Read a Good Book Lately? Try Donor Centered Fundraising
by Gayle L. Gifford
Which of these are standard practices in your development office?
* Listing donors in your annual report by giving category.
* Installing a donor wall to recognize capital campaign givers.
* Rationing donor rewards and attention in proportion to the size of the gift.
* Calling your direct mail program a success if a mere 50% of first time donors made a second gift.
But do we really know if our donor recognition strategies are effective? Why are we satisfied with such low returns and high drop out rates for so many of our new donors?
Penelope Burk of Cygnus Applied Research Inc. wasn’t content with anecdotal answers. Concerned about nonprofit complacency with retention rates and the lack of evidence for donor recognition practices, she decided to conduct comprehensive research on the subject. After interviews with hundreds of charities and donors in both the US and Canada, she published her findings in her 2003 book, Donor-Centered Fundraising, how to hold on to your donors and raise much more money.
The findings of her book are startling – and yet so obvious.
* Charities experience a significant revenue gap – the difference between what they are raising now and what they could be raising if they didn’t lose as many donors and increased donor giving over time.
“Of course,” you say. “I don’t need a book to tell me that.”
Right, says Ms. Burk, if we know this, then why aren’t we doing something about it? How can we accept losing 80-90% of our donors recruited through direct marketing just five years after their first gift? What fundraising practices are contributing to this problem? Charities preach that devoting resources to their current donors is the best investments – yet why do charities continue to report that they simply aren’t giving these donors as much attention as they would like?
* Charities need to refocus their fundraising to be donor-centered.
In order to manage limited resources, common practice is to segregate donors into two classes – 1. those who make large gifts (or have the potential to) and 2. those who do not. The first and usually numerically smaller class gets lavish attention, the second and significantly larger class receives the bare minimum.
Ms. Burk cautions us away from this approach. She urges us to become donor-centered, treating all of our donors as generous supporters, not judging their importance solely on the size of their gifts. The attitude that some donors matter a lot and others only a little taints our practice. For example, if you don’t send the newsletter to your $10 donors because it’s too expensive, how will those donors ever know that there are reasons for increasing their giving?
Our behavior toward donors is a self-fulfilling prophecy. Givers of small gifts will remain that way as long as we consider them second class, failing to treat them with respect and limiting the information that will motivate them to increase their giving.
Of all of our donors, we really can’t accurately predict who will be a major giver. While sophisticated research techniques may advise us that certain of our donors possess great wealth, we also know that large gifts or bequests are made by donors of modest means who don’t show up on those wealth screens. We know that renewing and upgrading current donors is much more cost effective and produces greater return than chasing new ones.
Ms. Burk challenges us to change our mindset: “The only way to become donor-centered is to assume that at any moment in time, all your donors are doing the best they can within the limitations that restrict their philanthropy.”
* Charities need to restructure their communications.
Ms. Burk’s research found that charities don’t do a very good job of communicating with their donors. And doing a good job isn’t that complicated: donors state that there are just three simple things they want from the organizations they give to:
* A prompt, personalized thank you acknowledging their gift
* Confirmation that their gifts have been set to work as intended
* Measurable results on how their gifts made a difference – before they are asked for another contribution.
How powerful is this approach? Ms. Burk cites an example from one of her clients. The client’s donor direct mail program had stalled out, largely due to excessive donor drop out rates after the first gift. The client believed they might improve retention with a more elaborate recognition program, including token gifts, publishing donor names and developing a thank you event for larger donors.
Ms. Burk suggested a different approach: why not do a better job of simply thanking new donors? So they conducted this test:
During the next acquisition mailing, every tenth new donor was called by a member of the board of directors within 24 hours of the gifts arrival, and no later than 48 hours. If they couldn’t reach the donor after one or two attempts, they left a message on the donor’s voice mail.
