Wake up to the new rules of fundraising!

By Richard Turner
On September 8, 2014 At 2:00 pm

Category : Best posts Q3 2014, donors, Latest posts, strategy

Responses : 38 Comments

Right now I feel like throwing a bucket of ice over the sector we fundraisers work in and shouting “wake up!”.

Years ago I knew something had changed in fundraising. I didn’t know what. Like us all I could see the symptoms such as rising acquisition costs, and falling response rates. I could certainly feel the pressure. So in between jobs I sat and read and read – books like Sticky Marketing, The Networked Non Profit and The New Rules of Marketing and PR. Surfacing from these fantastic reads I knew the rules of fundraising had changed. Over the last three years at SolarAid I have been learning how and doing by best to apply them.

This blog summarises my learning.

Recognising the rules have changed helps you understand the problem (not just the symptoms). And when you know the problem then you can do something about it. It becomes clear what to do, and what to stop.

The New Rules of FundraisingThe New Rules

So what are the new rules? These are the three game changers :

  1. How we make purchasing decisions has changed. We now buy from trusted sources, recommendations from friends or by reading reviews of past customers we haven’t even met. If it’s the case for products why not for charity?
  2. Everyone is now a channel. That includes your donors! And in this connected world you just don’t know who they know.
  3. The social capital that your donors have with their contacts is greater than the social capital your cause has with their contacts. How can you leverage it?

Why the rules have changed is the subject of another blog – in a word it’s the internet.

Just stop and think about the first one. How did you last decide on something to buy – that camera you bought, or a place you stayed, or the plumber you chose to use? Chances are it was from a recommendation by asking someone you trust, or going online and looking at the customer re-views.

Let me give you an example of new rules in action in our world of fundraising – this summer’s big hit the Ice Bucket Challenge. When you see it through the lens of the new rules you can see why it works – an ask (the nomination) from someone you know and engaging content produced by your supporters to their friends! Supporters as a channel using their social capital. By the way I drafted this blog post before I even knew about the Ice Bucket Challenge – when I first read about it I could see it through the lens of these new rules.

Yet although the rules have changed when it comes to fundraising we doggedly apply the old rules thinking the recession is to blame for high acquisition costs and falling response rates (when the real reason is the rules have changed). So as fundraisers we are told to:

  • Focus on areas of high return on investment (ROI), dropping areas of low ROI.
  • Ramp up the volume on the need/pity scale to lift falling response rates.
  • Ask more often.

As a result the short sighted siloed ROI mentality pervades and is dominated by Finance. Whilst this strategy might briefly check the declining trend it doesn’t provide a cure. If anything this approach exacerbates the problem leading to rising public distrust in fundraising. Worse still it leads you to adopt the opposite tactics you need to!

  • The low areas of ROI are often the very activities you need to spread your story and empower your supporters.
  • Ramping up the volume might get a better response in the short term but it turns off many more and it rarely inspires people to engage their networks.
  • If you ask ask ask you never create space to do what you need in between – the relationship building which is critical to why people give again, equip them with your story, or just as im-portantly, tell their contacts.

Need more evidence this applies to fundraising? New Philanthropy Capital recently published re-search on giving behaviours in its Money for Good report. The two top reasons a donor earning over £100k chose to give to a specific charity was from a recommendation by a friend, family or colleague or to sponsor a friend, family, or colleague. The top two! And these were the top two reasons for everyone else only after being an existing donor!

How can we not think this profoundly changes our marketing strategies!

So what does this means for fundraising right now?

  • DM (Direct Marketing and Direct Mail) needs to think smarter than how to get money out of tar-gets. Our marketing needs to inspire people to give and tell their contacts.
  • Let’s stop stopping people in the street to sign them up to direct debits (how to get money out of them). That’s old rule interrupt my day marketing (great in its day but not in the new rules world).
  • Looking at ROI by channel or area makes no sense. It’s how it all connects. So an event or ac-tivity with a low ROI might raise little but could inspire those you engage to be your advocates that leads to new opportunities.
  • Continuing business as usual by applying the old rules only makes matters worse. Results might be slightly better than they were (although probably at a higher cost) but still won’t stop the decline.

