The following article is an excerpt from Penelope Burk’s new book “Thanks! A Guide to Donor-Centred Fundraising”. In the book, Burk reveals the results of her National Study on Donor Communication and Recognition, an expansive look the fundraising practices of 111 charities and the giving habits of 100 individual, corporate and foundation donors across the country. She advocates for a new way of dealing with donors to help them strengthen their ties with your organization and keep giving long into the future.
From Chapter 8: Confirming How the Gift Will Be Used
One of the biggest challenges that will be faced by fundraisers in trying to implement donor-centred fundraising is convincing decision-makers to invest time and money in communicating more effectively with donors. That is why testing is so important; it provides the financial proof that is required to support an increased investment in raising money. Another challenge is helping decision-makers and program personnel understand why designated giving is an essential tool for building donor loyalty.
Designated gift fundraising is, simply, the commitment of a charity to use donors’ gifts for one or more specific purposes which comprise only a portion of the programs or services in which the charity is engaged.
Designated giving is resisted because charities assume that designated giving:
- restricts the charity’s ability to capitalize on new opportunities. Charities feel that if too much money is designated by donors to one program or only to certain programs, it will be impossible to finance any new area of service without having the flexibility to move revenue from one program to another.
- places too much power over program priority and execution in the hands of donors. Charities feel that donors will tend to designate their gifts to the most popular, well known or least controversial programs and others will go unfunded or be underfunded.
Here are the real issues behind resistance to designated giving:
1. Gifts must be undesignated to allow for maximum flexibility in programs and services
If this philosophy exists, the charity is most likely working without a strategic plan. In that case, there is a much bigger problem in the organization than a disagreement over designated giving. The most important attribute of a strategic plan is its ability to bring purpose and productivity to an organization. A strategic plan focuses everyone’s attention on a selected number of programs and services, each one with a measurable set of objectives to be reached this year and a few years ahead. A strategic plan allows fundraisers to communicate to donors why money needs to be raised, where it is going to go, and what the money will be expected to achieve. This makes for very compelling solicitations. More important, a strategic plan puts controls on the entire organization to do what it has promised to do and to produce measurable results. This is precisely the information that donors say they need in order to keep giving.
If gifts cannot be designated, then the fundraiser is relegated to talking to donors in general terms. She may cite specific programs and services, but only as examples of the work that the organization does as a whole. Without specifics to guide his decision-making, the donor is then hard pressed to find something on which he can focus his imagination and his philanthropy. The result is a watered-down solicitation that elicits a lacklustre response, opening the door for higher attrition and lower average gifts.
2. Gifts must be undesignated in case a new opportunity comes along that requires immediate funding
An extension of point 1 above, this speaks to an organization’s willingness to quickly abandon a current activity or add to a defined roster of services. This, in turn, implies a lack of faith in existing programs, and a less than required appreciation for the time and attention that should be afforded a new program concept before it is adopted. New programs need to be vetted against the organization’s mandate, researched, budgeted, tested, evaluated, assigned to staff, and blended into the entire programming strategy. That simply takes time.
By all means, the Executive Director and Programs Staff should think big — but that thinking should be followed by planning, controlled testing and, only then, by full execution. A new program requiring private sector support cannot be shaped, tested, adopted and marketed adequately within a single year. An effective strategic plan will include a provision for accommodating new ideas and opportunities, one that allows exploration of the concept, research, etc. in the current year, but does not disturb the integrity of existing programs. Things go wrong when staff and volunteer time are suddenly diverted to the new idea, leaving current programs inadequately supported.
