If we had to pinpoint just one issue as having a greater influence on the future health of nonprofit fundraising – especially major gifts but also at all other levels – it would be donor relationships.
Strong donor relationships lead to higher lifetime revenue. This is especially true with major gifts and planned giving. Current Fundraising Report Card data shows an average lifetime value of over $77,000 for donors who give $5000 or more. The next highest level, donors who give from $1000 to $5000, has a lifetime value of about $3200.
So since lifetime value is the greatest measure for how much a person gives, and the way to maximize lifetime value is to sustain that relationship for the rest of a donor’s lifetime and beyond – it’s clear that if nonprofits neglect or harm their donor relationships, they are putting their own futures at risk.
What is the status of your donor relationships, at all levels? And what can you do to strengthen your relationships with donors?
One study called A Better Way – a National Study of Nonprofit Leadership and Fundraising in a Rapidly Changing World, had a lot to say about this. The study surveyed nonprofit leadership and staff, so this gives a snapshot of what other people in the industry are thinking about a variety of issues, including donor relationships.
Here, we’re going to unpack some of the details from this study, and point you to additional articles where you can dive even deeper into the related topics and issues brought up in the study.
First, Donor Relationships Over Near-Term Gifts
At all levels of giving, large percentages of respondents said they want a greater focus on donor relationships compared to trying to win immediate gifts.
What’s challenging about this for most organizations is the fact that major donors need more relational attention than the other levels. Couple that with the fact that major donors provide the great majority of revenue for most nonprofits and you find yourself in a quandary.
You want these people to know, like, and trust you, and to feel valued, respected, and appreciated for their commitment to your cause. But you’re short-staffed. So how do you build deep relationships with them while also satisfying the needs of your mass market supporters? Plus, how do you keep the lights on while you are cultivating those big gifts.
After all, according to the study it seems that prioritizing near-term gifts with a transactional, solicitous, mass market approach over building deeper one-to-one relationships is a lot like betting it all while gambling. Yes, you might get a big score later. But you might drive people away (with your transactional communications) who could have become long-term major donors and possibly legacy donors. You could be sacrificing higher lifetime value for immediate revenue.
Do this for just one donor, and you might not feel the effects. But do it for 20, 50, or 1,000, and you’re talking about possibly millions of dollars lost in the ensuing decades.
After all, people leave more and bigger planned gifts when they feel a strong bond, a connection, with your organization. But overly solicitous messages that always ask for money can diminish that bond. It’s like having a friend in your neighborhood who only visits when they want something from you. After a while, you figure out that they aren’t really friends after all.
Thus, focusing on near-term gifts could lead to less long-term stability. This also increases stress and uncertainty for your staff, and results in a boom-bust cycle of always needing money because you’re not winning as many second and third gifts—or major and planned gifts. See more benefits of focusing on donor relationships.
Next, What’s the Most Valuable Metric?
The study asked participants what they considered to be the most valuable fundraising metric. Unfortunately the author failed to include Lifetime Value among the five choices. NOTE: Here’s how to calculate that and here’s a valuable cheat sheet you might want to share with others on your team. In case you haven’t been following my writings for long, you should know that LTV is what I believe is the most important metric you should measure.
Anyway, since that option was not listed, 45% selected donor retention. Here’s the complete breakdown:
Most valuable fundraising metric:
- 45% say donor retention
- 20% say how many donors increase their giving
- 18% say gross revenue growth
- 14% say net revenue
- 4% say donor file size – number of donors in the database
Don’t get me wrong. All these are valuable metrics, but the point is clear according to the study – most nonprofit workers and leaders feel donor retention is an important key to stable long-term revenue. And, donor retention depends on quality donor relationships – at all levels.
Remember, it costs 6 to 7 times more (according to campaignnow.com) to acquire a new donor than to retain an existing one. And, increasing donor retention from its current level (about 40%) by just 5-10% more can double the lifetime value of your donor database.
Sometimes retention is entirely out of your control. According to the same author, the main reasons are because they can’t afford to give any longer, or because they have moved or died.
But all the other reasons donors stop giving are under your influence. And as the Better Way study found, declining donor retention is primarily due to weakening donor relationships.
You can do something about this! And you need to, because right now, far fewer donors are giving an ever-higher percentage of the revenue for the industry. At some point, if those major donors don’t get replaced, massive upheaval could result.
That means prioritizing donor relationships at all levels. Today.
So How Do You Start Improving Donor Relationships
The study lists several things nonprofits can do to begin strengthening their relationships with donors. What this comes down to is the donor experience. I’ve written about this a lot. Mostly I frame it in terms of value delivery. I even created a ‘value checklist’ you can use to ensure that you’re delivering value to your supporters in ways that foster deeper relationships.
