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?
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.
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.
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.
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…
…while the low retention nonprofit stays the same, barely recovering the number of donors they lose every year.
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…
…vs the low retention nonprofit:
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.
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):
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.
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.
Policy and strategy go first. What do you want your gift officers to do? What are your auditors going to be requesting? The way your building your system has immense influence over how work will get done and even the types of work that will get done. Ask for internal or external advice, but think through these issues first. Although…
Don’t over-design. Assume you’ll have to make changes and don’t try to get it perfect (at great cost) until you’re actually using it. That means you’ll need to…
Plan for change, then double the ongoing maintenance budget. You’re always going to be needing to make tweaks, new strategies will require new reports, things change. Make sure you’ll be able to make them or your operations will grind to a halt. As you deal with larger organizations, change management becomes more of an issue.
Self-service. Make sure your users (development officers, reporting positions, admins) can pull all the data they need on their own.
Document everything inside the database. I’ve never worked in an established organization that hadn’t created thousands of reports AND actually explained what these reports did and how to use them. Assume that the people using the CRM will change every 18 months. The documentation needs to be right there in the database, not in some shared folder that everybody forgets about.
Everything else, you can figure out as you go. 🙂
Pre-CRM Thought Experiment
We’ve all bought into the concept that a CRM is indispensable and this is probably a good thing. But, I’d like you to imagine fundraising’s pre-CRM days.
There were rooms full of files, lots of cards, and scores of librarians or administrative positions to manage the input/output of data.
Then all that went away and we started looking at a screen that holds supposedly equivalent information.
What has improved since we started using CRMs? What is worse now?
Here are some possible answers:
We save money on administrative staff. Maybe. I don’t have specific data from the pre-CRM days but wouldn’t be 100% sure about this since we have had to hire entire IT departments to manage the systems.
We gain visibility into the actions of frontline fundraisers. This requires that they file contact reports and record their activity, which is not a given in every organization. This has, for the most part, worked out well. We are now able to manage larger fundraising organizations than ever before.
Facilitates reporting to auditors, to the board, etc. Psychologically, people trust “what the database says.” There is a level of built-in trust in separating the data from the humans who enter it.
Q: “Have you done anything in the last 3 months?”
A: “Yes! This report showed that we’ve had 354 substantive actions with as many current and future donors, presented proposals to 170, of which 82 have been accepted raising a total of $1,435,234.”
We have the database enforce our policies.
i.e. Gift officers must make 250 meaningful contacts per year. All contact reports must have a next step with a date attached to it.
Even defining “meaningful contact” is a way for you to prioritize specific types of interaction with donors. Hopefully, because you believe that these are conducive to better fundraising results. For example, events don’t count, short emails don’t count but longer, substantive ones might.
In other words, you use a CRM to be more consistent.
It is also a tool to help distribute information. Managers and sometimes entire teams want to see who is talking to who and what transpired in these conversations.
On the other hand, because access can be restricted granularly, it can be a way to keep certain information confidential from the rest of the organization.
CRMs allow big data analysis in ways that manual systems didn’t.
And yet, the great conundrum of our times is that the promises of big data remain so elusive. I have worked with Blackbaud products (Raiser’s Edge, Nxt), Ellucian Advance, Abila, Tessitura, homemade and have yet to encounter a system that allowed you to perform a keyword search of contact reports, much less was using the data in donor profiles to do any sort of tagging.
Allows many users to simultaneously make changes. (vs. a spreadsheet.)
This is a big benefit but also holds some hidden traps. If you allow lots of people to change the info in the database, you’re going to need a way to enforce data policies (is it Mr., Mr, or mr?) and include lots of context and explanations to make it dumb-proof.
This means you need input validation, data sanitization, and lots of contextual documentation. I have yet to see this done extraordinarily well.
Couldn’t We Just Use a Spreadsheet?
If you work in a large organization, you’ll probably be laughing this email into your trash folder right now.
Nevertheless, for the vast majority of nonprofits this is a legitimate question. I feel the answer isn’t so obvious.
The problem with CRMs is that, unless you’ve given thought to all 8 of the points above and have good answers to them, rushing into a CRM can cause you much pain down the line.
Oftentimes, small or startup nonprofits do not have the expertise to set the systems up in ways that can grow with them. CRM vendors are not of much help here. Their understanding of fundraising operations and strategy is limited and their incentives don’t exactly align with yours.
In my view the answer is yes. A spreadsheet that is thoughtfully set up, allows you to record contact notes separately, and has some minimal reporting can take you a long way until you are finding it hard to operate with it. I.e. if you have more than one gift officers, or multiple people are making edits to the spreadsheet at the same time, or several thousand donor records.
You won’t find anything innovative in this donor visit checklist.
That’s why I love it and why it works so well. It is a simple collection of best practices that even the most experienced development officers forget from time to time when meeting with donors.
If you adapt it to how your organization works and apply it consistently, it can help you and your organization reach great heights.
Do you know the story of how legendary UCLA basketball coach John Wooden began the first practice of every preseason with a lesson in how to put on socks? This is the equivalent for front-line fundraisers!