Saturday, June 22, 2013

Fundraisers: This is your highest priority!

"How do you suggest prioritizing time between cultivation/stewardship and new prospect identification/qualification?" T.H., Lake County, IN

APB responds: T.H., this is an important question. 

Your number one goal in fundraising is to RETAIN your current donors.

Most (somewhere around 70%) of first-time donors to U.S. nonprofits never repeat that gift. Then, NPOs lose 30% of those donors year after year. Imagine the shock and horror of a for-profit company CEO who learned that 70% of her customers never bought from her again! She'd be out of a job, really quick.

Yet, somehow, in nonprofits--especially in the human service sector--we often make the mistake of chasing new donors (or, worse yet, new money). It's a grass-is-always greener view. And it's a HUGE missed opportunity.

Let's take a for instance: Let's say in your first year on the job, you are able to attain 10 donors who contribute at a $25 level. In year 2, only three of those 10 donors give again, but they increase their gift by 10%. In year 3, you have two donors left, and in year 4 you are down to only one of those original donors. 

The total amount you have raised in 4 years from all of those folks is $426.

  Year 1 Year 2 Year 3 Year 4 Total Giving
Donor A $25 $28 $30 $33 $116
Donor B $25 $28 $30   $83
Donor C $25 $28     $53
Donor D $25       $25
Donor E $25       $25
Donor F $25       $25
Donor G $25       $25
Donor H $25       $25
Donor I $25       $25
Donor J $25       $25
$426

Presumably at some point during these four years, you would start scrambling to find new donors to replace the ones who are leaving their relationship with you. That would pull you away from stewardship and cultivation activities, and it would burn you out because 70% of all the new donors would never give again. 

But, let's say you prioritized retaining donors through stewardship and cultivation so that in year 2 you retained 50% of your donors and nothing else changed. By the end of your 4th year, you will have raised $545, 28% more than in the first scenario. 

  Year 1 Year 2 Year 3 Year 4 Total Giving
Donor A $25 $28 $30 $33 $116
Donor B $25 $28 $30 $33 $116
Donor C $25 $28 $30   $83
Donor D $25 $28     $53
Donor E $25 $28     $53
Donor F $25       $25
Donor G $25       $25
Donor H $25       $25
Donor I $25       $25
Donor J $25       $25
$545

So, T.H., if you work for an organization with a large number of annual donors that you don't know very well, I would suggest spending a larger portion of your time stewarding those donors and cultivating personal relationships that could lead to major gifts and legacy gifts from those same individuals.

However, if you work for a newer, grassroots organization with a very modest donor pool, I would suggest prioritizing a few "point of entry" events or solicitations to help you identify first-time donors. Then I would urge you to devote a substantial portion of time towards encouraging donor loyalty.

Get your hands and eyes on anything by Adrian Sargeant for more research on donor retention. In addition, read the latest from the Fundraising Effectiveness Project at the Urban Institute by clicking HERE. 

If you have any burning, nagging, or "I'll look into that later" questions about fundraising, philanthropy, or the complex world of nonprofits, you can askAPB (askapb@giving-focus.com). I'm excited hear from you!!

If anyone has more to share, please comment below!

No comments:

Post a Comment