Avoid Making Faulty Assumptions about Donor Loyalty

Loyal supporters are valuable assets for every nonprofit organization.

Unfortunately, there is an alarming lack of understanding about the definition of “loyal supporter.” Before we address that issue, however, let’s look briefly at why loyal donors are so important.

Because it’s more cost-efficient to retain donors than acquire new ones, loyal donors allow charity fundraising programs to operate more efficiently. The lifetime value of such donors is greater. More money, more cost-effectively raised means more funds for mission fulfillment.

Interestingly, loyal donors also exhibit greater engagement tendencies as researchers Adrian Sargeant, PhD and Elaine Jay, PhD observed in their book Building Donor Loyalty:

Donors who remain loyal are also much more likely to engage with the organization in other ways. Long-term donors are significantly more likely than single-gift donors to offer additional gifts in response to emergency appeals, to volunteer, to upgrade their gift levels, to lobby for the organization, to actively seek out other donors on the organization’s behalf, to buy from a gift catalogue, and to promote the organization to friends and acquaintances.”

Sargeant and Jay even quantify the value of this additional activity. In their experience, they have seen that such activities can increase donor lifetime value by 150 to 200 percent.

Increasingly, charities are coming to appreciate the benefits of having loyal donors. For example, progressively more development professionals understand that loyal supporters make the best planned giving prospects.

This raises the question: Who is a “loyal supporter?”

In the context of planned gift marketing, one development professional recently defined loyalty as a combination of giving frequency, giving recency, and cumulative giving amount. I agree, but only to a point.

First, as Sargeant and Jay describe in their book, loyalty can be either passive or active. Passively loyal donors might give because their friends give, because they want to do something while they continue to search for the charity that is just right, or even because of inertia. By contrast, actively loyal donors care passionately about the organization and its mission. They identify with the values of the organization and regard donations to it as an essential, rather than discretionary, part of their personal budgets.

When it comes to fundraising, actively loyal donors are the only truly loyal donors. In other words, not all regular donors rise to the level of being loyal supporters.

Second, people can be loyal supporters without being donors. They even can be so intensely loyal that they make a generous legacy commitment.

Is There a Relationship Between Monthly Giving and Bequests?

From time-to-time, I will invite an outstanding, published book author to write a guest post. If you’d like to learn about how to be a guest blogger, click on the “Authors” tab above.

This week, I have invited Erica Waasdorp, a self-proclaimed “philanthropoholic,” President of A Direct Solution, and author of the best-selling book Monthly Giving: The Sleeping Giant. Erica explains why nonprofit organizations should have a monthly donor program, explores trends in monthly giving, and provides plenty of useful how-to tips all in a mercifully brief, 131 page book.

Jerry Huntsinger, a direct-response fundraising guru, said of Erica’s book, “Good job! It’s the best resource book I’ve ever seen on the subject. You certainly put a lot in it.”

I agree with Jerry. As I read Erica’s book, I was reminded of the first time I wrote on the subject. In 1989, I wrote an article for Donor Developer that predicted that every charity would have a monthly donor program within five years. I believed in monthly giving and its power to help transform nonprofit organizations. I still do. Sadly, my prediction was wrong. It’s now a quarter-century later, and most nonprofits still do not engage in a robust monthly giving program. Nevertheless, they should.

In the 2011 State of the Nonprofit Industry Survey, Blackbaud asked philanthropy researcher Adrian Sargeant:

Where do you see the largest opportunities for nonprofits to make an impact on their operations as we enter the next year?”

Sargeant responded:

Two words: monthly giving. Regular/monthly or sustained gift programs are currently revolutionizing the economics of fundraising. If your nonprofit doesn’t have one — it should get one. Lifetime values are 600-800 percent higher than would be the case in traditional annual fund giving. It’s also more resilient in the face of changes in the economy.”

Now, Erica shares some of her insights with you including a revelation about monthly and bequest giving:

 

You should know right off the bat that I’m a true advocate for monthly giving, aka sustainers, aka recurring gifts. Not surprising, because it’s really a great way to generate loyal donors for your organization. What is not to like about the ongoing revenue you will see coming in month after month after month?

