Archive for ‘Stewardship’

February 20, 2015

Building Donor Loyalty: What’s New?

Among first-time donors to nonprofit organizations, the median rate of attrition is 77 percent! In other words, more than three-quarters of all new donors to a charity walk in the front door and promptly exit out the back door. That’s the appalling finding of the Association of Fundraising Professionals Fundraising Effectiveness Project.

First Time Donor RetentionOver the past few months, the issue of high nonprofit Donor Attrition rates has received increasing attention. I’ve even put a spotlight on the issue with the following posts:

As I worked on those articles, I couldn’t help but wonder: What’s new and effective that can help us build donor loyalty? Well, we’ll soon find out.

Adrian Sargeant, PhD, Director of the Centre for Sustainable Philanthropy at Plymouth University, will be presenting “Building Donor Loyalty: What’s New?” at the AFP International Fundraising Conference (Baltimore, March 29-31, 2015).

Sargeant has been passionately conducting donor loyalty research for two decades. Sargeant and his colleague Elaine Jay wrote Building Donor Loyalty: The Fundraiser’s Guide to Increasing Lifetime Value.  Tom Ahern, the internationally recognized communications expert at the helm of Ahern Donor Communications, has described the text as: “Transformational.” I cited this informative book in my post: “Avoid Making Faulty Assumptions about Donor Loyalty.”

In his upcoming session at the AFP International Conference, Sargeant will demonstrate how even small improvements in loyalty, in the here and now, translate to whopping improvements in the lifetime value of a fundraising database.

Cover- Building Donor Loyalty -- click to see book at AmazonFor example, he has found that a 10-percentage point improvement in retention can lead to a 200 percent improvement in the lifetime value of the fundraising database!

Sargeant will also look at what drives loyalty, drawing on lessons from both the commercial and the voluntary sectors, including work on the big three drivers of loyalty: satisfaction, commitment and trust. He will also explore new work on loyalty that looks at the role of donor identity and the extent to which donors identify themselves in part through their support of a nonprofit.

Sargeant will show how the concept of identity interacts with the other three big drivers of loyalty and which of all these factors offers the greatest potential to the sector to bolster giving and grow long-term support.

Sargeant told me recently:

February 17, 2015

The Greatest Idea for Retaining and Upgrading Donors

Every charity wants more money from donors. If only existing donors would write larger checks, become monthly supporters, make a major gift, and/or commit to a planned gift, there would be less pressure on the fundraising staff and the organization would be able to do more to fulfill its mission.

But, how can you raise more from your donors if they do not stick around?

Nationally, the median nonprofit organization finds that its donor retention rate is just 43 percent! Among first-time donors, the retention rate is an obscenely low 23 percent! (The stats come from the AFP Fundraising Effectiveness Project.)

Donor Retention 20013-14The good news is that if you can increase your nonprofit organization’s donor retention rate by just ten percentage points, you could see an increase of up to 200 percent in donor lifetime value, according to researcher Dr. Adrian Sargeant. In other words, if you retain more donors, they will increase their giving and some will even encourage others to support your organization as well.

Unfortunately, increasing your donor retention rate won’t happen all by itself. You need to make it happen. So, what is the simplest, most effective tactic for accomplishing this?

Telephone by laerpel via FlickrDo you see that shiny box on your desk? It’s probably black with some flashing lights, and it’s plugged into the wall. It’s a telephone. Pick it up and call your donors to thank them for their support. While you’re at it, find out why they support your organization.

Yes, it really is that simple. CALL YOUR DONORS!

Multiple research studies have proven that thank-you calls are a powerful donor retention tactic. For example, Penelope Burk, in her book Donor Centered Fundraising, reports:

•  95 percent of study donors stated they would appreciate a thank-you call within a day or two of the organization receiving their donation.

•  85 percent said such a thank-you call would influence them to give again.

•  84 percent said they would definitely or probably give a larger gift.

Burk went on to report, when donors were tracked after 14 months, the group that received a thank-you call gave 42 percent more on average compared to similar donors who did not receive a thank-you call. During the renewal cycle, those who received a thank-you call were 39 percent more likely to renew their support.

