3 Donor Related Fundraising Challenges Keeping Your Revenue Down

Greg Warner

October 09, 2024

Major gifts fundraising faces many challenges. That’s not news, and those challenges come in many forms, from many directions. But donor-related fundraising challenges often get overlooked in our obsessions with technology, processes, scripts, metrics, our mission, and the current state of politics and the economy, whatever that happens to be at the moment.

Donors donate. They sit at the foundation of everything else that happens. So if your fundraising methodology doesn’t include taking a hard and uncomfortable look at ways you may actually be inhibiting them from giving, you may be overlooking the most important piece of the puzzle.

In this article, we’re going to look at three particularly common donor-related fundraising challenges. These barriers tend to get triggered by outside forces, sometimes coming from the very nonprofit organizations the donor is considering for charitable gifts.

Here are the three challenges:

1. Wealthy Donors Feel Misunderstood

How you perceive wealthy people influences how you will relate to them. Does your perception align with the actual reality of living with what you consider to be large amounts of wealth?

That question in itself sparks one misconception: What is wealth, and do we all agree on that?

Is a person with a $1 million net worth wealthy? Or is $5 million the minimum definition of wealth? Does it matter if that wealth is liquid or not?

Suppose a family has a net worth of $1 million, but $800,000 of that comes from their home, which they just spent the last twenty years working hard to pay off, and now their debt is gone. Are they wealthy, even though they only have $200,000 in liquid assets?

That brings up another question and common misconception:

How many wealthy people inherit their wealth compared to how many earn it? Media portrayals and TV shows love to present wealthy people as entitled rich kids who grow up with everything but don’t know anything about hardship or real life. But is that accurate? Is it common?

According to the 2021 World Ultra Wealth Report, 72.5% of wealth in the US is earned, not inherited, and that percentage increased substantially from five years prior. Just 7.4% of wealth was purely inherited, with the remainder being a combination of both.

What does that mean for nonprofits?

It means the vast majority of potential major donors earned their wealth instead of inheriting it. That’s a huge distinction. It will influence how they perceive their money, their lives, what they plan to do with their money, and the values that brought them to this point.

These people do not relate to the popular media portrayals of wealth. They also don’t connect with marketing that speaks to those types of stereotypes, even if it does so in a positive way.

How does your nonprofit market and communicate to major donors and prospects?

In his book, The Storytelling Fundraiser: The Brain, Behavioral Economics, and Fundraising Story, Dr. Russell James explores and reports on numerous research studies looking into what predicts the most generous levels of charitable giving.

By far, the greatest giving happens when the part of the brain that values social-emotional outcomes gets activated. And that happens when the donor is allowed to visualize how they can become a hero by helping another person with whom they identify and for whom they feel empathy.

In other words, the biggest gifts happen when you can produce these three outcomes:

• Visualization – becoming a hero by helping someone else
• Identification – relating to that person or group because of something their stories have in common
• Social emotion – feeling empathy for the person or group being helped

The effects of all other attempts to predict major charitable giving pale in comparison to the power of those three social-emotional outcomes. Wealth capacity, giving frequency, giving history, algorithms – none of these can get you anywhere close to where those three outcomes can take you with donors.

To put a stop to the ways your nonprofit may be perpetuating the feeling of being misunderstood among your biggest donors and prospects, you must understand why people give. What motivates them, and how can you build a relationship that allows you to tap into that motivation?

It will be different for each person. Here are a few reasons why major donors give:

• Give back or repay
• Experience a spiritual feeling
• Practice their religion
• Build a sense of community
• Right wrongs – fight injustice
• Personal experience that relates to the organization’s mission
• Heal their pain
• Honor or memorialize someone
• Family tradition
• Gain a feeling of permanence – a legacy – that will remain after their life is over
• Gain notoriety
• Feel that they are a good person

Do you see the effects of the donor’s personal hero story, identification, and empathy in those reasons for giving? These three social-emotional outcomes are threaded through all of them.

