Welcome, everybody. This is Mazarine Treyz of Wild Woman Fundraising, and today I have the pleasure and the privilege of interviewing Heather Yandow, who I interviewed last year about Third Space Studio’s Individual Donor Benchmark Report.
MT: How many nonprofits participated in the Individual Donor Benchmark Report this year?
HY: This year we had 119 organizations, and they were from across the U.S. The significant thing about them is that they needed to have budgets of under $2 million. So we call them small and mighty. Then they had some kind of individual donor program, so more than one individual donor. We looked at all kinds of data around their individual donor fundraising success.
MT: I know last year, we talked about how the number one thing that successful fundraising programs do is make a fundraising plan. Is it still true?
HY: It is still true. We still found a strong correlation in the data between having a fundraising plan and fundraising success, and so what we looked at is overall, if you looked at the people who had fundraising plans and those that didn’t, you saw that their overall revenue was about the same. But they tended to have more of their revenue coming from individual donors. They tended to have almost double the number of donors, and the average gift was significantly higher. The average gift from each donor.
So just looking at that data, you might suspect that having a plan really does help you find more donors, get bigger gifts from them. I have a super data nerd who helps me really dig in and find these more intricate correlations.
He found that if you
1. Have a plan and
2. You pay your fundraiser more – you raise more money.
That’s right. If you have a higher salary, you raise more money from individuals.
If you have a plan and you engage your board more, you’ll raise more money. In fact, $11,000 more per board member you engage in fundraising if you have a plan.
Then finally, if you hire more staff, you’ll raise more if you have a plan. So as staff increases, revenues increase.
MT: Heather, I want people to know that when we’re talking about how fundraisers should be paid more, for example. We’re not just coming out with this information. We both have backgrounds in the nonprofit world. You worked for 7 years in fundraising and you were development director for some of that time.
MT: So obviously people can look at this research and say, yeah, but who is this person anyway? I mean, what are they to tell us what to do? Well, we have worked in the sector for over 20 years, between us. AND your research says that this works. It’s not just like, oh, it’s a good idea. You know?
HY: I thought it was a good idea before I did the research. I definitely thought that was. But the research really shows it, and the other interesting thing with this finding of having a plan is that we ask people, not just did you have a plan? But how much did you actually use it? So it’s great to have one, but we wanted to know, were you checking in on it all the time? Or only a couple of times a year? What we found was that people were evenly split between checking in on it on a regular basis or more frequently, and checking in on it less frequently. But that didn’t seem to have an impact in the results. So from what we can tell, the important thing is going through the process of creating that plan. So really being reflective about what has been working for you, thinking clearly about what are your strategies and the timelines, what are your goals? How do you need to engage other people?
So that’s really interesting to me, an almost 50% split of who really paid close attention to their plan after making it and who didn’t. But the results don’t change.
MT: According to your research, nonprofits are losing donors at an alarming rate, 40%. Why do you think that 40% of donors just walk out the door?
HY: That’s a really good question, and this is the first year that we asked for a retention rate. We found that that retention rate is 60%, which means that they’re losing 40%. I think that the interesting thing there, one is that it’s actually higher than I’ve seen with other studies. So some people might read that 60% as good news. But for a lot of people, I think maybe you and I included, 60% seems really low. It seems like people should be able to hang onto their donors a little better. So the biggest thing, I think there’s a couple of factors influencing losing these donors.
One reason you’re losing donors is your organization does not have the capacity to really steward them. That means to develop relationships with them, to make sure they’re getting asked again the next year.
So we’re talking again about organizations with budgets under $2 million. For a lot of these organizations, the person in charge of individual donor fundraising is the executive director, who’s also in charge of everything else going on in the organization. So sending out timely thank yous or renewals on the right schedule, or making sure that everyone gets put on the email list. All of these kind of baseline donor stewardship, donor cultivation tactics can be really challenging, and for good reason for organizations.
The other reason you’re losing donors is that there are these bigger shifts happening in the world. So I don’t want to talk too much about millennials, but we are seeing more trends that maybe people are giving one-off gifts. They’re not as likely to become members or long term donor. We’re also seeing more gifts coming in online, and those gifts I suspect are harder to renew just because of the noise that’s coming in people’s inboxes and on the web. So I think there’s a few different factors there.
MT: That’s really interesting. One of the comments that was on my blog recently talked about how – this person said, I used to give more to nonprofits but now I give to things like GoFundMe. I don’t really pay as much attention to what nonprofits are doing because these things seem to be more urgent. So I think that’s interesting and kind of falls in line with some of what you’re saying, that they’re making one-off donations to people who are like, “Oh help, I need a kidney transplant.” Vs. “Oh help, we need to save the habitat for birds” or whatever it is.
HY: Yeah, or oh help, it’s our annual fund drive. It’s time to give again. Right?
MT: That’s not compelling. So do you think part of this donor dropoff is due to the fact that there’s this proliferation of crowdfunding sites and so on?
HY: I do. I just think there’s more noise in the online giving ecosystem. There’s just more things happening. We know from past research that people are more likely to give again in the way that they first gave. So if you have someone whose first give to you was through an email ask, they’re more likely to give again that way. You probably aren’t as likely as an organization to put them on a list for major gifts or to get a second gift.
When we’re thinking about renewing donors, particularly online, we know that they are more likely to give again if they’re asked in the same way. So when they get that email the next year to renew that gift, they may have these GoFundMe emails. They may be on Facebook seeing asks for the crowdfunding or the peer-to-peer fundraising that’s also – we’re seeing a great rise in that as well.
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