I’d like to give you permission to not worry about something. (As a Fundraiser, you have plenty to worry about already.)
So… don’t worry about “developing younger donors.”
The biggest reason a person becomes a generous donor has nothing to do with any nonprofit. People become generous donors because they age into it:
They reach their peak earning years
Their kids move out
Expenses are lower and they have more disposable income
They have more free time
They start to value meaning more than they value status
As people age they tend to have more money to give, and more motivation to give it.
I say this because when I tell nonprofits to focus their efforts on older donors, someone always pushes back: “But we need to develop our younger donors, too!”
I understand the worry beneath that statement. When you’re at a nonprofit and you look at your donors, you see a lot of grey hair, and you wonder what will happen when those friends are gone. That’s a fair and reasonable thing to feel responsible for.
However, the thing that turns people into donors is not under your control.
So, with your limited time and resources, focus on the donors who can give you the most now, and let demographics take care of developing the next generation of donors for you.
Here’s how that happens. As people age into their giving years, they start to pay more attention to fundraising messages. They’re more likely to stop by your website. They’re more likely to open your mail. They’re more likely to go to your event.
So the best thing you can do to develop tomorrow’s donors is to develop a fundraising program that works great for today’s best donors. Then, as the next generation ages into its prime giving years, they will find you.
Your job is to be ready for them, not to get them ready.
And here’s a new idea: to grow, most nonprofits must do things that do not feel authentic.
Keeping detailed records about each major donor doesn’t feel authentic – in fact it feels weird at first. Yet it’s part of a professional approach to major donor fundraising and is part of any major donor management system.
Sending 70+ e-appeals a year doesn’t feel authentic – what kind of person would do that, and who even has the time to do that?!? But it’s part of a professional email fundraising program, and has been for several years.
Having an appeal letter that’s not in the Executive Director’s “voice” doesn’t feel authentic. Yet at larger organizations the ED doesn’t even see the appeals, because there’s a staff of professionals who have been given the authority to replace the ED’s voice with whatever tactics and approaches raise the most money.
Here’s the thing: none of those activities feel authentic, but they sure are effective.
They might not feel authentic to you at your stage of growth, but they absolutely feel authentic to the larger organizations that do them every day.
So as your nonprofit thinks about how to grow, don’t get stuck in the authenticity trap. Focus instead on what will get you to your next stage of growth and impact.
If you’re counting pledges towards your goal, you’re operating on faith that they will all be fulfilled – which doesn’t always happen.
One of Better Fundraising’s clients recently encountered this exact situation:
“One of our pledged donors who was planning to send $50k for the shortfall changed their mind and decided to consider a year-end gift instead. That $50k was part of our pledged internal total.
We continued fundraising since we hadn’t received it yet. I am so glad we followed your advice, if not we would still be short fundraising.”
I think we can all agree that it would have been terrible to stop a successful campaign but then discover that the organization was $50,000 short of the goal.
In capital campaigns, organizations are often told to expect a 90% pledge fulfillment rate for planning purposes. This means that if you’re trying to raise $1,000,000 and you’re receiving pledges, instead aim for $1,100,000 to cover yourself in case some pledges aren’t fulfilled.
The next time you’re running a campaign, don’t count all of your pledges towards your goal – remember that ‘life happens’ and keep going a little farther than you think you need to.
That’s what legendary music producer Rick Rubin calls himself:
From Johhny Cash to Jay Z, Rick calls himself a “reducer” because he “strips away all non-essential sounds to find a song’s core.”
This is similar to how the most successful direct response fundraising tends to get created: you strip away all non-essential ideas, trimming a letter or email down to being entirely about one main message/offer.
Note that I’m writing specifically about direct response fundraising here. Direct response is different than an event when you have the room’s attention for 45 minutes. Direct response is different than a lunch with a major donor.
In the mail, email and online, you only have people’s attention for a few seconds. You reduce the information you share with your readers in order to communicate one important thing clearly.
That’s what helps you cut through the clutter.
