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Your donors have only one question that bothers them.
If you want to acquire more donors, you have to answer it. If you want to raise more net revenue, you need to answer it. And if you want to increase the lifetime value of your donors, you must answer it.
Here's their question: "How will my donation change the world?"
Donors are confused
Donors ask this question for a number of reasons. For one thing, they're confused. If they live in Canada and want to support an organization that helps children with cancer, for example, should they donate to the Childhood Cancer Foundation, Canadian Cancer Society, Canadian Research Society, Cancer Recovery Foundation of Canada, Coast to Coast Against Cancer, Wellspring Cancer Support Foundation, Terry Fox Run, or someone else?
Many donors don't know. Or can't decide. So given that your non-profit organization has competitors who do similar work, you must tell prospective and current donors exactly how you will use their gift to transform lives. Otherwise your donors may donate somewhere else.
Donors have limited funds
There's another reason you must tell your donors how their gift will make the world a better place. Some of them are on a fixed income. Others just retired. More than a few have student debt. Or other kinds of debt. Some are broke. Either way, they can't support as many charities as they'd like, so they give their money to the few causes that promise to make the biggest difference with their gifts.
Donors fund specifics, not generalities
Have you upset one of your donors recently? Just how mad do you suppose they are at you, on a scale of 1 to 10? Take this quiz and find out.
1. Your major gift officer met a donor for lunch and ordered five martinis and spaghetti. 5 points
2. The folks in gift processing mailed a donation thank-you letter but it took over a month to arrive. 5 points
3. You spelled the donor's name incorrectly. 5 points
4. Your donor asked for no fundraising appeals by mail, but your annual giving officer thought Christmas was an exception. 5 points
5. Your donor asked your office not to phone her, so your receptionist phoned her to say OK. 5 points
6. You asked for a donation in a donation thank-you letter. 5 points
7. Your donor's spouse died and left you a six-figure bequest, but the folks in direct mail kept addressing your appeals to Mr. and Mrs. 5 points
8. A major donor asked your fundraising coordinator to send him your audited financial statements, but she was busy uploading a photo of her kittens to Twitter and forgot. 5 points
9. Your donor requested that you not acknowledge his gift in your annual report, but you did. 5 points
10. You told a major donor you would follow up in a week, but your Great Dane ate your day planner. 5 points
11. You engraved your wealthiest donor's name on your donor wall but put it under the wrong giving level (a smaller one). 5 points
Yes, grandma tweets daily about her arthritis and buys her cat food on eBay, but how does she prefer to donate, online or offline?
Yes, mailing a fundraising letter costs more than sending an email appeal. But which method brings in the most net revenue for most non-profits?
Yes, you prefer to communicate by email than by mail, but which method do your most profitable donors prefer?
The answers to these questions are best settled by the facts. The debate between direct mail fundraising versus online fundraising is settled, at least for the next 10 years. Here’s why.
Fact #1: The majority of donors give their first gift by direct mail
Direct mail is responsible for 75% of new donors. Only 16% of new donors make their first gift online. Source: Blackbaud 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report.
Fact #2: The majority of donated revenue arrives by mail
The typical nonprofit in North America receives more than 75% of its total donated revenue through direct mail but only 10% online. Source: Blackbaud 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report.
The secret to building long-term, profitable, mutually beneficial relationships with donors is to think the way donors think.
Here are some ways to see your donors as people and not pocketbooks. Understanding how your donors think is your key to helping them-and you-make a measurable difference in the world.
Thank your donors promptly and personally every time they mail you a gift.
Describe how you are using the donor's last gift the way the donor intended. The majority of long-term, faithful donors give to make a difference, and many will not give again until they know their last gift was put to good use the way they wanted-so show ample proof.
Treat your donors as thoughtful investors who care how their money is spent.
Don't appeal to short-term motivators, such as fear, that raise plenty of short-term funds but not enough long-term friends.
Give your donors enough information to make an informed opinion about giving. Anticipate the questions and objections that thoughtful people will raise about your organization, your mission and your ask, and answer them in your letter.
Help your donors solve a problem. Donors will not throw money at an impossible situation. They need to have hope that their donation will meet a need. So offer hope.
Don't promote future tax benefits alone. Instead, stress the difference a donation makes in lives changed and problems solved today. You want donors who believe in your cause, who want to help others more than they help themselves.
Instead of asking for funds that your organization needs, invite donors to accomplish their goals by making the world a better place (by mailing you a gift).
This morning, Renee Eaton and I were invited to a breakfast reception held by our client, VGH & UBC Hospital Foundation, to launch the hospital-wide phase of their employee giving campaign. (We were thrilled to learn that they had already achieved 100% participation from employees of the Foundation office – nearly 50 staff signed up to support the hospital through payroll deductions, monthly donations or single gifts. Great result!)
The speaker was an absolute inspiration. Steve was horrifically injured in a road-building accident on the Sea to Sky Highway between Vancouver and Whistler, in the summer of 2006. His tale of recovery is awe-inspiring. More tears than just my own fell into salty coffee cups when Steve showed us a video that began with photos of his first days in hospital and the extent of his injuries, through the dark days when he was told he’d never walk again, and ended with photos of his wedding in Mexico and ultrasound images of his soon-to-come baby. A profound tribute to amazing hospital teams, the powerful love and support of family, and a truly indomitable spirit – all coming together to first save his life and then help him rebuild it.