Applying the new rules to fundraising

So that’s what we should stop. What should we be doing a lot more of according to the new rules?

The key to unlocking the new rules is how to get as many of your supporters engaging their net-works – that includes your staff, volunteers, trustees, beneficiaries and donors.

  1. Engage people with an inspiring purpose (for example set a Big Hairy Audacious Goal or BHAG). This gives the driver – the why.
  2. Empower supporters to be advocates. Give them a sticky story to tell. Give them permission too. You just don’t know where that will lead to. Now digital has a clear place by providing a great basis for supporters to spread your story (but difficult to measure from a direct ROI).
  3. Partner with organisations who share your beliefs. Chances are their followers/customers/supporters will share those beliefs too. Now your ‘supporter base’ has grown 10 fold.

Now step back and see how your fundraising programme all connects to deliver the best overall ROI and join it up. Think holistic fundraising.

Last year SolarAid’s income just grew by 100% in just one year. We didn’t do this by bombarding people using the old rules (we couldn’t afford to). Examples include a former volunteer who se-cured a six figure trust grant, a donor who recruited others in her street, a major supporter who en-gaged government, a supplier who recommended us to a major donor, and another cause who promoted our appeal to their supporters. And this is just the beginning.

Using the new rules is transformative. But to make them work you need to invest time, resources and brain capacity to make the switch. The savings you make from not applying the old rules will more than compensate. You will need to work out new measures and you need to stop the old measures as they keep you applying the old rules. You may need to think of new ways of working. At SolarAid I have a role as Chief Fundraiser give me the freedom to see how it all connects.

It’s so obvious but you have to recognise what the problem is and then the solution is so much more straightforward. Look at old rule ways and either drop them or adapt them to the new rules. It’s so easy when you can see.

Why we need to wake up

If we continue to do the old rules it will just get people’s backs up. I can’t decide if that’s better for those of us applying the new rules as we will scoop the rewards, or could just mess it up for all of us as reputation and public trust in charities slides. To begin with probably the former but, in time, the latter is a genuine threat. The more of us that try the new rules the more we will learn.

This is a world of fundraising where supporters are champions of causes, where story telling really counts and digital thrives. Come on throw that bucket of water over yourself and spread the word about the new world of fundraising that awaits us. What an opportunity!

If you are already using the new rules and learning how to apply them then “hurrah!” – please tell me. I would love to know what you are up to. Email richard.turner@solar-aid.org or comment on this post.

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Richard Turner (7 blogs on 101fundraising)

Richard has been a fundraiser for 25 years with Oxfam, and, as Director of Fundraising, for FARM-Africa, FFI, and ActionAid UK and also worked agency side as a consultant and fundraising entrepreneur at Alan Clayton's Cascaid agency. He was awarded Fundraiser of the Year in 2001 by the UK Institute of Fundraising. An associate with Alan Clayton Associates, Richard now advocates a new way to fundraise, particularly based on his learning during the last five years as Chief Fundraiser at SolarAid, by spreading your story through your supporters to leverage their social, as well as financial, capital. Regularly blogs as @ifundraiser as he passionately believes that fundraisers themselves can make a difference to inspire others.


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Comments

  1. Great read and I completely agree, but where I get stuck is working out how to apply it to trusts fundraising. Any ideas?

     — Reply
    • Some initial ideas:

      – If you have a particular trust in mind ask who are their influencers? Who do they follow?
      – What are their beliefs and how do you align with them to help achieve their mission?
      – Prime all your supporters (staff, volunteers etc) so they can help advocate your cause and use their contacts to help you reach trust funding through them (which may be several people down the chain). This is why your mission and story needs to be a) inspiring and b) easy to convey. This will involve engaging audiences that aren’t trusts – hence the need to collaborate across teams (or think holistically).
      – Finally can you engage a particular trust – get their advice and input – before you even apply to them? Perhaps host an event to get their input?

      I attended a great case study by Chetham’s School of Music about their £31 million capital appeal at IoF Convention this year – they stated not one of the trust donations came from cold applications – they came from nurturing relationships and engaging potential supporters throughout their campaign.

       — Reply
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       — Reply
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       — Reply
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       — Reply
  2. So the new rules are basically relationship fundraising. Excellent!!

