Why RFM Fails at Populating Fundraising Caseloads

Many nonprofits use RFM as a means to fill their fundraising caseloads with supposedly qualified prospects – people who have a good chance of becoming major donors.

But does RFM work well for this purpose?

As any gift officer will tell you, the promise is often better than the reality. Most fundraiser caseloads are filled with bad leads and prospects who don’t want to hear from the organization, never return calls or emails, or aren’t capable of actually giving a major gift even if they had interest in their organizations.

So what’s wrong with RFM? What does it do well, and where does it fall short?

The idea here isn’t to say RFM has zero value at all. But if it’s the primary tool your nonprofit relies on to identify and qualify major gifts prospects, we contend that you are not getting enough bang for your buck, and that there is a better way.

What Is RFM for Fundraising Caseloads?

In fundraising, RFM stands for recency, frequency, and monetary value.

The RFM model looks to identify the best possible donor prospects by looking for people in your database, or in purchased lists, who have all three of these traits:

  • Recency – they have recently given a charitable gift
  • Frequency – they have a track record of giving repeatedly, not just once
  • Monetary value – they give gifts above a certain threshold that indicate wealth

RFM is a quantitative approach to identifying high quality major gifts prospects. It assigns a score in each category from 1 to 5, for each prospect. And when it finds a person who scores 3 or higher for all three of the above traits, RFM recommends adding that person to the caseload of one of your organization’s gift officers.

A person with three 5’s would seem like a surefire donor, according to RFM. That would mean they have given recently, they give very often, and they give large amounts of money.

Where Did RFM Originate?

Interestingly, the RFM model was developed in 1995 for the business world by direct mail marketing specialists.

This matters because when it comes to direct mail marketing, RFM is a valid tool for gauging the likelihood that a prospect might make a purchase. A person who never buys anything from mail advertising will be a tough sell. A person who buys from direct mail advertising frequently will be a much easier sell.

RFM looks for the best possible prospects.

The Problems with Using RFM to Fill Fundraising Caseloads

There are several problems with using RFM to identify major donors, not the least of which is the much smaller sample size compared to the direct mail audiences for which the method was created.

But we’re going to focus on the top two.

Problem 1 – RFM Is Only Quantitative

Donors are not quantities. They are human beings. They do not give because data on a spreadsheet says they will. No matter how much the data might suggest a person is likely to be a great major gifts prospect, the data simply can’t capture the essence of who that person is, their motives, their life story, their values, and all the things that motivate people to actually give.

For example, suppose RFM data finds a person who has given to a nonprofit hospital recently. In fact, they’re a monthly donor, which means they give frequently as well. And on top of that, they occasionally supplement those monthly gifts with large one-time gifts.

According to RFM, this person is a superb prospect for another medical nonprofit.

But, what if the real story is that this person’s spouse got treated successfully for cancer at this hospital, and the donor is extremely grateful to that hospital for their spouse remaining alive and in their life, free from cancer. So, in their immense gratitude, they donate to that hospital.

But what if the timing isn’t right for them to work with a Gift Officer one-on-one? What if they have a family member who needs their attention? Or, what if they’re dealing with headaches related to running a business? Or, what if they’re just not at that stage in their lives when they’d be interested in finding more meaning through philanthropy? What if the way they give now suits them just fine?

Such examples are endless.

Quantitative data can tell you one thing – WHO might give. Might.

But it cannot ever tell you WHY that person might be ready to consider making a more consequential gift, or even more important, WHEN. Timing is key!

In contrast, qualitative data can do all those things and more. With qualitative data, you can unearth motives, interests, values, readiness, and other factors related to making a big gift that really do affect people’s decisions.

Problem 2 – RFM Only Looks to the Past

Financial advisors are required by law to inform their clients that “past results are no guarantee for future performance.”

Well, that’s all RFM really is. It reports data from the past behavior of donors.

But people’s lives do not stay constant. Kids grow up. Marriages end. Marriages start. Parents die. Jobs switch. People move. Values change. Interests change. Passions ebb and flow. Businesses start. Businesses die.

As our lives change, so do our priorities, and that includes whether we donate money, how much we donate, and to which organizations we donate. All of this is in constant flux. None of it remains unchanged.

Some people give to nonprofits because they know someone who works at that organization. That’s the main reason – they just want to support their friend or relative. If that person changes jobs, the donor will probably stop giving, and there’s not a thing you can do about it. RFM won’t save you.

And all this should be pretty obvious.

But here’s what’s less obvious:

RFM also fails to identify NEW donors whose circumstances, interests, and life situations have changed such that they have become a top prospect for major gifts to your nonprofit.

Not only does RFM wrongly add prospects to caseloads who shouldn’t be, it fails to identify other prospects who should be.

Suppose your organization has a monthly donor who gives $20 per month, and has for years. So this person scores a 5 on frequency and recency. But at $20 a month, their score on the monetary value factor will be low.

What if they get married and their household income and net worth increases exponentially? What if they get an inheritance? What if they sell their business for seven figures or more? Suddenly this donor who is already a faithful donor now has the means to become a major donor.

But RFM will tell you not to add this person to any gift officer caseloads.

RFM Can Get You Started

If you’re just launching or re-launching a major gifts program, RFM can give you a place to start. Rather than having no names at all to reach out to, now you’ll have some.

But if you never look beyond RFM and start pursuing the much more valuable qualitative data about the people in your database, you will be failing to effectively fundraise for major gifts.

How do you get qualitative data?

With surveys and consistent, non-pushy, automated communication, sent out to many more people on your list than just the ones RFM would identify.

Continuously look to identify and pre-qualify potential major donors, and nurture them until they indicate to you they are interested and ready to advance in the process.

How do you do that? MarketSmart’s software was designed to do exactly this, and our system works so well that we offer a 10:1 ROI Guarantee. You will make at least ten times more in donations and planned giving pledges than you will spend, and our customers testify to how well our system works.

Want to see how we do it?

Schedule a free demo of MarketSmart’s Engagement Fundraising System


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