GO ON, GET A CHECKUP
The typical American child sees their pediatrician annually while they’re growing up. During each visit, a nurse usually measures height and weight to track these vital statistics on a chart to see whether the little cherub is above or below normal. My question to you is this: How often do you take your donor file in for a checkup? Is your growth above or below normal compared to a donor file of similar “age” and “gender”?
There is no debate among fundraising professionals that development decisions must be based on a solid understanding of recent growth – or lack of it. But when it comes right down to it, we often wait far too long before getting outside advice on whether our patient is really malnourished, or just naturally thin.
This article is here to provide some background on the most important vital statistics to measure on a routine schedule, if you don’t already…
Donor Life Cycle Analysis
- Donors on every donor list can be split into certain easily identifiable life stages. Just like children can be toddler, “tweens” or teens, donors have certain characteristics according to their age on the donor file. In their first year on the file, they are new donors, in their second they are either lapsed or second year renewed, etc. A good file analysis will provide basic donor stats by donor life stage, such as the average annual gift per donor, average number of gifts per donor, number of donors in the category, and the percentage renewed from the previous year, as well as the total number of gifts and income for each of six or more donor categories.
Donor Movement Analysis
- A donor movement analysis – sometimes called a donor migration analysis – shows how donors transfer between different pre-determined giving levels. This analysis will help you understand whether donors are generally upgrading, downgrading, or stable in terms of the amounts they give. This kind of analysis can help identify weaknesses in strategy regarding donor communications, ask amounts or both.
Donor Renewal Analysis
- A renewal analysis looks at vital statistics about donor renewal. Some analyses, like those used by Campbell Rinker, evaluate this by year of acquisition to reveal how successive acquisition efforts have impacted renewal in recent years. Others may look at it by acquisition media (direct mail, telemarketing, etc.), or by significant giving programs (e.g. pledge donors vs. high-dollar donors vs. low dollar donors). In any case, this type of analysis is essential for a good understanding of the health of a fundraising program.
Cumulative Giving Analysis
- The goal of a cumulative giving analysis is to demonstrate the impact of giving over time by various classes of donors – those who have begun giving in the same year, through the same media in different years, or at different gift levels. This is not the same as a lifetime value analysis, but it is similar. A lifetime value analysis attempts to forecast the future expected value of a class of donors at an early point in their history. A cumulative giving analysis more often concerns itself with the factual giving history. This analysis is very helpful in determining whether the value of donors has increased or decreased over time, is higher for donors acquired by varying media channels, and in isolating whether the total value of donations can be improved by focusing more of an organization’s energy on one or another type of strategy.
Recency Analysis
- A report on the average recency of gifts on the donor file is also very helpful. Beyond telling your organization whether donors are generally giving more or less often, the analysis should also help your organization pinpoint which segments influence the trends in this area and what strategies are necessary to counteract a negative trend toward longer spans between gifts.
Several analyses available from analytics firms have these reports – or variations of them – available for purchase. Most software packages also offer these reports in one form or another.
The key to getting good information from the report is to analyze your entire donor file and evaluate all aspects of your strategic fundraising plan, in order to develop a good understanding of its strengths, weaknesses, opportunities and threats. Once this overall assessment has happened, there is usually an opportunity to dig deeper within one or another segment and identify specific tactics that will improve your overall fund raising performance.
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THE TRUTH ABOUT LAPSED DONORS
Did you know that donors typically give to as many as 10 or more organizations over any two-year span? (The average in one recent donor survey was 13.2.) Several recent surveys encompassing thousands of donors have proven something fairly surprising: Lapsed donor attitudes are actually quite similar to those of active donors. In fact, lapsed and active donors are often very literally the same person. If an active donor and a lapsed donor are the same person, it follows that while a donor is lapsed with one nonprofit, she’s still active with another. Just let that notion sink in for a second… This fact has several dimensions that we’d like to explore in this column.
- Donors have certain attitudes about the quality of “service” from a nonprofit
- Donors have specific perceptions of nonprofit communications
- Donors have a self-image with regard to their own giving habits
Nonprofit Service Quality
Though your donor may support diverse causes and organizations, we have discovered highly consistent attitudes among donors about the qualities any nonprofit must deliver to succeed. This goes beyond the donor simply agreeing with the mission of an organization, which we obviously count as a primary driver of giving motivations.
In his watershed book “Building Donor Loyalty,” noted donor researcher Adrian Sargeant outlines specific service quality factors that donors expect a nonprofit to fulfill. Our research provides significant parallels to these. Donors want nonprofits to show honesty and integrity, communicate results, demonstrate effectiveness, provide specific feedback about the impact of gifts, and certainly not least - treat them with respect.
Each donor has in mind a list of service qualities like these that an organization must fulfill in order to secure her continued giving. These service qualities are often subconscious and are usually very difficult for donors to explain verbally. Interestingly, both active and lapsed donors link their giving to a nonprofit delivering quality service. For instance,
- 67% of active donors and 68% of lapsed donors said they would stop contributing to a nonprofit that failed to deliver on their expected service qualities.
