With all the recent fuss over declining donor retention, there is a huge elephant in the room. It’s time to call him out.
To keep donors, nonprofits must communicate in relevant and meaningful ways. To do this, we must know and understand our donor data.
But the majority of small nonprofits don’t.
Because we don’t understand our donor data and don’t proactively manage our donors based on this knowledge, nonprofits are losing supporters and leaving a huge pile of money on the table.
The low hanging fruit is not getting picked. It’s rotting right there on the branch.
Is this true for your nonprofit? Here’s a quick quiz:
Do you know how many active donors you have right now?
Do you know which donors have given $50 every year for the last 3+ years?
Do you know which donors used to give regularly, but haven’t renewed in two years?
Do you know who your mid-level donors are?
Do you know last year’s retention rate and how it compares to the year before last?
Perhaps you can pull this information rather quickly from your database. If so, good for you!
But here’s the bigger question: Do you have a strategy to renew or cultivate those donors?
For example, donors who have given the same amount for 3 years or more are ready for an upgrade ask.
Similarly, your once loyal donors need some extra attention when, for some reason, they’ve stopped giving. Perhaps a personal call would help identify the problem and bring them back.
Many of your mid-level donors, with some prospect research and creative cultivation, could become major donors 5 years or so down the road. First though, you need to define what “mid-level” means for your organization.
If your retention rates have been trending down over the past few years, you’d better notice. You’ll need to think about why this is happening and what tactics might help reverse that trend.
The problem is that even when nonprofits do collect this information, we don’t search for trends, track our important donor segments, or actually use this information to guide our fundraising strategies.
Instead, our databases are primarily used for reactive, transactional functions like recording gifts, tracking pledges, and data entry. While these are inarguably critical tasks, analyzing our data and developing a fundraising strategy based on that information is equally important. This is the piece we are missing.
Why is this? Why aren’t we using this extremely valuable information that’s right in front of us?
First, nonprofit leaders don’t recognize this as a problem. They don’t notice the low hanging fruit.
Instead of using our data to build powerful annual fundraising programs, we spend precious staff time, volunteers, money, and energy, toiling over special events, competing for grant funding, and pursuing the same major donors year-after-year.
Second reason: Analysis Paralysis.
Even with sophisticated fundraising databases, proactive management of donor data can be overwhelming, particularly when you are just starting out. Understanding what to measure, deciding how to track it, and crafting a solid plan based on this information is not an easy task. And because the fundraising sector undervalues this work, fundraisers haven’t been trained to simplify this process.
Third, managing and analyzing fundraising data is time consuming.
Once you’ve overcome analysis paralysis and developed some solid data management systems, you must dedicate substantial time each year for gathering, analyzing, documenting and planning.
It is a long-term investment that is difficult to justify in a fundraising culture that favors short-term returns.
So what can we as annual fundraisers do to change this?
Solution 1: Advocate for proactive donor database management as a critical component of healthy fundraising programs.
The nonprofit fundraising sector must begin to recognize the long-term value of investing human and financial resources in its annual giving programs, including proactive donor management.
Solution 2: Develop simple management systems and train fundraisers to implement these systems.
Forward thinking donor management software companies, such as Bloomerang, can help by emphasizing and training customers on the tools they offer that make donor segmentation, tracking, and reporting easy and efficient. Fundraising conferences should include as many sessions on donor data management as they do on board participation and “using social media in fundraising.”
Solution 3: Hire more professional, skilled donor database and annual giving managers.
Annual giving managers are scarce (outside of education and hospital development departments). With no annual giving manager, there is no responsibility for proactive donor management and planning. Currently most “database management” positions are considered administrative assistants, responsible for data entry and letter printing rather than fundraising strategy. We need to advocate for professional fundraising staff who are skilled in this function.
Yes. It is a lot of work to understand donor trends, develop strategies to address these trends, track and measure results, prioritize key donor segments and identify major donor prospects. But just because it is complicated and time consuming doesn’t mean it isn’t worthy of effort.
Annual fundraising is the backbone of our development program. Donor data is the backbone of annual fundraising. Until we prioritize strong annual fundraising programs built upon the wealth of information existing within our donor data, that elephant will still be in the room with us.
And he’s eating all our low hanging fruit.