A few years ago when I strained my hamstring while running, it was excruciating. Only months of dedicated physical therapy re-trained me for healing and strength. My body had to re-learn not to overemphasize and over-rely on just one set of muscles.
It’s about behavior patterns. And I believe the nonprofit sector has a muscle memory problem.
That’s especially true in light of the Giving USA report released in June. Depending on which analysis you read, giving either reached a new record of $427 billion or it was “slightly” down with adjustments for inflation. And we’re all still curiously watching whether the Tax Cut and Jobs Act will have a long-term effect on philanthropy, as all the analysts predicted.
(Worth looking at: Claire Axelrad wrote an excellent piece last month outlining an in-depth analysis of both the Giving USA and 2019 Q1 Fundraising Effectiveness Project reports.)
Cliffs Notes version?
Giving is pretty much flat. But more alarmingly: Donors, particularly smaller and mid-level gift donors, have declined nearly to the point of extinction.
This is the real story. Not the record total giving.
In fact, it was the word of caution in analysis from last year’s GUSA report.
National giving is still stuck at around 2 percent of the GDP, where it has remained for (at least) a decade. Average donor retention rates in the sector are stuck in the mid-40 percent range (last figure was about 44 percent, down from previous years). And smaller to mid-level gift donors are all but extinct. Oh, and by the way, analysts are warning of an impending recession next year.
What’s going on? What do we do about it?
We in the nonprofit sector must re-build two key muscle memories through our own forms of PT: unwavering GRATITUDE and a GROWTH MINDSET.
About building UNWAVERING GRATITUDE
The top motivator for donors is making a difference and seeing that their gifts have had an impact on solving a problem. Knowing their gifts mattered is vital to building a lasting relationship. Donor retention, therefore, is directly tied to how valued a donor feels. It’s not any more complicated than that.
Penelope Burk’s fundraising research reveals that when donors get these three things, they feel satisfied:
Prompt and meaningful gift acknowledgement.
Designation of gift to a program, service, or project narrower in scope than the charity’s overall mandate (i.e., donors can easily correlate the impact of their gifts).
Measurable results on the last gift, before being asked for another one.
These predictors of donor satisfaction matter now more than ever. The fact that on average, more than 50 percent of donors aren’t sticking with the organizations they give to, indicates there’s a huge disconnect between how they feel and how the organizations think they feel.
For our work in the social-good sector, I like how gratitude researcher Michael McCullough defines it:
The feeling of gratitude [makes us] aware of and appreciative for the benefits we’ve received from others and inspires us to show appreciation, which will, in turn, make others more likely to help us again in the future. In this way, gratitude helps build social bonds and friendships.”
Our nonprofit sector needs to practice thanking more than asking. We need to practice strategically looking at our donor trends and valuing not just the large donors but all of them—especially smaller to mid-level gift donors who have stuck by us year after year.
What “PT” can you do to retrain your organization’s gratitude attitude?
Replace your standard (and probably tired) annual report with a gratitude report.
Segment your donors by giving habit (recurring, first-time, inactive, etc.). Commit to developing a personalized plan to thank and engage them. Even if you’re overstretched and understaffed, you must still carve out 5-10 of your top donors (longest, largest, etc.) to steward, celebrate, and build a relationship with.
Check in with your donors through surveys.
Use your newsletter to regularly convey how important your donors are to you and to report on progress and impact in a way that the donors see themselves in your story (because of their gift).
About building a GROWTH MINDSET
The weight of meeting budgets can be stressful and overwhelming, forcing nonprofit leaders, boards, and staff into a scarcity mindset. They feel constrained to do only what they have funding to do—programmatically and administratively. This often leads to underinvestment (or no investment) in having the right fundraisers on staff. It can lead to considering fundraising a dirty word.
If this sounds familiar, pause for a moment. Close your eyes and take a deep breath. Imagine if money wasn’t an issue (thanks to Dr. Rob Sheehan at the University of Maryland who first shared this question with me). What would your organization look like? What would you do more of? Differently? What staff would you have in place?
Open your eyes. The “what if” scenario reframes what’s possible, right?
That vision ignites your donors’ interest. That’s where philanthropy is so powerful. Investing in your own fullest organizational capacity by having the right staff in place (and compensating them so they will stay) will lead to programmatic impact.
With more than 50 percent of donors on average not sticking with the organizations they support, AND more than 50 percent of fundraising staff leaving their nonprofits, something has to change. It all comes down to re-learning a growth mindset.
What “PT” can you do to retrain your organization’s growth mindset?
Know your donor retention rate and other metrics for donor behavior.
Commit to having the fundraising resources you need in service of your donors and beneficiaries. See how I phrased this? No organization can exist without donors. It behooves our sector to ensure that we have the right staffing in place to focus on creating a positive donor experience that can lead to transformational gifts. Repeat after me: Fundraising staff are as important as program staff. This dedicated staff capacity can leverage greater financial resources from donors.
Ensure that the development leader/team is part of strategic organizational decisions—especially around planning and projections around your fullest needs for programs and other resources. And that fundraising goals are based on an organization’s reality, not goals that set fundraisers up for failure from the start.
Build a plan for everyone to have a role in donor engagement. If the CEO and board leadership are not an integral part of key donor relationships, all fundraising rests on the development person or team (if you have the luxury of a team). No wonder we have high burnout and turnover. No wonder the time and effort it actually takes to create effective donor relationships gets underestimated.
Let’s face it, therapies can be a little scary. Re-training our default behaviors is work. But I believe in the individual and collective power of nonprofiteers to challenge ourselves. With clear intention and regular practice, we’ve got this. Our donors, our organizations, and the good we are doing in the world will show us the effort was worthwhile.
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.