Here are some tips to make your thank-you calls effective:

January 2, 2015

Don’t Make New Year Resolutions You Can’t Keep

It happens every year at this time. People make New Year resolutions. Then, a short time later, they break those resolutions.

Breaking New Year resolutions is bad. Doing so can make you feel guilty. It can erode your self-esteem. If you told anyone about your resolutions, your failure to keep them could even be embarrassing.

Here’s a novel idea for 2015: Don’t make New Year resolutions you can’t keep.

Fireworks

Happy New Year from Philadelphia!

Instead of setting overly challenging goals, I encourage you to adopt the three following, easy-to-keep resolutions. While easy to adhere to, the following resolutions are nevertheless meaningful. You’ll notice that my three resolutions include something that will benefit you, something that will benefit others, and something that will benefit your organization:

 

  1. Indulge yourself. Yes, you need to take care of yourself by eating right, exercising, and getting an annual medical physical. However, you also need to let yourself be bad occasionally. You need to take care of your psyche. If that means having a slice of chocolate cake, then go for it! If it means watching old television episodes of Gilligan’s Island, so be it. If it means having your spouse watch the kids so you can enjoy a leisurely bubble bath, make it happen. By being good to yourself, you’ll be better able to be good to other people.

 

  1. Make sure those you love know you love and appreciate them. Don’t assume that those you love know it or know the extent to which you care about them. Tell them. Show them. Don’t just run for the door in the morning to rush off to work; instead, take the time to kiss your spouse good-bye. Don’t just nod when your child comes home with a good test score; instead, take the time to tell him how impressed you are. Make your partner a steaming cup of tea before she asks for it or goes to make it herself. In other words, make the most of the little moments.

 

  1. Grow professionally. One of the hallmarks of being a professional is ongoing education and sharing knowledge. So, commit to attending seminars and conferences. If time or money are obstacles, participate in a webinar; there are some excellent free webinar programs available throughout the year. Or, read a nonprofit management or fundraising book. There are some terrific books at The Nonprofit Bookstore (powered by Amazon) that will inspire and help you achieve greater results. You’ll find Reader Recommended titles, the complete AFP-Wiley Development Series, and other worthwhile items. If you have found a particular book helpful, consider sharing a copy with a friend, colleague, or your favorite charity. By the way, a portion of the sale of books through The Nonprofit Bookstore will be donated to charity.

 

(If there’s a nonprofit management or fundraising book that you read recently that you found particularly helpful, please let me know below so I can include the title in the Readers Recommended section.)

For additional reading, you might also consider looking at some of my posts that you might have missed. Here is a list of my top ten most read posts during the past year:

  1. Can a Nonprofit Return a Donor’s Gift?
  2. Delivering (My Own) Bad News
  3. 5 Things Never to Do in Your Phone Fundraising Calls
  4. One Word is Costing Your Fundraising Effort a Fortune
  5. Special Report: Top 40 Most Effective Fundraising Consultants Identified
  6. How NOT to Run a Capital Campaign
  7. Cheating Death
  8. #GivingTuesday Has NOT Made a “Huge Difference”
  9. 5 Lessons Moses Can Teach Us about Fundraising
  10. 20 Factoids about Planned Giving. Some May Surprise You.

I invite you to read any posts that might interest you by clicking on the title above. If you’ve read them all, thank you for being a committed reader.

I’m honored to know that I have readers from around the world. (I love the Internet!) While I appreciate all of my readers, I thought it would be interesting to look, beyond the United States, to see my top ten countries for readership:

December 19, 2014

Is Spelman College Unethical?

Spelman College has announced that it is suspending an endowed professorship in humanities that was funded by Bill and Camille Cosby. Spelman issued this one-paragraph statement:

December 14, 2014 — The William and Camille Olivia Hanks Cosby Endowed Professorship was established to bring positive attention and accomplished visiting scholars to Spelman College in order to enhance our intellectual, cultural and creative life; however, the current context prevents us from continuing to meet these objectives fully. Consequently, we will suspend the program until such time that the original goals can again be met.”

The Cosby family donated $20 million to Spelman in 1988. In 1996, Spelman opened the Camille Olivia Hanks Cosby EdD Academic Center. At that time, “an endowed professorship named for Drs. Cosby was also established to support visiting scholars in the fine arts, humanities and social sciences as well as Spelman College’s Museum of Fine Art,” according to a November 25 written statement by Beverly Daniel Tatum, Spelman’s president.

