Trust in the institutions of our country continues to decline. And yes, that means in nonprofits as well, even though they are more trusted. According to one report, 73 percent of people need to trust a nonprofit before giving. However, only 19 percent of those surveyed said they had a high level of trust in nonprofits. And only 10 percent had optimism that with time, the nonprofit sector would become more trustworthy. Therefore, fundraisers need to understand how to maximize their donor relations activities. And, that's especially during uncertain economic times.
Problem: People in the United States distrust many institutions, including nonprofits. Moreover, during uncertainty, there is a tendency to protect personal financial assets. Therefore, with distrust by the public and economic uncertainty, donor giving could experience significant shifts from the previous patterns.
Opportunity: Despite the unknown, nonprofit leaders who focus on maximizing donor relations activities will reap the rewards. The reality is that the same study suggested that 22 percent of donors would be willing to give more—if approached.
Resolution: Donors need a higher degree of control and certainty for donating. And, this is coming as they explore more giving through donor-advised funds and innovative platforms. However, as part of their donor relations efforts, nonprofits need to meet supporters where they are in the giving cycle.
Lifetime Value of Donor Relations
Concerning donor relations and the impact on nonprofits, two aspects of the lifetime value of donors are essential to know. The first thing that fundraisers have to realize about donors is the value of the nonprofit to the donor. So, for instance, we know that donors typically give because of an emotional connection to the cause. However, they also donate because it makes financial sense for them to give. As an example, look at donor-advised funds. As we know, Fidelity Charitable Gift Fund is the largest charity in the U.S. And, that's because advisors tell major donors, and now smaller dollar donors, about optimizing tax planning through philanthropy.
When you understand the lifetime value of your donors, it changes your appetite for retention and acquisition strategies.
As an example, by using data analytics to gain donor insights, how you approach donor relationships changes. Once you see the lifetime financial impact of your donors, you realize how much you have to personalize your approach to each donor. In doing so, you and your team should take your donor groups and segments and create inventories for cultivation and stewardship.
As most fundraisers do, you want to begin with your top donor prospects and get as much information on them as possible through listening channels. Ultimately, you work your way to smaller lifetime value donors. Depending on the information, you should adapt your donor relations strategy and how you cultivate around those insights.
How to Master Your Relationships with Donors
Now that we understand that knowing the lifetime value of donors is essential let's explore how to master donor relations. For one, you have to invest in data. For instance, tools such as boodleAI, which is people-focused predictive analytics, could help you leverage donors. That platform uses AI in predicting behaviors. But, what more should you do to ensure the success of your donor relationships?
1. Make the Financial Investment
As I mentioned, you have to make an investment into data and information for donor relations. And, remember, a lot of this data gets collected by listening to what leads and prospects have to say.
The leader sets the tone. As a result, you have to get prepared to make the financial investment for getting top-of-the-line data tools.
Of course, you could do this with a simple ask or two of major donors for nonprofit sustainability. However, it's also crucial for the leader to have a strong mindset for leading change. And, by now, everyone should know that massive uncertainty forever exists going forward in everyday operations.
2. Your Entire Team Is Part of Donor Relations
It's easy to think that just the CEO, board, and fundraisers have skin in the game concerning donor relations. However, that's not accurate. Therefore, as a leader, you have to ensure ongoing training for your entire team for good relationships with donors. For instance, how people answer the phone and go out of their way to resolve issues matter. So, for those with public-facing roles, everyone must see themselves as part of shaping the donor experience.
Your marketing and fundraising teams have to embrace and nurture a passion for wanting to know everything. In other words, you want them insatiably curious about donors and data.
3. It's All About the Data
Here's something that nonprofit leaders need to understand. What fundraisers and people think does not drive decision-making. In short, all decisions must have a basis in data and analytics. So, while old school fundraisers would say that fundraising is both an art and science, I argue that's no longer true. Fundraising is first about science and technology—meaning data. And, talented fundraisers support the data, not the other way around. So, think of technology and data as a person. It is that person who provides the output for decision-making. As a result of the information, fundraisers with high communication skills, then do their thing.
Data is king, and fundraisers follow.
4. Not Everyone Thinks or Behaves the Same
Segmentation is vital for donor relations. It's a fool's errand to think that everyone should get treated the same. And nonprofits that still do that will not survive. The public, and all generations, live in an on-demand and customized world. The pandemic has only made technology, customization, and on-demand services more integrated into life.
Nonprofit leaders must invest in technology that segments and prioritizes donors.
But, and here's an essential thing, nonprofit executives have to take that information and act. Moreover, they have to act even when their gut tells them something different. For example, they might favor a particular donor, but data shows them that they have to cultivate someone with whom they don't have a deep relationship. So, they have to ignore their gut and follow the data.
5. Donor Relations Requires Easy Donations and Engagement
Finally, donor relationships in today's world require easy engagement. So, nonprofits must operate wherever donors want to communicate. By doing so, nonprofits increase and optimize the lifetime value of donors. Therefore, we know that different people and generations give differently. Further, you have donor-advised funds and technology that's fundamentally altering the relationship with donors. Thus, executives and fundraisers need to learn how to cultivate and steward when, for instance, you deal with an institution such as a Fidelity Charitable Trust as opposed to an individual donor.
Donors are in control, and that's always been the case. The only difference now is that donors have a lot more options for choosing how and when to support a cause.
However, again, as I stated above, when you fully understand the lifetime value of your donors—which could only get done with data—your donor relations strategies and activities change and evolve toward optimization. It's only natural.
Ben Stroup is Chief Growth Architect and President at Velocity Strategy Solutions where he helps leaders design, develop, and deploy smarter business growth strategies. Ben is a futurist, disruptor, and data champion. He leads a team that takes a structured learning approach to business challenges, which allows them to assist leaders in bridging the gap between ideas, innovation, and revenue—taking ideas from mind to market.
Velocity Strategy Solutions is an on-demand, next-generation business strategy and management consulting firm which provides clients with a relentless focus on data, execution, and results that positively impact the bottom line. Velocity delivers integrated people and revenue strategies combined with a disciplined approach to growth architecture that elevates the capacity of leaders, teams, and organizations to succeed and win more.