- Another 14% of active donors and 13% of lapsed donors said that they would decrease their giving based on a shortfall in these qualities.
- Donors are unlikely to begin supporting a nonprofit if the organization seems to lack these qualities.
Certainly one of the most important services a nonprofit can deliver to its donors is honesty and integrity. In this area, donors consider an organization’s longevity and prestige to be visible indicators of honesty and integrity. The typical donor could easily infer that a long-standing organization without scandal must embody these qualities.
Another huge element of honesty and integrity is as simple as doing what your organization says it will do: If you talk it, you’re going to have to walk it. This involves not only doing the work itself, but effectively communicating back to the donor that the work was done and, even better, how their gift made a difference.
Donor Perceptions of Nonprofit Communications
Another major quality factor among donors involves what we might call a sense of “human relations” — treating the donor like a real human being, with common courtesies, and allowing the donor to feel like a partner in the work instead of simply a money-giver. Perhaps communication is a subset of integrity; the two could well be linked. However, connecting with your donors is such a big area that we believe it deserves its own heading.
For example, one in five donors cited “failure to express their thanks and gratitude for my contribution” as a reason for lapsing — and more than 35% as a reason for decreasing their contributions. Active donors were even more passionate about gratitude: 36% would stop giving, and 24% would decrease giving, if a nonprofit failed to express thanks. Thank-you notes that are not linked to receipts or even to specific donations reinforce the notion in the donor’s mind that the nonprofit is genuinely grateful and strengthen the donor’s sense of connection. As one donor said in a recent focus group “I would be very surprised if they just thanked me. [Nonprofits] always seem to have something else attached to [the thank-you], and then it’s not really a thank-you at all.”
This is a crucial area. To your donor, partnership is not simply a giving-history category. It is a powerful feeling that imbues a donors’ impression of your organization. In a 2004 survey of 3,000 donors,
- Two-thirds of active donors and 50% of lapsed donors say they would stop giving if a nonprofit used “Guilt and manipulation to motivate you to donate.”
- More than a third of donors (35%) said that “Not treating you like a partner in the charity’s mission” was a cause for decreasing their donations. Another 30% said they would simply stop giving altogether.
- Three in ten lapsed donors said that they would decrease their giving if they felt they were being treated as “just a source of money.”
Therefore, demonstrate that you consider your donors as partners in pursuing your mission. Let them know how their gift is working to fulfill your shared goals. Be prompt with thank you notes. Drop the guilt language from your vocabulary, and have independent editors read your outgoing letters to look for this specifically.
Donor Perceptions of their Giving Habits
Because your organization is just one piece of the donor’s giving puzzle, donors typically think they’ve given to you more recently than the facts indicate. Your organization will need to make the call about whether or not to inform donors of how long it has actually been since their last gift. Either course carries risks and rewards.
Another outcome of the donor supporting numerous charities is that they don’t see their giving as changing over time. In the grand scheme of things, they still see themselves as supporting broad charitable categories emotionally even if they haven’t actually supported these individual causes recently. They don’t see their giving as influenced greatly by events in their personal lives or in the world around them. Another element to this is that today’s donors often diversify their giving portfolio to avoid being “had” in the event a scandal impacts any one of the broad causes they’ve supported. In this way, they can still be an avowed supporter and at the same time distance themselves from any scandal that diminishes service quality.
I mentioned earlier that donors subconsciously take service quality into account when making their giving decisions. They take them into account before giving a first gift, and they often stop giving if a nonprofit doesn’t fulfill after they’ve given.
Where this gets tricky is that a majority of the donors on your donor file don’t see themselves as giving less or not giving because of any “exterior events” — from crises around the globe to her own personal setbacks — they tend to only see themselves lapsing based on the nonprofit’s fulfillment (or lack of fulfillment) of important service qualities. While about 10 percent of active donors have decided intentionally to stop giving, a huge majority sees you as fulfilling on those same qualities, and is happy to keep giving. But if that is the case, why do donors lapse?
We need to understand that the decision to not give isn’t necessarily intentional. It can begin in subtle ways. Let’s say a donor starts to get disappointed with respect to important service factors. The nonprofit becomes generally less important to her, and her commitment to supporting the nonprofit “softens.” So then, when she experiences some pressure in her life — her financial situation changes, or she’s distracted by a family issue — she may lapse without a conscious decision to lapse even if she still supports an organization emotionally.
In any case, lapsing is very much about what the donor regards as the “most important qualities” in your nonprofit. The messages your nonprofit communicates to its donors should consistently support the notion that your nonprofit meets or exceeds the vital service expectations your donors have, because they are watching for them – whether they know it or not.
Condensed from The Disappearing Donor, by Dr. Dale Berkey, Doug Brendel and Dirk Rinker. |