The November statement also explained:

The academic center and endowed professorship were funded through a philanthropic commitment from the Cosby family made more than 25 years ago, and at this time there are no discussions regarding changes to the terms of the gift.”

Just 19 days later, Spelman reversed its position and suspended the professorship. When contacted, several Spelman officials refused to comment. A representative for Cosby also declined to comment.

Bill Cosby by remolacha.net via Flickr

Bill Cosby

For the past several weeks, Bill Cosby has been the target of a large number of sexual assault allegations. However, no criminal charges have been filed against Cosby. Spelman knew this in November. It’s unclear why the College abruptly suspended the endowed professorship now. While additional allegations have been made in the intervening weeks, Cosby still has not been charged with a crime.

To paraphrase Tyler Perry, if Cosby did commit the sexual assaults, it’s a terrible situation. If Cosby did not commit the sexual assaults, it’s a terrible situation. I won’t comment on the Cosby situation beyond that. However, I do want to explore the Spelman news because it has broader implications for all nonprofit institutions.

Nonprofit organizations are ethically required to use a donor’s contribution in the way in which the donor intended. The applicable portions of the Donor Bill of Rights “declares that all donors have these rights”:

IV. To be assured their gifts will be used for the purposes for which they were given….

V. To receive appropriate acknowledgement and recognition….

VI. To be assured that information about their donations is handled with respect and with confidentiality to the extent provided by law.”

The relevant passages from the Association of Fundraising Professionals Code of Ethical Principles state:

December 12, 2014

Is the American Red Cross Hurting Your Fundraising Efforts?

The American Red Cross regularly touts how responsible it is with donors’ money. ‘We’re very proud of the fact that 91 cents of every dollar that’s donated goes to our services,’ Red Cross CEO Gail McGovern said in a speech in Baltimore last year. ‘That’s world class, obviously.’

“McGovern has often repeated that figure, which has also appeared on the charity’s website.

“The problem with that number: It isn’t true.”

That stunning revelation was made in a recently released investigative report by ProPublica and NPR.

National Red Cross HQ by NCinDC via Flickr

American Red Cross National Headquarters

The Red Cross is a great organization. My wife and I have been donors. I even did a blog post highlighting the effective stewardship practices at the Red Cross and encouraging readers to support the organization. The American Red Cross does not have to “serially mislead” the public.

Yet, that’s exactly what it has been doing according to the reporters. While the organization has told the public that 91 cents of every donated dollar goes to services, its fundraising cost to raise a dollar has been 17 cents on average. And that does not include organization overhead expenses. Clearly, the Red Cross has not been as efficient as its leader has claimed.

When reporters contacted Red Cross officials for more information, those officials were uncooperative. However, the organization did change the claim on its “website to another formulation it frequently uses: that 91 cents of every dollar the charity ‘spends’ goes to humanitarian services. But that too is misleading to donors,” states the investigative report.

Sadly, this is not the first time that the Red Cross has been accused by the media of misleading the public.

As a Red Cross supporter and a fundraising professional, I’m alarmed and disappointed by the behavior of the Red Cross. Misleading the public, either through lies or the clever manipulation of language, is unnecessary, unethical, and unacceptable.

Such inappropriate behavior erodes public trust, which makes fundraising more difficult. Perhaps this is one reason that the Red Cross has had trouble consistently raising more money. In 2009-10, the Red Cross raised $1.1 billion. In 2012-13, the Red Cross again raised $1.1 billion.

In a study that examined the relationship between trust and philanthropy, researchers Adrian Sargeant and Stephen Lee found, “there would appear to be a relationship between trust and a propensity to donate.” In addition, “there is some indication here that a relationship does exist between trust and amount donated, comparatively little increases in the former having a marked impact on the latter.”

March 29, 2014

Top 10 Posts of All-Time from “Michael Rosen Says…”

I want to do something a bit different in this post. While I’ve ranked my posts in a given year to give you a Top-10 list, I’ve never before ranked all of my posts. So, I thought it would be interesting to do so now.

