Is it ever ok NOT to retain donors?

Maybe you saw this headline in The Chronicle of Philanthropy last Friday: Charities Lost 103 Donors For Every 100 Donors They Gained in 2014, Says Study. Nonprofits are right to focus on donor retention. It is significantly cheaper to retain a donor than it is to acquire a new one. I think it’s equally valuable […]

Does Your Nonprofit Have an R&D Budget?

Many of the world’s most innovative products were created as a result of dedicated corporate research and development efforts. Products like the iPhone, the space shuttle, pacemakers, stealth paint, microwave popcorn, Antiretroviral drug therapies, Post-It’s, 3-D ultrasound technology, etc., were all developed out of bold vision, a willingness to embrace risk and invest in research […]

What nonprofits can learn from reality TV

A guest post from MarketSmart's Greg Warner

  I asked Greg Warner, CEO/Founder of MarketSmart if he’d share his take on the two biggest mistakes that nonprofits make. And if you happen to know Greg (I’m thoroughly enjoying getting to know him), you know he’s not shy. He’s also not short on opinions about how we in the nonprofit sector can improve […]

5 Great Online Tools For Nonprofits

I’m always on the lookout for new tools that make it easier for fundraising and nonprofit leaders to get their jobs done. Unique ways for nonprofits to engage their supporters, and for organizations to raise more money for their causes. Today I want to share five of those tools with you. I’m recommending these because I […]

What you’re giving up by not asking #volunteers for financial support

Many nonprofits fail to fully integrate volunteers into their organization. They silo the volunteer names in a spreadsheet outside the organization’s donor database and suppress them from any and all fundraising efforts. Sometimes this is because they just can’t get their disparate systems to talk to one another.

Other times, this happens because someone in the organization doesn’t believe volunteers want to be solicited. And even other times, it’s because volunteers don’t convert to cash donors in high volume, and therefore don’t look as valuable as donors that are acquired with an initial cash contribution.

However, in an analysis of three different nonprofit donor files recently, I saw that supporters who were both volunteers and cash donors were anywhere from 50% – 150% more valuable than those who were only cash donors.

The very real risk of revenue saturation for #nonprofits

Profit and loss

A lot of nonprofits suffered heavy losses from 2007 – 2009 when the U.S. economy fell apart. The organizations that were impacted the most were those with the fewest revenue streams. Of those, some of the worst stories came from organizations that generated 50%+ of their revenue from local, state, and federal grants. As the national economy contracted, municipalities, states, and even the federal government began cutting grant funding to many nonprofits.

Without well developed additional revenue streams, many nonprofits were forced into staff layoffs and furloughs. Others weren’t as fortunate. Hundreds of organizations shut their doors permanently because they had relied on a single revenue stream for the majority o their funding — and that funding dried up without warning.

The same thing is happening right now to organizations who have long survived almost exclusively on direct mail. Many nonprofits smartly used direct mail fundraising to build a large and loyal base of supporters, then from that base of support created major donor programs, planned giving strategies, and event efforts that have allowed them to maximize revenue from their supporters.

But other nonprofits unfortunately didn’t think broadly about their fundraising. Direct mail was working, so they doubled down. They didn’t invest the time, effort, or resources needed to create other revenue streams. And now that donor behavior is changing, and fewer people are responding to direct mail, these organizations are beginning to suffer the effects of not diversifying funding streams.

Don’t make this mistake!

The more revenue streams your organization has, the more flexible you can be.  And the more likely you’ll be to weather unexpected financial storms.

 

 

Image courtesy of Stuart Miles at FreeDigitalPhotos.net