Fundraising Effectiveness or Three Steps Forward, Two Steps Back!

AFP and The Urban Institute recently published their “2013 Fundraising Effectiveness Survey Report”. The report summarized data from 2,840 nonprofits covering their fundraising efforts for 2011-2012. It contained some very interesting and compelling facts:

• For every $100 gained through fundraising in 2011-2012, $96 was lost through gift attrition.

• Gains of 866,000 new donors were offset by losses of 909,000 lapsed donors for a negative growth in donors of 44,000.

• Larger organizations fared much better than smaller ones; organizations raising over $500k had an average net gain of 16.6%, organizations in the under $100k group had an average net loss of -13.5%.

• The average donor retention rate for all categories is 41%.

• The retention rate for first time donors is even more dire: 22.9%, but if you can get the second donation it jumps to 60.8%.

• The total of philanthropic giving in the USA has remained at 2.0% of GDP for the past 40 years.

• It costs less to retain and motivate an existing donor than to attract a new one. Taking positive steps to reduce gift and donor losses is the least expensive strategy for increasing net fundraising gains.

It’s not rocket science and for most of us none of this information will be that surprising. The report contains lots of statistics and methodologies. It also has some trenchant advice for those of us looking at it seriously. We work so hard to get donors in the front door; we need to work just as hard to keep them from slipping out the back.So, remembering that what gets measured gets improved upon:

• Do you know your donor retention rate?

• Have you established a donor retention goal?

• Does the retention rate measure by donors and dollars?

• Do you know downgrades as well as no gift at all by donor?

• How often do you communicate with donors directly? (An email doesn’t count.)

• Have you gotten advice from the experts, Clair Axelrad, Dr. Adrian Sargeant and Tom Ahern specifically? Tom was the keynote speaker at last November’s Philanthropy Day in Delaware. Adrian Sargeant will be the 2014 Philanthropy Day (Delaware) keynote.

Think of ways to make net gains instead of always trying to make up lost ground.

Donors Have Changed, Have You?

We read all the time about changes in giving. Although the Chronicle of Philanthropy reports that total giving has diminished very little over the past 5-10 years, many nonprofits have seen their donations suffer a decline.

The recession began in 2008. We are in a recovery, slow but steady. Nonprofits cannot use the recession as the whipping boy for smaller and fewer contributions. Donors are more hesitant to give now. That is true. They are more careful with their money, they want value, they have less trust in nonprofits and they want to know what will happen and what difference it will make when they donate.

Change is inevitable. Are you being changed or part of the change? Smart fundraisers will lean forward.

Consider the following:

       Show donors the impact their money can make.
Try using numbers – real ones! “your gift of $500 will do WHAT?”, “ your investment of $1M will help raise $10M for WHAT?” You get the idea.

·      Similar to above: show how their gift is an investment in the future.

What can happen, continue and expand because of major donations. Nervous donors need to know that you will use their gifts widely.

·      

    Show donors a clear return on their investment.

How much goes directly to programs. Don’t get caught in the myth of overhead, it’s a false diversion. Rather concentrate on mission, what these donations make happen; how do they create change in lives or the community. “I can make a difference” is important.

·      Don’t talk about process, talk about OUTCOMES.

It’s not how often you did something; it’s what happened because of your programs. Here is the place to how client or program success stories. The Salvation Army does a good job of this in that they talk about lives changed, hurt eased, children in a safe place etc.

·      Build credibility.

·          It’s okay to use charts and graphs to show where donations are used. Your Board names and positions should be on your website and letterhead. Show awards and recognitions you receive. Show your IRS 990 on your website. Add a “Your Gifts at Work “column to your newsletter and website.

·      Consider letting donors designate their gifts.

What are priority needs and what do they cost? Having a designation, maybe naming list of projects for donors to select if they so choose. Have a range of choices. I gave a road once that was subsequently named “Bonny Lane”. It was a big donation and a got a big smile from me, plus tears. I still make annual donations.

     

Make your annual appeal project focused.

Use numbers: Your donation of $x helps one person for how long?   Your donation of $x keeps us open longer after school for how long?

What ideas are you using to meet this challenge? Share with us what has worked for you. Do these ideas resonate at all?  Let’s talk.

Adapted from Gail Perry's “Fired Up Fundraising”.