Fundraising consultant and researcher Penelope Burk of Cygnus Applied Research says direct mail is declining in popularity. She is wrong.
In her firm's latest report, The Cygnus Donor Survey: Where Philanthropy is Headed in 2011, Burk says there is "a continuing decline in donors' desire to transact their gifts through the mail; 26% of those who gave through the mail last year said they plan to give less this way in 2011 (less often, less money or both).
The problem with Burk's survey is that it reports on what donors say they will do, not on what they actually do. Burk partnered with 40 not-for-profit organizations for her research. But she didn't ask them if their direct mail programs are growing or shrinking. Instead, she surveyed 22,000 donors from these organizations, and asked these donors what they think of direct mail.
And there's the problem.
Donors will tell you they receive too much mail. But respond anyway. Donors will tell you they hate receiving fundraising telephone calls during supper. But give over the phone anyway. Donors will tell you they prefer to hear from you by email. But then won't read your email appeals.
What donors say they will do and what they actually do are often two different things.
I had a neighbor like that. Maurice said he'd never attend an estate sale organized by the local auctioneer because the auctioneer was "as crooked as a snake." But wouldn't you know, at the estate sale of a widow neighbor of ours, who was up at the front of the auction, bidding on all the items he wanted? Maurice.
If you want to discover where philanthropy is heading, don't ask donors what they desire to do next year. Ask charities what they are doing next year.
Nothing says more about the success of your fundraising program than the lifetime value of your average donor.
Average lifetime value, of course, is the gross income you receive from your typical donor during the time the donor is giving to your charity.
Donors to your charity give different amounts. Some give a lot. Some give a little. Some give often, some give seldom. Some give one gift.
Others give multiple gifts. Some give for a year. Others give for decades. Some give through one channel (direct mail, for example). Others give through multiple channels (direct mail, online, phone, special events).
Your goal as a fundraiser is to figure out how long your average donor gives to your organization, and how much that donor gives during that “lifetime.” You should know what this number is for every fundraising channel, and for all channels combined.
If your average lifetime donor value is high, then your donors likely stay with you for a long time. You are doing a good job of donor retention.
If your average lifetime donor value is high, your average donor likely gives through more than one channel during her lifetime (direct mail, phone, online, face to face, for example). You are doing a good job of multi-channel fundraising.
If your average lifetime donor value is high, your typical donor likely increases the size of her gift over time. You are doing a good job of donor upgrading.
The secret to building long-term, profitable, mutually beneficial relationships with donors is to think the way donors think.
Here are some ways to see your donors as people and not pocketbooks. Understanding how your donors think is your key to helping them-and you-make a measurable difference in the world.
Thank your donors promptly and personally every time they mail you a gift.
Describe how you are using the donor's last gift the way the donor intended. The majority of long-term, faithful donors give to make a difference, and many will not give again until they know their last gift was put to good use the way they wanted-so show ample proof.
Treat your donors as thoughtful investors who care how their money is spent.
Don't appeal to short-term motivators, such as fear, that raise plenty of short-term funds but not enough long-term friends.
Give your donors enough information to make an informed opinion about giving. Anticipate the questions and objections that thoughtful people will raise about your organization, your mission and your ask, and answer them in your letter.
Help your donors solve a problem. Donors will not throw money at an impossible situation. They need to have hope that their donation will meet a need. So offer hope.
Don't promote future tax benefits alone. Instead, stress the difference a donation makes in lives changed and problems solved today. You want donors who believe in your cause, who want to help others more than they help themselves.
Instead of asking for funds that your organization needs, invite donors to accomplish their goals by making the world a better place (by mailing you a gift).
Direct mail fundraising is a soccer game where the opposing team keeps moving the goal posts.
A premium that worked last year doesn't work today. A package design that worked at your last charity doesn't work at your new one. A proven way to acquiring new donors gradually fails.
How can a tested, proven tactic stop working?
When you test one thing against another in the mail and Thing A outperforms Thing B, you know what works, right? The key to knowing what works in direct mail fundraising is testing, right?
Well, sort of.
There are at least three times when you should ignore your test results.
When Charities are in Different Sectors
I know of two charities. One is a national animal welfare group that relies heavily on premiums (greeting cards, address labels, note pads) to acquire and retain donors. The other charity is a national human rights organization where one in four of its donors hate premiums, never respond to them, and ask the charity to never mail them.
As you can see, a tested tactic that works for one charity will not necessarily work for another. When you move from one charity to another, ignore your test results from your former charity, or at least re-test them to make sure they are valid at your new charity.
When the Test Results are Dated
What worked in the mail once may not work again. When was the last time you received a CD in the mail from America Online (AOL) promoting their dial-up Internet service? There was a time when half of all CDs produced worldwide had an AOL logo on them. In the late 1990s, AOL was signing up new subscribers at the rate of one every six seconds.
No more.
Does your charity need to double or triple or quadruple its income over the next five or ten years? Are you trying to figure out how to do that? Follow these simple steps to discover how many donors you'll likely need to reach your goal.
Let's assume you need to raise $1 million annually.
Step 1: List your giving methods.
Open a new spreadsheet. In Column A, list the methods you'll use to raise funds from donors. Your column will look something like this:
INDIVIDUALS
Direct Mail
Email
Major Gifts
Monthly Giving
Online
INSTITUTIONS
Corporations
Foundations
Government
