in a monthly giving program, up from 46% just the year before. This trend means supporters increasingly prefer ongoing commitments.

The real benefit? Recurring donors tend to become your most loyal supporters. One study found recurring donors have a 78% retention rate, compared to only 38% for one-time donors. In other words, they stick with you much longer.

That consistency is invaluable. Encourage it gently, for example, suggest that a donor try a modest $10/month pledge. It may feel small to them, but it becomes $120 a year, and often leads to a deep, lasting connection.

Fundraising is “the gentle art of teaching the joy of giving,” as Hank Rosso put it – make it easy and rewarding for donors, and they’ll keep coming back.

5. Donor stewardship

Donor stewardship means nurturing the relationships after someone donates. It includes thanking them, showing them the impact of their gift, and staying in touch.

Good stewardship is crucial because donors can easily drift away otherwise. Sadly, about 62% of first-time donors never give again within three years, even though keeping an existing donor is far cheaper than acquiring a new one (new donor acquisition can cost up to 7 times more than retention).

By promptly saying thank-you, updating donors on successes, and involving them in your story, you flip those odds. In fact, research shows that increasing donor retention by just 10% can boost fundraising revenue by up to 200%. In short: stewardship pays off.

Always value your donors – a heartfelt thank-you note, a personal update, or an invitation to a program event makes them feel appreciated. That keeps them invested in your success.

Start your fundraising with BetterWorld at no cost

Starting a nonprofit already comes with plenty of expenses, but fundraising doesn’t need to be one of them. BetterWorld gives new organizations everything they need to raise money online without charging platform fees. That means every dollar raised goes straight to your mission.

Ready to launch your first campaign? Sign up with BetterWorld today.