According to the report, here’s what donors want to experience when they give or interact with your organization.
Know you got their gift
This one is easy. But just about everyone probably has at least one story of donating to a charity and never hearing anything back. This is just unacceptable, on a basic level of respect. Someone gave you money in exchange for no products or services. The least you can do is let them know you got their gift and that you appreciate it.
Feel the change their gift makes possible
Donors want to know their gift matters and made a difference. Even more, they want to feel it. Let them see it by sending pictures, graphics, and stories. Let them hear it through videos and perhaps with music, depending on the organization. Make it possible for donors to feel the world changing for the better because of their action.
Even a small gift deserves an attempt at this.
Connection and access
This isn’t true for every donor. But the more money someone gives, the more likely this matters to them. Donors want access to the people who work at your charity. They’d like to meet the leaders and the board. If appropriate, they’d like to meet some of the people their gift directly impacted.
Or, even if they don’t feel the need to meet any of these people, they will still appreciate being offered the opportunity. That tells them your organization cares about their interests, isn’t afraid of them, and wants to partner with them.
Personally, I believe that webinars and Q&A sessions are a solid way to scale value delivery here.
Valued for who they are, not just their money
Donors want to be treated like partners, not ATMs. They want to feel valued and important. With major donors, this is even more important to get right, because their bigger gift will be much more appreciated by the charity. So you really need to make sure your donor communications aren’t all about money. Here are some ways to nurture major donor relationships.
Confidence and trust
Trust goes hand in hand with relationships. More trust equals stronger relationships. Donors want to confidently engage with you and know they can trust you to use their money wisely and effectively. The best way to deliver this experience is to consistently report back what you’ve done with your funds, and show the difference it has made.
Be part of solving big problems
What constitutes a ‘big’ problem? Whatever your mission is about, you’re solving a big problem to the people who care about that problem. This is what draws people to the great variety of nonprofits out there.
For some, a big problem is preserving natural spaces. For others, it’s giving stray animals a place to go. For others it’s helping victims of abuse. For others it’s helping people caught in natural disasters. For others it’s saving the orchestra, helping with disease, fostering mentorship, or fighting addiction.
All of these are big problems. No one cares enough to try to fix all of them. But just about everyone, if you talked with them long enough, would care about at least one of them enough to contribute to solving it.
Make donors feel like they are part of the solution, and they will keep giving.
Of course one way to do this at scale is through the use of a donor survey — an approach MarketSmart has perfected over the past 15 years.
Positive experience when interacting with you
This is the equivalent to customer service in the business world. Nonprofits need good customer service too. When supporters call or email, they expect a response and don’t want to be put on hold for 20 minutes. They don’t want to feel like they’re bothering you, or that you don’t have time for them, or that their questions aren’t important.
Be friendly and warm. Be prompt and courteous. Think about your own customer service experiences – the ones you’ve hated and the ones you’ve enjoyed and appreciated. Be like the second group.
Align their giving with their values and goals
Different donors want this to different degrees. But like the experience of meeting your leaders and beneficiaries, it is often more about simply being offered this opportunity, more than actually allowing each and every donor to give to the exact program they want.
Most donors aren’t super picky. But they also have values and goals that matter to them more than other things. If your nonprofit has a number of programs and aspects to its mission, it’s very likely that some donors will be drawn to some of those more than others.
That’s okay. And when donors express such an interest, you should respond accordingly, wanting to see them achieve their goals through giving.
Relating to Donors at Different Giving Levels
What you’ve already learned will look a little different for someone who gives $50 compared to someone who gives $5,000 or $50,000. Donors at all giving levels care about their experience. And all of them care about each item in the above list, to one degree or another.
Still, it’s worth exploring some of the segmented differences between how to initiate and cultivate relationships with low-dollar, mid-level, and major donors.
Mass market donors
Now here’s a bombshell some might now want to hear: The vast majority of mass market, or low-dollar donors, will never give nearly as much revenue as your major donors. Even if you have a huge organization with a million low-dollar donors, just a few hundred major donors will give a far greater percentage of your revenue.
While that may be true, you and I both know your mass market donors matter a lot, and not just because some of them will later ascend to become mid-level and major donors.
They also matter because they don’t just supply additional revenue, but they can also advocate for your cause. A low dollar donor may never give more than a few hundred dollars. But what if they connect you with a new board member who has connections to numerous business sponsors and major donors? That one low dollar donor is now responsible for all the giving that comes from these wealthier people.
Or, they could leave a major planned gift to support your cause.
Same goes for the impact of volunteers (spoiler alert – some volunteers actually have major giving capacity, and they’re volunteering to evaluate your nonprofit).