You may think that a discussion about strategic planning is somewhat “off topic” for a book on donor communications, but it is not. If your organization is one which tends to “switch horses” easily, then it is very difficult for fundraising personnel to create compelling literature and donor solicitation pieces. It also suggests that the charity thinks it doesn’t matter what donors are told in order to get their money. It does. Donors do read and are influenced by the content of direct mail and other solicitation pieces; they become suspicious when they cannot find references to the programs or services they thought they were funding. They look for reports in correspondence, newsletters, on charities’ websites. When they don’t get them, they feel duped and they become concerned about how their contributions are being used. CCP’s National Survey of Giving, Volunteering and Participating demonstrated that 40% of donors stop giving or decide not to give more when they could have, because they thought their money would not be used efficiently. Donors form this opinion when charities fail to provide them with the information that would allay their suspicion.
Charities rely on staff and volunteer fundraisers to be the essential information link to donors. It is impossible for them to do their job if the very programs that donors thought they were supporting are now gone or relegated to minority status. When fundraisers are constantly selling new programs rather than reporting on progress, they are forced back into a form of donor acquisition. This means that all the time, money and skill that went into capturing donors in the first place has been wasted.
3. Planning places onerous controls on staff
Many Executive Directors and program staff resist planning because a strategic plan puts performance expectations in very tangible terms. Just as fundraisers should be expected to work to specific financial objectives, administrative and program personnel should also have tangible and measurable expectations for service and organizational growth. Instead of measuring gross and net dollars, though, their measurements are in terms of numbers of clients served, program growth, audience enjoyment, research progress, etc.
When programs and services are specifically defined, and targets are time-limited and measurable, it becomes possible for the Board of Directors to do its job. Sometimes staff feel that if their Board is kept in the dark as much as possible, they will not interfere with day-to-day operations. The opposite is actually true. A Board that has no plan and no realistic benchmarks for achievement has no option but to step in and have a look for themselves. Armed with a pragmatic plan that measures growth and staff performance, however, the Board retreats to its position as policy-makers and governors, knowing it will be easy to determine whether or not the organization is on track.
An important related matter is the budget-setting process and the attitude that some organizations have about their annual operating budgets. It is impossible to create a reliable budget unless the organization knows what it is going to do with the money; and, as budgets are created in advance for an entire operating year, it stands to reason that the planned activities for a full year must be known before the year begins. Once the budget has been established, it should not be changed. Some charities treat their budget as “a work in progress”, altering revenue and expenses as the year unfolds. This is inappropriate as it relieves managers of their responsibility to plan, to forecast accurately, and to deliver the services that donors believed they would be funding when they made their contributions. It also has the regressive effect of denying staff and Board a vital sense of achievement. If people don’t know what they are trying to achieve, how do they recognize success?
Fluid budgeting is a disaster for fundraisers. Many charities think nothing of adjusting the current year’s fundraising goal upwards when the year is already in progress, or choosing a goal for an untried fundraising event that matches the amount required to balance the budget. Actions like these leave professional and volunteer fundraisers feeling like Rumplestiltskin. “Just go into the next room dearie, and spin that pile of straw into gold, too.” If they are successful, it’s due to luck, not skill, and luck has a way of running out just at the moment that expectations rise.
For donors, the effect of fluid budgeting is equally harmful. One of the most common frustrations expressed by donors in the Study is that they often do not hear about success. They respond to compelling appeals but do not get to enjoy the good news after the money has been raised. If fundraisers are doing their work without the benefit of a strategic plan or to expectations that are always changing, they never know if they and their donors have succeeded. They are denied the opportunity of reporting successful results, which also means that, for all intents and purposes, they are denied the tools they need to engage in donor-centred fundraising.
4. Designated giving grants too much power to donors
Designated giving means that prospective donors are given information about how their gifts will be used before they commit to give. Designated giving does not mean that donors are given the freedom to choose from among all possible program options at the time they make their gifts. It is always within the charity’s unilateral control to select the programs or services that will be offered to donors as funding choices. If a charity needs more money for program B than for program A, then B is the one that should be showcased in solicitations.
