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Jun 24

Tipping Points in Fundraising

Roy C. Jones, CFRE

Why do regular donors suddenly step up and do something spectacular?

I was reminded of the importance of “Tipping Points” in fundraising this week by World Help’s Director of Sponsorship programs, Noah Barnett.  We had a donor who suddenly went from sponsoring a child at just $35 to sending in $15,000 to help build water wells in an African village.

“There must have been a tipping point in the relationship…” explained Barnett.  Upon checking the donor’s record it was easy to see just what happened.  The donor’s sponsored child had been sick and in the hospital so the World Help team updated the sponsor and promised to keep them informed as the child recovered.

Unrelated to the sponsorship call, the development team sent to the donor the organization’s annual report and outlined, among other things, the number of wells World Help needed to drill this year to provide clean water and prevent children from getting sick.  A few weeks later the development department called the donor to make sure they got the annual report and reminded them that 97% of the money raised for projects is used in the field.  The donor then sent a check for $15,000 to help with a well.

Tipping points…  a call about a sick child, a plan to help others from getting sick, a stewardship call, then a BIG gift.  Like dominoes falling, the donor knew this was not some mass marketing campaign.  It was truly one-on-one cultivation, truly building a relationship through accountability and stewardship.

Of course, the use of the term “Tipping Points” in fundraising is not new.  It dominated the industry nearly 14 years ago when Malcolm Gladwell first published his book, The Tipping Point: How Little Things Can Make a Big Difference (ISBN 0-316-31696-2).

Tipping points in fundraising nearly always focus on stewardship.  Donors upgrade their giving when they fully understand that you intend to be accountable for every penny spent.  Most importantly, the donor will invest more when they see that you are looking for a business partner, not just somebody to to write a check.

The most exciting thing about Tipping Points is that they rarely happen in a vacuum or by themselves.  Most of the time when a donor crosses the threshold moving up to the next level of giving, they are usually taking others along with them.  They do not make 5-figure and 6-figure giving decisions without getting the advice of others.

Gladwell defined a tipping point as “the moment of critical mass, the threshold, the boiling point.”[1] The book seeks to explain and describe the “mysterious” sociological changes that mark everyday life. As Gladwell states, “Ideas and products and messages and behaviors spread like viruses do.”

When you have a donor who upgrades their giving, especially those that move dramatically to the 5-figure level, do not just put them through your normal thank you receipting process.  Get out of your office and go see them.  Get face to face with that donor and thank them.  Ask them to explain the decision making process and who are their trusted advisers that helped them with the decision.  Before you know it that single gift will blossom into five or six figure major gifts, but only if you take the time to meet and cultivate real friendships.

Tipping points… they happen everyday.  The true professional understands their importance and acts immediately!

Jun 10

A Check Up From the Neck Up

Roy C. Jones, CFRE

I am always amazed at the professionals in fundraising who fall prey to their own methodologies.  They build a fundraising program and processes over years and year of hard work.   They develop a work-around, solutions, and new procedures every time they are confronted with a new problem.

In most cases, the policy or process they have developed is a work of art (and science), something to truly be proud of.  However, when you start to layer on these types of decisions one on top of another, sometimes over decades, it can clog up a fundraising program.  The organization can become clunky and hard for donors to stay involved in.

Fundraising programs are so unique to each organization, it is often impossible to tell when it is time for a “check up”.  What tends to happen over time is that organizations (especially those that have had some turn over in the development area) institute policies and procedures which have outlived their effectiveness.  Nearly always they were the right decision at the time they were instituted, but over time these fundraising procedures stacked one on top of another can place an organization in a box that they cannot get out of.

Donations often dip because a charity or non-profit has not changed with the times and updated their techniques and strategy.

I encourage organizations every year to take a step back and look at where their organization results are today and compare them with what is going on nationally.  If you see specific areas that are off kilter, begin focus on those areas first.  A triage approach is critical to improving results.

Is it time for you to compare your fundraising program with trends nationally.  Here is a quick list of industry standards that should help you with your check up:

  • WEBSITE GIFTS: 25 TO 50% of all donations are transacted via the organization’s website; regardless of the channel solicited (mail, email, phone, event, TV, radio, FSI, SS are all using the web to process their gift). Note: Direct mail is not dying, the reply device is simply changing.
  • WHITE MAIL: White mail (the donor’s own envelope) is more pronounced as average gifts exceed $100.  Most organizations are seeing 15 to 25% of all donations arrive via white mail (coded reply devices are still important for instructions on how to give, but donor sophistication is making them a thing of the past). The mail is not “dying”… the reply device is changing.  The RD’s are now choked full of instructions for ways to give in addition to the supplied reply envelope.
  • MULTI-CHANNEL: 80% of all donors are multi-channel givers nationally today.  The old adage that if a donor is acquired by the mail they can only be renewed by the mail is no longer true.
  • RENEWAL GIFT AMOUNTS: 50% of all donors are renewing at their previous highest gift level
  • RENEWAL UPGRADES: 15% of all donors are upgrading their giving level over the previous year
  • DONOR LIFE CYLCLE: 5 to 7 years is the average life time of a donor on a specific file
  • LTDV: Long Term Donor Value spikes dramatically after 5 years, renewal donors will renew between 80 to 90%
  • AVERAGE GIFTS: Renewal gifts should be higher than the initial gift; most charities see renewal gift amounts increase by 50% after the first year
Jun 6

Where Do You Find New Major Donors?

Roy C. Jones, CFRE

Contrary to popular opinion, major donors do not come from a super secret list of wealthy philanthropists.  They do not come from a little black book safeguarded by your fundraising counsel.  They do not suddenly appear at your door step after you have made a visit to the local ballet or art museum, and they certainly don’t follow you home from your last visit to the chamber of commerce meeting.

Major donors are found on the little black box sitting on your desk with a keyboard plugged into it.  That’s right, major donors nearly always originate from your own database.  They begin by making a $25, $50 or $100 donation to your organization.  They begin by becoming a monthly sponsor of just $25 or $50.  Over time, depending on what your organization does and how they are treated they gradually begin increasing their donation amount.

Major donors NEVER (or rarely) begin by making 5-figure and 6-figure gifts to your non-profit organization.  Remember, major donors are NOT donors at all.  They are investors!   Major donors expect (some will even demand) to see a return on their investment before they increase their giving.

If the donor is not “stewarded” properly, what happens?  They simply stop giving to your and give to another charity that has figured out who they are and has given them the attention, acknowledgement and ROI reporting they expect.  Remember too, major donors are always “multi-donors”.  They give to multiple organizations. 

A recent study called “Heart of the Donor” interviewed donors from more than 300 non-profit organizations.  The research was commissioned by America’s largest fundraising agency, Russ Reid, and revealed that the average donor gives to SIX different charities.  So if you are not doing the right things with your major donor prospects, guess what?  Someone else is…

The situation reminds me of a quote from one of my favorite Civil War generals from the deep south, “He who gets there the firstest with the mostest WINS…”  It is not good grammar, but it makes the point.  If you want to become the favorite charity who gets the lions share of a major donors investment dollar you have to communicate with them quickly and demonstrate the biggest bang for every dollar invested into your organization.  Return on investment (ROI) is critical to growing major donor investment.

 

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