Each Donor Is a ‘Guest of Honor’ in Your Fundraising Budget

At some point in the year, every fundraiser deals with the dreaded budget. You may put one together, have input into one someone else builds or (horrors!) have no input until it is handed to you — and you don’t know whether to laugh, cry or just resign.

Budgeting as a fundraiser can be challenging. Too often, the overall goals seem to be (1) spend less and (2) raise more. It’s as if it was as easy as simply willing it to happen … I am unable to solve that problem for you, but here are six groups you need to be sure have a starring role in your next fiscal year budget.

Not-yet-your-donors: Fight for budget for donor acquisition. I won’t repeat all the facts about attrition, but if you need ammunition for making the case for acquisition, here’s the bottom line: On average, six in 10 donors don’t renew their giving year over year. Find out your retention rate if you don’t think those studies relate to you; it’s usually shocking (and not in a good way).

Once you know your attrition rate, it’s fairly easy to calculate when you’ll basically have no donors left unless you make some serious changes. Trust me — that’s a graphic that can convince almost anyone to open the purse a bit more for the acquisition budget.

First-time donors: Once you get the first gift, how are you going to make sure these people stay with you? (If you think attrition rates are bad, check out rates for new donor conversion. On second thought, don’t — the shock may keep you up all night.)
A good second-gift conversion program begins with the receipt and continues with special language and offers to get your new donors to repeat those gifts within three to six months (or maybe a year if you are mainly reliant on annual membership renewals). There’s no off-the-shelf program for this; you need to design a program that makes sense for your donor demographics and mission. Just remember that it’s not enough to acquire them; you have to have a plan for keeping them.

Ongoing donors: Ah, the donors we all love — those who give again and again, responding to even our weakest direct-mail appeal or e-news. But even these faithful donors can give up after a while and stop giving. Find out where the danger points are, and have a plan in place to proactively get in front of those times with a compelling reason to keep giving.

For others, circumstances prevent them from giving as they did in the past. Do you just forget about them? I hope not. Instead reach out to them and try to rekindle the relationship. They may be ready to think about planned giving or be more comfortable now with a smaller monthly pledge rather than occasional larger gifts. Make sure your budget includes a variety of giving opportunities so you can keep pace with donors through their stages of life.
Lapsed donors: It’s not at all uncommon for a nonprofit to have many more lapsed donors than current donors. And granted, some of them are never going to come back. But others will if you reach out to them at the right time (for them) with the right offer (for them).

Avoid the temptation to make an offer they almost can’t refuse — like a really great premium or a one-time “deal” that you won’t repeat. While you may get them to give again, you need to ask what percentage will only give that one time and then relapse. Manage your budget for lapsed renewal, and always pay attention to whether you’re bringing back true friends of the organization or simply bargain hunters.

Middle donors: As anyone who was a middle child knows, it’s an easy place to be overlooked. The same is true with middle donors. They aren’t yet giving at levels that qualify them as major donors in your organization, so they aren’t getting the TLC from your major-donor team or senior leadership. But they are giving above the typical direct-response donor.

Consider a few special communications to them each year, inviting them to be part of a unique project that you’re not promoting to “the masses.” Offer recognition options (i.e., names of all project supporters on a plaque in the room they help you renovate). Use heavy personalization, and talk about how special they are to the organization. Hold a private reception to thank these middle donors. Invite them to participate on a conference call or webinar where your president explains the new project. In short, in whatever you choose to do for this group, show them you care and that they matter to you.

Major donors: Ah, yes, the group we all just can’t get enough of. If only we had so many major donors that we didn’t have to worry about all this other stuff I keep writing about … But the truth is, many major donors get to that point by reading newsletters, responding to direct mail, clicking on a link in an e-appeal, coming to an annual event, maybe even lapsing and being won back by the sincerity of your organization’s effort to reach out to them.

Budget for special treatment — a handwritten note to say “thank you” from time to time. A phone call from your president or board chair to express appreciation. Birthday cards and holiday cards. A tour of a new program site. A VIP reception when you are opening a new exhibit or facility. And yes, a very personal letter with a professional-looking prospectus inviting them to participate on the ground floor of a new project.

Bottom line from this old dog: One size does not fit all in fundraising. Your budget needs to reflect your unique plans for each of these groups of donors, both to hold the fundraising team accountable for all of them and to show where investing more in the future will have the greatest impact (without neglecting acquisition, which ought to be non-negotiable).

And your annual budget is a great place to start to plan the special attention you’ll give each guest of honor over the next 12 months.

Originally published in NonProfit Pro.

Author: PJBarden

With a professional career in strategic fundraising that spans more than 35 years, Pamela brings a wealth of experience and knowledge to working with nonprofit organizations. She specializes in writing fundraising copy, grant proposals, P.R. materials, instructional articles and blog entries, as well as developing and executing fundraising strategy for her clients. Pamela is a Certified Fundraising Executive (CFRE); an instructor for UCLA Extension School’s Fundraising Certification Program and the University of La Verne, College of Business and Public Management; a frequent webinar speaker; and author of two online courses for UCLA Extension. Pamela earned a Doctorate of Business Administration in 2015; her doctoral project (dissertation) was entitled “Nonprofit Organizations’ Awareness of and Preparation for Legislation, Regulation, and Increasing Scrutiny.” She is a past winner of a Gold Award for Fundraising Excellence and an ECHO Award from DMA; recipient of a Distinguished Instructors Award from UCLA Extension; a weekly columnist for NonprofitPRO (formerly Fundraising Success); and a monthly contributor to Blackbaud’s blog, npEngage.

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