Despite more dollars raised, a new report shows fewer people gave in 2018. That could portend disaster unless fundraisers make changes now.
Fundraising often plays a big role in a nonprofit’s overall financial health. A new report from the Fundraising Effectiveness Project indicates that despite more total dollars given in 2018, danger could lie ahead.
“One of the things is—and I think people really need to be focusing on this—donor retention. We are losing lots of donors,” says Michael Nilsen, vice president of communications and public policy for the Association of Fundraising Professionals, one of the groups that sponsors the FEP. “This is a huge thing.”
It’s huge because effective fundraising relies on small donors, according to Nilsen. Unfortunately, the FEP 2018 Fourth Quarter Report shows that while the total money raised was up by 1.6 percent, the total number of people giving was down by 4.5 percent. Fewer people giving is a death knell for fundraising.
“We think of giving as a pyramid, and as you cultivate people up, there are fewer of them, but more major donors,” Nilsen says. “We’re going to have a problem if you’re depending on just these large donors.”
Because the idea is to convince smaller donors to become larger donors, it is important to have many individual donors, even if the amounts of money they give are small. “There are people who donate $50 or a $100 every year, and then they die and leave half a million in the will,” Nilsen says.
Better Relationships, Better Retention
Another retention stat on the decline from the report: For new donors obtained the previous year, nonprofits convinced 15 percent fewer to give again. This is problematic, Nilsen says, because retention is essential to the donor pyramid that ends with major donations.
“Most people don’t wake up and want to give $100,000 to a charity,” Nilsen says. “That’s why developing the donors and developing the relationships is the important part.”
Building a relationship with donors is about more than just staying in contact with them; the message sent matters. “It used to be, we get a donor, then thank the donor, and ask for more. There is this sense that it’s just transactional,” Nilsen says. “It can’t be transactional if we want to hang on to donors. If you are only ever contacting people to ask them to give money, that just isn’t going to work.”
Rather, organizations need to approach their donors as partners. “People want some engagement. They want a sense of how the gift is being used,” Nilsen says. “There is a way to engage donors, and that has to be looked at in a very strategic way.”
To boost engagement, a fundraising department shouldn’t be its own silo, alone figuring out how to deal with donors, Nilsen warns. It should interact with other parts of the organization to come up with engagement plans that retain and cultivate donors.
Nilsen also recommends asking donors how they prefer to be engaged, whether it be online via emails, newsletter, text, or even calls. “You used to only give calls to the top 10 or 20 donors,” Nilsen says. “Whether its’s you or a volunteer, reaching out to a low-level donor can build a relationship.”
Widening the pool of donors makes fundraising goals achievable for everyone, while limiting prospects to a shallow pool of bigwigs spells doom. “Focusing just on major donors is to our detriment,” Nilsen says. “There are two million plus charities, and a lot of them have a very experienced fundraising program. You can’t all go after those wealthy donors.”
What is your organization doing to build relationships with its donors? Please share in the comments.