     — Reply
    • I almost said that Denisa but hadn’t checked it by Ken Burnett. it was ahead of it’s time and it does feel like it’s time has come! Relationship Fundraising 2.0?

       — Reply
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  4. Thank you
    Too many nonprofit managers judge the fundraising program on return on expense instead of return on investment — that ROE is how the outsiders (and some managers) measure the cost of fundraising — without regard to the long term.

     — Reply
  5. Hey Mr T! Good blog. Interestingly these rules have always applied in major gifts/trusts… or at least for the 15 years I’ve been involved. Perhaps there’s something here about all our supporters now expecting some VIP treatment?

    I’ve just seen below that the point has already been made re Relationship Fundraising! Totally agree.

     — Reply
    • Thanks Sharon, Spot on. So supporter care now becomes a critical part of the fundraising programme (its not a back office processing unit anymore). Take a fraction of the spend used in direct acquisition cost and invest it in providing amazing supporter care – so your donors recommend your cause to their friends.

      I agree major giving is a great basis for these rules. An inspiring goal (eradicate the kerosene lamp from Africa by 2020) helped engage our major supporters at SolarAid, and has helped us continue our story with them year on year. They are now becoming advocates.

      On Relationship Fundraising the difference is the context has changed – how we make purchasing decisions has profoundly changed – which means that it’s even more important than it was before! Not only that you just don’t know who people know in this connected world and everyone is now a channel.

       — Reply
  6. interesting read. as a supplier to non-profits and their agencies – its a good reminder to know having a common goal (raising more donations / treating supporters like family) is actually one of the best parts of growing our business – – even if we don’t actually work at the non-profit. – –

     — Reply
    • Suppliers are now key too. You have influence and contacts and no doubt you use social media. So inspiring suppliers and helping them amplify the message of a non-profit is part of the win win.

      Make suppliers feel part of the mission – and no doubt this helps you go that extra mile when a client needs you to too.

       — Reply
  7. Dear Richard ,

    Thanks for the very interesting article . Just throwing a spanner in the works . Do you think many NPO’s are after that big ROI simply because its a matter of survival or closure?

    I think many fundraisers have this in their mind , you have to go big or go home, and changing approaches may take a while to see results , Perhaps mixing old with new could present a solution.

    I agree thou with your article , fundraising times have certainly changed and finding intelligent ways to maximize resources could be the difference between surviving to reach organisations vision or giving up right before the finish line.

    Nishen Naicker
    SA

     — Reply
    • Dear Nishen,

      My take is simpler than that. Many organisations focus on ROI at lots of levels (by activity, by fundraising area etc) because it’s reassuring in uncertain times. So as a result you feel pressured to prioritise activities that give a direct respond as they are easy to measure.

      Once you accept the way we make purchasing decisions has changed and we no longer want to be interrupted about what to buy (or who to give to) then you begin to see why things aren’t working so well. Add that everyone is a channel and you can start to see the solution.

      The new rules mean you will need to inspire, have ‘BHAG’ style goals that others will advocate (so that ask comes from people you trust). It will be hard to measure (although in time we may learn what to measure) but overall I believe the ROI (overall) will be far far greater.

      Richard

       — Reply
      • Okay, I’m not really crazy about butterflies. either. One of his little relatives (the dreaded tomato horn worm) came around a few weeks ago and COMPLETELY stripped my pepper plant that I had growing here for 3 years. There goes breakfast …. AGAIN!

         — Reply
      • 2600SF is a LOT of PV – about ten times the size of a typical 3-4KW household installation – and a massive expense that probably exceeds the cost of home/land.You'd be back-feeding the gird whenever the sun is up, essentially acting as peak power generator. You'd likely be into an whole different classification regarding state/fed incentives, and how you'd interface with your local utility, permitting, pricing, etc…I understand it's just a ball-park sizing exercise, but it's pretty far out!

         — Reply
    • OMG!! I was telling David about that episode!! I even presented the plate with a, “Look! Muffin tops!” They WERE yummy, after all. 🙂 I think that I should have made banana bread instead, that way it wouldn’t have fallen apart since I wouldn’t have had to dig each muffin out.

