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Resources

Should we have suggested donation amounts?

Question from a reader:

This discussion came up, and I was hoping you may be able to direct me to some resources I can share with her to make the internal case for ask amounts in appeals. Thanks for anything you can pass along!

I have a difficult time convincing that specific ask amounts work. Am I completely off base?

Including a suggested ask amount is considered a fundraising best practice. As such, it’s included in the fundraising letter checklist.

There is scientific research that shows that including a suggested donation amount gets more people to give. They also tend to give the amount you suggest.

References:

Edwards, J. T., & List, J. A. (2014). Toward an understanding of why suggestions work in charitable fundraising: Theory and evidence from a natural field experiment. Journal of Public Economics, 114, 1-13.

Toward an understanding of why suggestions work in charitable fundraising: Theory and evidence from a natural field experiment (pdf)Download

Goswami, I., & Urminsky, O. (2016). When should the ask be a nudge? The effect of default amounts on charitable donations. Journal of Marketing Research, 53(5), 829-846.

When should the ask be a nudge? The effect of default amounts on charitable donations (pdf)Download

Reiley, D., & Samek, A. (2017). Round giving: A field experiment on suggested charitable donation amounts in public television. University of Southern California working paper.

Round giving: A field experiment on suggested charitable donation amounts in public television (pdf)Download
Categories
Donor Participation Summit Resources

How to Grow Giving Participation

I recently shared a list of US higher ed institutions with a high growth rate. Specifically, alumni giving participation growth between 2009 and 2019.

My team and I have been interviewing the top 10 in the nation. This varied list includes Ellon University, Villanova University, Morehouse School of Medicine, and Princeton University. Here is what we’re learning:

Donor growth is (one of) the VPs personal priorities

Growing organizations have the unit in charge of growing this metric (typically “Annual Giving” or “Annual Giving and Alumni Engagement”) reporting directly to them.

They act like “community incubators”

A “community incubator” is a term I created to describe organizations that are constantly generating different engagement opportunities for their donor base. “It’s a volume business,” one of the growing org VPs shared with us.

None of the schools told us that they had just grown and grown their existing engagement opportunities (i.e. reunion program, alumni board) to reach their ambitious growth goals.

Instead, they told us that they were constantly innovating and finding new segments and designing engagement opportunities for these constituencies: primary care physicians, alumni business owner marketplace, athletics-focused groups, the list goes on and on.

They do not shy away from transactional exchanges

All the growing schools embraced the fact that, at times, people will just “give to get.”

What they get can vary from access (“dinner with the president”) to simple incentives and promo items in the public radio-style, or simply satisfaction (“the 100th gift will unlock $10,000 to a specific program!”). Often, this is done to promote first, second, and third gifts.

Intensive use of incentives, challenges, and matches are an integral part of all of these programs.

They make recurring gifts easy and emphasize this way of giving wherever possible

They all have robust offerings and streamlined systems for monthly giving and multi-year pledges that you can make online, on the phone, or by mail.

They experiment and change their org chart based on priorities and team strengths

If they’re convinced that annual giving and engagement are two parts of the same coin, they will put them together in the same department. If they believe that a certain area needs more attention, they will have it report directly to the VP. If they believe that this is no longer the case, they will change the org chart again.

Stagnation and rigidity are not part of the vocabulary at any of these organizations.

Categories
Resources

Emotion-Based Fundraising May Not Work In the Long Run

This article is not about fundraising and yet it answers some good fundraising questions.

Why Triggering Emotions Won’t Lead to Lasting Behavior Change
An article on behavioralscientist.org on why behaviors based on emotions do not last.

Why giving days and other giving events work and why they sometimes struggle to retain the new donors they generate.

Why the design of your gift form (online or paper) is more important than you think.

Why we should think about defaulting to monthly giving.

Why we should consider the global effect on fundraising capacity of our decisions, not just how many dollars the next letter will raise.

Recommended read.

Categories
Resources

Why Retain Donors?

Recently, I was asked to do some simple modeling on the effect of retention rates on revenue.

The results were surprising. You can read the post and resulting conversation here.

The post author’s goal was to show what that investing in donor retention is better than investing in donor acquisition (getting new donors) OR donor extraction (getting more major gifts from your existing pool of prospects).

The model is simplistic but the consequences for our engagement strategy are profound.

