5 Steps for Effective Donor Cultivation

Recently, a Talisma Fundraising poll found that nonprofits have seen increases in donor activity and fundraisers are optimistic about 2011.

The poll, which surveyed 383 organizations, was conducted by Talisma parent company Campus Management as part of a FundRaising Success webinar, “Best Practices for Cultivating Major Donors” (available on-demand). Of the 383 nonprofits polled, 77.8 percent reported seeing increased donor activity over the past six months, 47.8 percent reporting “moderate” to “significant” increases. When asked what kind of donor activity these organization expect in 2011, 94.1 percent believe there will be an increase.

“The recession and the [Bernie] Madoff scandal had a huge impact on the nonprofit community — so many of the folks invested with him either had very high philanthropic profiles or were charities themselves, foundations that had stock investments,” says Dan Germain, director of Talisma North America. “All that took a huge hit on the nonprofit industry as a whole. But the economy is bouncing back a bit. People are seeing improvement in jobs. … People are feeling positive about the economic recovery that seems to be slowly taking place.”

The key to capitalizing on this cautious optimism is to focus on efficiency and transparency, according to Germain.

“Difficult economic times are really tough for nonprofits,” he says. “They usually get a double-whammy: They get less money coming and oftentimes have increased demand for their services. So in those kinds of times nonprofits have to get more efficient.

“As they start to recover now, nonprofits want to retain efficiencies that they’ve built in the hard times,” Germain adds. “Donors like to see where their dollars are going. They like to make sure that when they’re making contributions, monies are going to the primary cause of the nonprofit they’re giving to. They’re holding nonprofits accountable more and more.”

That means cultivating donors requires more care than ever. Here, Germain provides five steps to efficient and effective donor cultivation, as well as ways fundraisers can capitalize on the newfound optimism in the sector even in the midst of budget cuts.

Identification
The identification of donors is the first step in donor cultivation, Germain says. You must understand who donors are in terms of generation, personal attributes, how they like to communicate and what their capacities to give are.

“You might start to identify someone who may be young in terms of age and career and may not be able to afford to give a lot, however might be very willing to volunteer,” Germain says. “So identify what is this particular individual’s capacity to give — whether it’s financial, whether it’s in time commitment, whether it’s another mechanism for contributing to the organization.

“Identify your donors. Who are the ones that are most likely to become major donors? Who has the giving capacity as well as the interest in your cause? Use the data to quickly identify if this is someone who has great giving potential, and start to cultivate them appropriately,” he adds.

Cultivation
Once you’ve identified donors and understand how to categorize them and how best to communicate with them, make sure you send them information that’s pertinent to their interests, Germain says, for proper cultivation.

“If I’ve told you that I’m interested in investing in water wells in Africa, then don’t send me information about saving whales because that’s not what I’m interested in,” Germain says. “Communicating effectively with pertinent messages based on what you’ve learned is key. Not only is it efficient, but it communicates efficiency to the donor, who will feel that their money is well-spent — as opposed to their money being squandered by sending information that’s not pertinent to that donor’s particular interests.”

Evaluation
Analyze when, where, how and how often you communicate with donors.

“Let donors tell you,” Germain says. “They might be very interested in subscribing to your Twitter feed and not receiving lots of mail at their homes. Give them a choice. Let donors tell you how to communicate with them so you can do so effectively. The more involvement they have, the more they feel that you’re being responsive to them as an organization, the more they’re likely to continue to support you.”

Germain cautions that it may be different for different donors. More and more people are giving online and doing research about nonprofits online, “but overall the giving that organizations are getting from online transactions is really still a pretty small percentage — although it’s a rapidly growing percentage of their gifts,” he says. “So you have to balance all these media. You can’t forget that older donors may not be on Facebook, may not be on Twitter. But certainly as a charity you have to be looking at the up-and-coming generations, and you have to go where they are.”

Involvement
“In terms of involvement, not all donors can contribute significantly financially, but many of them will be glad to contribute their time,” Germain says.

Obviously, it’s wonderful if you can get both donors’ time and money, but sometimes people can do more on one side than they can on the other.

Remember, “any involvement is good. It keeps people engaged, and as they mature, their involvement might change,” Germain says.

For instance, donors may start to involve their friends or family in the organizations they support. They may mature from volunteers to donors to both. And as they mature and pass along that passion to those around them, that passion is communicated from generation to generation.

“It’s a great way for organizations to sustain themselves long term,” Germain adds.

Stewardship
It’s vital to show donors that their gifts are appreciated and truly make a difference.

“Stewardship is all about thanking, recognizing and showing donors that they’re appreciated, and communicating that effectively and efficiently so donors don’t feel that their money is being squandered on trinkets, for example, as opposed to going to the cause,” Germain says.

Understand your donors intimately so they can be thanked appropriately. And always make sure to thank them.

“We're really seeing the optimism turning into nonprofits seizing the moment. We’re seeing a lot of projects that got put on hold for the last couple of years being invested in again. Boards are understanding that this is the time to get back in the game and start to grow these organizations,” Germain says.

“People, especially American people, are very compassionate. So as school funding and funding in so many sectors are impacted by budgets — whether they’re at the state, local or national level — donors will step in and dig deeper in their pockets,” he adds. “Effective nonprofits are leveraging those communications mechanisms right now trying to capitalize, if you will, on the opportunity and get ahead of any sort of budget shortfalls for themselves to be ale to continue to support their causes.”