Wealthy people who want to give will give to organizations that don’t make them feel bad for having money. That’s one of the main reasons so many give to foundations or set up their own, or create donor advised funds.

You don’t like that? Then change how you approach and relate to donors. Seek to understand them.

About $15 trillion will be passing down from one generation to the next during the rest of this decade from families who have more than $5 million in assets. About one fifth of that is expected to be donated. That’s $3 trillion in potential major gifts.

That’s what’s at stake. Scoff and deride the wealthy at your own peril. The ones who want to give do actually care about the causes they want to give toward. Are you prepared to go with them on that journey?

2. Wealthy Donors Are Hiding

Even first-generation wealthy people who have earned the majority of their wealth eventually figure out that everyone wants their money. It doesn’t take long, and this doesn’t just refer to nonprofits. Friends, other relatives, businesses selling particular products, governments – everyone wants to get their hand in the pot.

But $5 million doesn’t really go that far in the grand scheme of things. And first-generation wealthy people know that. That’s why they stick with the values, work ethic, and other qualities they believe led to the accumulation of the assets in their possession, and they don’t mean to squander it.

So, they learn to hide it, conceal it, and spread it around to make their financial status less obvious.

When someone comes to them looking for a piece of their savings, they learn to pick up on it, and to avoid that person. This is one reason major gifts fundraisers get ignored and hung up on. They showed their cards too early, and made it obvious that all they wanted was money. They didn’t care about the person, their values, their dreams and desires, their story, or what matters to them.

If your nonprofit’s pitch just regurgitates your own achievements, the lofty values and goals surrounding your mission, and that because you’re so great and worthy, everyone should just naturally want to give, you will inspire wealthy donors to run and hide.

If you don’t want them to hide, then take a different approach. Put the relationship first. Learn how to deliver value, not just go after it for your organization.

3. Rational Error Detection

What is rational error detection?

It happens when logic and reason take over, and push out the social-emotional outcomes mentioned earlier that you have hopefully been working hard to produce in a potential donor.

Giving isn’t rational. When you give, you now have less than you had before. Who wants less? So when a fundraiser starts bringing in principles and processes that get the donor thinking with their brains instead of their hearts, desires, and longings, their rational brain starts talking them out of giving so large a gift.

The worst kind of rational error detection gets triggered by logic, math, and the part of the brain that looks for errors, inconsistencies, discrepancies, and possible deceit.

So many nonprofit organizations employ marketing strategies that do exactly this, and they don’t even realize it. Your up front goal is not to win a gift. It’s to help the donor move themselves forward in their consideration of a gift – to advance them forward.

Do you see the difference?

Few people – no matter how much money they have – will go from having never considered a large gift to suddenly making a five, six, or seven figure gift. That’s just not how people operate.

When you trot out facts, figures, diagrams, charts, giving options, processes for giving non-cash assets, and things of that sort, what you’re doing is showing that you know your numbers and are good at explaining things. You get their analytical brains going, and they might even be having a good time with it, because for some people, that’s fun.

But then, when you ask for a gift, you’ll get responses like these:

• “I need more time”
• “I have to think about it”
• “Great presentation”
• “Very interesting”
• “You guys are doing some great work, it must be so rewarding”

These responses all reveal that no emotional connection between your cause and the donor’s personal story has been forged.

What can you do?

Keep the logic and the details to a minimum until the donor has fully committed to making their biggest, most transformational gift. After that, the details that really do matter can be discussed without imperiling the decision to give. The decision must be sealed first. Then you can bring in the nuts and bolts.

Related Posts:

• What Dr. James means when he recommends you harness the power of storytelling in major gifts fundraising
• Understanding Wealthy Donors – 3 Truths Every Gift Officer Needs to Know
• The 4 Core Values of First-Generation Wealthy Donors You Need to Understand
• 4 Ways Your Assumptions about Major Donors Are Hurting Your Fundraising

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