Tale of Two Nonprofits

We compared two nonprofits, one with high retention and low acquisition and another with low retention and high acquisition. Unsurprisingly, the high retention nonprofit grows and grows…

image (1).png

…while the low retention nonprofit stays the same, barely recovering the number of donors they lose every year.  

image (2).png

(For those interesting in playing with the numbers, the spreadsheet is freely availably here: https://docs.google.com/spreadsheets/d/1SzstQEA8PrkHXKD_JS1mH_RvfMG7JzQ581j2RwLdixg)

To calculate revenue, I presumed that all donors start out as annual donors ($25/year) except for a small pool of donors who have been with the org for a while (5% of those who have given for three years or more) who then become major donors and make a $10,000 gift.

Here, the high retention nonprofit ends up making four times more per year…

image.png

…vs the low retention nonprofit:

image (3).png

Assumptions

Post-analysis, it was enlightening to think through the underlying assumptions. If this is so clearly a better strategy, why doesn’t everybody do it?

  • If you’re investing in retention, you’ll also need to invest in major gift capacity.

If you decide that a high-retention strategy is for you, after seven years you’ll have a major donor pool that is five times bigger. 
This means that you’ll also need to invest in gift officer, stewardship, and admin training/personnel to be able to proportionally maintain your ability to get major gifts from that engaged pool (the 5% rate in the model). 
It is a decision that requires at least a three-year commitment. How many orgs are operating on year-to-year plans?

  • Not Everyone Wants or Can Handle Growth

On the service delivery side, it takes vision to become the organization that is worthy of receiving this extra funding. Your service model might work at your current scale but will have trouble reaching more people. Maybe there is internal resistance to becoming so reliant on fundraising revenue.

Perhaps, despite all your current needs, additional revenue would create more problems than it would solve. Major gifts typically have some type of restriction in their use. Unless you have a crystal clear vision and are willing to walk away from certain gifts, an influx of restricted gifts could be problematic.

The people factor can also be important here. In this new world where you 4x your fundraising revenue, would you grow your people and make it a priority for them to stay?

  • With Great Engagement Comes Great Responsibility

More engaged constituents are people that expect a superior level of human communication with the organization. Many of us find this challenging enough as individuals, even more, when dealing with organizations. Some organizational leadership may actually prefer having less engaged, arms-length constituents. The disconnect happens when they also want those disconnected constituents to be audaciously generous.

  • The 5% “Extraction Rate” is a Big Assumption

In the model, I assumed that the “extraction rate” remains constant at 5%. In other words, your capacity to generate gifts from the pool of donors with high engagement and high capacity. It probably fluctuates more than this. As gift officers turn over, staff needs to be retrained, and donor relationships rebuilt. You would think it made sense to offer longevity bonuses at least for the time it takes for major gift relationships to mature.

  • Engagement == Annual Donor

Having annual donors is nice but, in this model, it isn’t only about the money. More generally, it is about having people engaged with the organization long and deeply enough so that the few with the capability to make a transformational gift are inspired and invited to do so. In the past, it may have been hard to measure other forms of engagement so making an annual gift was a good proxy. This is no longer the case and every org with a CRM can build an engagement score of some type.

The true goal is to maintain and increase engagement year over year. 

This engagement can express itself in multiple ways: making a gift, being an active member of your community, or visiting your website every week.

Categories
Donor Participation Summit Resources

8/19/20 (noon EST) Lunch Analysis

ANNOUNCEMENT: Research co-author Angie Thurston will be joining the discussion portion of the meeting!

Religious participation and giving is seeing the same decline as overall civic life participation.

The authors of this report study the “emerging landscape of Millennial communities that are fulfilling the functions that religious congregations used to fill.”

How We Gather (report).pdfDownload

Angie Thurston and Casper ter Kuile discover and analyze successful communities with thousands of members (religious and non-religious, they include CrossFit for example) that bring meaning and purpose to its members, many of whom are Millenials.

As we struggle with how to involve people in general and Millenials in particular with our organizations, this is a surprising treasure-trove of ideas.

Brainstorm and Discuss this Report With Peers During our August 19 Lunch Analysis

Lunch Analysis is a 45-minute meeting that is a part book club, part scholarly discussion, part brainstorming session, and part support group. Participation is open to all who fundraise or have fundraised at a nonprofit.

Each Lunch Analysis covers a specific topic in donor participation and has required reading and discussion. This one will be on August 19, 2020 at noon EST.