The point is, it’s to your great benefit to cultivate strong relationships with your mass market donors. You don’t know which ones have the potential to end up making a much bigger impact, so you need to treat them all as if they have that potential, while giving opportunities to self-identify for the ones with more to offer.
That means you need to deploy scalable strategies to deepen relationships with mass market donors at low cost, that delivers a serious return on investment. That IS possible with a smart strategy and smart technology combo.
And, What About Mid-level donors
This group varies much more in size for different organizations. Though major donor revenue makes up the great majority for most nonprofits, mid-level donors comprise a sizable portion of it for many. And, these people tend to have more disposable wealth, life stability, influence, and valuable personal connections. They’re also better candidates for potential legacy giving.
As the A Better Way study found, nonprofits aren’t doing very well in communicating with mid-level donors in ways that set them apart from the mass market ones. In terms of making stronger donor relationships, you might want to begin here.
You must figure out a way to communicate with mid-level donors that is unique to them.
One great strategy is to start a print newsletter. You can justify the extra cost for this if you only send it to your mid-level and monthly donors. This also allows you a natural forum for accomplishing several of the items listed earlier that donors seek in their giving experiences with the organizations they support.
You can communicate impact, make invitations, give opportunities, show gratitude, and so much more. Here are some more outstanding strategies for cultivating mid-level donor relationships, in addition to these:
- Invite them to join your board or take a volunteer leadership position
- Offer donor trips and tours of facilities
- Create a staff position that only communicates with mid-level donors
- Don’t ask for money too often
- Personalize all your communications
- Give a thank you phone call to all new mid-level donors – within 48 hours of their gift
Major donors
As mentioned earlier, for most nonprofits their major donors account for the great majority of revenue. And it’s getting even more skewed as fewer people give to charity than ever before.
That’s why you need to not just prioritize relationships with your existing major donors, but with potential new ones as well. You need effective procedures for every step of the process, including:
- Identifying new potential donors
- Giving them the opportunity to self-identify as a potential major donor
- Cultivating the relationship on their terms
- Making that first personalized outreach call really count
- Delaying asking for gifts
The key here is time. While there are exceptions where you’ll meet a major donor who is ready to give now and wants to give now, in the majority of cases, this takes time. Give it time. That’s okay. In the long run, you’ll get more revenue and have happier, more satisfied major donors. Everyone wins when you put the relationships first.
The challenge comes when you try to create a strategy for reaching major donors that is also unique to each one. How can you have one strategy that’s also unique?
The answer comes from the donors themselves! Let them dictate the pacing and direction of your relationship. You can deepen it with well-timed questions and by continually pursuing ongoing communication. But if a donor tells you they need to lay off or that they’re not ready for a big gift, you lay off and respect their wishes.
It’s a relationship first. Giving comes after.
And if you do it well, giving comes again, and again, and again.
It’s also very important to focus on gifts of assets instead of cash. Most major donors hold the great majority of their wealth in non-cash assets. In other words, they can’t just write a check to access this wealth. Giving from these other sources takes time. Time means trust. Trust means relationship.
Here’s more on how to cultivate major donor relationships
Finally, the Biggest Relational Concern – Getting Feedback
The last issue to address regarding donor relationships comes back to the A Better Way study.
The study found that a huge area of concern among nonprofit leaders and staff was in how to consistently get meaningful feedback from donors. NOTE: Here’s some helpful advice from Dr. Russell James (the foremost researcher in our field) on this topic.
Sending out an occasional survey doesn’t always seem to get a great response. And how can you target surveys only to specific people? If you have a segmented database or email list, you have a little more ability to do this. But it still won’t be personalized. And, it’s harder to follow up appropriately when 500 people respond to a survey.
And this matters, because when you send surveys out but don’t do anything in response, this has been shown to actually produce a negative effect – it hurts your organization to ignore survey results.
With MarketSmart, the opposite happens. Our surveys drive future engagement and communication so it gets more personalized over time. And this is how our system identifies potential major donors among your mass market donors, which is ultimately what you want to see happen.
MarketSmart’s AI-infused software responds personally to each donor and communicates with them in accordance with their preferences. This is the best way to conduct surveys – one on one. You can’t get more personalized than that.
And if the donor says they don’t want to talk about giving for a couple years, our system will respect that, and will keep all communication for the next two years focused on other things.
Here’s a short video showing how our system enables major donor discovery through the best method possible – self-identification.
Related Posts:
- Donor Levels – Why and How to Treat Your 3 Tiers of Donors Differently
- How to Deepen Your Major Donor Relationships
- Major Donor Retention – What’s Holding It Back?
- 8 Ways to Cultivate and Strengthen Your Mid-Level Donor Relationships
