Fixing the nonprofit bucket (it leaks worse than a sieve)

The Chronicle of Philanthropy  reported in its October 2 online feed that in 2014, charities lost 103 donors for every 100 gained – a disturbing net loss!  Even more disturbing, this trend has held true since 2012.  The Center on Nonprofits and Philanthropy at the Urban Institute conducted this study as part of the Fundraising Effectiveness Project, in collaboration with the Association of Fundraising Professionals.

Another finding from the study is the median retention rate – those donors who make repeat gifts – stands at 43%.  What is our sector missing that others do not?  We could discuss the reasons all day, but perhaps it boils down to we are not as focused on stewarding our present donors as we are chasing down new donors.  With today’s robust donor management systems, acknowledgement letters automatically can be printed as soon as the gifts are entered.  But are you, a board member, other volunteer, service staff, or service recipient personally thanking the donor – and how soon after the gift is received?   That initial contact has to be more than a perfunctory thanks.  Donors want and deserve answers to questions like:

• How will the gift advance your mission?
• What outcome(s) can be achieved through your generosity?
• What research could my gift support?
• What solutions does my gift buy?

Penelope Burk’s studies provide crucial insights into the importance of showing gratitude as an organization.  According to Cygnus Applied Research (Burk’s company), 95% of donors would appreciate a thank-you call one to two days after a gift.  That is not surprising, just human nature to want a special gesture to be acknowledged and appreciated.   Empirical evidence demonstrates that the simple and timely thank you call leads 85% of donors to give again and 84% of these donors would likely increase their gift.   Perhaps this one finding would spur everyone in the development office to rethink their procedure on donor acknowledgement and thanks!  Burk’s research shows the importance of board involvement in thanking donors:  40% larger gifts from these donors and 39% more renewed their gifts.

Many organizations receive far too many gifts to provide this level of stewardship.  They must rely on letters, which have been written at the same time as the appeal, have some degree of personalization, and weave a story about how the gift will support these outcomes, etc.

With overall charitable giving at 2% of GDP – and has hovered around the 2% mark since the mid-1970’s, the net loss of donors means they are scaling back the number of supported organizations, frequently dropping small charities (raising less than $100,000 – Cygnus Applied Research).

Fundraising 101, yes (but it bears repeating):  Your best donor prospects are those already giving to you! Stewardship has to mean more than an annual dinner, CEO letter, newsletter, etc.   PLEASE SHARE your successes in stewarding and deepening donor relationships.  Let’s learn from each other and grow our sector beyond the 2% ceiling!