       — Reply
  8. I wish I could say your blog is groundbreaking, but it’s already been addressed for years. It’s called supply-sided fundraising — or now known as donor-centered fundraising. What you write about is what many of us have been urging over the years (just like you), but the nonprofit sector is run by dinosaurs who employee individuals who don’t understand proper fundraising etiquette — building relationships and finding the connection between the donor and the organization. We prefer to use methods like direct mail for fundraising instead of realizing acquisition mail is just that — acquisition of new donors — and it returns only 1% to 6% new donations based on the entire mailing. Once organizations have them, most think you could keep them after the first donation by sending them another direct mail piece. False! Yes, you need to send out a “thank you” within 48 hours of receiving the donation — but there is much cultivation an org must do before even asking for that second gift. I commend you for your writing and shining a light on an issue that seems to have dwindled to a glimmer of hope for the sector. Like I said — this is something that has been pushed by many groundbreaking fundraisers through intensive research that you could find in books written by people like Hank Rosso, an original founder for the Center on Philanthropy at Indiana University. I’d suggest checking out his writing.

     — Reply
    • Thanks Dan. I will certainly check out Rosso’s Books.

      I guess my key point is that the context of why donor-centered fundraising is even more important has changed based on how we increasingly make purchasing decisions based on recommendations from our trusted network. In addition there now exists a means for donors to act as a channel themselves through social media etc. So along with a donor-centered approach we need to equip donors with the tools to spread our story and act as amplifiers to our mission. That’s when the magic begins to happen.

       — Reply
  9. Very nice, would like to be in touch with you regarding fundraising for implementing Free Solar Lamps distribution to Tribal school children through our charity organisation.
    Thx.

     — Reply
    • Mohanakumaran I look forward to hearing from you. By the way we don’t give solar lights away as this isn’t a sustainable approach and would undermine local traders. We sell them at a fair market price to help build a market for solar. Selling lights puts the power in the hands of ‘customer’ – they had a right to a warranty should the light need repair or replacing. It moves faster than a traditional aid model.

      Donations fund the cost to SolarAId for getting a quality solar lights to remote rural areas (currently £3/$5 a light). We tend to distribute through local schools working with the local education authority. In schools we have also trialled light libraries which can be a great way of building trust in communities (so this might be something you could set up through your charity organisation). We can send you our learning.

      Also check out the new website of SolarAid’s wholly owned social enterprise SunnyMoney http://www.sunnymoney.org/

       — Reply
  10. These are great insights, Richard.

    I’ve recently made the transition from commerce to fund-raising.

    Casting my business eye over things I see the primary messages from charities being:

    i. We’re doing this: please fund-raise for us.
    ii. Please do that: and fund-raise for us.

    Yet, in a socially connected world, there are so many more possibilities.

    Macmillan recently launched a scheme in Brighton to invite people with a spare hour to make home visits to people with cancer and help with house-work, gardening or even just to be there as company.

    With that small, yet creative, investment, Macmillan provided care for people, involved their supporters, supplemented their own staffing requirements, and got people like me to share their ‘brand’.

     — Reply
    • Love your observation Dorian.

      By coincidence we met with Grant Leboff today (author of Sticky Marketing which is one of the books I reference). He made the point that now people want to be involved and the most effective charity model is no longer one of : give us the money and I’ll do it for you.

      So to make the most of this (and the fact that everyone is now a channel) I think organisations will have to think how can they involve their supporters in a meaningful way. Your example is a great one.

      Thanks for sharing.

       — Reply
      • Hi Richard,

        Great subject and very close to my heart.

        A couple of thoughts & observations

        – Charities really have failed to understand the importance of copying behaviours when donors are making decisions – The work of Mark Earls etc is a real eye opener and asks some fundamental questions about the role of herd behaviour on persuasion.

        To my mind charities (esp. fundraisers) are still locked into a one to one marketing approach rather than understanding how to market to tribes

        – As social & peer to peer channels offer a great opportunity to tap into tribes how do the emotional territories that charities use need to change. Fundraisers rely upon anger, sorrow, sympathy etc. – are these the right emotions to use in order to help spread ideas within a group.

        – Over the past few years I’ve measured supporter commitment for a wide range of charities, across different categories. And even those charities that enjoy high commitment ( i.e. they score high on trust, satisfaction, clarity and importance etc.) score poorly on involvement – so supporters are highly committed but still feel uninvolved and want a greater sense of participation (or at least wish to be asked!).