I have been fortunate to be involved with large monthly giving programs generating millions of dollars of reliable income. It truly sustained organizations after major disasters such as September 11, 2001, Hurricane Katrina, Super Storm Sandy, to name a few, where all focus and attention and individual giving was elsewhere. Yet, that sustainer revenue kept coming in.

When you look at whom to target for monthly giving, there’s certainly an interesting mix of sources:

• Existing donors, who have been giving $10 or more and made two gifts in the past year.

• Existing donors, who have been giving one gift a year for the past few years.

• New donors, who are willing to try this convenient way of giving right away (yes, this does work!).

• Reactivated donors, who just came back into the fold and they used to give several gifts in the past.

Is there anything you recognize here? 

Special Report: Free Webinar with Researcher Russell James

[Publisher’s Note: “Special Reports” are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. “Special Reports” are not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column. Subscribers will receive a link to download a free copy of researcher Russell James’ latest book.]

 

The percentage of the US population with wills and trusts has declined sharply over the past 12 years, as I first reported here. What’s a smart planned giving marketer to do?

Russell James, JD, PhD, CFP, a leading philanthropy researcher based at Texas Tech University, will offer some answers in a FREE webinar hosted by MarketSmart on Wednesday, January 29, 2014 at 2:00 PM ET (Optional Q&A 3-4 PM).

James will discuss the decline of wills and trusts along with other legacy giving issues including:

• How can you garner legacy gifts from donors who do not have wills or trusts?

• What are the top demographic predictors that someone will make or revoke a bequest commitment?

• Why are beneficiary designations becoming increasingly popular?

Space is limited, so be sure to register now.

Is it Ethical When an Ethicist Browbeats Prospective Donors?

Peter Singer, a professor of bioethics at Princeton University and founder of The Life You Can Save, not only thinks it is acceptable to browbeat prospective donors, it’s exactly what he did in an op-ed article published in The Washington Post.

In my opinion, Singer’s piece, “Heartwarming Causes are Nice, but Let’s Give to Charity with Our Heads,” contains a glaring ethical problem:

Coercive Manipulation. Singer suggests that people who donate to causes that he does not endorse, such as the Make-A-Wish Foundation, are guilty of murder.

Let’s look more closely at this issue before exploring other problems with Singer’s reasoning.

After pointing out that the Make-A-Wish Foundation does not save lives, Singer presents a variety of examples of how contributions to his select group of organizations, instead of Make-A-Wish, can actually preserve lives. Singer writes:

Yet we can still ask if these emotions are the best guide to what we ought to do. According to Make-A-Wish, the average cost of realizing the wish of a child with a life-threatening illness is $7,500. That sum, if donated to the Against Malaria Foundation and used to provide bed nets to families in malaria-prone regions, could save the lives of at least two or three children (and that’s a conservative estimate).”

Singer goes on to say:

It’s obvious, isn’t it, that saving a child’s life is better than fulfilling a child’s wish to be Batkid [referencing a child who benefitted from Make-A-Wish last year]?”

Such adolescent logic is harshly manipulative. The taking of a human life is widely considered the greatest possible sin. By accusing people of this sin, Singer is using guilt to coercively manipulate donor behavior.

Mosquito by Ibrahim Koc

Rather than offering an unbiased exploration of the roles of emotion v. intellect in the philanthropic process, Singer uses the forum to browbeat people to meet his own personal philanthropic standards.

I’m not sure why Singer thinks he is better qualified to judge which charities are worthy to exist or not. Nevertheless, it is certain that Singer feels he has a better moral compass than the rest of us. And, unless we want to be murderers, we should support his anointed causes.

What I find particularly interesting is that, while Singer appears concerned about saving lives, he seems little concerned with the quality of those lives saved.

What happens to the child who has been saved from Malaria? Would Singer oppose donations to build a school to educate those children? After all, the money otherwise could have gone to buy more mosquito nets.

Singer’s op-ed article provides an excellent example of what nonprofit organizations should not do when trying to attract people to a cause. Instead, here are some of the things that charities should do:

How Much is a Story Worth?

