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9 November 2015

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 November 9, 2015
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Today I’m interviewing Heather Yandow of Third Space Studio in North Carolina about her research, the Individual Donor Benchmark Report.

heather-yandow

Mazarine Treyz: I’ve read your report and I think it’s fascinating. What would you like to convey today?

Heather Yandow: There’s two things that I want people to understand.

One is that there is a lot of value in paying attention to benchmarks and to understanding your own data and the data of other organizations like yours. It’s a tool for understanding where you are doing really well and where you might grow.

The second thing is that creating a fundraising plan is really the secret sauce to success. I also really hope that today we can talk about fundraising planning and why that leads to success for fundraising program.

 

creating a fundraising plan is really the secret sauce for success.

MT: I love that. Why did you start studying this topic?

HY: That’s a really good question. I was a development director in a small but mighty organization for 7 years and I would often look at the data that was produced, the GivingUSA report and other reports where the smallest organization they surveyed had a budget of $5 Million dollars. At the time I was working for an organization that had a budget of $500,000. I really couldn’t make a comparison between my organization that had half a staff person for gifts from individual donors and a much larger organization that had lots of staff working on fundraising, who might have an entire person just devoted to online fundraising.

I came out of that and I moved into consulting about 5 years ago. As I worked with other organizations, I got all sorts of questions, like, how much money should we be raising from individuals? What’s a good average gift? What’s a recurring donor program look like? I looked around to see if there was any research for small organizations in this and there really wasn’t. So I thought, well, I have a background in fundraising, I have a degree in mathematics, I love data so I can solve this problem. I started focusing in North Carolina because that’s where I’m from and I had a lot of connections there. I just worked with organizations in North Carolina to collect their data, and that was the first year. The next year we went national and it’s grown from there. This year we have 87 organizations participating.

MT:  Why is it so important for nonprofits to make a fundraising plan?

HY: So what this data has told us is that it is the one thing that matters. It allows you to put more resources in and get more resources out. I was working with our chief data nerd who thinks about data all day long. I told him, I want to know, what in our data will predict if someone will have fundraising success? He looked for connections between all kinds of data points. One of my questions was, If you have more board members participating, do you have better fundraising results from individual donors? He looked at everything and he found that it was really about having a plan.

individual donor benchmark report

If you had a plan, then investing more by spending more time and more money led to greater results. If you didn’t have a plan, there was no correlation between spending more time and more money and having better results. That’s what the data tells us about having a plan. It really is the thing that makes all of your investments worth it.

MT: Wow. That’s really important. I agree. When I work with people individually, I always ask, do you have a plan and have you ever made a plan? People usually say No and No. If people do want to get a copy of your report to dive deeper into the proof of this, click here.

As we know from GivingUSA, 72% of donations in the US come from individuals. One of the trends in this research seemed to be that nonprofits were depending on grants more than ever, even as they worked to get more individual donors. What would you recommend for a nonprofit that is highly dependent on grants?

HY: Being highly dependent on grants seems like the state for a lot of small nonprofits. We focused on nonprofits that make under $2 million a year.  For those folks, for the past two years they have averaged 36% of their revenue coming from individual donors. They’re raising a little over a third of their funds from individual donors. If you’re dependent on grants right now, you are not alone. For those who are trying to ramp up their individual donor work, there are two things to think about.

  1. Find some low risk experiments. Look at the data around best practices. Your donors are your donors. If you want to start an online giving program, read about best practices and set up an experiment. We are going to try this over the next 6 months, we’ll collect this kind of data, and we’ll commit to evaluating it at the end of this six months to see what worked, what didn’t and see what we learned.
  2. The other piece of advice is to pay attention to major donors. Of course you have a plan if you’re doing individual donor work. Major donors are the greatest bang for your buck, especially meeting with major donors. Every meeting with a major donor resulted in $5,000 on average. The more you meet with people, the more you raise.  Getting out and meeting with donors and talking with them is critical. We saw the average organization only had 17 meetings with donors per year.

 

MT: Planning again, is the key. Of the 87 organizations you looked at for this year’s Individual Donor Benchmark Report, how many of them looked at their fundraising plan a few times a year or regularly?

HY: What was surprising was that 14 out of 58 that had plans they looked at. The vast majority only checked it a couple of times a year or it sat on the shelf.