        – A little evidence on the changing way supporters are choosing who to support. I looked at how people choose which child sponsorship agency to join. 28% said they had gone through an online search process to compare the different sites, looking at their social media pages, and a smaller % said they also asked friends or family.

        So for a high prize product people are looking in the same way as they would a consumer product. Yet charities have done little to appreciate this and take steps to build in trust & credibility into the decision making process.

        Interestingly Trust Pilot doesn’t even have a category for charities.

        Time to wake up indeed!

         — Reply
        • Thanks for sharing your thoughts James.

          – In my opinion inspiring content is more sharable because .. er it’s inspiring. The emotions you list that fundraising often use might get a better short term response – but it doesn’t leverage the new rules as effectively which I think will deliver a better ROI overall.

          – To force organisations to involve supporters more I suggest charities need to set a “Big Hairy Audacious Goal” or BHAG (Wikipedia it). A goal so scary the only way to achieve it is to get every part of your organisation – including supporters – to help deliver it.

          – On the child sponsorship evidence just think how causes could leverage this through the lens of the new rules. If I was them (and I used to work for one) I would get my supporters as online advocates so when I did my research I would see transparent reviews of my child sponsorship experience. Of course this means the charity needs to deliver a great experience! So supporter care would be paramount (no bad thing). And then I would be proactive in empowering supporters to engage their contacts (and I don’t mean the old style “can you give us the name of someone” that we, the charity, can contact” – as this doesn’t really leverage their social capital).

          I’m off to check out Mark Evans and dig up my copy of Seth Godin’s Tribes.

           — Reply
  11. Thanks Richard for a very thought-provoking piece.

    I must admit I find the concept of ‘new rules / old rules’ a little sensationalist and misleading – it implies that people’s attitudes and the way they choose to support charities have changed overnight, and that the concept of building trust and establishing meaningful relationships is a new one. As others have commented, the concept of ‘relationship fundraising’ isn’t new, though I appreciate your point that the context in which it applies has (gradually) evolved.

    I think that you define some new goals for charities very clearly but there is a big chasm between understanding what to aim for and knowing how to achieve it. This is particularly true for small charities who lack the in-house expertise to adapt their marketing approach and feel confident about building a strong network of advocates. In theory I suppose the ‘new rules’ could be seen as creating a level playing field for charities but I doubt that many solo fundraisers, or Trustees, in small organisations would have much confidence about cashing in on the potential you rightly identify.

    Another thought – yes the ‘new rules’ probably make it easier to acquire support if you get your approach right, but do they also make it harder to retain support? Inspiring stories come and go, social media can be a fickle marketplace. Your Ice Bucket Challenge example is a good one – millions of people suddenly know about ALS and have donated to the cause, but will the vast majority still be engaged in six months’ time? Will they even remember the charity’s name? Or will they move seamlessly on to the next viral campaign that all their friends are supporting? It can be a daunting challenge to harness and retain all that potential support, even if you understand the basics!

    Thanks again for providing us all with plenty of food for thought.

     — Reply
    • Thanks for your thoughts Mike.

      I agree trust has always been there as a major factor – the difference is everyone is now a channel. That changes everything. It changes who we now rely on for that trust.

      I believe it is a great opportunity for small charities. We (as I count SolarAid in that grouping) don’t have funds for aquisition that takes several years to pay back. In my experience small organisations do have more flexibility to adapt and try a new approach. And it seems to be working at SolarAid although at times it’s scary as it’s unknown. I’m fortunate to work for an organisation that is willing to embrace the new rules (driven by an big hairy audacious goal of eradicating the kerosene lamp from Africa by 2020).

      The inspiring bit comes from your mission goal – I mentioned the ICE bucket challenge in the context of the power of leveraging people’s social capital and that the best marketers are the people around us. Your mission goal should of course stand the test of time and that’s what’s helps you spread your story. In fact retention is less of an issue – as your entire driver is about engagement and once you have someone engaged they are interested in you (because you bring some value to them).

