If you’re wondering what the future holds for fundraising, you’re not alone. With the COVID-19 pandemic, we’re living through tumultuous times. So much of what we thought we knew about the world has been turned topsy-turvy.
What might this mean for philanthropy and fundraising moving forward? There were many at the beginning of the pandemic who suffered a crisis of confidence. Fearing the sky was falling, they thought people would hunker down and fundraising would be a disaster. They began sharpening red pencils and cutting staff and programs, moving into lean-and-mean mode. Others shifted differently, adapting their messaging and redoubling their fundraising efforts.
What did you do? How did it affect your bottom line? And what should you do over the next several months? That’s what I want you to think about today.
Giving 2020 facts that may surprise you
Giving during the pandemic and recession did not go down; it increased, albeit modestly.
Giving USA 2021, produced by Giving USA Foundation and Indiana University Lilly Family School of Philanthropy, reports total giving grew 5.1% on a year-over-year basis in 2020 (3.8% adjusted for inflation).
Here are a few 2021 key findings from the report to help us retain and upgrade nonprofit donors:
- Giving by individuals increased 2.2% (1% adjusted for inflation), even as its share of total giving remained below 70% for the third consecutive year.
- Giving by bequest increased 10.3% (9% adjusted).
- Giving by foundations jumped 17% (15.6% adjusted), presumably due to growth in the S&P 500 in recent years and how the 2020 market recovery positioned foundations to respond to the impetus to distribute more during a time of pressing needs.
- Corporate giving, cash, and in-kind fell 6.1% (-7.3% adjusted), presumably due to losses and/or income uncertainty.
Giving was unevenly directed; donor perceptions of greatest need had an impact.
In terms of issue area, giving to:
- Public-society benefit organizations grew 15.7% (14.3% adjusted for inflation)
- Environmental and animal welfare groups grew 11.6% (10.3% adjusted)
- Human services organizations grew 9.7% (8.4% adjusted)
- International affairs-related causes grew 9.1% (7.8% adjusted)
- Foundations grew 2% (0.8% adjusted)
- Health organizations fell 3% (-4.2% adjusted) in part due to declines in revenue from fundraising walks, runs, and other events.
- Arts, culture, and humanities fell 7.5% (-8.6% adjusted).
Giving was unevenly sourced; wealthier donors were more insulated from pandemic effects. The effects of the pandemic and the ensuing economic shock disproportionately affected households such that some may have had greater capacity to give charitably than households and communities that struggled financially.
Despite these documented leaps in giving for 2020, many nonprofits are now wondering about giving patterns moving forward. The Fundraising Effectiveness Project (FEP) noted that while 2020 saw an overall increase in giving, that year’s donor retention rate dropped by 4.1 percent.
Moving forward with how to retain and upgrade nonprofit donors in mind
Take heart: When times are tough, the tough get giving.
Per the FEP’s report, in 2020:
- The overall number of donors grew by 7.3%.
- New donors were up by 18.5%.
- Recaptured donors (whose last gift was two or more years ago) were up nearly 14%.
- Total giving in the United States increased by 10.6%.
Donors are still giving at rapid rates
That punch-in-the-gut feeling you have that you’re losing as many donors as you’re gaining is real. Per the FEP, donor retention rates (which have been falling at least since 2006, the first year of the FEP) continued to fall last year. This was true for all types of donors in 2020, regardless of recency or frequency.
- The overall donor retention rate was 43.6%, a 4.1% drop from the 2019 rate of 45.4%.
- The first-time donor retention rate dropped 9.2% to an average of 19.2%. Moving donors from their first gift to their second continues to be a chronic issue for the sector.
Your mission, if you choose to accept it
I firmly believe nonprofit fundraisers are in the happiness delivery business. That means you need to keep the donors who gave last year—first-timers, loyalists, and especially those who gave more than usual over the trying times we’ve just experienced—happy. Give people appreciation, purpose, meaning, joy, and a sense of well-being, and they’ll be willing to share that feeling of abundance and generosity with others.
Pay attention: Every donor deserves thoughtful responsiveness.
The best fundraising programs operate on all cylinders. You must fuel your engine, rev it up, and then put it into drive if you really want to get anywhere. If you pay attention only to fueling up, leaving the leaking hole in your gas tank unattended, you’ll run dry. Similarly, if you pay attention only to major donors, pretty soon your donor pipeline will run dry.
The good news is that data reveals that you’ve got a lot to work with at every level of giving.
- Gifts of less than $250 grew by 15.3%.
- Gifts of $250 to $999 increased 8%.
- Gifts of $1,000 or more increased 10.4%.
