Tag: Donors

The Soft Skills and Leadership Needed to Acquire a Lot of New Donors

Steven Screen  |  Repeat

Earlier this week I shared how nonprofits acquire significant numbers of new donors every year through paid acquisition.    

But to acquire new donors through paid acquisition, a nonprofit needs to demonstrate a high-level of what we might call “vision and steadfastness.”

Here’s what I mean, and I think you’ll see why a nonprofit needs some of those “softer skills” in order for paid acquisition to be a success:

  • The nonprofit must create a new line item in your budget specifically for donor acquisition.
    • This is hard for a nonprofit that already feels low on money!  This feels like a big new expense when you’re trying to run as lean as possible.
  • The acquisition program will lose money in year #1.
    • You more than make up the loss in future years.  But the people with the longer perspective will have to be just as vocal as the people who are fixated on short-term ROI and want to cancel the program.
  • Usually a nonprofit needs to do paid acquisition for at least a year before they get good at it.
    • Because buying ads, creating offers, and creating acquisition ads is a skill you have to learn through practice, your results the first year will likely be low – but you have to keep going for the investment to be worth it.

It’s easy to see why not very many nonprofits sign up for this!

I say all this because for a smaller nonprofit to start an acquisition program is a real effort in leadership and faith.    

So, How Do You Succeed?

Thankfully, tens of thousands of nonprofits have successfully gone down this path. 

Here’s what their experience tells us is necessary to succeed…

  1. The leader of the program, and often of the entire nonprofit, must talk about what the plan is, why it makes sense, and why it’s worth it.  And because all the outward signs are negative, the leader has to talk about it a lot more than they expect to.
  2. The organization must have an investment mindset.  They must look past the short term; they must think in business growth terms like “cost per new donor” and “lifetime value.”  If the Board or anyone else is overly focused on short-term ROI, the nonprofit will cancel the program too early, leaving itself with most of the expenses and almost none of the new donors.
  3. Finally, the person leading the effort must get good advice.  Talk to acquisition experts.  Pick the brains of larger nonprofits who have established donor acquisition programs – they will happily share the lessons they’ve learned.

The chances of figuring out scalable donor acquisition on your own is unlikely, but thankfully it’s unnecessary.  You are not alone – other organizations have been down this road before!

If You Really Want to Acquire More New Donors, Read This

Steven Screen  |  Repeat
Make “The Leap” to Acquire a LOT of new donors

We’ve been asked a LOT lately about acquiring new donors.  (I don’t think this is a coincidence given that the number of individual donors in the U.S. decreased last year.)

If you want to learn about how bigger nonprofits acquire significant numbers of new donors every year, please take a look at the blog post below.  I wrote it in 2018 and every word is still relevant. 

Spoiler alert: there is no silver bullet.  There’s a skill you have to learn.  But the path is knowable.  And the great news is that lots of nonprofits have gone on the path before and will gladly share what they’ve learned to help you.

Happy reading!

This post is about acquiring new donors.

But it’s for nonprofits at a very specific stage in their development.

Keep reading if the following three things are true for your organization:

  • You’re actively trying to grow
  • You realize that to achieve that growth you need more new donors each year than you’ve been acquiring
  • You know that your current ways of acquiring new donors won’t achieve your new goals

I’ll give you an example. We work with a handful of organizations that have between 500 and 4,000 donors. These organizations want to grow… but the ways they acquire new donors are labor-intensive and are hard to expand:

  • Tours of their facility
  • An event or two a year
  • Word of mouth
  • A major donor connects them to another major donor
  • Vision Meetings

All good things – but small nonprofits can only do so many of them each year.

So the organization is stuck: they want to grow, know they need more donors, but don’t have the staff to do more.

If That’s You, What Do You Do?

If that’s you, please know that you’re in good company. A LOT of organizations are in your shoes.

But your question remains: how do you begin to acquire significantly more new donors than you have in the past?

It starts with thinking differently about acquiring donors. The Big Idea is that there is a cost associated with acquiring new donors. You’re going to need to pay for the attention of potential donors via media like radio, the mail, Facebook ads, etc.

In my experience, most smaller nonprofits never make the leap from homegrown, labor-intensive methods of acquiring donors. These smaller nonprofits don’t want to pay (or don’t think they can’t afford) the costs needed to do this.

