I recently had the honor to be part of a panel discussion releasing a new report on the state of fundraising in the U.S.
The report came from a task group I’ve chaired for the past year and half with Rogare, the Fundraising Think Tank. Together, eight fundraising/nonprofit experts analyzed the internal and external landscape of the nonprofit sector. We identified the core issues fundraisers are facing, not based on opinion or anecdote but verified by primary and secondary sources.
What became clear to us as we looked at the report in its entirety is that philanthropy and social good run deep in this country. There are 1.8 million nonprofits in the U.S. alone and a strong culture of generosity—with a record $410 billion contributed by Americans to charities in 2017.
One thing we learned? As a sector, we need to do much more research on how to strengthen our success and then commit to leading changes that make the nonprofit sector even more vibrant and impactful than it already is. This project was an important contribution, and here are the issues that emerged:
Chronic donor retention problem
Tax reform and what it means for philanthropy
Standardization and the talent crisis of the profession
Diversity, inclusion, and gender equity
Data, technology, and social media
In looking at the topics as a whole, sadly, none of these are really new. We keep talking about them in the nonprofit sector. Any one of these can and do affect your fundraising success. Let’s look at three of these pervasive nonprofit concerns that are interestingly intertwined:
First, About Donor Trust
Research tells us that donors want to trust a charity before giving. They want to make informed assessments before they give. And they want to be generous. What underpins a donor’s trust? It’s simple: Whether they know their gift is making a difference in your work.
When donors don’t know the outcomes of their support, they start to focus on the wrong things—like your budget allocation between program and non-program costs. This leads to nonprofit leaders feeling they must tighten their belts to appear lean. But without staff and financial resources to effectively manage and grow programs, outcomes are not met and donors feel they’ve wasted their contributions. Vicious cycle!
Ask Yourself Today
How do you build trust with your donors? Do your communications convey stories of impact and failures (because donors want to know that you are managing to outcomes), beneficiaries, celebration of donors who are your heroes?
Does your budget fully reflect true costs for outcomes, in both indirect AND direct costs? If not, what needs to change?
Next, About Donor Retention
Our Rogare report documented chronically stagnant donor retention in the nonprofit sector. Again, no big surprise.
Giving has been stuck at about 2 percent of our GDP for the last two decades. The average donor retention rate that the Fundraising Effectiveness Project tracks has been stuck at about 45 percent for the last 8-10 years. This means that on average, nonprofits are losing more than half of their donors every year.
So often boards and EDs lament that they need “more” donors when, in reality, they need to be focusing their limited time and resources on making their current supporters want to stick around.
Ask Yourself Today
Do you know your organization’s donor retention rates and why it’s important to track this and other giving metrics?
What can you do to improve your donor retention rate—whatever it may be? What is your donor experience like? If you don’t know, survey your donors. Find out why they support you, what they like/don’t like about you, how their giving experience was, how often they want to hear from you, and in what ways.
Finally, About Data
Nonprofits have many options for tech resources to manage donor relations, enable online giving, do analysis and prospect research, provide peer-to-peer giving platforms, and mobile giving.
But to Steve MacLaughlin’s Data Driven Nonprofits, “Just having access to modern technology does not mean it is used in the right ways.”
Data and technology, while commonplace in fundraising, are not easy topics. To the smaller fundraising shop, in particular, they often feel inaccessible or overwhelming. It takes time to evaluate, select, learn, and implement new software. It’s a real job to clean and manage a database. But the fact is: Tools are available to help us fundraise more effectively and efficiently. Knowing how to integrate them in our work in a way can be useful to limited staff and budget.
And using data analysis can identify which donors are really engaged or want to be with our organization and who might be likely to increase or stop their giving. Segmenting and tailoring our communications strategies across multi-channel can improve the donor experience, which will improve donor trust and donor retention. (See how this all ties together?)
Ask Yourself Today
What tech tools and platforms you are currently using? Are they integrated with each other in your overall fundraising strategy or creating more work for you?
Have you ever conducted data analysis to give you a benchmark of your efforts? Do you use data to help you personalize and focus your communications and solicitations strategies? If not, what first step can you take, to get you there?
The Critical Fundraising Report addresses many other issues—but not all that affect our sector—we felt were worth highlighting. I hope they spark further discussion to find solutions. Let me know what you think about the findings in the comments below.
This post is reprinted from the Windmill Hill Consulting Blog.
Barbara O’Reilly, CFRE, has 25 years of fundraising experience at major nonprofit organizations including Harvard University, the National Trust for Historic Preservation, Oxford University in England, and the American Red Cross. She has experience developing successful relationships between donors and nonprofits through annual funds, capital campaigns, major gifts from high net-worth individuals and corporations, direct mail, and stewardship.