Donor Stewardship: How to Stop Losing Your Donors
A strong individual giving program is the best way for nonprofits to ensure their financial health from year to year. And the reason why is pretty simple. An organization can lose a big grant in the blink of an eye, but it’s pretty difficult to lose all of your donors at once.
In order to maintain a healthy individual giving program, however, you need to make sure you are gaining more new donors each year than you are losing. Obviously, when you start shedding more donors than you are acquiring, you’re heading down the wrong path. To address this challenge most nonprofits focus on ways to bring in new supporters each year, but donor retention strategies deserve just as much (if not more) attention. And that’s where the concept of donor stewardship comes into play.
What is Donor Stewardship?
At its core, donor stewardship is about progressively building deeper relationships with your donors. That means having a plan in place for thanking, communicating, and interacting with donors in ways that solidify their support over time. Developing a stewardship plan will help you maximize retention across years and increase the lifetime value of each donor. Put another way, the focus of donor stewardship is relationship building but the natural results of those efforts are increased retention and higher giving levels (these two financial metrics will also help you judge the success of your plan).
The Case for a Renewed Focus on Donor Stewardship
The Association of Fundraising Professionals and the Urban Institute’s 2012 Fundraising Effectiveness Survey Report sheds light on the current state of donor retention among nonprofits. The study found that for the over 3,000 nonprofits that responded to the survey there was an overall net decrease in donors per organization from 2010 to 2011. In 2011 participating nonprofits gained a total number of new donors that was equal to 54.9% of the total donors from 2010 (e.g. if you had 100 donors in 2010, you added 55 new ones in 2011). This seems great, but those same nonprofits lost a total number of donors equal to -58.5% of the total donor count from 2010. In other words for every 100 donors that were acquired about 107 were lost.
Of course, there’s a lot more nuance in the full survey. Not all segments performed as poorly as the average. For example, organizations making under $100,000 had the steepest losses while those with revenue over $5,000,000 actually saw a net increase in donor numbers of 4.2%. But even so, the importance of donor retention really cannot be overstated. A 10% decrease in donor attrition is generally better than a 10% increase in donor acquisition (because it costs less to keep donors than acquire them), but most nonprofits spend a lot less time focusing on retention.
Bottom line: By renewing your focus on retaining and upgrading donors (through proactive donor stewardship) you can increase net growth of donors across years and raise more for your mission.
The Basics of Developing a Donor Stewardship Plan
As you start to think about developing a donor stewardship plan here are some fundamentals to keep in mind:
1. Practice the Art of the Thank You
This one’s a no brainer, but it’s amazing how often it winds up being neglected. Every gift deserves a prompt thank you. There’s no bigger let down from a donor’s perspective than getting no acknowledgement for your gift. Also, keep in mind that auto-receipts really aren’t a substitute for actual thank you notes. Your donors are real people; they want a thank you message from a real person.
Make it an institutional priority to respond to donors with brief personal notes. Even if you don’t think you can do it, try. If at the end of the day you are really just doing too much volume to respond to each donor with a quick note, then consider using a solution that will at least allow you to personalize the message a bit. When it comes to donor thank you messages, the more personal the better. An auto-letter with a one line sticky note on top is infinitely better than just an auto-letter.
2. Do Some Segmenting to Prioritize Outreach
You’ll want to separate your donors into different groups to make sure that you are spending your time as wisely as possible. Every donor is important, but you aren’t going to have a board member write a hand written letter to someone who has given $5 (you might for someone who has give $50,000 though). By splitting your donors into different groups, you can come up with an appropriate thank you and engagement plan for each group. What level of support merits a letter from a board member? What about personal phone calls?
These are some of the things you’ll want to think of as you map out your plan. It’s pretty easy to create an excel spreadsheet to chart out your thank you and engagement strategy. Make columns for different gift levels and rows for different thank you options and reach out activities. Once you’ve created the basic framework, all you have to do is mark out which options apply to different levels of donors.
3. Show Them the Impact
Communication is the essential ingredient of donor stewardship. Just like with any other relationship, your ability to connect with your donors will be shaped by how you communicate with them. Regardless of the specific channels you chose to reach out to donors (emails, letters, phone calls, social media, blogs, etc.) you need to make sure that the impact created with their gifts is a central element of the conversation.
When you focus your communications on impact, you accomplish two important things at the same time. You get a chance to connect with the donor AND you close the loop by showing that person the tangible result of his or her gift. This creates an important moment when donors can connect the dots between the act of giving and the ultimate impact achieved. All too often donors leave feeling like their gift went into a “black hole.” Focusing on communicating impact helps eliminate this common complaint. Annual reports and regular newsletters are two broad base ways to communicate impact. On top of this base level of communication, you can layer on more personal outreach for donors who have given higher amounts (or given to particular projects or funds).
4. Create Opportunities for Personal Interaction
When it comes to building relationships, there’s no substitute for actually meeting people in person and talking to them! That’s one reason why events play such a crucial role in your overall fundraising strategy. They are a lot more than just opportunities to raise more money; they are opportunities to have staff network with donors and cement positive relationships. Everybody in your organization should share this understanding.
On top of your existing events, you should consider periodically inviting donors into the office to meet the team. Even better, take some of them to the front lines of your programs so they can really see the impact that is being made.
At the end of the day, there are no one-sized fits all solutions for creating an effective donor stewardship plan. We’ve listed some of the basics that you certainly need keep in mind, but beyond that it’s really up to you. And that’s a good thing because you know your donors best.
Start by getting creative and brainstorming with your team. Think about things from the outside in. How would you like to be acknowledged as a donor? What types of personal interactions would help solidify your support for an organization you’ve given to once or twice? By tackling these questions as a group you can begin to list out different options for engaging and communicating with supporters. After you have a good list of options you can start mapping out which ones should apply to different levels of donors. Creating an outline of your plan like this is the first step towards getting institutional buy-in and putting your new ideas into action!
Photo Credit: Flickr User Flickr User Jronaldlee
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