In the best of times, many nonprofits struggle with donor acquisition, retention, and, worst of all, lapsed donors. Now, with the North American financial markets imploding from the sub-prime mortgage fallout in the US, experts predict that voluntary sector organizations will need to refocus on the communication that truly reaches their donor populace: sincere acknowledgment based on donor-centred principles.
Words from the guru
Long considered one of the continent’s foremost experts on donor recognition, Penelope Burk, president of Cygnus Applied Research, spoke to CharityVillage from her office in Hamilton, ON, about what nonprofits can and should be doing to ensure a healthy – or at least as healthy as possible in this economy – donor base.
Reiterating a core concept she helped pioneer in the early part of the decade through research into the sector – chiefly through in-depth analysis first covered in her 2003 book, Donor Centered Fundraising: How to hold on to your donors and raise much more money – Burk states that “donors define recognition differently” than nonprofits.
“They define it as acknowledgement [and] this cannot be trumped by any outward display of [recognition by nonprofits], whether it’s a reward like stamps, or magnets, or an annual form. It’s the so-called ‘soft side’ of acknowledgement…phone calls and personalized letters, that gives them the desire to give more,” she says.
According to Burk’s research, donors have always felt this way but somehow, over the years, nonprofit management shifted to different forms of recognition “because they felt it was the appropriate way to go,” she says. “If donors say acknowledgement is more than the typical recognition [shown by nonprofits], then it would seem logical to me that [organizations] shift their budgets from recognition to acknowledgement.”
In 2003, Burk asked nonprofits how their budgets were prioritized between recognition and communication divisions. What she found was that on average, $0.19 was being allotted for acknowledgement purposes, while $0.30 was being spent on recognition programs.
“I was encouraged by that because it showed there is room for [budgetary] shift,” Burk states. “In Canada, only 20% of donors surveyed said that recognition programs would encourage them to give and keep giving. All the research we do in this area for nonprofits and fundraising keeps returning to the donor-centred theme.”
Looking ahead into murky waters
Burk’s company will conduct a new study in early 2009 called The Effect of an Economic Downturn on Philanthropy: A survey of American donors and their giving intentions, and there may be a Canadian survey done as well. In the interim, when asked what she expects responses to be like, Burk guesses that 2009 will see a “major downward” trend in fundraising in the acquisition of new donors, recovery of lapsed donors, and renewal of once-stable donors. The only thing that may remain steady, she says, is the value of the average gift.
“This masks, to some degree, everything else,” she says of this last prediction. “The only thing nonprofits care about is the money [they can raise] and they don’t care where it comes from. This is a mistake. But as long as the revenue holds, there’s little attention paid to the rest. One of the last things donors will do in these times is try out a new cause, I’m guessing. If the donor-centred theme plays out in [the 2009 study], donors will probably say, ‘I’ll stick with what I know’ and ‘I’ll tend to favour organizations that appreciate me’.”
Nothing beats the personal touch
It seems others have also being influenced by the donor-centred philosophy.
From Vancouver, Lynne Boardman, managing director of Harvey McKinnon Associates, a consulting firm dedicated to “building loyal donor relationships”, tells CharityVillage that this year it’s more crucial than ever for nonprofits to acknowledge donors and also to think carefully about how they choose to recognize them.
“Nonprofits should be considering higher-touch or more targeted ways of thanking donors, such as having volunteers make short calls to certain donor segments,” she says. “Consider some added personalization in your thank-you for the campaign of last gift. The added benefit here, of course, is being able to report back on progress, which is a fabulous stewardship tool. Try to be as specific as possible. We also recommend special acknowledgement for that small core of super-loyal donors – perhaps a premium or a donor recognition event. Even if they don’t give as much this year as before, [the organization should] continue to acknowledge their ongoing support to the same degree.”
Asked what specific advice she has for senior executives of nonprofits this year in their recognition planning, Boardman cautions not to make any facile assumptions about major donors.
“It’s important to remember that many of your high-value donors will be experiencing financial stress themselves. It might be easy to think that our most wealthy supporters are untouchable by recessions or economic turmoil, but it’s not true,” she counsels. “Remember that financial stress touches everybody, and remember to be respectful of the way they might be feeling. Offer up solutions and be flexible…[suggest] different ways of supporting, longer time to fulfill pledges, optional giving levels. Perhaps it’s a year in which to remove the value-bands in annual reports, so that the supporter who gave you $250,000 last year isn’t embarrassed to be listed in the $100,000 category this year. And also, be careful of being too inward-looking with some of your designations. We fundraisers think in terms of ‘active, current, lapsed, and dormant’, but this is our own jargon. If I made a stretch gift to a favourite cause 18 months ago, I certainly wouldn’t think of myself as ‘lapsed’ or ‘dormant’ today, so I would be quite shocked to hear myself referred to that way in a telephone call or letter.”
Boardman also has a pragmatic suggestion for nonprofit senior management, one that may help stem a potential funding bleed: get personally involved.
“We suggest setting up a team of senior people who will commit themselves to phoning mid- and high-level donors with their personal thanks. These calls should come in the two weeks following a gift,” she says. “Mid-level donors go on to be major donors, who then go on to leave sizeable bequests. If you can recruit four senior people, like the CEO, the burden of calling should not be too heavy. As these calls will be 100% ‘thank-yous’, they should be enjoyable rather than intimidating to do.”
Sobering stats from 2003
Trotting out some statistics she gathered during the last US downturn in 2003 (which she remarks was nowhere near as cataclysmic as the one North Americans currently face), Burk says the following numbers could be a harbinger of the greater hurdles fundraisers and nonprofits will face in the latter half of the decade.
- 59% of donors said an economic downturn does affect their giving.
- 14% said they were likely to prioritize support to organizations that affect them personally.
- 37% reduce their gift values.
- 44% eliminate some gifts altogether.
Burk also recently launched a blog, where she is giving advice to professionals in the sector on how to navigate proactively through the current economic downturn. A small excerpt follows, reprinted with permission from Burk.
It has never been more important than now to reach out.
You are either already experiencing a decline in fundraising revenue or anticipating one. As you develop your ‘Plan B’ and as your anxiety level rises, you may be putting a lot of thought into how to express your next ask in an even more urgent tone.
If so, you’re making a mistake and you’re missing a critical donor-centred opportunity.
Now is the time to tell your donors that you are thinking of them, that you know they are hurting, and that you hope they will be okay. Now is the time to reassure them that your organization has a bottom line – that regardless of where the economy goes, your not for profit will still be out there, fulfilling your mandate as energetically as possible. Now is the time to tell your donors that you will be able to keep going forward, not if your donors give in the future, but because they have stood by you in the past.
Impressing the fundraiser
Boardman recounts a personal giving story that she says best reflects how nonprofits should be acting toward their donors.
“About a year ago, I donated $100 to a women’s hospital to celebrate the birth of my baby. Two weeks after mailing my donation, I received a very sincere thank you phone call from one of the volunteer board,” she relates. “I was pleasantly surprised that I would receive a phone call for a $100 gift. Six weeks later, my friend had a baby, and sure enough, I donated another $100. And will again. Such is the effect of a personal, two-minute call…even on professional fundraisers.”
It’s a simple message that nonprofits can, and should, be heeding in this, the year of the meltdown.
Five ways ensure donor retention and satisfaction (courtesy of Lynne Boardman)
- Thank them promptly.
- Thank them specifically.
- Consider higher-touch, more targeted ways of thanking donors.
- Remind donors about their gift’s impact.
- Don’t take “super-loyal” donors for granted.
Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at andy@wordlaunch.com.
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