Understanding Donors Is the First Job of Nonprofit Fundraisers
Nonprofit customers are the same as for-profit customers, namely, the people who write a check; for nonprofits, it means individual donors and other funders. That's why, according to author Tom Ahern, a nationally respected authority on donor communications, the top job for nonprofit fundraisers is to keep their customers happy.
Poor donor retention rates, however, indicate that fundraisers and their organizations generally do a dismal job retaining new donors, as approximately 75% of first-time donors to charity in the United States do not make a second gift. If a similar share of first-time customers at a restaurant or hair salon didnt return, those businesses wouldn't survive.
Key to retaining donors is understanding their lifetime value to the organization, essentially the amount of funds a typical donor can be expected to give over her life. Knowing that number informs decisions on how much to spend acquiring a donor. It's estimated that nonprofits spend an average of $50 to land a new donor, cheap in comparison to, say, Starbucks which spends $1,400 to get a new customer. Starbucks will do that, because it figures the 20-year lifetime value of a customer is $14,000.
New donors may initially make annual gifts of $50 or $100, but they can be encouraged to give larger gifts, which could lead to a bequest of significantly greater value. As Ahern writes, "you already know who your best bequest prospects are. They're the donors in your database who give to you faithfully."
Successful donor retention flows from effective communications, which is at the heart of Ahern's message. It's why fundraisers need to focus, first and last, on the needs of donors. "Your boss, board, and fellow staff are NOT your target audiences," he writes. "In the end their likes and dislikes are irrelevant to your charity's fundraising success."
In addition, communications committees and elaborate internal approval processes for donor communications are to be avoided because they foster bland messaging, and "bold outsells bland every time."
Ahern successfully makes the case for effective donor communications by drawing on decades of experience, backed up with research and real-world case histories, all presented in a highly engaging style. For example, he shows the power of properly anchoring an appealthe idea that the information one first encounters will shape their expectationsdrawing on research by Nobel Prize-winning psychologist Daniel Kahneman. In the example cited, the amount raised in an appeal corresponded to the amount asked: setting high expectations from the start helps to frame expectations among donors regarding how much to give.
The book is very much a tutorial in effective donor communications. It delves into topics such as how long a direct mail appeal should be, what the opening paragraph should say, how to present an offer, whether to include a P.S. at the end of the letter, how often to reach out to donors. And, of course, much more. Those new to fundraising, as well as veterans, will learn from it.
What Your Donors Want...and Why is available from Emerson & Church, Publishers.
Reviewed by Peter Lowy