This is also why effective letters and emails are so rarely created when more than two or three people can speak into a project: each person adds what they think is important, which increases the number of ideas instead of reducing the number of ideas.
Stay focused. Be a “reducer.” Create small, easy steps for your donors to take. You’ll be amazed at how many respond with gifts, and how many more donors you end up with over time.
It’s one of the questions we get asked most often:
How many times a year can we use matching funds?
There’s a real fear that donors will “catch on and stop giving” or that the matches will somehow tarnish the organization’s brand.
But in our experience, you can use matches almost as often as you’d like. I think my personal “record” is 8 matching grant appeals in one year. (And they all worked GREAT.)
There’s another fear that organizations have: that if they use matches too often, the matches will stop working. This fear does not come true – and if you look at the data you see something interesting: You notice that the 8th match does not work as well as the 1st or 2nd match, but the 8th match still works better than an average appeal.
In other words, matching grant appeals are so effective that, even when they don’t work at full strength, they work better than average appeals.
Both of those posts make a recommendation about how to maximize the boost that using many matches give you: vary the approach. For example, your organization could have a spring match, a fall match, and a year-end match. You could use a unique design for each of your matching campaigns. You can vary the multiplier. You can release the match over time. You get it.
The big lesson here for growing nonprofits is twofold: don’t be afraid of using a match too often, and redouble your efforts to source matching funds.
Matches are a reliable, proven way to make your current fundraising raise more money.
It doesn’t happen very often, but every once in a while something in fundraising is easy. “Adding a match and raising a little more” is one of those things.
Say you run a coffee shop. And over the years, through trial and error and iteration, you’ve figured out how to make a latte that people LOVE.
More people start coming to your coffee shop. You’re making more money. You get voted “Best Latte in Town.” You now have a steady stream of new and repeat customers, you’re selling more pastries, things are growing.
Here’s what no one tells you: pretty soon you’re going to be bored to tears making that latte in that way.
And because you’re human, you’re going to be tempted to change the way you make your latte.
So you’re faced with this choice: to keep making the latte the same way (which reliably delivers revenue and growth) or try something new and see what happens.
This situation plays out in Fundraising all the time.
Through trial and error and iteration, a nonprofit creates a fundraising offer or message that reliably brings in more donations than any other offer or message… then after a while the staff get tired of that fundraising offer or approach, or they believe that if donors knew more about the organization they would give more… and pretty soon the organization is on a path to replace the proven performer with something new.
Here’s what a smart coffeeshop owner does (and it’s the same thing a smart nonprofit should do). They would never just “stop making the famous latte and replace it with something they think would work better.” Instead, they would maximize that latte’s effect while simultaneously developing new products.
So, they would put a big sign in the window that says “home of the best latte in town,” and feature large posters of the latte in the store, all while using the reliable flow of customers and revenue to fuel the business.
And at the same time they would regularly try little experiments with boundaried consequences. They’d make a latte in a new way and add it as a “special” for a month. They’d try a tea drink on a random Tuesday and see how many customers buy it. In other words, a nonprofit would try out a new offer or message in a new appeal they’ve never sent before. Or they’d try it out in a mini email campaign.
For nonprofits, the principle is that if you’ve spent all the time and money to develop a fundraising message that you know worked really well – and your beneficiaries or cause are counting on you – don’t change it because you’re bored with it. There’s too much at stake!
It is absolutely OK to change offers or messaging (that’s how organizations learn and grow!), but when you have a proven, reliably successful offer or message, you only change it when you’ve tested a new offer or message and have evidence that it will work as well or better than the current offer or message.
And here’s a little note for people who don’t like or are bored with fundraising that works well for your organization: just as it’s OK for the famous latte to not be the favorite thing on the menu for the owner of the coffee shop, it’s OK for a nonprofit’s most successful fundraising offer or message to not be the favorite message of the staff or leadership. The latte isn’t made for the owner, and the fundraising isn’t made for the staff.
There’s a core idea in that post that I want to name, and then go deeper on.
The core idea is that your database is made up of different groups of people with different characteristics, and each group responds at a different (but predictable) rate to your fundraising.
