It Always Pays to Increase Donor Gift Size

A dollar bill’s value is very different depending on the state where that dollar is being used. That’s the premise of “The Value of a Dollar in Every State,” a 24/7 Wall St. article by Thomas C. Frohlich and Steven M. Peters.

Based on data from the Bureau of Economic Analysis, 24/7 Wall St. calculated the value of a dollar in each state to highlight the relative purchasing power of Americans and the difference between the prices of house, food and services across the U.S.

As stated in the article:

Compared to the national average cost of goods and services, a single dollar goes the furthest in Mississippi, where the cost of living is lowest of any state. A dollar in Mississippi is effectively worth $1.15. By contrast, in Hawaii, the most expensive state, a dollar is worth the least—only $0.86.

Income levels differ far more than costs of living between states. In states with high incomes, a single dollar tends to be worth less because of the often-higher costs of living in those states. In the 15 states where the dollar is worth the least—that is, with the highest costs of living—the median annual household income exceeds the national median of $53,657. In low-income states, by contrast, a single dollar tends to go relatively far. Mississippi, the state where a dollar goes the furthest, has the highest poverty rate and lowest household median income in the nation.

This important information made me wonder about the impact of each contributed dollar by donors in every state. Are charities getting the most bang for their donor-contributed bucks? Because of the variability of the dollar, and the always-increasing need for programs and services by charities, one obvious solution is to stay ahead of the curve by continuing to increase donor gift size.

Alan Sharpe has been studying and providing donor gift-size information to nonprofit professionals for many years. In one particular 2006 study that was updated in 2013, he suggested how to increase the size of donor gifts from fundraising letters:

• Ask for specific amounts.
• Increase the size of smallest suggested donations.
• Have donors circle their desired donation levels.
• Ask based upon each donor’s giving history.
• Mail special appeals to major donors.
• Upgrade donors to cover inflation.
• Reduce your expenses.

In an article called, “How to Upgrade Your Donors,” Joe Garecht tells professionals how to upgrade their donors. He noted that stewardship of donors is important to the process, and encouraged organizations to build fundraising networks to find new donors. He believed all donors should be asked to upgrade their average gift sizes.

According to Garecht, current donors are “low-hanging fruit” for larger gifts. They will upgrade their gifts if they have the following beliefs:

• They believe in the mission of the organization.
• They feel the organization is using their donated money wisely.
• They believe in your fundraising team.
• They are asked to upgrade their giving levels.

Garecht noted you can get donors to upgrade their gifts by acknowledging the most recent gift; showing donors positive outcomes from the most recent gifts; explaining to donors why you need more money; asking your donors to upgrade; and being quiet and letting donors think when soliciting an ask.

As nonprofit professionals, we constantly are asking for dollars. When we do this, we know we are dealing with donors facing changing economic times. They might have unpredictable attitudes, reliance on potential non-decision-makers, shifting institutional priorities, and organizational boards that constantly change in strength and importance, as well as many other things to account for.

In a development world where many variables seem to be out of our control, taking steps to increase donor gift size is one variable we can address and should emphasize in our toolbox of processes. Upgrading donor gift sizes is an excellent way to generate greater revenue for your organization.

As Garecht asked in his article: “Does your organization have an upgrade strategy? Are you actively working with donors to increase gift and pledge sizes?” If not, the time to get started is now.