Nonprofit Fundraising

The demand for services is up and the availability of money is down. Foundations are cutting back. The competition for donations and grants is very keen. The increased demand for services and inflation will ensure that costs increase. Do you have a strategy?

A large number of people are suggesting that one should strengthen the bonds with the donors. It certainly makes sense. Is that sufficient advice or do you need a practical suggestion for implementing the advice?

The best way to strengthen the relationship is to know what the relationship is based upon. The only way to establish the base is to ask the donor. However, with a few hundred donors in your database that seems like an impossible number of phone calls.

Step one is to divide the donor base into four tiers. The first tier contains donors who give less than some figure. For most small and mediums size agencies, it will be around $500 per year. The second tier is the group of donors between $500 and $1,000. The third tier is the group of donors between $1,000 and $5,000. The top tier is the group of donors over $5,000 per year. You may decide on a different tiering but you get the point.

The process for dealing with each tier is the same. However, who does the work differs. The first step is to call each donor. The call is simple and takes only 5 – 10 minutes. The caller identifies themselves and the agency. They next thank the donor for their support. They follow that by asking something like, “What is it that our agency does that is most important to you?” The final step is to make a note of the response and ask any clarifying questions.

That is the process. Simple and easy. Anyone can do it. There is no attempt to solicit funds or try to get the donor to move closer to the agency or change anyone’s mind about what is important. No matter how misguided the donor’s concept is it is their reason for giving.

So how do you do that with several hundred donors? The answer is different for each tier.

Those donors in the top tier deserve something more than a phone call. The only purpose of the phone call is to arrange a lunch, breakfast, or coffee with the donor. The top tier donors deserve personal thanks from the top executive and one of the board members. Double team the donor. Make them feel important and truly appreciated. Do this even if the donor is a member of the board or related to someone on the board.

Have a board member, the executive, or the development officer make the calls to the third tier.

Have other staff members make the calls to the second tier donors.

Have volunteers make the calls to the first tier donors. This may mean recruiting several new volunteers.

The goal is to collect the information about what is important within 90 days. If it is impossible to do the data collection within 90 days then restructure the tiers. It is important to ensure the data is timely. This also needs to be done quickly so that it is possible to use the data to improve this year’s fundraising.

There are four important benefits from this approach. The first is it will immediately draw your donors closer. It tells the donor they are important. This will actually have a larger impact on the small donors. Some of them will move up a tier just because of the phone call.

Second, you will have an advantage over other agencies the donor is supporting. It is doubtful that any other agency treats them this way. You make donations. Have you ever been asked about the importance of the mission you donate to? In addition, their expressing the importance reminds them of why they give and it helps strengthen their connect to the mission. All of this helps prevent attrition in the donor base. It is probably more important to retain donors this year than any other year in the past 10.

Third, you will receive valuable information about the importance of your mission to the community. Sometimes what we learn can be surprising. How to use the information will be covered in future articles.

Fourth, you will motive, inspire, and energize your board, staff, and volunteers. As they listen to the donors telling them what is important about the mission, the listener’s passion will grow. The increase in passion will bring vitality to the mission.

It is important that the contact occur through a call. This sounds old school. If you try this through email, only two groups will respond. The highly satisfied and the highly dissatisfied will be the only respondents. It is good to hear from both. However, that means that the bulk of the donors will be silent and they control the bulk of the money. Without hearing their voice how do you appeal to them? In addition, we all get too many emails and text messages each day. Finally, there is nothing nicer than a warm human voice saying thank you.

Mission Enablers

Are these tough times to raise funds?

Only if you use the same techniques you used last year. Use a different technique and you will get different results. Are last year’s results worth repeating?

How did most nonprofits raise funds last year? They focused on their needs. They made claims that lacked credibility. They focused on the crisis. They made the appeal almost exclusively emotional.

Their needs –

Without your support, we will need to close our Main Street offices.

(We all need to tighten our belts during a downturn. Why should the public care or be sympathetic?)

Credibility –

Our mission is to put an end to hunger.

(The mission statement is several years old but the number of hungry individuals grows each year. There must be a more effective place to invest one’s donations.)

Crisis focus –

There are more homeless people at our door every day.

(In a time of crisis, we need solutions rather than reports of more problems.)

Emotional appeal

Pregnant teens have a hard time coping.

