The nonprofit sector is facing a crisis.
The need for the services provided by nonprofits has increased dramatically in our post-pandemic world. At the same time, organizations face rising costs to deliver those services.
From a fundraising perspective, we see a concerning trend: fewer donors are giving, and studies point to a shrinking donor pool.
With this rising pressure, the impulse of finance departments, boards and CEO’s is to go where the “big money” donors are, namely by focusing efforts on major giving. And indeed, I’m seeing charities cutting investment in direct response in favour of major giving.
As a fellow fundraiser said to me recently, “smaller, regular donors are being increasingly seen as less important.” However, these are the very donors that for decades have proven that they are willing to provide stable, recurring funding to the charities they care about.
Longer-term thinking pays dividends
There is no question that direct mail has become more expensive. Face-to-face and telefundraising have also become more costly in the last few years. However, cutting spending might not take longer-term implications into consideration. Cutting costs for short-term gain, leaves donors, potential donors, and revenue behind. It takes money to make money. We simply cannot cut our way to prosperity. That’s not a sustainable strategy.
The key is to ensure that our fundraising dollars are invested wisely, both for today and for the long term. This means having a strategy and plan that acknowledges the loyalty and reliability of conventional “regular” donors. It means finding cost-efficiencies, maintaining meaningful donor stewardship, and testing additional avenues for solicitation (e.g. using AI and digital). Integrating other tools and channels gives us a better chance of
At the same time, we must be nimble enough to make adjustments in the strategy and plan along the way.
Monthly donors matter more than ever
Many great organizations continue to rely on direct response to bring in stable, unrestricted revenue, year after year. And we know that these donors have a strong aptitude for giving regular, recuring gifts. Monthly gift programs for organizations who choose to invest in them are doing very well. Clients who saw the future possibilities of monthly giving a decade or more ago, now have upwards of 25% or more of their file converted to recurring gifts.
A well-maintained database of direct response donors can also be a place to find intermediate and major donors, and ultimately legacy donors. One of our clients recently received a $50,000 gift in the mail. This was after this same donor previously sent two gifts of $5,000 each. You need to understand your file to make the most of it.
Direct response still works but the paradigm has shifted
Years ago, many would have predicted that direct mail would be dead by now. People thought direct mail would be replaced by digital fundraising. However, the mail remains a proven method of connecting with donors and it’s still the bread and butter of many organizations.
We know from neuroscience that print on paper elicits a stronger emotional reaction than digital. It offers a higher memory recall and better brand awareness and unaided recall and print still garners a higher response rate then digital.
The studies concur:
These studies hold true across all generations.
So, what’s shifted?
Fundraisers can no longer afford to think in terms of siloed channels for giving. We need to think about where our donors live, work and play. Organizations are now starting to see the benefits of Integrating fundraising channels.
We need to be where our donors are—on their phones, answering texts and on social media where they are encouraging each other to support the charities they care about. Donors still read their mail, answer their phones, and use their laptops, tablets, and personal computers. They are being served up ads targeted directly to them. And yes, people with a propensity to donate, still read emails and they see outdoor and indoor display and transit ads.
The more an organization is visible in these spaces with a strong brand and consistent and compelling messaging, the more likely they are to receive a gift when they ask for one.
Simply put, the more you are where your donors and potential donors are, the more donations you will generate, but only if you ask.
Those gifts will not necessarily be given through the same channel in which they received your ask. For example, for one of our clients, the number of donors who give online when they receive a mail solicitation is over 20%. Those online donations would not have come in if they weren’t prompted by the mail communication.
There is so much potential for “average” donors to support your cause
Let me back up. Earlier I mentioned the “shrinking donor pool.” There are in fact fewer donors giving, according to various sources – from government reporting to the Association of Fundraising Professionals Fundraising Effectiveness Project. However, our populations are not shrinking.
Why is it that fewer people are giving?
There is absolutely no reason to think that the “average” person today is any more or less generous than people have been historically. It’s true that hard times may cause people to give less. But typically, gifts of the size we find in annual giving donor files—one-time gifts of $50, $75 or monthly gifts of $15 or $20—have remained relatively recession-proof. People who give at these levels may have a deep understanding of what it’s like to face a challenge and have a strong sense of responsibility to help their fellow citizens.
Why are there fewer donors?
Could it be that we simply haven’t been asking as many people to give to our causes as we used to? For example, in the 1980s and 90s, national charities sent out acquisition mailings in the millions of pieces. But today, many of these same programs have reduced their investment in donor acquisition significantly. And today, if we see fundraising results in the mail decline, is it because we’ve just not been asking enough? Perhaps we are not connecting with as many potential donors as we could be.
So, would I advise nonprofit organizations to mail more direct mail pieces? Likely not.
But here’s what I would suggest…
This is just the tip of the iceberg. I love talking about the future of direct response fundraising. Feel free to reach out and continue the conversation.
As CEO of Stephen Thomas Ltd (ST) Paula Attfield is passionate about helping nonprofit clients raise more money, particularly in the realm of integrated direct response annual giving. Contact her, PaulaA@stephenthomas.ca