The professional name for this is called “audience segmentation,” and if you already report fundraising results by audience segment, you can skip the rest of this post. But if not, let me give you an easy example:
If you mail an appeal to 100 people who have given your organization a gift in the last year or so, perhaps 5 people will respond with a gift.
If you mail that same exact appeal to 100 people who have volunteered at your organization in the last year or so, perhaps 1 person will respond with a gift.
Knowing that different groups respond differently (and predictably) has obvious implications for your fundraising plan. And I hope you’ll walk with me through an example from one of the nonprofits Better Fundraising serves.
The nonprofit is a Christian missionary-sending organization. If you’re not familiar with the model, there are two layers of fundraising. Each missionary raises their own financial support from friends and family, people who give because they know and believe in that specific missionary. The organization itself has donors too, but these are people who support the cause or the institution itself as opposed to any specific missionary. The money the “organizational” donors give to the organization funds things individual missionaries can’t provide for themselves: training, emergency care, recruiting the next generation of missionaries, etc.
When sending out fundraising, the organization used to lump the results of the two groups together. Here are the results for their June appeal a couple of years ago:
When reviewing these results, you’d think something like the following: “This appeal did OK but not great. We drove $17k in net revenue with an ROI of 2.36.” But that’s from over 9,000 donors, and our response rate was only 1.91%, which isn’t great for an appeal to current donors.
However, because we know that the 9,000 people who received this appeal are made up of two distinct groups (missionary supporters and organizational supporters) we should review results from this appeal broken out for each group. Now here’s what we see:
Look at the difference in performance for the two groups!
Breaking out the results like this, we see two completely different stories that were hidden when the results were lumped together:
For organizational donors, the appeal was a huge success. It resulted in almost $20k in net revenue with an ROI of 6.8 and a response rate of 6.06%. That’s a win that we’d take every time.
For missionary supporters, the appeal was not a win when judged by conventional cultivation metrics: it lost over $2,000, had an ROI less than 1, and a response rate of just .62%. Ouch.
However, it did result in 44 new organizational donors at a cost of $215 per new donor (the “cost per response”) which is an acceptable cost per new donor for this organization.
The organization learned a handful of lessons from this exercise that has helped them grow since this mailing was sent two years ago. For instance:
They used to think their appeals were only working OK. Now they know that their appeals are working great for organizational donors. This makes the organization feel much more confident in their fundraising.
They now know the tradeoffs of sending mailings to Missionary donors. Today, for most mailings, they include few or no Missionary donors, which saves the organization tens of thousands of dollars a year.
And when they do send a mailing to Missionary donors, they judge the mailing’s success by the number of new organizational donors acquired.
There’s also a political reason for all of this: now, whenever a stakeholder or Board member says something like, “Hey, why are we mailing missionary donors” or “Hey, why are we not mailing missionary donors” the person in charge of fundraising points to the spreadsheets, says “this is what happens when we do, this is what happens when we don’t, and here’s why.” The stakeholder or Board member usually walks away impressed.
So, what different groups is your database made up of? And can you start analyzing your fundraising results by group (“by segment” is the technical term) so that you can make your fundraising operation more efficient and effective?
For instance, many nonprofits that we start working with have been sending their appeals to basically everyone: anyone who has given a gift in the last 5 years, plus their volunteers, plus the non-donors that are on their list. But when we evaluate the performance for each group, the organization usually discovers they’ve been losing money by mailing to some of their groups.
So they “tighten up” the groups they’ve been mailing to, start saving meaningful amounts of money, and then use that money to either raise more money or do more mission work.
My advice to you, if you don’t already, is to start getting to know your segments!
Here’s a question we get asked a lot at Better Fundraising: “should our nonprofit send two letters at year-end?”
Here’s what we’ve noticed over the years: a second letter between Thanksgiving and Christmas will reliably raise at least 1/3 of what your main letter raises.
So here’s an easy way to figure out if your nonprofit should send a second letter:
Figure out how much gross revenue your first letter raises in a normal year.