To Take Part

  • Download and read the file above.
  • Choose one of the profiled communities and try it out: visit their website, sign up to their platform, join a newsletter.
  • Pick one element that you could apply to your own fundraising program right away. Prepare to share your thoughts!

Sign up here to get the Zoom details (I check that all participants are from legitimate fundraising organizations):

Join Us

Louis Diez

James Barnard, Executive Director of Annual Giving and Integrated Marketing at University of Cincinnati Foundation

Tilghman Moyer, Vice President at Development at University of Arizona Foundation

Hawken Brackett, Executive Director of Strategic Engagement at The University of Alabama

Grant Kelly, Senior Director of Development at The Johns Hopkins University

Noah Maier, National Principal Gifts at OneforDemocracy.org

Michael Spicer, Director of Alumni and Parent Engagement at Pomona College

Colt Chambers, Director of Development at Georgia Ballet

Ivan Alekhin, Development Coordinator at National Parks Foundation

Continue reading “8/19/20 (noon EST) Lunch Analysis”
Categories
Resources

Simple Guide to Fundraising Excellence

Best practices for nonprofit organizations with or without dedicated development staff.

Simple Guide to Fundraising Excellence.pdfGET YOUR COPY
Categories
Resources

Three Fundraising Metrics

Three metrics for forward-looking fundraising organization:

  1. Retention rate: How many donors you keep year over year
  2. Acquisition rate: How many new donors you bring into your organization
  3. Extraction rate: Percentage of your moderate to highly engaged constituents make an annual/major/planned/principal gift every year

Typical areas that should focus on these metrics:

  1. Retention: donor relations & stewardship, annual giving
  2. Acquisition: annual giving
  3. Extraction: leadership gift officers

All there are necessary for a growing, inclusive organization. If you focus on extraction, then you’re creating risk in the long term (not enough engaged donors), if you focus on acquisition, you’ll have a lot of arms-length donors and will have difficulty converting them into major donors. If you focus on retention, you’ll have a highly engaged community but your financial results will not be there.

Categories
Donor Participation Summit Resources

Heroes of Alumni Giving Participation

You could easily call the last 10 years “the lost decade” in alumni engagement. Based on VSE data I analyzed, US higher ed lost 285,293 alumni donors on an annual basis.

The heroes of this lost decade are schools that increased both the number of alumni donors AND their participation percentage (number of alumni giving / alumni of record). How did they achieve this feat? Here are the top 10.

Top 10 Higher Ed Institutions by Alumni Giving Participation Growth 2009-2019. Source: VSE and own analysis.
Categories
Conferences Donor Participation Summit

Donor Participation Summit

The first Lunch Analysis is scheduled for August 19, 2020. Sign up below for your invite.

The Donor Participation Summit (DPS) convenes fundraising professionals who:

  • Work or have worked at a nonprofit in a fundraising capacity.
  • Are concerned about the nationwide decline in donor participation (20 million US households lost between 2000-2016).
  • Believe this can be solved by changing our fundraising practices and want to learn from peers who are moving the participation needle. No sales pitches; only verifiable, measurable results.

To that end, we’ll…

  • Meet monthly for Lunch Analysis: a 45-minute meeting that is a part book club, part scholarly discussion, part brainstorming session, and part support group. Each Lunch Analysis covers a specific topic in donor participation and has required reading and discussion. The next one will be on August 19, 2020 at noon EST and will cover this text about the “emerging landscape of Millennial communities that are fulfilling the functions that religious congregations used to fill.”
  • Hold the first Donor Participation Summit in the Spring of 2021.

Join the Movement

Enter your email now to join the next Lunch Analysis:

We will only use your email for information about the Donor Participation Summit community and will never share your information with anyone else.

Categories
Press

Nonprofit news coronavirus fundraising tips

Keeping Up Relationships in Times of Crisis is Good Business

As featured in NewStart Alliance newsletter

Good ideas frequently come from making connections in parallel fields. There is a fair amount of research about this and even a Steve Jobs quote.

As local news organizations face critical times, perhaps the following tips from the nonprofit fundraising field will help you. The tips here are most obviously helpful to nonprofit newsrooms, but can also help for-profit organizations since the goal should be to maximize revenue, independently of where it comes from (companies, donations, sponsorships, advertising, subscriptions) or it’s legal status (donation or fees).

While you are probably carefully looking at emergency financial resources for COVID-19 hardship, keeping up relationships -‒ especially in times like these -‒ is good business practice.

News Nonprofits: All About Relationships?