Here are links to my Top 10 Most-Read Posts of All Time:

1.  Can a Nonprofit Return a Donor’s Gift?

2.  Survey Sounds Alarm Bell for Nonprofit Sector

3.  5 Things Never to Do in Your Phone Fundraising Calls

4.  How NOT to Run a Capital Campaign

5.  Does CFRE Have a Future?

March 18, 2014

Get More Repeat Gifts: The Rule of 7 Thank Yous

Donor retention is a worsening problem for the American 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.

Something must be done.

It’s challenging and expensive to acquire first-time donors. Charities must do a better a job of hanging on to those donors. Cost-efficient annual fund campaigns as well as major and planned giving efforts depend on loyal donors.

MG Fundraising CoverFortunately, guest blogger Amy Eisenstein, ACFRE  offers a simple idea that can help: “The Rule of Seven Thank Yous.” Her rule will help you retain first-time donors, loyal donors, small donors, and major donors — in other words, all donors.

Amy is an author, speaker, coach and fundraising consultant who’s dedicated to making nonprofit development simple for you and your board. Her books include 50 A$ks in 50 Weeks and Raising More with Less.

In her current Amazon bestseller, Major Gift Fundraising for Small Shops, Amy takes the complex subject of major gift fundraising and distills it down to its essential elements. The book provides a clear, methodical approach that any organization can follow. Great tips, real-world stories, check lists, sample forms, and more make this a book that you will keep on your desk and refer to often, that is if you want to raise more money than you might have thought possible.

I’m happy to share Amy’s advice about how to more effectively retain donors. Here’s what Amy Eisenstein says:

There are two main reasons that donors, including those who make major gifts, provide for not making a repeat contribution:

1. They didn’t feel thanked; and/or

2. They were never told how their first gift was used.

Fortunately, the answer to this dilemma is a simple one: donors give because doing so makes them feel good. This includes feeling appreciated for their gift and knowing that their check has fed more children, cleaned the environment, or in whatever way has made a measurable, positive difference to a cause they care about.

Your job, no matter how large or small your budget, is to make sure your donors are satisfied on both counts. Over the course of working with dozens of nonprofit organizations, I’ve developed a simple process to help you do just that whenever you receive a major gift.

You may have heard that you should thank a donor seven times before asking for another gift. Here is my version of “The Rule of Seven Thank Yous” works:

1. Thank the donor at the ask meeting (once they say “yes”).

2. Have a board member call to say thank you after the meeting.

3. Send a tax-receipt thank-you letter within forty-eight hours of receiving the gift.

4. Have the executive director write a thank-you card as a follow-up to the ask meeting. 

November 1, 2013

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.

September 20, 2013

I’m Sorry

Eventually, we will all do something for which we need to apologize. So, it’s essential that we all know the right way to do it.

Unfortunately, one of my readers reminded me recently that many people find it extremely difficult to say simply, “I’m sorry.” She told me about a secular charity that had scheduled an event to be held during Yom Kippur, the holiest holiday for the Jewish people.

Sorry by butupa via FlickrIf the nonprofit organization with the bad scheduling sense was based in North Dakota, there might not have been much of a problem. However, the charity is based in Philadelphia, home to a large and philanthropic Jewish community.

Ironically, the organization’s mission honors an individual who pioneered religious and ethnic tolerance in America.

My reader emailed the charity to alert it to the conflict, to let it know she would not be attending this year despite having attended in the past, and to express her displeasure with the organization’s scheduling decision.

Here is the response my reader received via email:

The choice of this date was not meant to offend anyone or exclude anybody. This event has been held on this weekend since its inception. . . .

[We] apologize for any offense you may take from us scheduling these events on Friday and Saturday.”

Let’s closely examine the message.

Regardless of whether or not the organization intended to cause offense, it did. The scheduling mistake was either a result of outright intent or oblivious carelessness. By excluding an important part of its donor base for this once-a-year event, the charity caused offense.

The nonprofit organization further offended my reader by lying to her in the email response. The charity claims the event has been “held on this weekend since its inception.” However, as someone who has attended the event in the past, my reader knows otherwise. She documented for me that, in recent years, the organization has hosted the event on a variety of different weekends. Even if the organization’s statement were true, it’s still no excuse for failing to consider a different date.