If 1/3 of your first letter’s gross revenue would more than pay to print and mail an additional letter, send an additional letter.
Let me give you a couple of examples and then give you one more helpful idea.
Say your primary letter raises $30,000 gross, and costs $5,000 to print and send. Then I would send a second letter. That’s because a second letter will reliably raise at least $10,000 gross (which is 1/3 of $30,000), and with a cost of only $5,000 you’ve raised an additional $5,000 in net revenue.
Important note: in addition to the extra revenue, you’ve also gotten gifts from all the people who donate to the second letter. Statistically speaking, this increases the likelihood those donors will give to you again next year.
But if your primary letter raises $15,000 gross and it costs $5,000 to print and send, I would not send a second letter. Reasoning; 1/3 of $15,000 is $5,000, so you’re raising an additional $5,000 gross with expenses of $5,000. You’re only breaking even. Instead of sending a second letter, I’d spend the time and budget on something with a higher ROI.
The Fear
When I’m walking a nonprofit through this exercise, and they see that sending a second letter will make sense for them, we then run into what is often the real barrier: even if the second letter is projected to make money, the nonprofit fears there will be some un-named and unknown negative consequence to asking again.
Getting past the fear of sending a second letter is a very real part of helping a nonprofit increase how much money they raise at year-end.
Here’s what I tell people: the negative consequences they fear do not come to pass:
There’s a fear that the “threshold for donor fatigue” will be reached by sending a second letter, and even though more money is raised this year fundraising for next year will go down. Doesn’t happen.
There’s fear that a significant number of major donors will react negatively to a second letter, and reduce their giving next year (or leave entirely). Doesn’t happen.
There’s fear that the second letter will “steal revenue” from the first letter. This does happen, but in such small amounts that it basically doesn’t matter. To give you a sense of scale: a second letter might “steal” $2,000 in revenue from a first letter, but raise an additional $10,000 in new revenue. So yes, the first letter raised $2,000 less. But you have $8,000 more in total net revenue to use to make the world a better place.
Every larger nonprofit I know sends at least two direct mail letters between Thanksgiving and Christmas. Many send three. It’s a tactic that works.
And now you know how to come to a first draft conclusion for whether it makes sense for your organization.
My suggestion: do the math, figure out whether it pencils out, and if it’s even close I would “assume abundance” and send it!
I was talking the other day with a smaller nonprofit who really wants to grow.
They have a few hundred donors, and are doing good work, but they want to increase their impact.
They currently do one main event a year, do a couple of mailings, and a handful of emails. They’re thinking about doing “vision meetings” to meet new people, and community events to increase awareness of their organization.
I told them that both of those things are good, but neither are likely to help them grow at the rate they want to grow.
That’s because all of the ways this organization currently fundraises and wants to grow require personal interaction with a potential donor.
But a leader or nonprofit can only have so many personal interactions. Say you meet 10 new people a day for every day of a month, including weekends. That’s 300 people, which is a lot.
But that’s dwarfed by purchasing a mailing list of 20,000 people in your community. Or doing a targeted online campaign to 10,000 people who care about what your organization is working on.
The organization I was speaking to needs to go through a transition that all larger organizations have gone through at some point: moving from most donor acquisition being through personal interaction to a system that acquires a meaningful number of donors solely through communications.
You can only meet so many people.
Yet there are thousands, or tens of thousands of people out there who would love to support what you’re doing who you’ll never be able to meet. That’s a larger market. And it requires a different set of skills to tap into and fundraise from.
This is why every large nonprofit has a thriving direct mail and email fundraising department. They know that there are millions to be raised from people that they will never meet in person. (And as an added benefit, the mail and email will keep the organization in better touch with the donors that they know in person, too. You know that an event donor’s average lifetime value goes up when they give to the mail or email too, right?)
So just remember: there are more donors out there than you can meet in person. If you want to grow to your potential, you need to learn the skills to be able to “meet” thousands of potential donors.
You’ve learned scads of other skills along your journey. I’m sure you can learn this one, too.