But if they really want to grow, they need to.

Making the Leap

Below are my tips for “making the leap” to a new way of acquiring new donors.

And I need to say right away that I’m not providing the solution to your donor acquisition problem. This is not “7 easy tricks to more donors than you can count!” (That post would probably get a lot of readers, but it wouldn’t hold water because there is no silver bullet.)

The Current Situation

Most small nonprofits have no line item in the budget for donor acquisition. They also really don’t know their current cost for every donor acquired, because those costs are buried in other expenses.

For example, they might spend $50,000 on an event that acquires 100 new donors. But the expenses are only looked at in relation to how much revenue came in, not how many new donors were acquired.

What’s needed is a dedicated budget for donor acquisition.

How to Grow

Smaller nonprofits basically have two options for growth. You can pursue either one, or both:

  1. Start a scalable Donor Acquisition program. This means doing specific activities like buying radio spots and/or mailing lists, upping your online donor acquisition game, etc.
    • For example: doing a radio share-a-thon for $15,000, getting 500 new donors, then doing that every year moving forward. And this is scalable because you could do two radio share-a-thons for $30,000 and acquire 1,000 new donors. Or 3 radio share-a-thons for $45,000 and acquire 1,500 new donors.
  2. Do more of what you’re currently doing. (For clarity’s sake, I would define what most smaller orgs are doing in donor acquisition as not scalable. Could you expand your event and get 250 more donors? Maybe. Could you add three more events and get 750 new donors? Probably not.)

In my experience, “doing more of what you’re currently doing” almost never results in the type of growth a motivated organization is looking for.

So they have to bite the bullet. They have to pay the costs to start up a donor acquisition program.

Ask a Good Question

The most successful organization leaders, when they want to grow, are asking one of these questions:

  • “I have $XX,XXX to spend on getting new donors in 2018. How many new donors could we get for that?”
  • “I need X,XXX new donors in 2018. How much is it going to cost me?”
  • “By 2020 I need to have our income be 50% higher than 2017. How many new donors do we need to reach that level, and how much will it cost?”

If you know how much you have to spend, we can estimate how many new donors you can acquire.

If you know how many new donors you want to acquire, we can estimate how much it will cost you.

If you know how much you want to be raising 5 years from now, based on how your current donors are performing, we can tell you how many new donors you’ll need, to reach your goals.

Helpful Big Ideas

For organizations who want to begin scalable donor acquisition, there’s a set of ideas that more-or-less must be present in your organization for it to work:

  • If your organization is serious about acquiring new donors, you’ll have a line item in your budget for Donor Acquisition.
  • Measuring the Cost Per New Donor is a sign of maturity for an organization. It means you’re running the thing like a business, with known (and measured) inputs and known (and predictable) outcomes.
  • Scalable methods of donor acquisition require an investment mindset. Usually in donor acquisition you lose money in the short term, but you make money in the long term. For example, you might spend $1,000 and get 10 donors who each give you $50. So you spent $1,000 to raise $500. BUT, if you do a good job retaining those 10 donors they’ll give you $3,000 over the course of their time with you. So you actually spent $1,000 to raise $3,000.
  • There’s no way to know exactly how much a new donor will cost for an organization without testing. But there are industry standards and deep experience for every media channel – even Instagram, believe it or not. Find somebody or some organization who is doing a lot of donor acquisition, and ask them. In my experience, people will help you.
  • The Cost Per New Donor is always higher when you first start scalable acquisition methods. That’s because you do not know what will work best. Over time, you figure out which messages and mediums work best, and the cost per new donor comes down over time. (This is another reason it’s so important to have an investment mindset when you start to scale your acquisition.)
  • There is a “minimum level of investment” to start a donor acquisition program. For instance, if a radio share-a-thon costs $20k and gets you 200 donors, you can’t buy half a share-a-thon for $10,000 and get 100 donors. And by the way, Dear Reader, I don’t think you need to hear this. But I share it because there’s always someone on a Board that says, “Could we just buy seven commercials and see if that works?” What you want to do is figure out what the “minimum effective test” is, and do that. Not half of that.

Moving to this type of donor acquisition is a great sign of growth and maturity for an organization. It’s almost always a sign of a nonprofit being run like a business – and I mean that in the best way possible. It’s being a great steward of the resources given to us by donors to maximize their impact.