What this tells me is that it’s not necessarily about checking in on your plan every day, it’s the act of planning that creates the benefits.Fundraising plan sample

That’s what I would encourage you to do. Even if it sits on the shelf, you’re still getting benefits from it because you went through, had the conversations, determined the priorities, and thought about the timelines.

MT: It’s the act of planning. Even if it sits on the shelf, you still know what your plan is. Astonishingly, the Individual Donor Benchmark Report states that if a nonprofit meets with donors, but doesn’t have a plan, there’s no correlation between visits and getting more money. Why might that be?

HY: That’s a good question. My sense is that people aren’t necessarily doing it strategically. They might be meeting with donors who don’t have the capacity to give. They might be meeting with donors but not making a compelling pitch, not really talking with them about the most important need, or have a sense of what the most important need was. We’re looking at data in the aggregate .There were some people that were successful in major gifts.

MT: For those of you who are doing major donor visits out there right now and you don’t have a plan, make a plan. Your research says that for every $1 more you pay your fundraising staff person, you can raise $4.25 more from individual gifts. But if you don’t have a plan, there’s no correlation. This is a warning if you don’t have a plan, you’re not really helping your fundraisers succeed.

HY: In thinking about this, you should definitely pay your top person more. Salary is one clear metric for assessment. People may invest in training, in experiments, but salary is a good way to invest in your organization.

individual-donor-benchmark-report

MT: According to the Individual Donor Benchmark Report, fundraising from monthly donors can mean smaller amounts initially but larger amounts over the course of the year. Do you have any quick advice for nonprofits that want to get more monthly donors?

HY: Yeah, you’ve gotta ask them consistently and personally. It’s like asking someone to go steady. It’s good to ask them in a really personal way, in a letter or email or phonecall. Then think about how you can consistently engage with them over the year. Keep them and upgrade them. Think about who you should target to become monthly donors. As you create that small campaign to recruit monthly donors, think about who are the people who have been giving you $50/$100/$200 over the past few years. Those are your great prospects to potentially become your monthly donors. If they could increase their giving modestly at first, they could increase their giving and go above and beyond with your organization.

MT: I love that. That’s so true. This is something that people in the UK do a lot better than we do in the US. They do more monthly giving and they get a lot more from it. So if you haven’t started a monthly giving program yet, I’d highly encourage you to do it. It will really pay off.

My next question for you is, one of the biggest areas of potential growth for a small nonprofit is online donations, according to the Individual Donor Benchmark Report. What’s one thing a small nonprofit can do to help get more online donations?

It's the act of planning that creates the benefits

HY: One thing they can do is make it really easy to donate online. Being really clear about how people can donate, make your landing page streamlined, make it all on one page. We found that folks that were using a fundraising platform saw greater fundraising results. Using something like Razoo or NetworkforGood got more online donations.

MT: I know that in your report people liked NetworkforGood or Razoo were the ones that people liked.

HY: Right, NetworkforGood helped us get the word out about the survey, so the results are skewed in favor of people that came from them.

MT: Are you planning to continue this research?

HY: YES we definitely are!

MT: What are some new directions you plan to go in this research in the next year?

HY: A couple of things. We’d love to find more folks who want to participate in it. If you have a budget of under 2 million and an individual donor program we’d love to have you participate in it. We’d also like to learn more about retention rates. It has been hard in the past for organizations to report that in the survey. We’d also like to research more about how online gifts come in, is it through email, through your website? Finding about the fundraising plan was totally unexpected but fantastic, and I’m curious about what people include in their fundraising plan, and what their fundraising plan means.Fundraising plan sample

MT: I love that. If people do want to learn more about fundraising plans, here’s a link to a quick and dirty one page fundraising plan that you can use. Thank you so much for the interview today Heather, I really learned a lot about this report. i hope it gets bigger and bigger and more significant data is produced from it.

HY: Thanks for your interest in data, and if you have any questions, contact me at heather@thirdplacestudio.com.

If you now want to make a fundraising plan but don’t know where to begin, check out “Make Your Fundraising Plan for 2016”, a comprehensive 4 week e-course to help you truly succeed in 2016. This is the one thing that makes or breaks your fundraising program, so you know this next decision is critical. Make your plan, and rest easy knowing that your fundraising will work harder for you, all year round!

 

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