Our friends over at the Fundraising Effectiveness Project just released their latest Quarterly Fundraising Report for 2019— and the results from the first half of 2019 should be a wake-up call for every nonprofit leader.
Each quarter, The Fundraising Effectiveness Project measures revenue and retention metrics, analyzing data from over 176 million transactions across more than 20,000 nonprofits. As one of the most comprehensive reports in our industry, it’s a premier resource for evaluating overall performance. It is important to recognize that these results — and our comments — are based on a snapshot from a single quarter. We should continue to watch how the balance of the year performs.
That being said, here are a few important takeaways we’re shouting from the proverbial rooftops as we interpret the declines reflected in the report.
The 2019 Fundraising Effectiveness Project Q2 Report: It’s Time to Take a Stand
The continual decline of donors and revenue should make us stop and evaluate how we are engaging donors immediately.
While it can be unwise to evaluate quarterly metrics in a vacuum, the fact that they’re all in decline is enough to cause serious concern. We saw the same trend earlier this year, when we released the 2019 Giving Outlook. This decline in donors and revenue is the new normal for our industry.
Rather than hoping things turn around by themselves, it’s important for nonprofit leaders to take action and start implementing new strategies and tactics for improving donor retention right now.
This agenda item can’t wait for your 2020 planning.
Think about what you can do between now and the end of the year to create more meaningful donor experiences.
When it comes to making donor loyalty a priority, many organizations struggle to get buy-in from their leadership or board. Stewardship can be hard to justify because it doesn’t impact the bottom line in the same, direct way that a traditional acquisition appeal does. One way to overcome this objection is by quantifying the loss you’ve experienced as a result of NOT making donor loyalty a priority.
Reversing this trend can feel overwhelming, but it’s not. Start with your organization.
This data represents 20,000 organizations of all sizes, so it’s important to recognize that specific sectors and different-sized organizations might perform better than the industry average. That’s one reason we’re excited to be releasing our inaugural Donor Loyalty Benchmarking Study next month: It breaks down donor retention and lifetime value metrics by sector and organizational size.
Once you have a better understanding of how you compare with similar organizations, it’s important to review the metrics that apply to your organization and assess your own performance. Establish a baseline — you need to know your starting point if you want to track your progress. Identify your organizational metrics around lifetime value and retention and how much it’s costing you to meet those numbers, then ask:
- Which donors carry a high cost to engage, but have a lower lifetime value?
- What strategies are driving engagement with your highest-value donors?
- Are there benefits for those tactics that we’re not accounting for (e.g. brand awareness)?
- What qualitative benefits do we get from certain tactics and strategies that might not show up on a spreadsheet (e.g. brand awareness from events)?
Evaluating your programs through these questions will help you to be more objective. Don’t be afraid to challenge the sacred cows of fundraising within your organization. Adapting your strategies to meet the expectations of today’s donors is the only way you can expect to get different results.
It’s time to stop talking about the problem and start doing something to increase donor loyalty.
The good news is that nonprofit organizations are starting to recognize the importance of donor loyalty. Organizations are weighing inspiration against obligation and seeing that donors whose hearts are moved to give make a greater impact than those who give because they feel it’s a burden or debt.
Likewise, nonprofits are weighing the value of transactional vs. relational donors and coming around to the simple-but-powerful idea that developing long-term meaningful relationships yields more than working tirelessly for short-term giving.
It’s time to apply these attitudes to our fundraising methods. How long have we been discussing better practices around donor-centric fundraising and stewardship?
To create a thriving organization, donor loyalty needs to be the beating heart of your organization, pumping life and energy into everything you do. It needs to become the engine that drives your development efforts moving forward.
It’s Time to Take Action: How to Start Taking a Stand for Donor Loyalty
We believe it’s time to both think differently and act differently. Committing to donor loyalty means acting within a new paradigm.
It doesn’t have to be complicated. Here are a few ways you can create more meaningful experiences for your donors. Some are simpler than others, but making a commitment to act on at least one of these ideas will help you reverse the decline in retention and revenue numbers:
- Create an intentional stewardship strategy for donors based on their relationship with you. Acknowledging and thanking your donors promptly is a fundamental element of donor stewardship. But are you treating donors who give year-after-year the same way you do first-year donors? Long-time donors prefer to be recognized as such.
- Show donors the impact their gifts are making. Report on the impact being made by your donors at least once a year. This can be accomplished through something as simple as an annual report. You can also create a more immersive experience, even if you have to do so virtually.
- Leverage data to create more personal and relevant experiences for donors. Nonprofits have more access to data about their donors than ever before. Creating better experiences starts with learning as much as you can about your donors and engaging them based on that information. You can (and should) segment donors who are passionate about a certain program and families that have benefitted from your cause differently.
That’s the stance we’re taking at Pursuant — and it’s one you can take too. Our resource, Driving Donor Loyalty, was created to address the specific issues and challenges highlighted in the latest Fundraising Effectiveness Report.
Taking a Stand for Donor Loyalty is Part of Our DNA at Pursuant
Pursuant is an agency that’s committed to inspiring passionate people to change the world, and everything we do is intended to help our industry discover ways to increase the loyalty and passion of today’s donors. Whether we’re helping clients leverage data and donor insights to create personal and relevant experiences or creating custom direct mail campaigns segmented by the unique motivations of a donor base, we believe that the only way an organization can thrive in today’s evolving landscape is to be intentional about the way it engages donors.
We’re tired of seeing declines year-after-year. We believe the future of fundraising is incredibly bright. The new paradigm we’ve described is a really good thing: It will encourage nonprofits to find new ways to engage with donors, leverage new tools and technologies, and become more efficient and effective. We’re entering a world where it’s mission-critical to become a philanthropic priority to a core set of loyal donors.