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 […]
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
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
Measure what really matters in #fundraising
It’s always surprising to me when I see a nonprofit’s request for proposal (RFP), or talk to a development officer and the focus of their inquiry is on “increasing average gift”, or “doubling the response rate in direct mail.”
These are fine goals for any organization to have, but by themselves, they do little good for any organization. Here’s why…
If an organization has 1,000 donors, they could simply focus only on the top 50 donors and thereby increase their average gift. However, disregarding the remaining 950 donors would significantly reduce the total revenue the organization raises annually.
Similarly, if an organization’s goal is to double response rate, they could easily change their ask strategy and only request that each donor give $5 in support of their cause (in fact, I’ve seen this happen — and the result isn’t pretty!). This could dramatically increase response rate, but also similarly decrease their overall revenue by downgrading donors who had been giving gifts of $100, $500, or even $1,000+.
It’s easy to focus on these things though. They’re the quickest to impact, and often the easiest to measure. But if you want to build and grow a successful fundraising program, focus on these key metrics instead:
- Annual value per donor
- Income coverage (the amount of income generated over and above the amount lost to donor attrition)
- Donor retention by segment (focus on retaining the highest value donors – sometimes it’s OK not to retain the lowest value donors)
- Donor upgrade and downgrade percentage
- Long-term value
Image courtesy of samarttiw at FreeDigitalPhotos.net
Middle donors, like middle children, are often overlooked. Most nonprofits have defined major gift programs, and annual giving programs for lower level donors. Very few, however, spend the effort to create strategies aimed at their mid-level givers. This is a HUGE mistake! Join me for a webinar (Thursday, Sept 10, 10am PDT) where I’ll share the characteristics that […]