The person who responded to my reader then concluded by apologizing “for any offense you may take.” That’s not an apology! It’s a deflection. With this statement, the organization has not taken responsibility for its actions. Instead, of taking responsibility for causing offense, the charity put the blame on the donor who took offense.

August 30, 2013

Can You Thank People Too Much?

A few years ago, I served on the board of a large nonprofit organization. During one of the Development Committee meetings I attended, we reviewed the organization’s stewardship policies.

That’s when one of my board colleagues asked, “Does anyone else think we thank people too much?”

Thank You by woodleywonderworks via Flickr and Wordle.netAs the discussion moved forward, I mentioned that, from a practical perspective, I did not think it possible to overly thank folks. I added that, if it was possible to overly thank people, this particular organization was so far away from being in danger of doing so that there was really no point in further discussing the matter. Others agreed with me, and the conversation eventually moved on to other related matters.

Well, it’s finally happened. I found an organization that overly thanks people: The Democratic Congressional Campaign Committee.

Don’t worry. This is not a political post. I won’t be commenting about the political content of a thank-you email I received recently from Kelly Ward, Executive Director of the DCCC. Instead, I’ll stay focused on the thank you nature of the communication.

By the way, during the last Presidential election, I signed up to receive emails from a number of political organizations and candidates as a way of learning a bit about how these groups use social media. So, please don’t make any assumptions one way or the other about my political orientation.

When I received Ms Ward’s email, it immediately caught my eye. The subject line read:

Michael, thanks!”

 I like that the DCCC used my name in the subject line. And I liked that I was being thanked, though I couldn’t imagine why. While I could see the email was from Kelly Ward, I didn’t know her or who she represented. The combination of the personalized subject line that expressed thanks along with not knowing the sender made me open the email. Above all, I wanted to know what I was being thanked for.

Here’s what the email stated:

Michael –

We asked you to step up and, boy, did you ever!

House Republicans are home this month for August Recess, and activists like you have been holding their Republican Members of Congress accountable in some pretty amazing ways.

We put together a video of some of our favorite displays of activism — you should take a look at what YOU’VE helped accomplish this August:

[link provided to video]

We hope you’re inspired by the video to continue to hold Republicans accountable. Keep up the great work out there!

Thanks,

Kelly Ward

DCCC Executive Director

P.S. Here’s a sneak peek of one of our favorite highlights from the video: In Illinois, Rodney Davis was confronted by a group of concerned voters about ‘ducking’ questions on his ethics investigation. One activist even brought a LIVE duck!” [link provided to the video]”

Ok, here’s where it really gets interesting. While the DCCC wrote to thank me for my activism, specifically my actions to hold Republican members of Congress accountable, I never did what they were thanking me for. I never even donated money to the DCCC to help pay for the activism of others

As a result of the bizarre email from the DCCC, I’ve reached the conclusion that you can indeed over thank someone.

If you thank people for something they really did not do, you’re wrongly thanking them. Instead of showing appreciation, you’re being manipulative, gratuitous, lazy, or all of the above. Reserve your thank-you messages for expressions of real gratitude:

  • Thank people for giving their time.
  • Thank people for donating.
  • Thank people for demonstrating that they care.
  • Thank people for an inquiry.
  • Thank people for attending an event or program.
  • Thank people for referring others to the organization.

You get the idea. Just be sure you don’t behave like the DCCC. Don’t thank folks for what they have not done. If you do, you’ll only end up diluting the value of real expressions of appreciation.

For your donors, your organization should have a donor recognition policy that outlines how supporters at various levels will be thanked and recognized for their support. Just remember that some donors might not want the recognition you’re offering. For example, some donors may wish to give anonymously. In that case, thanking these people by name in your annual report would be inappropriate. Always remember to be donor centered.

To avoid the uncommon risk of over thanking people:

  • Do not thank folks for what they have not done.
  • Do not thank folks publicly if they want to remain anonymous.
  • Do not thank folks in ways they have told you they won’t appreciate.

When you do thank people, be personal, warm, and sincere.

For more information about showing gratitude effectively, see my previous posts on the subject:

What Can Your Nonprofit Learn from a Fortune Cookie?

Stewardship: More than a Thank-You?

Can a Thank-You Letter Contain an Ask?

That’s what Michael Rosen says… What do you say?

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