Year-End Giving: Renewing or Refreshing?
The season is upon us. ’Tis the season for year-end giving. Year-end giving — those gifts received in the last six weeks of the calendar year — account for up to 40 percent of what many charitable organizations receive during the entire year. For some nonprofits, this period is truly a make-or-break window for their fundraising.
As you reach out to renew those friendships with loyal donors to your cause with year-end appeals, the first question you should ask yourself is how these investors to your organization came to be the loyal, dependable friends that they are? You’ll discover that sustaining and expanding the flow of year-end investments is much more about what you did last year than anything you will do in the next few weeks.
Acquisition — the first step
Sustainable, scalable fundraising efforts depend upon both building and renewing your donor constituency. Principle 7 of "The Eight Principles of Sustainable Fundraising" is “Renew and Refresh.” So which is more important? Neither — each effort is critical to the success of the other. Acquiring new donors and renewing existing investors are interdependent tasks. Certainly you have to acquire donors before you can renew them, but once you’re off and running a fundraising program that sustains itself, it requires both.
Sustainability of your fundraising program comes from acquiring new donors. No matter how excellent you are at building and maintaining relationships, some donors will go away. They lose interest. Their priorities change. Their financial situations change. They pass on. As in any fundraising activity, your efforts in donor acquisition must be purposeful, focused and consistent. Right now, if I asked you to review your program of donor acquisition, could you? Could you point to an effort that is designed, executed and evaluated specifically as an activity to bring new donors into your fold? Could you give me unambiguous detail regarding its success?
Your donor acquisition program is shaped by the nature of your cause or charity. Do you have members? Is a single, passionate idea the primary driving force behind your mission? Do you have grateful clients — individuals whose lives your organization has changed for the better? Do you have “alumni” in whatever form? What are the core characteristics of your true believers? Understanding the character and parameters of your organization and then applying this knowledge in a strategic way will yield the right program for you.
Renewal — scalability and the joy of friendship
Acquiring new donors on a continual basis is the critical activity in achieving sustainability for your fundraising program. To make your organization’s fundraising efforts scale, however, you must devote concentrated, ongoing effort to renewing the donors you already have. When donors figuratively (or occasionally, literally) walk through the door of your organization for the first time, it’s a sure bet that their first investment in your organization will be a nominal one. Nominal for them, that is.
As you renew a donor and carefully build the relationship with that person, the donor’s level of investment will rise. The goal of a successful donor renewal program is to move the relationship with that investor to the point where the investor’s gifts to your organization are commensurate with his or her financial capacity to give. As a rule of thumb, a “commensurate” gift will be made somewhere between the third and fifth investment a donor makes.
When you consider that gifts come to your organization with a disproportionate level being contributed by a relative few (generally 80 percent of what you raise comes from 20 percent of your supporters), it’s easy to see that renewing your donors, and renewing them consistently — and at a high level — is critical to achieving scale in your fundraising.
The very best benefit of donor renewal? It’s the friendships that you make along the way. As I often say, fundraising is about people, not money.
Making it work — it takes both
At this point, I’m sure it’s fairly clear that acquiring new donors and renewing most of your current investors are both important — even critical activities. Hopefully, you’re also convinced that these two activities are inseparable and interdependent with one another. You may even be saying, “Enough, already. This is common sense!” And it is — in principle. In practice, however, such an awareness is virtually absent from the fundraising landscape. Not to put too fine a point on it, but how do your efforts really stack up?
If you think I am exaggerating, consider the recent fundraising effectiveness study by the Association of Fundraising Professionals. As part of the ongoing research on the productivity and overall effectiveness of fundraising programs across the charitable spectrum, the AFP report details the fact that despite gains in giving due to donor acquisition, virtually all of those gains are erased due to poor or nonexistent donor retention efforts.
So, when you’re frantically rushing about making year-end appeals for that all-important 40 percent, pause to recall the question posed in the first verse of Auld Lang Syne: “Should auld acquaintance be forgot, And never brought to mind?” Answer with a resounding, “No!” and repeat the chorus: “For auld lang syne, my dear, For auld lang syne. We'll take a cup o' kindness yet, For auld lang syne.” In doing so, you’ll have both plenty of friends and plenty of investments. Cheers!
©2012 M E Grace & Associates. Used by permission.
An internationally recognized philanthropy and fundraising thought leader, Larry C. Johnson trains the staff and volunteers of worthy causes to achieve real impact through the creation of reliable, growing revenue streams. He emphasizes principles before methods as the key to long-lasting success. He stresses the simple, the practical and the joyful.
Larry is the founder of The Eight Principles, the premier brand for educational products and services in relational fundraising and philanthropy. The Eight Principles provides digital education, live workshops and structured coaching to nonprofit organizations.
Author of the award-winning book, "The Eight Principles of Sustainable Fundraising," AFP named Larry Outstanding Development Executive in 2010. The Wall Street Business Network ranks him in the Top 15 Fundraising Consultants in the USA. Larry is a graduate of Yale University. Larry speaks widely and serves on numerous nonprofit and corporate boards, including The Philanthropy Council of The Carter Center, the philanthropy of the 39th President of the U.S.