Click here to read on AFP
by Sam Laprade, CFRE
If you’re like me, there are moments when you feel like your work at a nonprofit is like being in a hamster wheel. You go around in the same circle desperately in search of funding without ever moving your organization forward. The result of this cyclical thinking includes fundraiser burnout, transactional fundraising, and frustration for both leadership and boards of directors.
During this unprecedented time of a global health pandemic, now is your chance to enhance your fundraising skills and do some of your work differently.
Try to look at your fundraising strategy through a business lens—it will change your career. I guarantee it! You may worry that this approach will make you feel cold about your work or that you will miss the “heart” of the nonprofit experience. But this new lens will have you invigorated, inspired and more informed about your donors.
A decade ago, I became frustrated with my position as a major gifts and planned giving officer at a homeless shelter. In my heart, I knew I had to change the way I looked at my position because every day felt like Groundhog Day. I began to read business books to learn how to apply this knowledge to the work I did. At the same time, I immersed myself in donor database analytics. And then a lightbulb went off, and I saw my work in a whole new light.
Know Your Donors And Your CMS
Donor database analytics is the secret ingredient to a robust fundraising plan. You may fall into one of two categories:
- You already use donor data to engage more donors or
- You’ve recently started to dip your toe into the donor data pool.
Whichever category you fall into, data analytics will bring your organization to the next level.
What if I told you every database has donors who want to give more? Some donors want you to ask, some require more stewardship, and some will only give to you once. By analyzing your data, this will help you fundraise more strategically.
Analyze your loyal donors over a 10-year period and send them a letter with a follow-up phone call; this is a great way to connect with donors who may want to leave a gift in their will to your organization.
We each have a different relationship with our database. Some of us are married to our Customer Relationship Management system. We love it completely, and we understand how to use it seamlessly to pull comprehensive reports. Some of us are only dating our data management system. We use it but don’t know it intimately. We may even go days without checking in on it. And some of us are longing to see other databases. We may log into our database to enter information, but as we do, we dream of a new data partner. Make sure you find and embrace the donor database that is right for your organization; it will make all the difference.
Donors speak to us through the data. Have you ever thought about donor information this way? Metrics gives you a bird’s eye view of donor behavior. Here are some important benchmarks for your nonprofit.
Know What the Numbers Say
As a first step, let’s look at the number of active donors compared to the number of donors on file. This is where I typically use the phrase “fish in your own pond.” You may find that 15% or even 30% are active (i.e., donors who have given in the last three years). This leaves many lapsed or soon to be lapsed donors in your database. Through segmentation and this critical metric, you can reconnect with donors who have given in the past. Any gifts from this lapsed group would then contribute to another metric you need to measure: reactivation.
Being able to reactivate donors is the best feeling ever. You’ll become addicted to challenging yourself and your team to grow this number. Donor reactivation is a cost-effective way to raise more money. This group already has a connection to you, so they might need some donor love and reminders about why your organization touched their heart in the first place.
Next, renewing donors year after year is the other key to sustainable fundraising. The donor renewal metric can be influenced by authentic, consistent and strategic stewardship. If you have a low donor renewal number, do a donor survey and listen to what donors are telling you about your communications.
Donor database analytics is the secret ingredient to a robust fundraising plan.
Although you may want to look away, you must also review donor attrition or how many donors you lose every year. It is natural to lose donors, but if the number is negative after you measure your new donors against your donor attrition, you lost more donors than you acquired. If you are on the plus side when you analyze this number, stand up and pat yourself on the back.
Let’s get back to the fear so many fundraisers have about donors who only give one gift. This metric is called the Second Gift Conversion. Globally, this is one of the most frightening metrics we review, as it is typically around 30%. In some cases, donors might have given a one-time gift of $25, and the result over the next couple of years is that you have spent their contribution trying to engage them in a second gift.
Some stewardship strategies to engage donors in a second gift include a welcome call, gratitude reports, or an appeal-specific thank you letter with a handwritten note. Engaging your team and your board of directors in stewardship strategies is a great way to enhance your philanthropy culture.
Then, there’s long-term donor value (LTDV)—a metric we all need. I consider this to be that favorite piece of clothing everyone has in their closet. LTDV is a prediction of how much revenue you can expect to receive from a donor during the lifetime of their giving to your organization. This is an exceptional metric to use when you need to justify the expense for an acquisition campaign.
Planned giving is another area that can benefit from donor database analytics. If you’re wondering how: consecutive years of giving. Analyze your loyal donors over a 10-year period and send them a letter with a follow-up phone call; this is a great way to connect with donors who may want to leave a gift in their will to your organization.
You are probably in search of a metric you can use right away to raise more money. For data nerds, RFM (Recency, Frequency and Monetary) is the quickest turnkey fundraising metric. Include all your donors over the last three years and use the filters for when the gift was given (recency), how many gifts were given (frequency), and the value of the donations (monetary). By dividing this metric into your top 10 percent, 20 percent, and the remaining 70 percent, these results will show you at a glance your top donors so you can concentrate your efforts for the best result.
Whether you are already knee-deep in donor data analytics or this is a first blush for you, it is essential to use all the available tools. You can source information from business books, fundraising podcasts or various webinars. As we take some time to readjust priorities and organizational strategies amid the global health pandemic, this is an excellent opportunity to think differently about how we fundraise. Adopting a formula that includes analytics, storytelling, and stewardship, with a splash of business intelligence, is an approach that works for many nonprofit leaders. As our sector begins to change, we must think differently about how we engage and learn our donors. With the spotlight now placed on so many charities, it is the perfect time to forge a new strategic path that will lead to more engaged donors, which will result in more good work done in the world.
Sam Laprade, based in Ottawa, Ontario, Canada, is a professional fundraiser who works closely with generous donors to impact some of the most vulnerable people in her community and country. In 2009, Sam started as director at Gryphon Fundraising, where she shares the importance of donor database analytics with fundraising professionals worldwide. Over a 30-year period, Sam has raised money for important charities in her community, such as The Ottawa Hospital Foundation, the Ottawa Humane Society and the Ottawa Mission Foundation.Return to Insights & Events