The Fundraising Landscape, Circa 2005

You might be thinking that the new year will just bring more of the usual fundraising grind, slogging forward step by step, scratching for every dollar.Well, I have good news: It doesn’t have to be that way.

In fact, the smartest fundraisers are paying attention to what promises to be next in breakthrough fundraising trends, strategies and tactics that will revolutionize the way funds are raised in the years ahead. So get on board if you want to ride the coming surge of fundraising effectiveness.

Diversify your channels
Direct mail has been the workhorse of donor acquisition for many, many years, but other channels can work — and have worked — amazingly well, too. For starters, I’ve seen newspaper inserts and display advertisements work very well for local and national organizations.

Cable- and utility-invoice inserts also deliver a low-cost new donor. What’s more, the Internet and direct-response radio and television have emerged as important acquisition channels for some nonprofit groups.

The key strategic question to ask here is how best to diversify your acquisition sources so you are not so dependent on just one channel, such as direct mail. Acquiring new donors is like managing your stock portfolio: Diversification is crucial to minimizing risk and maximizing return on investment.

Consider lifting your list-exchange cap
Many nonprofits exchange donor names and addresses with other organizations as part of their direct mail acquisition campaigns. This extremely common practice leads to lower acquisition costs and helps build donor files with like-minded charitable givers. However, almost every organization involved in this practice limits the exchange to donors who have given less than $100.

There have been some recent nudges in the industry to get organizations to increase their exchange cap to as much as $999.99. Why? Because exchanging these more valuable donors will lead to a greater pool of younger donors who tend to give much larger first-time gifts.

Another strategic question to ask at the beginning of this new year is whether you want to acquire more valuable donors by lifting your exchange cap. When you think about it, there’s really no reason not to. As one consultant told me recently, “this could be the million-dollar idea for 2005.”

Bond with new donors
The biggest mistake nonprofits make is failing to pay close attention to new donors who have just given their first gift. Here’s a proven fact: New donors who fail to give a second gift within two to four months of their first gift likely will never give again.

To put it more positively, new donors who give a second gift within two to four months of their first gift are three or four times more likely to continue giving long into the future.

Acquiring new donors costs a lot of money, takes enormous commitment and can lead to contentious internal debates over allocation of resources. To win these debates, you must produce a solid ROI on your expenditures — usually within the first couple of years of acquisition. Failure to keep your new donors active will plunge you deeper and deeper into financial trouble.

The key strategic question, then, is how can you quickly obtain a second gift from new donors? The answer is all about opportunity.

A new donor should immediately receive a gift-acknowledgement package that affirms her decision to give to your organization, reintroduces her to your cause and gives her an opportunity to give again. Roughly two weeks later, she should receive a special-appeal package that reconnects her to the original acquisition message and asks her to give again.

Depending on her original gift size, you might even want to place a special phone call to welcome her to your family of supporters and ask for another gift. Remember, the goal of these efforts is to bond your new donors with your organization so they will consider giving additional gifts.

Grant donors choice and control
Donors have become more discerning, particular and demanding. They want choice and control over their philanthropic relationships. This is especially true of donors under 60 years of age.

Think about it. These individuals are more engaged, self-aware and self-motivated, and they bring the same high expectations they have fine-tuned in the consumer marketplace to their charitable giving. They expect quality service and quality products. They want to call the shots, make their own decisions. They expect to have a choice.

Strategically, the most successful nonprofits will grant donors choice and control. They will allow them to set their own communication preferences and choose to opt in or opt out of direct mail, telemarketing, e-mail or other contact programs.

Tap into the ‘middle’ gold mine
Many organizations run effective fundraising campaigns for general- and major-donor audiences, but they neglect the potential gold mine hidden between these two groups.

Mid- and upper-level donors — those individuals who generally give between $500 and $9,999 a year — effectively can be cultivated to give much more.

Tactics that work with this group include thank-you telephone calls and specialized direct mail appeals, or affirmation mailings, that tell the donor how his gifts are being used.

Some organizations even assign personal representatives to these valued donors. The donor who wants — and expects — choice and control now has his own direct contact with the organization to which he entrusts his dollars.

Other organizations have granted involvement opportunities, allowing donors to participate in dial-in conference calls with executive leaders, travel to project sites, gather together for informal conversations and provide opinions and ideas.

As we watch the interests, motivations and demands of donors evolve, a good strategic move would be to more precisely target mid- and upper-level donors, give them choice and control, and increase their involvement opportunities.

Offer a ‘money-back’ guarantee
Do you have enough confidence in the quality of your work to offer donors a money-back guarantee?

Marshall Burke, vice president of private support for CARE, one of the country’s leading major-gift fundraisers, believes that you can’t really be effective as a fundraiser if you aren’t passionate about your cause. Is your passion for your organization’s work strong enough that you would promise to refund the donor’s gift if he isn’t wholly satisfied?

I know, this may sound counterintuitive. But, strategically, why should your donor’s experience with you be any different than his experience with Nordstrom? Or Starbucks? Or Lands’ End?

Few nonprofits have tried offering a money-back guarantee. But I believe the tactic holds great promise. More discerning donors would flock to charities that demonstrate this kind of unwavering confidence in their mission.

Adapt to changing times
This roundup of new trends, strategies and tactics could go on and on. We’ve only skimmed the surface. But fundraising is changing rapidly. It’s changing because donors are changing. Your strategies and tactics also must change in order to effectively communicate with — and motivate — these new donors. Those of us who can adapt to take advantage of this evolution will reap the benefits.

Timothy Burgess is cofounder of the Domain Group, an international direct marketing firm serving nonprofit organizations in North America and Europe. A 27-year fundraising veteran, Burgess serves on the advisory council and ethics committee of the Direct Marketing Association’s Nonprofit Federation. He can be reached at 206.834.1480 or via e-mail at tim.burgess@thedomaingroup.com.