Donor Relations Strategy – Foundation for Success | Funding for Good

By: Funding For Good

 

If you were to poll development professionals about their primary goals, you would likely get some answers around donor relations strategy.

These answers would vary based on the specifics of the organization, their scope of work, and the experience of the development staff. However, I can absolutely guarantee that no matter what the answer, a strong, engaged donor base would be top priority.

So, let’s break down “Donor Relations Strategy”. What does it mean to have a “strong, engaged” donor base? To me, it means that your donors don’t just give because of what your organization does; they give because they feel personally connected. As a development professional, your donor relations strategy is to provide donors an opportunity to personally connect with your organization.

Since we are focusing on your donor retention, I don’t want to spend too much time talking about acquiring new donors. That said, I just can’t seem to help myself! Do you have any idea what your organization’s cost is to acquire a new donor? If not, this is a number you should be familiar with for a couple of different reasons. First, you should understand whether your methods are cost-effective. Analyzing how you acquire your donors will allow you to be more efficient and targeted with your efforts. Secondly, you won’t believe how much more expensive it is to acquire a new donor than it is to maintain your current donors. The calculation will vary slightly by organization, but generally speaking, it is simply:

Donor Acquisition Cost = Dollars spent on new donor acquisition / number of new donors acquired

I would recommend that you do a lot of digging on this to uncover what donor acquisition activities net the highest return on investment. While this is an entirely different topic, it’s one you should spend time on. Just not right now, because we are focusing on donor relations in this article.

But seriously, spend some time on that. (Later)

Now I’m really going to blow your mind. Without knowing your organization and your strategies for acquiring new donors, I can predict, with 100% certainty, that it is significantly cheaper to keep current donors than it is to acquire new donors. Full disclosure, I’m not a psychic (sorry). There are copious amounts of research articles estimating the cost of acquiring a new donor versus the cost of retaining a current one. To keep it simple, Nonprofit Quarterly estimates that it costs ten times more to acquire a new donor than it does to keep a current one.

So, how does your donor relations strategy help with donor retention?

Donor Retention

As a professional fundraiser, when you read statistics like those mentioned above, you should immediately evaluate your donor retention rates. Donor retention rate is simply the number of donors that continue to give a year after their last gift. Research shows that the industry-wide average retention rate for nonprofits is 46%. If you really want to improve donor retention rates, you must cultivate your relationships with your donors. I’m not just referring to your top donors. They are important, and you should be doing special things to recognize them, but your smaller donors are also vital to a successful donor relations strategy.

Imagine you inherit $1 million. You’re smart, so you make an appointment to meet with a qualified financial advisor. Their job is to limit your exposure to risk while still putting you in a position to grow your wealth. Would you expect them to put all your money into a singular investment? Of course not! They would analyze the market and diversify your money to protect against loss.

This is how you should approach your donor base. Sure, it’s tempting to only spend time on those large donors; after all, you don’t want to lose a $5,000 annual donation! However, if you have a strategy to build relationships with all donors, you can diversify your donor base. That way, if your $5,000 donor moves away or decides to support a different cause, you have an entire base of $250 donors to cushion the blow. Another thing to consider – that $5,000 donor likely started as a $250 donor. Don’t overlook donors based on the amounts that they give!

Prioritize Personal Communication

I know you are busy, believe me, I’ve been there! I want you to take the mindset that there is no such thing as wasted time spent communicating with your donors. And when I say “communicate,” I mean personal communication, not form letters automatically emailed/mailed to them. How will you find the time? Glad you asked.

  • Block off time every day – Set aside time on your calendar, every single day, to communicate with donors. These communications can include things like phone calls, handwritten thank you cards, emails, and in-person visits. This is the most important thing you can do for your organization, commit to it!
  • Recruit some help – Maybe your organization has hundreds or even thousands of donors, making it very difficult to get to them regularly. Talk to your boss; I guarantee they will be on board with you using resources to build relationships with donors. Find some volunteers who you trust to help you with phone calls, thank you cards, etc. You don’t have to do this alone, and it’s good for your donors to hear from different people from time to time.
  • Become an expert on not asking for money – Look, we all know the ask is important. But that’s only a part of the big picture. If you don’t frequently contact donors just to thank them for their support, try it. You don’t even have to wait for a donation to come it, just pull up a list of donors who have given in the last year or two and call to thank them. They will be blown away that you called without any ulterior motive. Bonus points if you can provide a quick update on what your organization has been able to do because of their support!

Practice Organizational Integrity

When people give their hard-earned money to an organization, that organization has a responsibility to be good stewards of that gift. This doesn’t just apply to restricted funds that are designated by the donor for one specific program/project/need. I’m talking about the way your organization is perceived by its donors. Are you wasteful with their money? Do they know what you are doing with their donation? What is your organization’s reputation in your community? As a fundraiser, it is up to you to be the voice of both your donors and your organization. You must constantly communicate to your donors how their gifts are being used and what difference they are making in your community. You also have to communicate to your organization the feedback you are getting from your donors. This helps your organization understand where its perceived weaknesses may be and how their donors feel about the progress being made.

Building and maintaining strong relationships with your donors is a significant task. You will have to spend time and your organization’s resources to plan and execute a strategic plan to improve donor retention. Invest everything you have in making sure that your current donors remain your very top priority. In the end, they will be more engaged, you will be more effective, and your organization will thrive.

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