Do you know how you may be breaking your donor’s heart? Keep it up, and they’ll break yours.
This is important.
It’s about a report that may change how you do fundraising.
Let me explain.
Unless you’ve been asleep at the wheel, by now you should know most nonprofits have been hemorrhaging donors for over a decade.
By tending to focus more on expensive, staff-intensive acquisition strategies like direct mail and special events, charities are bringing in one-time donors who never give to them again. It’s why I focus so much on donor retention strategies and exhort you to make them your priority strategy.
Why? Because otherwise all your acquisition efforts are wasted. The latest Fundraising Effectiveness Project Report revealed an astounding 81% of first-time donors lapse. [BTW: This isn’t the report that’s going to change your modus operandi; it’s merely the rationale for the release of the report that will. Keep reading.] Of repeat donors, 39% lapse. This means, on average, charities retain only 45% of all donors. For every 100 new donors acquired, on average nonprofits lost 96 existing donors. That means you’re engaging in a whole lot of work, for a pretty miserable return on investment.
“Over 70% of people that we recruit into organizations never come back and make another gift, so we’re caught on this treadmill where we have to spend lots of money on acquisition which most nonprofits lose money on anyway, just to stand still.”
– Professor Adrian Sargeant,
Director of the Centre for Sustainable Philanthropy at Plymouth University
This is the proverbial three steps forward, two steps back – only worse!
This burn and churn strategy is killing nonprofits — and burning out the folks who work in them.
Why is it that for profits manage to retain 94% of customers, yet there’s such a huge disparity when it comes to nonprofits?
In the for-profit world, it’s common knowledge it costs much more to secure a new customer than to retain an old one. So businesses, because they know it’s cost-effective, focus on customer service. Otherwise, they’d run out of potential customers pretty soon. They’d go out of business.
Somehow too many nonprofits haven’t fully grasped the same holds true with donors and nonprofit businesses. Your supporter world really isn’t infinite (even in the digital age). If you keep ticking folks off after they’ve given to you, you’re not likely to keep them for long. Or their friends, family or colleagues either. Word gets around.
You can’t keep losing ground at the rate at which the average nonprofit today is losing it.
A fundraising program that focuses on one-time transactions won’t get you very far.
You need to build a business model that moves your organization steadily forward – based on your reputation for effectiveness and service.
To gain ground requires you to (1) actively show donors the impact they’ve made through their philanthropy, and (2) remind them they are heroes for having come to the rescue.
There’s tons of competition for donor dollars today. If you don’t do something intentional to make donors happy and assure their loyalty, donors are not going to stick with you.
Consider yourself in the happiness delivery business.
Which brings me back to my purpose for writing to you today.
I am convinced if you do just two things you will raise a lot more money from current donors and lose a lot fewer of them.
Specifically, you will:
- Create more passionate donors, and
- Keep them loyal
The two things are simple to understand.
Yet, in practice, not so simple.
They boil down to just three words: Donor. Centered. Relationships.
Thing One: Donor-centered fundraising.
Thing Two: Relationship fundraising.
Let’s pause for a minute for definitions.
Here’s Penelope Burk’s definition of donor-centered fundraising:
“[Donor-centered fundraising] is an integrated and collaborative approach to raising money that inspires donors to remain loyal longer, to make more generous gifts, and to shift their giving from modest to generous sooner. The concept is easy to understand; it focuses on the things that make fundraising more profitable; and it comes from donors themselves.”
Here’s Ken Burnett’s definition of relationship fundraising in the seminal book of the same name:
“[Relationship Fundraising’s] overriding consideration is to care for and develop that bond [between supporter and nonprofit] and to do nothing that might damage or jeopardise it. Every activity is therefore geared toward making sure donors know they are important, valued and considered, which has the effect of maximising funds per donor in the long term.”
In my career, I had one “light bulb” moment that completely changed how I did fundraising.
It was meeting Penelope Burk, learning about her comprehensive research into the things donors most wanted from nonprofits and reading her pioneering Donor-Centered Fundraising (my copy is completely dog-eared). No one has expounded more eloquently on the subject of donor-centered fundraising than Penelope Burk.
We toss this phrase around lightly today, but 20+ years ago it was the first comprehensive look at the way donors think and feel. And it was wildly divergent from the way nonprofits thought donors felt.
Nonprofits then were scrambling to make donors happy with Gala events, donor recognition walls, hand-engraved plates, fancy newsletters, annual reports and so forth. Many nonprofits, sadly, are still trudging down this path. And while there’s nothing wrong with events and donor communications and the occasional token gift, it’s not the place to begin building your connection to your donor.
When donors make their first gift, the main thing they want to know is whether they can trust you.
Trust is at the heart of every lasting relationship.
And it begins with your demonstration of authentic gratitude. It turns out, based on Burk’s research, donors really want only three simple things – all of which boil down to you showing them they can trust you. You see, when donors give they have a bit of anxiety. Did they make a good decision? Will you get the money? Will you use it wisely? Will it make any difference? Might there have been a better way to spend their hard-earned dollars?