Good luck out there – and get in touch if you’d like to talk about donor acquisition!

This post was originally published on September 13, 2018.

Yes, You Want Transactional Donors

Steven Screen  |  Repeat

I’ve heard the following multiple times this year:

“But we don’t want transactional donors.”

If you’ve ever heard this at your organization, or even thought it yourself, please keep reading.

Because you absolutely want transactional donors.  Not only are they a good source of revenue, but transactional donors are where you find many of your future major donors.

I mean, sophisticated organizations think it’s so important to acquire “transactional” donors that they have line items in their budgets expressly for doing so!

Here’s why, summarized:

  • The term a large fundraising organization would use for “transactional donors” is “mass donors.”
    • A well-run mass donor program generates $3 or $4 for every $1 spent on the program. 
  • Most of your mid donors are mass donors who start giving more.  More mass donors + well-run annual fund = more mid donors!
  • Likewise, most of your major donors are simply mid donors who start giving more.  More mid donors + well-run annual fund = more major donors.

So the next time someone says, “no, we don’t want transactional donors,” you now know that you absolutely do want them.  You’ll raise money from them today, and you’ll raise a lot of money from them tomorrow.

On Developing Younger Donors

Steven Screen  |  Repeat
Young donor.

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.

Should You Count All Your Pledges?

Steven Screen  |  Repeat

Here’s another reason to keep a fundraising campaign going even if you reach your goal: not all of your pledges will be fulfilled.

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.

The Myth of ‘Engage 7 Times Before Making the Ask’

Steven Screen  |  Ask
Seven times.

There’s some advice going around out there that I’d like to debunk: you do not have to talk to a person seven times before asking them for a gift. 

I say this because I have helped nonprofits acquire hundreds of thousands of new donors over my career, gifts from people the nonprofit had never contacted before the moment they made the gift. 

Just last year we helped a nonprofit launch a brand new monthly giving program.  They have acquired 3,300 new donors in the last year, and approximately 95% of those new donors had never heard of the organization prior to giving their first gift. 

I have experience acquiring new donors for small to mid-size nonprofits who most donors have never heard of before, through email, direct mail, television, radio, telemarketing and face-to-face.

Just last Saturday I went to a small fundraiser for a person running for local office.  (I had nothing to do with the event; I was in the audience.)  There were about 40 people there.  None of the potential donors had ever met the candidate before.  Yet the campaign left with a meaningful number of donations and new donors.

This is not sorcery; it’s mostly being confident enough to ask.  And some of it is knowing how to ask well.

I suspect that the myth of “you have to engage with a donor 7 times before asking them for a gift” hangs around because asking feels risky.  And the idea that “we need to warm them up first” feels like good relationship-building.  But the data doesn’t support it, and in the meantime, gifts are being left on the table. 

Instead, please know that it happens every day.  It’s happening right now.  It’s probably happening to your donors right now.

Be confident.  Assume abundance.  Make the ask.

You’ll be glad you did.    

***

P.S.  Are there a couple vanishingly small contexts where the “7 times” advice holds?  Sure.  If you run into a potential major donor at the grocery store, it’s not the right time to ask them for a gift.  If you’re talking to the grants officer from a foundation for the very first time, it’s not the right time to ask them for a gift.  But don’t take those contexts and apply them to your event, or your email list, or the mail, etc.

Don’t Mail Your Newsletter to Non-Donors

Steven Screen  |  Report
newsletter

Let me save you some time and money: don’t mail your printed newsletter to non-donors.

The return on that investment is not worth it. 

I have tested this five or six times over the course of my career.  Each time, the nonprofit has lost money sending their newsletter to non-donors (even though the very same newsletter makes money from their current donors).

Does a non-donor or two give a gift?  Sure.  But it’s along the lines of ‘we mailed the newsletter to 850 non-donors and 3 of them gave a gift.  Put another way, it’s spending $1,200 to mail them and raising $170.  Even if you were to make an argument about lifetime value of those 3 new donors, it doesn’t pencil out.

If you’re interested, test it yourself.  Break your mailing list into two segments, one for current donors and one for non-donors.  Determine the Cost Per Piece, measure the response for each segment, and then look at the results for each segment.  You’ll quickly see how few (if any) non-donors reply to newsletters – even if your donors are responding in droves.

