Chief executive officers and managers often ask me whether donor relations matters. As employers and supervisors, they are asking two important questions:
- Can the value of donor relations (and, by extension, donor relations staff) be objectively measured?
- Are those measures reliable indicators of fundraising success?
In both instances, the answer is a resounding “yes”.
In its broadest sense, the field of donor relations includes anything other than fundraising appeals. From thank you letters to donor recognition events, from update communications to impromptu phone calls, donor relations encompasses a wide variety of stewardship activities which fundraisers say contribute to building solid relationships with donors and which their bosses hope are worthwhile investments of time and money.
In the big picture, donor relations is singularly responsible for fundraising profit. The majority of donors, when giving for the first time to a particular cause, make contributions that are, by their own admission, not generous within their own means. When the cost of acquisition appeals, processing gifts and issuing receipts is taken into account, many of those first-time gifts actually net out at a loss. It’s what happens after donors give for the first time which determines whether fundraisers will be able to turn their break-even or net loss acquisition efforts into sustainable fundraising profit.
The Ask Only Works Once
According to donors, the ask is the critical trigger that turns potential supporters into active donors (see my January blog for more on what it takes to get donors to give for the first time). But once they are acquired, asks give donors the opportunity to answer the question, “Will you give again?” but that answer is almost always decided long before the ask is made. The decision to give again (or not) and to give more (or not) is the product of the particular mix of stewardship options that is offered to donors in the down time between appeals. Donor retention and average gift value are, therefore, the concrete bottom-line performance measures for donor relations staff.
Are All Stewardship Activities Worthwhile?
Doing something for donors in between appeals is certainly better than doing nothing, but certain stewardship activities are highly effective while others leave donors cold. I have written extensively in Donor-Centered Fundraising about how brilliant and original thank you letters inspire donors to stay loyal and to give more generously the next time they are asked. Conversely, our research has also found, for instance, that categorizing donors by gift value or level and publishing that information has almost no impact on either loyalty or generosity. So, not all stewardship activities are created equal, at least according to donors.
What donors have found to be consistently influential is this: they want to be thanked promptly and meaningfully for their gifts; they want to see their gifts designated or assigned to a specific project, program or initiative, and they want a report, in measurable terms, on what has been accomplished in that program before they are asked to give again. If donors get those three things every time they give, they will give again in numbers far greater than what fundraising experiences today and they will give more generously.
Measuring Performance in Donor Relations
In managing Donor Relations staff, then, the first job of directors and supervisors is to ensure that time and talent are primarily focused on the three things that matter to donors. The next is to set clear, statistical measures of performance while allowing for maximum creativity. This table demonstrates the difference between performance expectations in a typical fundraising environment (one that sees stewardship as an add-on that is difficult to measure), and in a donor-centered fundraising operation where donor retention and average gift value are the concrete measures of success.
(Click image above to enlarge)
Fundraising always comes down to numbers – numbers of donors and amounts of money. The same applies to donor relations. Budgets are lean and talented professionals are hard to find, so how donor relations staff spend that budget and what they do with their time determines whether fundraising will thrive or merely survive. When managers rely on the all-important measures of retention and average gift value while affording maximum creativity to their staff as they reach for ambitious goals, higher profit is the inevitable result.
I like these measures and would love to see your ideas for what these would look like for a shop focused solely on major donor giving.
First, congratulations on establishing an atypical, but much more lucrative, approach to Development. With 100% of your efforts focused on major gifts, renewal and gift value still remain the priority focus, but these practicalities need to be taken into account:
• Annual (ie, 12 month) comparisons are inappropriate. It is important to take into account a more realistic timeframe for closing the first major gift from the point of identifying the prospect, which could be anywhere from six months to three years. Renewing major gift donors’ support can usually happen more quickly, but expecting annual gifts would be unrealistic;
• Major gift success is more sensitive to fluctuations in the economy, so that needs to be factored into planning;
• Gift value is even more closely tied to the case. Some cases are more appealing, compelling or urgent to donors than others. While all the cases you are selling are important to your not-for-profit, gift value will not always go in an upward direction, even with donors whose financial capabilities are expanding. Donors’ commitments to other capital campaigns or major funding initiatives need to be taken into account, too;
• Increasing success in closing major gifts comes with an obligation to expand post-gift stewardship. More time at the back end is required and there will be a limit to what any single gifts officer can handle in the dual roles of closing new and repeat gifts while providing excellent stewardship to an increasing volume of prospects and donors.