Donor retention truth: It’s driven by fundraisers, not donors
Don’t rely on donors—at any level—to reward and/or re-solicit themselves. Some people will give every year out of habit or obligation, but they’re not the lion’s share of your donor pool. Most folks need to be rewarded by you.
This means you must develop a donor love and loyalty plan. No one plan fits all nonprofits, but there are all sorts of successful strategies from which you can pick and choose. Even better, pick different strategies to use across multiple channels (e.g., direct mail, email, social media, text, phone, advertising, website), targeting different donor audiences. Begin by looking at what you already know about your supporters; use this data to tailor your approaches using the right message and medium for different groups.
The more targeted and personal you are, the more you’ll stand out positively and the better retention you’ll experience. Alas, the reason donors stop giving are well-documented and have everything to do with poor communication and poor donor service from fundraisers.
In studies like those from Cygnus Research, donors themselves report they’d give more if they got more:
“There were two instances this year where I made gifts over and above what I had intended and they both involved personal contact from someone in the development office.”
“I didn’t receive any information at all after making a gift to a not-for-profit last year. I wonder what they did with the money and whether it helped.”
“An update on what they are accomplishing with the gifts that I and other donors have already made is actually more effective than another appeal. The updates themselves make you want to give again.”
“Last year I had one of the most positive experiences ever after donating to a relief agency that was intervening in a disaster that had affected our out-of-state friends. After giving, I received email updates that always included expressions of appreciation for my contribution. The organization described how they were helping those affected by the disaster, and how their services would be evolving over time. The tone of every communication was positive and respectful. As a result, I will give them another gift this year, even though I do not live in the area in which they work.”
You can do it!
The opportunity is clear: People are giving. All things being equal, or even unequal, people have continued to give at a rate hovering around 2% of GDP in the U.S., regardless of what else is going on in the world economy.
You are in a position to jump giving up a notch. Odds are if you keep doing exactly what you’ve been doing, you won’t move the needle much. You need to do more to improve donor retention and upgrade nonprofit donors. In other words, you need to sit down and take a minute to jot down concrete strategies you can use in the coming months to proactively:
- Reward donors. Stop assuming they don’t need or deserve recognition or attention.
- Deliver meaning. Accept this is something people are on a continual quest for and something nonprofits have in spades. In fact, marketing research shows the one factor most associated with brand loyalty is shared meaning.
- Keep donors in your sights. Otherwise, “out of sight, out of mind” will apply.
Show up for your donors
Absence does not make the heart grow fonder when it comes to your donors. Forget about thinking you’re doing your supporters any favors by not “darkening” their mailboxes or inboxes with your communications. People always want to give and receive meaning.
Tried-and-true retention actions for you to fold into your donor love and loyalty plan to boost overall donors and dollars could include:
- Welcome kits for first-time donors to set the tone for a relationship you hope to build and the community into which you’re happy they’re becoming a member.
- Thank you phone calls for first-time donors, major donors, monthly donors, and other targeted groups to offer immediate gratification, establish trust, and demonstrate the need for the just-received gift. Research shows these calls definitely improve retention and can upgrade nonprofit donors. You can find a sample script here.
- Thank you videos for making a personal, human connection between the gift and its purpose. You can shoot these on your own cell phone; they don’t need to be long. One type can be just you, smiling, taking a few seconds to make the point you want to let them know, personally, how much their generosity means. You can also make longer ones (maybe a minute) to post on your website and share an emotional story that makes the donor feel good.
- Thank you texts to offer immediate gratification, establish trust, and demonstrate the need for the just-received gift. Example: “Thanks again for your thoughtful gift. We’ll put it to work right away to feed a family!” Because people check their phones so frequently, thank you text messages can be as powerful as text appeals.
- Surveys showing the donor you care to get to know more about them than the fact they have or gave money. The best ones are brief, engaging, and ask about the donor’s interests and preferences rather than seeking demographic information.
- Invitations (especially to free events) that offer interesting and fun opportunities for supporters to find even greater meaning and enjoyment in their affiliation with you. Examples include on-site or virtual town halls with interesting speakers (these could be the people you serve), fireside chats with your leaders or community experts, or conference calls on specific issues with your executive or program directors, including Q&As, behind-the-scenes tours, and hands-on volunteer activities.
- Token gifts you can easily insert into an envelope or attach to an email. These don’t have to be expensive or even tangible. Get creative!
Separate fact from fiction and fear. In a survey earlier this year, nearly nine out of ten donors said they planned to give this year; one in five planned to give more. You still have time to seize this opportunity to retain and upgrade nonprofit donors for year-end fundraising and your own nonprofit’s future. Carpe diem!
Check out our free Nonprofit Donor Retention Guide & Checklist to help you create a plan, build relationships with your donors, and ultimately increase donor retention and upgrade nonprofit donors.