Thinking of your audience in lifetime relationship value terms (i.e. as much more than subscribers) can open paths to higher-value offerings, whether they be a donation or a cruise (like The Nation cruises).

Not every nonprofit’s business model needs to be based on building strong relationships with its beneficiaries (read this for a definitive overview of nonprofit business models), but for local news it makes a lot of sense. Is this how you are thinking about local news organizations?

  • Some nonprofits, such as the Cleveland Clinic, are reimbursed for services that they provide to specific individuals, but rely on people who have benefited in the past from these services for additional donations. We call the funding model that these organizations use the Beneficiary Builder. Two of the best examples of Beneficiary Builders are hospitals and universities. Generally, the vast majority of these nonprofits’ funding comes from fees that beneficiaries pay for the services the nonprofits provide. But the total cost of delivering the benefit is not covered by the fees. As a result, the nonprofit tries to build long-term relationships with people who have benefited from the service to provide supplemental support, hence the name Beneficiary Builder.

The consequence for you – right now – in crisis mode?

Find out who your most loyal advertisers, subscribers, and donors are. A good proxy to measure “depth” of the relationship is the date of their most recent transaction, how many times they’ve interacted with you, as well as how much they’ve spent/given. This is called RFM or Recency-Frequency-Money. These individuals and organizations should be your top priority as you implement the strategies below.

Reach out to your Community

Mark Cuban has said that response to Coronavirus will define companies’ brands for decades. I believe this will be a similarly pivotal moment for journalism nonprofits and for-profits, alike. 

Now is the time to be reaching out to your closest friends and supporters: check in with them, ask them if they are alright, make sure you have updated contact information, share resources that your news organization is making available to the community. Potentially, invite them to partner with you on fundraising initiatives related to the crisis (more on that below).

Does this sound too ‘feely touchy’?  

Never mind how much relationships matter in business, if you’re going to do it, do it well and efficiently. 

Develop an outreach template but do not send a blast email. Use templates if you are using Gmail or AutoText if you are in Outlook, then personalize each one. File the responses and then evaluate them to determine which ones may require additional contact or even potentially a conversation about making a significant gift.

Partner, Do Not Plead

In crisis times, should we be asking or not? 

Nonprofits that are building sustainable organizations are sensitively inviting their communities to join them in building solutions that alleviate societal problems. It is not about desperately asking for pennies to keep the doors open.

For-profit newsrooms can fundraise and run crowdfunding initiatives, even if the gifts are not tax-deductible (see here and here). The principles are the same.

Losing a trusted pillar of the community that is critical to disseminating potentially life-saving information during emergencies definitively qualifies as a worthy cause. Some fantastic initiatives have been shared in the NewStart Alliance newsletter. Giving your closest (organizational) friends the opportunity to join you by investing in them should be a no-brainer.

Yes, but how?

1. Make sure your infrastructure is in place. At its simplest, this is a decent online gift form and mass email-sending capability. I recently shared this presentation with high impact, free or low-cost digital fundraising resources.

2. Determine your “case for support” and “giving levels.” Are you fundraising to keep local covid-19 coverage available to all, to provide digital subscriptions to students, or to provide free physical copies to digitally underserved audiences? You’ll have to marry your priorities with donor interest.

You should also provide giving levels, as a way of framing the impact of different donation amounts. Framing is an important effect in behavioral finance, and it will be harder to reach your goals without it.

3. Start with your most loyal supporters. If you’ve gone through the outreach exercise above, you will already know who your most engaged supporters are and will be in touch with them. Share your fundraising initiative with them and invite them to join you. Explain that their early support will be critical in achieving the necessary momentum.

4. Launch a crowdfunding campaign. Use your own platform or third-party resources (some free ones available here) to set up a fundraising page. Engineer your goals to utilize the goal proximity and urgency effects as well as matches. Your most effective communication medium will be email but make sure to use all available channels and leverage the “big names” in your community, including editorial staff.

5. Thank. Do this well to guarantee the sustainability of your organization. Most critically, use the post-gift communication to build relationships with your supporters.

For the last 10 years, Louis Diez worked at and consulted for higher education, cultural, and news organizations including nonprofit giants such as Lincoln Center, the Johns Hopkins University, and the American Journalism Project. You can read his resume here or connect on LinkedIn. He’s passionate about local news and is offering pro bono assistance for coronavirus-related fundraising. Send him an email at: louis@marktlab.com or a text message at 865-630-0626 to brainstorm.