Board members didn’t know how much the individual had given. They simply called to say thank you, using the following script: “Hello, Mrs. X. My name is Jane Brown and I’m a member of the volunteer board of directors of (name of organization). I’m calling to thank you for your support of our organization. We just received your gift today (yesterday) and I wanted to let you know in person how very much we appreciate it.”
Both groups were solicited again four months later. As Ms. Burk reports: “The test group gave, on average, 39% more than the control group. After 14 months, the average gift level of the test group was 42% higher than the control group” The only difference between the two groups – one simple phone call to say thank you.
(Ms. Burk cautions that you shouldn’t just assume that such a program will work for your organization. Test everything first).
Ms. Burk attributes the results to two factors: the promptness of the thank you to the gift’s receipt and that the appreciation came from a leadership volunteer.
* Charities need to differentiate donor responses to three types of communications: Acknowledgement, Recognition, Information
Based on her donor interviews, Ms Burk advises us to consider the purpose and impact on donors of three types of communications:
1. Acknowledgement – the private affirmation of giving (e.g. the thank you letter). This was highly prized by donors when it was done promptly, focused on the act of generosity, was genuine and confirmed what the gift was to be used for.
Ms. Burk offers 20 very simple tips for writing great thank you letters. Starting the letter with warm, excitement and enthusiasm (and not that boring old “On behalf of ?..). Spell the donor’s name right – and everything else in the letter as well.
2. Information – communications about the work of the organization and its progress, especially measurable results achieved through donor contributions. Donors prized this more than anything else. Ms. Burk cites information as the #1 driver of donor loyalty. Photos and testimonials of the donors’ gifts at work were well received. A majority of donors said they would prefer a targeted, one-page bulletin that talked about a particular program or service instead of receiving multi-page newsletters which often didn’t get read and sometimes just seemed as “thinly veiled promotion pieces for upcoming fundraising events or campaigns.”
3. Recognition – public acknowledgement of giving (annual report listings, awards) Recognition was a mixed bag. The majority of donors surveyed (53%) said they didn’t want to be recognized publicly for their gift and another 18% were ambivalent. Corporate donors and sponsors, however, overwhelming did want public recognition.
What about all of those donor recognition programs? Donor responses varied. I’m sorry to report that of the individuals who received plaques or certificates, 73% reported throwing them out immediately or storing them to throw away later. On the other hand, most corporate donors displayed them, especially if they came framed.
When I asked Ms. Burk about the common practice of publishing donor names, she reported that donors had mixed feelings, especially when they were listed by gift size. Some wealthy donors were embarrassed that they regularly appeared at the top of lists simply because they gave more money though their gift wasn’t particularly generous in proportion to their wealth. A number of the donors at the bottom of the list felt underappreciated — while their gift might be extraordinarily generous for their financial circumstances, they would never be able to move to the top of the list in their lifetime.
How can your organization become donor-centered?
Crafting a truly donor-centered fundraising program may require a radical re-thinking of your attitude, your programs and the way your department is structured. Include critical measures of the movement of donors over time. Design your programs to “help donors find their optimum giving level,” as Ms. Burk advises. Test everything so that you understand exactly what difference particular activities and spending produces. Re-assess the sacred cows of donor recognition.
A sure sign that your organization isn’t donor-centered is the way you talk about fundraising. Stop speaking about donors as targets or your contacts with them as “hits.” Cultivate a climate where every donor is recognized for their worth as a generous human being. We depend on our donors as critical partners in philanthropy, people who share our belief that ordinary citizens build better communities, a better world for all the earth’s citizens.
Donor-centered Fundraising. Read it, it will forever change your fundraising practice.
This article first appeared in Contributions Magazine.
Gayle L. Gifford, ACFRE and her colleague Jonathan W. Howard at Cause & Effect Inc. help nonprofits from the grassroots to international create strategic change for a more just and peaceful world. With over 30 years of nonprofit experience, Cause & Effect helps nonprofit organizations with strategic planning, board development, fundraising and communications needs.