      Whilst relationships are important, even relationship fundraising and donor-centered fundraising is seeking to gain a transactional outcome from the donor. With this approach, using the new rules, it’s all about engagement. Every peice of marketing needs to have some value. I.e marketing is no longer a means to an end it is now a means in itself. Now getting someone to spread your message is as important as them giving – which means the ability to take a holistic view to fundraising is critical.

      How to achieve it is a great question and the subject of a blog I’m just in the midst of writing. Once you know what it is you need to do – the how just drops out (your structure, your measures).

      It has big implications beyond fundraising. The traditional approach to charity is give us the money we will solve the problem. Now people want to be involved. I think this is a great opportunity – as now everyone is now a channel.

       — Reply
      • Really appreciate you elaborating in such detail Richard.

        I’m not sure I would recognise SolarAid as a small charity by any of the usual definitions but I’m glad to hear that your new approach is proving it can be successful even without significant investment behind it – that’s certainly a blueprint small charities will be very excited about!

        Speaking of excitement, I’m looking forward to reading your expanded blog about ‘the how’ – I’ll be one of the first to take a look so please do let me know when it’s published.

        My concern with the idea that ‘getting someone to spread your message is as important as them giving’ (which I appreciate in principle) is that this only works if there are enough people donating as well as sharing. The ultimate aim surely has to be reach donors. I worry that along with the ‘new rules of fundraising’ we are inadvertently introducing ‘new rules of supporting’ which make people feel that talking about a cause and broadcasting it means job done.

        I’ve talked to a lot of charities who have tried hard to develop a social media strategy without really understanding how to monetise it. Consequently they invest a lot of time in developing content but either don’t see a return or don’t have access to any data that helps them understand how to identify and maximise that return.

        I’m sure I am guilty of ‘old world thinking’ here to an extent, but even as a fairly young fundraising professional (under 30) I’m not sure I’m completely sold on the merits of this new approach yet!

         — Reply
        • Of course you’re right Mike – it comes down to what brings in the money. It goes beyonds ‘likes’ and sharing. Ultimately fundraising is about asking. This approach is about engaging your donors so they do it for you.

          What makes it even more appropriate for fundraising is the price of the ‘product’ people are prepared to pay varies from person to person (unlike a camera you may recommend someone to buy) – and in this connected world you just don’t know who people know. So a “low level cash donor” (not untypical of labels we use) could help you acquire a major gift.

          I accept its unchartered and will need new measures – and that’s why we should share what we doing so we can learn from each other. Even the process of writing this blog and responding to comments has helped progress my own thinking!

          Whilst I complete a post on the ‘how’ check out this guest post I just did for the new Rogare blog. It asks ‘why?’. As in why aren’t we acknowledging the change.

          http://blogs.plymouth.ac.uk/criticalfundraising/2014/09/15/opinion-who-will-lead-us-out-of-the-wrong-marketing-paradigm-were-stuck-in/

           — Reply
          • Thanks as ever Richard and apologies for the slow reply.

            It sounds like the best approach is to find a middle ground between excitement about the ‘new rules’ / revolution; pragmatism about what can ultimately raise money; and shared learning experiences. There is surely potential in that mix!

            I read your sister blog and certainly appreciated a lot of the points that you made. One thing that stood out for me was your rallying call for fundraisers of varying backgrounds to come together and discuss / refine the ‘new rules’. I always welcome more discussion and innovative thinking. I firmly believe that not enough of that happens in small charities (and, by the sounds of it, big ones too) and I’ve definitely been guilty in the past of a closed approach. I’d welcome the chance to be involved in any such discussion.

            Meanwhile, just to show that some of my comments here have been to play the role of devil’s advocate and that I really do appreciate many of the points you mentioned, I referenced your blog here in a recent blog I wrote about fundraising events on my website: http://www.limegreenconsulting.co.uk/blog

            I look forward to reading the ‘how’ post!

             — 
      • This is my blog on the How (to apply the new rules of fundraising)

        http://ifundraiser.wordpress.com/2014/11/24/why-what-and-finally-how/

         — Reply
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  14. Thanks Richard, I thoroughly enjoyed reading this article.

     — Reply
    • You are really welcome Alice. Let me know if it’s of any help in how you approach fundraising or any learning along the way.

       — Reply
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