More or better: Which donor strategy is preferred?

More or better: Which donor strategy is preferred?

Looking at the charity sector at the macro level, statistics are reassuring.  Giving has been recovering since the financial crisis of 2008.

Screen Shot 2013-11-12 at 11.34.40 AMThis past summer, sources reported that year-over-year growth in charitable giving for 2012 continued at a steady pace of 3.5%.  The largest sectors receiving donations continue to be religious institutions (32%), education (13%) and social services (12%).  Online giving remains a relatively small part of the total at $316B, yet it also continues to outpace all giving (up anywhere from 11% to 17%, depending on the source and sector).

None of this data really surprises us, does it?  But at the micro level, for the average nonprofit, it doesn’t really help either.

Regardless of the big picture, the challenge is simple for the typical director at the average nonprofit.  You need to raise more money than last year while also improving donor retention and finding new donors … and a 3.5% increase in donations won’t be enough.  Modest shifts in giving trends won’t help you reach your organization’s goals.

So, how do you raise more money?

You’ve got limited resources.  Do you try “new fundraising ideas”? (Google those three words and you can read for hours.)  Will new technology help? (Isn’t there always some new-fangled technology solution out there?)

Where do you focus?  Here’s a novel idea – let’s start with your data.

More or better?

As part of any fundraising strategy, nonprofits need to look at their underlying data, and focus on their data management plan.  Whether you decide to add a new type of event, or change your messaging for a direct appeal, or start a new giving campaign, it is critical to understand the state of your data.  And with that data quality assessment comes an age-old question:  should we add more prospects to our outreach efforts, or should we get to know our existing donors better in order to increase their giving?

It’s a data question, really … quantity versus quality … more or better?

Once you think about the problem in those simple terms, you realize that we could write a book on the subject, with lots of ideas, recommendations, annecdotes.  This is a blog post.  At Third Sector Labs, “more or better” gets to the heart of many (most?) of our client engagements.  We will be posting more on this subject, and soon you will be able to follow us via More or Better webinars and YouTube shorts.  For today, let’s review some options here.

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What are your options?

More:  three technologies to think about that will help you find more donors.

Websites – the basics. Are you capturing the lead that’s knocking on your door? We see this over and over. A charity wants help finding new donors, but their website isn’t optimized to capture visitors. Use your website CMS to invite visitors into the site. Create CTAs (calls to action) to encourage involvement. Make it interesting, but focus on utility … the user’s experience.  Make it easy.

Social media – According to The Pew Research Center, 72% of online Americans use social media.  Will they bump into you or your organization?  LinkedIn, Facebook, Twitter, Tumblr, Instagram, Pinterest, NING, Classmates. Do you need a presence on all major social media platforms?  Probably not.  Engage with the social media where your donors and potential donors are ‘hanging out’, having conversations and advancing causes of interest.
• Do you know where your donors ‘hang out’?  It’s time to find out.
• Do you know what a target donor profile looks like for your nonprofit?  Your data can tell you.
• Need help managing multiple social media platforms?  There’s technology for that too.
Just remember, whatever decisions you make regarding social media, make sure that your data strategy is mapped to your marketing and communications strategy.

Donor lists – it’s a brave new world.  Years ago, buying a donor list was a shot in the dark.  You often purchased little more than a list of names and addresses.  Big data has changed this path to donor acquisition.  If you want to acquire a list of potential donors, make sure you are getting a complete picture of each donor – name, address, phone, email, alma mater, employer, interests and other affinities, and donations to like charities.  Better yet, profile your donors first, so you can make a more focused request of the data provider.  If you can’t get most or all of this data from a list provider, then you don’t want the list.  The more you know about the potential donor, the better your chances of securing a gift (more on knowing your donor below).  You also want the data in an electronic format (csv file is best).  Be sure to check any limitations that restrict your use of the data.

Better:  three techniques to know your donors better.

CRM – the capacity to know.  What do you want to know about your donors that will help you understand them better?  And just as importantly, does your donor management or CRM software enable you to track and use this information?  For example, a nonprofit hospital would want to know if potential donors or their families had been treated at the hospital.  Any charity should want to know if their donors’ employers offer matching gift programs.  You probably have three or four means of contacting your donors – do you track which your donor prefers?

Communication – getting to know.  Want to know more about someone?  Just ask.  Sounds basic, but it’s often overlooked.  We have more technology-based tools available to help us than many people realize.  For example, how many of the following have you worked into your communications strategy:  direct mail, email, e-newsletters, surveys and polls, Facebook, Twitter, blogging.  You don’t want to direct all of them at all donors.  As noted above, you want to understand how your donor wants to be reached, and then use the preferred medium.

And just as important, is your communications strategy talking at the donor or with the donor?  Are you just telling your donors about your organization, or are you telling them that you’d like to get to know them better?  Again, your technology tools should help you with the return loop in communication – you should store feedback aggregate it, and learn from it.

Discovery – the depth of knowing.  The better you know your prospective donor, the better your chances of establishing a relationship, obtaining a gift, and then making a successful larger ask in the future.  This is where analysis comes in.  Some CRM tools will run standard reports that provide high level analysis.  Custom databases can be queried.  And for the organization dedicated to discovery, there are affordable analytics software systems that can tell you so much more about your donors and prospects.  (We prefer online, Software as a Service analytics, but that’s another post.)  You will need a good data cleansing, and possible some data appending before you engage analytics.  Understanding your donors’ backgrounds, relationships, interests and affinities is a clear path to fundraising success.

Quantity versus quality

Back to the original question.  You have limited time, money, and resources.  Should your donor strategy focus on finding more potential donors or getting to know your donors better in order to grow those relationships?

The correct answer is … both!

But you may not have the time or resources to attempt both right away.  So develop a plan.  Understanding the available technologies and techniques will help you plan, budget, and prioritize.

About Gary Carr

Gary is the founder and president of Third Sector Labs. With more than 20 years of experience delivering software and data solutions to a wide variety of clients, Gary turned his attention to the overwhelming problem of data. Third Sector Labs is committed to making sense of data for the nonprofit industry.

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