If you achieve your fundraising goal this year, your reward will likely be an increased goal next year. At most nonprofit organizations, the struggle to raise ever-increasing amounts of money never ends. This drives many nonprofits into a continuous donor-acquisition mode.
However, you don’t need a single new donor to raise more money.
Given that the cost to acquire a new donor is often $1, or more, for every $1 raised, finding a new donor does not even help most organizations with short-term mission fulfillment.
So, how can you raise significantly more money for mission fulfillment without acquiring new donors? Here are just six ideas:
1. Ask for More. I still receive direct mail appeals that say, “Whatever you can give will be appreciated.” Ugh! That’s not an ask. If you want people to give, and give more, you need to state your case for support. Then, you need to ask for that support in the correct way.
Many charities simply seek renewal gifts. If I gave $50, the charity will simply ask me to renew my $50 support. Sometimes, a charity will randomly ask me for an amount series (i.e.: $100, $250, or more) that has nothing to do with my previous level of support.
However, there is a better way. Try saying this:
I thank you for your gift of $50 last year that helped us achieve __________. This year, as we strive to __________, may I count on you to increase your support to $75 or $100?”
Thank the donor. Mention how the organization used her previous gift. Establish the current case for support. Ask for a modest increase linked to the amount of the previous gift. A hospital in New York state tested this approach against its traditional approach and saw a 68% increase in giving.
2. Second Gift Appeal. Just because someone has given your organization money does not mean you have to wait a year to ask for more. If you first properly thank the donor and report on how his gift has been put to use, you can then approach him for a second gift. However, you need to have a good case for going back to the well.
Most grassroots donors don’t think, “What’s my annual philanthropic sense of responsibility to this charity? Fine. That’s how much I’ll give.” Instead, most grassroots donors look at the charity they wish to support and then consider how much money they have left over after they pay the monthly bills. Then, they give from that reservoir of disposable income. Guess what? Next month, and every month thereafter, that reservoir usually gets replenished. So, going back to the donor for an additional gift can work, again, if you have a strong case for support. By the way, the replenishing disposable income reservoir is one reason why monthly donor programs can be effective (see below).
3. Recruit Monthly Donors. Way back in 1989, I wrote an article for Donor Developer in which I predicted that every nonprofit in America would have a monthly donor program within five years. Sadly, I was very mistaken. Even in 2013, too few charities host a monthly donor program.
While not every donor will enroll in a monthly giving program, many will if given the option. Typically, those that do choose to participate will increase their annual giving average in the process. For example, a $25 a year donor is not likely to become a $2.08 a month donor. Instead, she might give $10 or even $25 per month becoming a $120 or $300 donor!
4. Get a Challenge Grant. To underscore the importance of new and increased support, secure a challenge grant to endorse your effort and to, in effect, enhance the value of each donor’s gift. In addition, you can use the prospect of increased support from donors to encourage a major donor to increase his support to provide the challenge.
A symphony orchestra in the Northeast had a corporate donor that only contributed modestly. The orchestra attempted to get the corporation to sponsor a tour. The company declined. Next, the orchestra presented the idea for the company to provide a challenge grant for the orchestra’s efforts to renew and increase its grassroots support. The corporation liked the idea that their gift would be leveraged and that it could help the orchestra to further diversify its funding base. The company substantially increased its support to provide the challenge grant.
In the orchestra’s case, the challenge grant inspired an increase of support from grassroots donors. In turn, the prospect of that increased grassroots support encouraged the corporation to boost its giving to the organization.
5. Retain Donors. Acquiring donors is expensive. The benefit of finding new donors comes when those individuals renew and increase their support. Unfortunately, donor retention is a worsening problem for the nonprofit sector, according to Jon Biedermann, Vice President of DonorPerfect. In 2011, only half of first-time donors to a charity could be counted on to make a second gift. As bad as that retention rate was, it dropped to 49 percent in 2012.
If charities want more money for mission fulfillment, they need to do a better job of retaining the donors they already have. One significant way to do this is through sound stewardship practices including properly thanking donors and reporting to them about how there gift has been used.
6. Ask for Planned Gifts. In a survey conducted by researchers Adrian Sargeant and Elaine Jay, 88.7 percent of donors to nonprofit organizations “indicated they believe it is appropriate for nonprofits to ask for legacy gifts.” Sadly, only 22 percent of Americans over the age of 30 have been asked for such a gift, according to a Stelter report. As a sector, if we want more planned gifts, we need to ask more people to make them.
Planned giving need not be difficult. You can simply ask a donor to remember your charity in her will. By the way, the average value of bequests that are under $1 million is $57,000. In other words, with very little effort, you can secure large gifts.
To calculate your organization’s bequest gift potential, use the electronic calculator I developed in partnership with the good folks at MarketSmart: BEQUEST POTENTIAL CALCULATOR.
While it is worthwhile to seek bequest gifts, remember that not all planned gifts are deferred. For example, with the stock market now at a record level, you will want to ask donors to consider gifts of appreciated stock. More than half of Americans own stock. So, this is a great option for many of your donors. A gift of appreciated stock can earn them a charitable gift tax deduction while helping them avoid capital gains tax.
For most nonprofit organizations, acquiring new donors will remain an important pursuit. However, once someone has committed her support to your charity, you will want to maximize her philanthropic engagement.
I have listed just six ways you can raise more money from your existing donor pool. What ideas do you have to add to the list?
That’s what Michael Rosen says… What do you say?
Michael Rosen Says... 