The Nonprofit Marketing Blog

Dig Into Your Donor Database

The Giving USA 2015 Annual Report on Philanthropy, released in July, announced that charitable giving, while growing steadily over the past five years, has reached its highest level since the Great Recession—an increase of 7.1% over 2013 totals. Donors of all kinds—individuals, foundations, and corporations—are back, baby! They have recovered from the economic setback of 2008 and are feeling more confident than ever to invest in charitable causes across the country.

The future has never looked better for the nonprofit sector, right? After all, the study shows that more donors than ever are making gifts. You may be wondering how to start building your donor base to welcome these new donors to your mission. “If only more donors knew about us, just think how much more money we would be raising” may very well be crossing your mind right now. As tempting a thought as this may be, the truth is that the grass is not greener with a whole new set of donors. It’s greener exactly wherever you are watering it.

 

Let’s drill this down a little bit further: 43%. That’s the median donor retention rate that the Fundraising Effectiveness Project (FEP) calculated from the 2012–13 fundraising results of its survey respondents. This means that, on average, many organizations are losing almost 60% of their donors each year. Why? Many reasons. Some, like changes in personal circumstances, are out of the control of any organization. On the other hand, according to the 2014 Burk Donor Survey, nearly 50% of respondents cited reasons like over solicitation, overhead costs, and the lack of demonstrated impact as influencing their decision to stop giving. These lie squarely in the hands of how organizations communicate with and to their donors.

The solution to this attrition issue isn’t getting new donors.
Quite the contrary. Getting new donors is:

  • Expensive: Raising $1 costs anywhere from $.25 to $1.50.
  • Inefficient: It has a very low ROI ($1).*
  • A short-term solution: Only 23% of first-time donors ever give a second gift.

That seems like an awful lot of work to nearly break even or incur a slight loss each year. On the other hand, it is worth looking at how to grow and retain the 64% of loyal donors who have been supporting you over multiple years. After all, fundraising costs to raise $1 from renewals are very low ($.20 to $.25), and these donors offer the highest ROI ($4).*

First, identify your donors’ behaviors.

What are the past giving levels of your donors’ gifts? By comparing gifts over the past few years within levels such as $1 to $499, $500 to $999, $1,000 to $2,499, and so forth, you’ll be able to see where you’ve had the greatest growth and losses. What is your own donor retention rate, both generally and for first-time donors? What is the average gift rate for each of the years you are comparing? Knowing these data points can ground how you solicit your donors in a way that will encourage growth. For example, you may want to focus on donors within a certain gift range to tailor higher asks. You might also segment a group of lapsed donors or higher-level donors and personalize outreach to them by phone, mail, and in-person communications.

Second, understand who your donors are.

Which donors have given for multiple years? Who previously supported you but has lapsed? Identify the top 50 to 100 of your longest donors, your largest donors over their lifetime, and newest donors (with a particular eye to those who made large first-time gifts) last year and this year. If you have the resources, it’s helpful to run capacity screening of these three groups to understand where there is greater gift potential. In starting or expanding your major gifts program, these are the donors who will comprise your major gift pipeline. They rarely bounce around from organization to organization. Your next major gift will likely come from one of these donors who has capacity and has supported you for a long time (and not giving at particularly high levels) and may also have been a volunteer. It’s important to get to know this group to understand what motivates their giving and interest in your organization.

Third, consider how you communicate with your donors.

These current and lapsed donors already know you and are more likely to give more generously if you ask and demonstrate your impact. If we think back to Penelope Burk’s survey results, two of the three top reasons donors stop giving are tied to an organization’s impact and effectiveness. More than ever, donors want to understand how their gift is making a difference in your work. They are giving through you to address a societal need that has meaning for them. Is their gift helping you make a difference? Bring them closer to your work by sharing a personal story of a beneficiary, a measurable accomplishment, or a plan to solve a seemingly intractable problem. As you qualify the major gift potential for those top 50 to100 donors you identified earlier, your ultimate goal is to build meaningful relationships so it naturally leads to sustained and increased support. Get to know their motivations, interests, and philanthropic goals. Use this information to lead your discussions about investments in your work. Remember, it’s not about you.

Tied closely with programmatic impact is how effectively your organization operates through costs for program delivery and administration. You don’t necessarily want to skimp on administrative expenses to seem “lean and mean” when it compromises—and even hinders—your ability to scale, deepen, or improve the quality of your work. Without unrestricted operating support, which includes enough funding for your fundraising efforts and staff, you can’t deliver and grow the services of your organization. Build that message about capacity into your donor outreach. Do your donors come away with a strong understanding of what you do, your plans for the future, and why their continued support (unrestricted and restricted) is important?

Finally, using the green grass analogy, after you’ve watered and fed your grass with your current donors, it’s still important to plant seeds for the next pipeline of donors. These aren’t the names you rent from mail houses. They can be, but as you saw from an earlier statistic, that’s not a cost-effective solution in the long run. The potential new donors I’m suggesting are people who self-identify in some way. Perhaps you find them through a sign-up on your website or a visitor book if prospective donors can visit your facilities. They can and should also be from the networks of your board and other volunteer leaders. Adding even 10 new names a month can yield up to 120 new donors—if you communicate with and engage them through a relationship model as described above.

How can you make the grass you’re standing on greener? By grounding your fundraising approaches on a good understanding of your donors’ giving patterns and interests, creating strategic communications that invite donors into your work, and planting seeds for new supporters in the future. This will strengthen all of your fundraising—annual fund, major gifts, planned giving, and events—and create opportunities for donors to partner with you in bigger and better ways.

*From the 2013 DMA’s Response Rate Report


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About This Blog

Linda Lombardi

We’re here to help you win hearts and minds—and donations.

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