The Business of Fundraising

The numbers are self evident. More Americans these days are supporting nonprofit causes both financially and with their time than ever before. We are a multi-billion dollar industry that forms a vital component of our nation’s strength. And survey after survey shows that we are the most generous nation on Earth.

Yet despite the importance of the nonprofit sector, I fear that there continues to be a lack of business sense in what we do. Too often I’ve heard peers say that they’re expecting a gift because the donor owes it to the organization, or that the mission of the nonprofit is so important that donors will give without being asked. Despite the fact that we are involved in a nonprofit industry, it is still a business — and our business is selling our cause to donors and potential supporters.

With this in mind, I always take time at the beginning of each year to reflect on the previous year and look at lessons learned.

Lesson 1: Don’t underestimate the intelligence of your donors.
The typical American is being inundated with more messages today than ever before. And often what they are hearing from the media about nonprofits is not positive: misuse of funds, scams, donor intent being ignored and worse. Donors are asking more questions about how their gifts are being used and are more cautious about making gifts. They are being turned off by the “gift is due” or “account is lapsed” treatment they are receiving from many of the organizations they choose to support.

To differentiate themselves in this very competitive market for charitable gifts, organizations have to be proactive in communicating with supporters. Tell them exactly how you are using their gifts. Be as open and honest about your mission and accomplishments as you can. Your supporters aren’t just a source of funds, but rather they are a committed partner of yours and should be treated as such. If you insult their intelligence by treating them otherwise, they will abandon you.

Lesson 2: Don’t short change the long-term value of your donors.
More and more we are seeing donors make small gifts — starter gifts, if you will — to test an organization before making a larger commitment. Obviously, organizations pay more attention to a $10,000 donor than a $100 donor, but think of ways you can improve communication with all of your donors.

Of all of our major donors — what we define as those who give more than $10,000 — 60 percent started out in the direct-marketing program, many with an initial gift of less than $50. The majority of our bequests are from donors who make modest gifts year after year. You have to give all of your supporters the opportunity to raise their hands and say, “Pay attention to me.” There is a lot of potential for increased giving among those who already support you.

Lesson 3: Don’t forget to thank your donors.
Believe it or not, I had a peer in another organization tell me last year that it doesn’t send thank-you letters to its supporters because it’s a waste of money. I was stunned. Don’t underestimate the power of a thank-you letter. It shows you care. And think beyond that specific gift and letter.

A thank you shouldn’t just be about the gift. It should be telling a story of success that the gift made possible. And it can take many forms, including a hand-written note from a person affected by the gift, a newsletter that doesn’t ask for a contribution or a phone-call thanking first-time givers for joining. Each of these forms of communication is a form of thank you and, if done right, will more than recoup the time and cost.

At the same time, do you ask for another gift in the thank you or in your newsletter? It can be a source of income, but how does that further your relationship with that donor if she perceives you as always having your hand out? I can’t stress enough: Thank your supporters promptly, regularly and often, and don’t always be asking for another gift.

Lesson 4: Don’t forget why your donors support your work.
Belief in your cause always should be the No. 1 reason — although I can’t tell you how many times I ask that question of our peers and their response is, “Because we ask.”

But there is more to the equation than just belief. How often do you ask your supporters why they are supporting you? How often do you personally talk with a donor? Do you regularly perform market research? It’s very easy to get caught up in our day-to-day responsibilities and lose touch with our donors. A typical donor doesn’t necessarily care about the details of our work; they are busy enough in their own lives. The gift is a sign that they want to be part of something bigger, something that is a success or makes a difference. Take the time to talk to them and tell them your story, and you might be surprised by why they give.

During a building campaign, we surveyed our donors to ask why they would support the campaign and the answer we assumed would be the No. 1 reason was, in fact, ranked third. As a result, we shifted the whole focus of the campaign.

In the end, a nonprofit is a business. And while we’re not selling Frosted Flakes, we are selling something. The more we focus on our donors as valued customers, the more success we will have in the future.

Carsten Walter is the director of membership programs at The Heritage Foundation in Washington, D.C.