6 Ways to Raise More Money without New Donors!

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.

Growing Money by Images_of_Money via FlickrMost 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?

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23 Responses to “6 Ways to Raise More Money without New Donors!”

  1. Great tips, and I love the bequest calculator! It’s definitely important to add new donors on an ongoing basis, but it is great to work on generating funding from your existing donors. Too many organizations think Annual Fund means only once a year… you are truly leaving a lot of money on the table.

    I, too, am intrigued why not more nonprofits are focused on a monthly giving program, hence my book Monthly Giving: The Sleeping Giant, trying to make the process a lot easier. You have all the tools in house, you just have to apply them.

    One of the things I’ve seen anecdotally is that these monthly donors are especially likely to leave your organization in their will, so it’s a win-win all around.

    Erica Waasdorp, President of A Direct Solution, Author of Monthly Giving: The Sleeping Giant.

    • Erica, thank you for commenting. I’m glad to know you liked the Bequest Potential Calculator. I congratulate you on your new book. It’s good to know you’re out there encouraging nonprofit organizations to build monthly donor programs, and that you’re helping to make it easy for them.

      I want to underscore one of the points you made. Monthly donors do make great planned giving prospects. It’s not exactly a causal relationship. However, an organization’s loyal supporters are the folks most likely to enroll in a monthly donor program. Because loyal supporters make some of the best legacy giving prospects, a monthly donor program is one way to identify highly loyal folks.

      Keep spreading the word.

  2. Very good tips, Michael. I will add two more: 1) IRA Charitable Rollover gifts for those 70 1/2 and older with Traditional IRAs, and 2) used car donations.

    • Richard, thank you for sharing your thoughts and for your kind words. I also appreciate your two suggestions. Fundraising professionals should not assume that donors are financially sophisticated and, therefore, don’t need to be reminded of these options. We need to educate donors and keep the giving options front of mind.

  3. Michael,

    You’ve outlined a good plan for working within the organization’s database to increase donation revenue. It’s a proven practice of success! One glitch in the plan, in my recent experience working with nonprofits, is that many (and I do mean many) small to medium size nonprofits still use Excel or unsupported software to manage their donor information, which would make it very difficult to create the algorithm needed to segment increased asks based on past giving.

    The reasons for this are layered; they think they can’t afford a proper gift software and/or the staff turns over so quickly that the training and competence needed to maintain the integrity of the data is compromised and thus unreliable.

    There are many excellent and affordable gift software products in the marketplace, yet the stigma that they are expensive and complicated still exists.

    • Susan, thank you for sharing your thoughts. You’ve identified an critically important issue. Nonprofit organizations need to collect vital information, and they need to store it in a way that allows it to be used. While I’ve done a number of blog posts about gathering and using information, I don’t think I’ve done one about how to effectively store it. You’ve given me an idea for a future a post!

      • Hi, fyi..

        There are tons of wonderful software systems that are better than Excel, but not an arm or a leg for nonprofits and not Raiser’s Edge.

        Cheers, Erica

      • Erica, thanks for commenting. You’re correct. There are many software packages out there that can affordably meet the needs of small to mid-size nonprofit organizations. I think part of the problem is that nonprofit managers at these organizations are either a) unaware of the options, or b) overwhelmed by the options, or c) do not feel qualified to sort through the options and implement a solution.

  4. Invite existing donors to special events. These help increase their giving and provide an in-person opportunity to steward donors and sponsors to further build the relationship.

    • Karen, thank you for sharing your suggestion. You’re correct. Inviting donors to events, not just fundraising events, is a great way to build the relationship. Even if the donor chooses not to attend the event, he or she will likely appreciate being asked.

  5. Hey Michael, all good points in retaining and obtaining more revenue from your current donors. Nice work! One point of correction though. You state, “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.” I think you are mistaking the cost of one piece of mail that goes out vs. the amount to acquire a new donor. Usually the cost to acquire a donor can be anywhere between $50-$100, potentially even more depending on how you acquire them. Then, of course the goal is to retain as many donors to achieve at least a $350-$450LTV from those donors. Gosh, would love to only spend $1 for a new donor! Thanks for your good work.

    Jeff

    • Jeff, thank you for your comment. While I might have made my point in a clumsy way, we are on the same page. The point is that donors are often acquired at an initial loss. The thinking is that donor acquisition is an investment that will pay-off overtime as donors renew and increase their support.

  6. Michael – good tips. Beneficiary designations (partial or full) of life insurance policies and/or retirement plans are other ways to raise more money, albeit deferred, from existing donors.

  7. Michael, Thanks so very much for your post on this, I always find your pieces a great interesting read. I particualry like the comments section and would love to see a piece on software program as mentioned above.

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