We all enjoy a good story. Sometimes, a story will make us sad or happy. It might even make us laugh or inspire us. But, how much is a story worth to a fundraising professional?

A few days ago, I read a news article out of Lincoln, Nebraska. No, the piece was not about the bone-chilling temperatures resulting from the Polar Vortex. Instead, it was a heart-warming tale about an 18-year-old server.

When two men recently visited the Cracker Barrel restaurant, they asked the hostess to seat them at a table staffed by the grumpiest server. They explained they wanted to cheer-up the person.

The hostess explained that Cracker Barrel did not have any unhappy servers; so, instead, she would seat them at a table staffed by the happiest server.

After placing their order, the men asked Abigail Sailors why she was so happy. Over the course of the meal, she answered their questions.

Abigail Sailors (photo by Morgan Spiehs/Lincoln Journal Star)

Years ago, Abigail’s parents were involved in a tragic car crash. Her mother had suffered a severe brain injury. Her father could not care for the children by himself.

Following the crash, Abigail and her four siblings were placed into foster care, in separate homes. Abigail was abused and bounced from home to home.

When Abigail, a sister and brother were returned home to their father, the story did not reach its happily-ever-after moment. Instead, the father was ultimately arrested for abuse.

Then, nine years ago, John and Susi Sailors rescued the five children and cared for them alongside their own five offspring. Abigail and her siblings were finally together in a secure, loving home.

After talking about her past, Abigail spoke about her present and future. She had attended one semester at Trinity Bible College in North Dakota. She paid her own way. Unfortunately, she did not have enough money to return. So, she is working at Cracker Barrel and saving her earnings so she can go back to Trinity or study on-line.

Given where she has come from, where she is, and where she is going is why she is so happy, Abigail told her customers.

As the two gentlemen finished their meals, wrapped up the conversation, and prepared to leave, they did something remarkable. Actually, four things that are remarkable:

Do You Have an Attitude Problem?

Has anyone ever accused you of having an attitude problem?

I hope so.

If you don’t have an attitude problem, I encourage you to develop one. For your sake. For the sake of your organization. For the sake of the nonprofit sector. You can even make it your 2014 New Year Resolution.

I’m not suggesting you cultivate a bad attitude. Instead, I’m encouraging you to shake up the status quo regardless of what others might think. I want you to challenge conventional wisdom in an intelligent way.

Remember, if some of our ancestors had not had an attitude problem, we’d still be living in caves.

Let me share two stories that will illustrate what I mean.

I quite fondly remember the very first time someone told me I had an attitude problem. It was Mrs. Imperiali, my first-grade teacher. Mrs. Imperiali, her real name, asked the class, “What’s the smartest animal in the world?” I immediately raised my hand. When Mrs. Imperiali called on me, I confidently answered, “Dolphins.”

My response puzzled my teacher. She asked, “Why dolphins?” I told her, “Because they don’t kill each other for no reason.”

Mrs. Imperiali snapped, “Mister, you have an attitude problem!”

I need to point out here that, when I was in the first grade, it was during the height of the Vietnam War. I guess Mrs. Imperiali didn’t appreciate what she believed was the anti-war sentiment of my response. However, since I believed in my answer, I did not take my teacher’s criticism as a negative. As a result, I’ve worn the attitude-problem label with pride, not shame, my entire life.

In case you’re wondering, the answer Mrs. Imperiali was going for was “humans.” As it turned out, she had designed her lesson plan to demonstrate that humans are part of the animal kingdom. Oh well.

A couple decades later, I met Carol Buchanan Daws at the Academy of Natural Sciences. Like me, Carol had an attitude problem.

As the Assistant to the Museum Director, Carol was responsible for the back-office processing of museum memberships. Despite being the oldest natural science research institution and museum in the Western Hemisphere, the Academy only had a token membership program and no Director of Membership.

Carol saw an opportunity to grow the membership program. She repeatedly told her boss about the potential of the membership program. Unfortunately, the Museum Director was content with the status quo. So, Carol did the only natural thing she could do: She kept nudging him about it.

Finally, when the Museum Director was sufficiently annoyed or, perhaps, convinced, he appointed Carol Director of Membership.