(Sympathy is low in a time of crisis. We all have problems. The crisis was created by judgment errors. The judgment errors of others hang over all of us and threaten the security of many of us. It is hard to be sympathetic to someone else who is suffering from their own judgment error.)

The typical donor in 2007 responded to one or more of those appeals. Why? The donor felt secure so it was easy to be generous. The donor was willing to take the time to look behind the words (credibility was less important). The donor was optimistic about the future. The donor was willing to trust you to be effective and efficient. The donor trusted the financial management of others.

In 2009, the donor will have different priorities. You need to make them feel secure. The rising unemployment causes them to worry. You need to talk directly to them instead of having them work for the message. You need to focus them on the future and give them hope. The recent financial turmoil makes all of us untrusting of others when it comes to money management. You need to prove your agency is trustworthy. The financial turmoil is blamed on people focusing on their interests rather than broader interests. Everything you do needs an outward focus. They want facts they can trust.

As a result, any funding appeal must tell a compelling story. If possible, it must provide simple statistics that demonstrate that the story is repeatable and benefits a large number of people. (Logic, credibility, and emotion)

You must display your passion. The work will go on regardless of their support. Their support is important but not critical or urgent. You will find a way. (Passionate and in control)

The reader must connect to your client. It isn’t about the new computer system. It is about ensuring that the family receives the food they need for a balanced diet and to honor their religious dietary guidelines. (Outward focused, durable, concrete, unique, and problem solving – prudent use of funds that is different from what everyone else is doing.)

It is not more work. It is working differently.

Mission Enablers

Is there any reason a nonprofit should loose a donor?

The easiest donors to keep are the passionate, loyal donors.

Putting aside death, retiring to Florida, and unemployment, donor attrition should be less than 5%. Why is it that many nonprofits experience much higher attrition rates?

In part, it may be cultural. Since the nonprofit down the street looses 20% of its donor base each year, a 15% annual loss seems good. Why worry about it, when the results are better than someone else’s?

Think about that for a moment. If a nonprofit has donor income of $1.5 million, a 15% loss is $225,000. It is doubtful that there is a more expensive problem facing the nonprofit. Even a small nonprofit with donor income of $100,000 will lose $15,000. That is still one of the biggest problems it faces. In either case, the lost income would effectively solve several problems the nonprofit faces.

The long-term impact is more dramatic. If one retains the 15% that increases income for many years. The sustainability benefits are significant.

In part, complacency is contributing to the loss. Historically, the fundraising program was effective enough to grow the donor base even with attrition. As a result, the attrition seems like a minor problem or it is ignored because the affect is zero. Does the development department need this stress? Do you believe that this is a sustainable model for 2009? Was it successful in 2008?

In part, it is hard work. Cultivating, keeping, and building passion among donors is hard, time-consuming work without thanks or obvious immediate results. Is the long-term return worth it?

As usual, when the economy turns down the consultants warn that the donors will reduce their gifts. One possibility is a smaller gift. The second is eliminating support for some nonprofits. This article focuses on both. Passion for the mission is a cure for both reduction and attrition.

Enough crying over spilled milk, what is the solution? There are three solutions. One is to spend more time recruiting passionate donors. They are harder to find than those who are willing to give. A previous posting provides some thoughts on one element of the donor recruitment process.

The second is to thank the donors. Do donors ever get calls thanking them for their support? A handwritten note, email, or text message is too easy. The extra effort of making the call makes the thanks personal rather than perfunctory. This helps slow attrition but it is short of prevention.

The third is to cultivate the donor. What is important to them? How can they engage in the mission so that their passion will grow? The only way to answer those questions is to ask. Finding the answers helps with preservation of the relationship. The answers is found by having direct personal contact.

People very seldom walk away from their passions. Even if they move to Florida, they are likely to keep supporting the passion. People seldom reduce their support for their passions. Even if they retire, they are likely to sustain their giving level if they are passionate.

What every nonprofit needs are passionate, loyal donors. The second solution creates loyal donors. Solutions one and three create passionate donors.

Is it too late to prevent attrition? No, but you need to start today.

Is it hard work? Yes, but if it prevents an annual loss of several thousand dollars, it is worth it. If it makes next year easier on everyone, it is worth it. If it increases sustainability, it is worth it. If it reduces the stress on the development department and helps them reach their goal, it is worth it.

Can you think of one reason to delay?

Mission Enablers