In most charitable organizations, donations from private sector donors are not the sole source of income. Government grants, revenue from admissions, product sales and memberships, for example, constitute income that is usually undesignated and which can be allocated anywhere the charity sees fit. These funds are best assigned to programs that are less attractive to donors, making the job of creating compelling solicitations much easier. Of course, the more you get to know your donors individually, the more you will discover how diverse their interests are, and how willing they are to fund risky or less popular services, as long as they are kept informed of your progress.
Donors do not want to run the charitable organizations that they support; they are much too busy running their own lives, families and businesses. But when they lose confidence about whether or not their money has been put to good use, donors do one of two things: they either stop giving or they start making more demands. If the latter, it may seem like donors are trying to dictate how an organization should be run. In reality, they are just trying to hold staff and volunteers accountable for the expenditure of their money.
Occasionally, an organization may encounter a donor who is offering a substantial gift on condition that the charity adopt a program or service other than the ones currently available for funding. This is another instance when having a strategic plan is incredibly valuable. If the donor’s interest is within the plan’s objectives, then a terrific opportunity is on the table. If not, then the donor is appealing to the wrong organization and should be redirected to one of the other 80,000 charities that might be able to provide a better fit. Any organization that takes the time to make a considered referral will gain both the donor’s and the other charity’s respect.
5. Some programs or services are unsaleable
It is always easier to write or talk about the core service or the more popular programs in any organization. New or less understood initiatives are more difficult to position to donors in a compelling fashion. Just as professional marketers are a boon to donor acquisition, they are also most skilled at positioning new or difficult-to-sell programs and services. Sometimes organizations shy away from designated giving because they feel that some or most of the programs for which they need money will not be attractive to donors. It may simply be a matter of not knowing how to enunciate them in ways that will be appealing to the public.
Working Backwards – Starting with Designated Giving
Charities need to turn their thinking about and application of designated giving upsidedown. Designated giving is used today as a “privilege” or benefit to be granted to major donors, when it should actually be a tool to attract new donors and breed early loyalty.
The relationship between organization and donor is most tenuous at the time the first gift is made. This is proven through attrition statistics which clearly and consistently demonstrate that fundraising loses more donors between the first gift and the second ask than at any other time. (See Chapter 3.) With this in mind, practitioners need to ask, “what is loyalty” and “what does it take to turn a first time or occasional donor into a philanthropist”? Loyalty is the byproduct of trust and trust has to be earned. So, when someone gives for the first time, she is more hopeful than trusting. Something influences her to contribute to your organization — it could be your superior marketing that surrounded the campaign, your charity’s prior reputation, a personal affiliation for the cause — whatever it is, she gives you the benefit of the doubt that you will handle her gift responsibly, but she has no real way of knowing, in advance, whether or not you will. Your job now is to turn that first tenuous gesture into continuing, confident giving.
Prompt gift acknowledgement goes a long way in making your organization stand out in the mind of a donor who may give to several causes simultaneously or who is living with sour memories of past disappointments in donor communications. But, specific information is also required. Designated giving can multiply the beneficial effects of donor communication, especially with new donors.
Trust, engendered by time, reduces the need for gift designation. Ken Ramsay, Founding Chair of the Canadian Association of Gift Planners, is often asked about dealing with potential planned gift donors who are keen to designate bequests to a very specific end use. As there is no guarantee that a fifty-year old donor’s current interest will be a focus of the charity by the time the donor dies and the bequest is realized, undesignated bequests are certainly preferred. How is Ken successful in moving donors from a desire to designate to a willingness to provide an undesignated gift? — by talking with them. Through personal communication, the donor gets to know and trust both Ken and the organization he represents. It is that trust that makes it possible for the donor to commit a bequest in the knowledge that it will be put to good use within the organization’s overall mandate and according to their specific goals and needs when the time comes.
While our immediate preoccupation in fundraising is always to make money, we are also responsible for helping non-donors learn about the joy of giving. Gift designation is one of the tools at our disposal for creating resilient philanthropists.
For more information about Thanks! A Guide to Donor-Centred Fundraising, visit http://www.burkandassociates.com.