Here’s the lesson I’ve learned over the years: in the context of direct response fundraising, when you are trying to turn a non-donor into a donor, sharing successes from the past (which is what a newsletter focuses on) does not work well.  What works better at acquiring new donors is sharing something compelling that needs to happen soon and appealing to the donor to help by making a gift.

So if you’re currently mailing your newsletter to non-donors, I’d stop it.  Save the money.  Instead, send them an appeal letter.  It will cost less and acquire you more news donors than the newsletter currently is.

Donor Fatigue: The Most Misdiagnosed Problem in Nonprofit Fundraising

Steven Screen  |  Repeat
Fatigue.

Sometimes when an organization isn’t raising as much as they used to, or they’re sending out a bunch of fundraising and it’s not working as well as they hoped, the specter of “donor fatigue” creeps out like a layer of cold air at everyone’s feet.

Everyone suddenly feels a little less comfortable.

“We may be experiencing donor fatigue,” the nonprofit tells itself.  And there’s this kind of unsaid belief that “well, we raised as much as we could from them, but we did our best.”

This would be like a chef who loves his own cooking, and then if most of the restaurant’s tables are empty, blames the customers.  That’s what “donor fatigue” often is: an assumption that the fundraising itself is great, so the donors must be the problem.

But we have to remember that there are two parties involved in every fundraising interaction: the people receiving the fundraising and the fundraising itself. 

Unless an organization also gives its fundraising a critical look, allegations of “donor fatigue” are effectively blaming the donors while letting the fundraising off the hook. 

Don’t get me wrong, “Are our donors fatigued?” is a perfectly good question.  But it should always be accompanied by another question: “What if the problem was something about our fundraising materials?”

In my experience, a good amount of poor performance gets misdiagnosed as “donor fatigue.”  I say this from experience because Better Fundraising is regularly hired by organizations that want to grow but are fearful of donor fatigue, or have declining results and are blaming donor fatigue.  And what generally happens is that we help the organization immediately start raising more money from the same group of donors. 

You can’t change your donors.  But you can change your fundraising.

We try to have an attitude/approach that goes something like this: we can’t control our donors, but we can control our fundraising.  So if a piece of fundraising doesn’t work, assume it is the fundraising and go to work on that.

This takes real strength for a nonprofit to do.  Not every organization is willing to say, “Hey, hold on, maybe the problem is what we’re saying.”

But when you do, you start working on what you can control.  And when you’re working on what you can control, it gives you more agency, responsibility and power.

Never Interrupt Your Donors When They’re Being Generous

Steven Screen  |  Ask
Generous people.

My mentor used to tell a story about “the $100 donors.”

He was serving a large national charity that had approximately 250,000 active donors at the time.  The charity noticed that every time they sent out an appeal, a large group of donors would each give $100.

A person at the charity was worried they were going to “burn out” those $100 donors, so he decided to remove all $100 donors from the next few appeals.

My mentor always talked about how “three bad things happened, two in the short term and one the long term”:

  1. The $100 donors stopped giving.  They just stopped.  Thousands of them gave to one appeal, and none of them gave to the next appeal. 
  2. The organization raised a lot less money.  Their appeals simply raised less than they used to, and the organization accomplished less. 
  3. When the $100 donors were added back into appeals months later, some of them started giving again, and a significant percentage of them never gave again.

One person’s fear that “their donors were going to get burnt out” was given more weight than the behavior of thousands of donors.  Because of that, the organization raised less money and lost many of those donors.

Hearing this story, you can see how that was a big mistake.  But at the time, the person’s worry sounded strategic.  I’m sure the reasoning was something like, “Let’s not burn these donors out.  Let’s let them rest, and then they will give more later.”

That reasoning sounds smart because we all have fears around asking too often.  And the idea that “we can ask less often and will somehow raise more” is very attractive.  So it’s easy to say yes to suggestions like this.

But because of stories like this one, and 30+ years of fundraising experience, at Better Fundraising we’ve learned to assume abundance instead of letting our fears put boundaries around donor generosity.

There’s a great quote from Napoleon, who said, “Never interrupt your enemy when he is making a mistake.”

Here’s how that applies to this story and fundraising: “Never interrupt your donors when they’re being generous.”