Your job, right off the bat, is to assuage your donors’ anxiety.
They want to know you received their gift, you put it to work the way they thought you would, you truly appreciated their philanthropy and the end result is something of which they can be proud. Donors want a:
- Prompt thank you,
- Personal thank you, and a
- Report on impact before you ask again.
It shouldn’t be that difficult.
Research has confirmed the importance of saying thank you in order to satisfy supporters, engender feelings of trust and kick-start their ongoing, loyal relationship with you. Here’s a great article on the Donorbox blog discussing nine different ways to build strong donor relationships. Read and heed them all, and don’t be at all surprised one of the key strategies is building trust!
Nothing is more predictive of loyalty than trust and customer satisfaction – and it’s important you provide this satisfaction consistently over time. So don’t just thank donors once. Do it multiple times, in multiple ways, in multiple venues.
Communicate. Communicate. Communicate.
Research shows the primary reasons why donors leave are closely connected to failed communication strategies. Ongoing communication is the foundation of REAL friendship and the key to fundraising sustainability.
Which brings us to the new report, and what to do over time to stop losing donors and build growing loyalty.
I hope if you read Rogare’s Relationship Fundraising: Where Do We Go From Here you will have a “light bulb” moment.
It’s about the latest fundraising research to come out of Rogare. Rogare (Latin for ‘to ask’) is the Institute for Sustainable Philanthropy’s fundraising think tank and the home of “Critical Fundraising” – the discipline of critically evaluating what fundraisers know, or think they know, about their profession.
Several years ago I had the honor to serve as part of an international Advisory Panel to Rogare, in a project jointly funded by US donor management software company Bloomerang and American fundraising agency Pursuant. We were charged with embarking upon an almost year-long, international effort to evaluate the status of relationship fundraising by incorporating ideas from psychology and relationship marketing science, and making recommendations for moving forward to stop the leaking bucket syndrome and drive greater donor commitment. This was the first major study on relationship fundraising conducted in twenty-five years. Other advisors included such well-known nonprofit experts as Ken Burnett, Sean Triner, Craig Linton, Tom Ahern, Simone Joyaux, Jay Love, Gail Perry, Marc Pitman, Kivi Leroux Miller, Kent Stroman, and more.
The four-volume report – Relationship Fundraising: Where Do We Go From Here – is available to download. I sincerely hope you will do so, and heed the research as you develop your donor relationship-building strategies moving forward. Too few nonprofits are paying attention; as a result, every year since this report came out the Fundraising Effectiveness Project numbers on donor retention have been going in the wrong direction.
Volume 1 – Examines the evidence for relationship marketing in the commercial sector and assesses whether, and under what circumstances, this can be transferred to fundraising, or if there are times when transactional approaches are appropriate.
Volume 2 – Explores how fundraisers can utilize and adapt current and emerging theories in social psychology to build better relationships that help meet their donors’ needs.
Volume 3 – Leading relationship fundraising practitioners from around the world describe current trends in relationship fundraising and outline some of the key challenges they think it faces, and what the profession needs to do to meet those challenges.
Volume 4 – Summarizes the findings from volumes 1-3 and recommends future directions that relationship fundraising could take.
There’s a lot of food for thought here, and it’s best to read it for yourself. I hope your copy will become as dog-eared as my Donor-Centered Fundraising book from Penelope Burk became. I can assure you my copy of this report has become filled with underlines, annotations and post-it notes.
Here are two bottom-line takeaways for you:
Before you enact any fundraising or marketing strategy, always ask the donor-centric question “What’s in it for me?”
If the donor can’t see why they should say “yes” – be it to accepting an invitation to coffee, coming on a tour, opening an email, sharing a link on social media, or making another gift – then you’re not going to get very far down the road with them.
Get inside your donor’s head, and think consciously about what may connect with them. What may be relevant and meaningful to them? What may reward them for their incredibly important support? What may make them feel special, even heroic? What may make them feel like they belong? What may make them feel they’re part of something important – something larger than themselves?
If you can stand in your donor’s shoes, and show them you know them, you can’t help but improve your results.
Before you ask for another gift, always be sure to send stories and reports that clearly demonstrate the impact of your donor’s philanthropy.
Donors lament that reporting, if it happens at all, rarely includes accountability for how their contributions were spent and what was achieved. However, when this information is provided to donors, they are ready to give again almost immediately. The key is developing reports that show impact and drip gratitude, often through emotional storytelling. Not reports with letters from VIPs and ego-boasting content about awards and numbers of petitions filed, patients served or concerts performed. Always ask: Will this content be of use to the donor, or will they perceive it as useless?
When you comply with donor wishes, and meet their straight-forward requirements for donor acknowledgements and donor-centered communications, they are more than willing to stay loyal and give even more generously in the future.
Is there anything you’ll do differently moving forward? Please share in the comments below.
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Photo by Kelly Sikkema on Unsplash