Donor Relationship Management

As the modeling-versus-RFM debate goes on, proponents of each donor-management approach continue to champion their preferred method. Weighing in recently on the Recency-Frequency-Monetary Analysis side was Arthur Middleton Hughes, vice president of KnowledgeBase Marketing. In his session at the 2005 Annual Washington Nonprofit Conference earlier this month, Hughes was exuberant in his support, calling RFM “the most powerful segmentation method for predicting response,” adding that it’s “better than any segmentation model.” But despite his accolades -- some of which might be considered fightin’ words in modeling country -- Hughes also warned that RFM isn’t something organizations should use all the time. Warning session attendees

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.

An amazing thing happened when we decided to give our mid-level donors power — revenue soared. And so did gift frequency and donor loyalty.

It all began when we started to treat donors like the “owners” of CARE they truly are. We gave them choices and direct access to senior staff at CARE. We honored their wishes. The results have been extremely gratifying.

With a languishing donor-acquisition program and shrinking applicable-list universes, Catholic Relief Services prudently mined its own data in search of answers.

And for good reason.

The 61-year-old international-relief and development agency of the U.S. Catholic community relies heavily on the private sector for donations; in 2003, CRS netted $484 million, 20 percent of which came from private-cash contributions. What’s more, the organization’s direct-response fundraising program accounts for roughly 50 percent of all donations from private contributors.

Popularly defined as those individuals born between the mid-1960s and late 1970s, Generation X is the most maligned and enigmatic generational cohort of the 20th century. Often characterized as aloof, cynical and fiercely independent, Gen-Xers have been largely overlooked by charitable organizations as an active philanthropic-giving group.

Even now, as the generation enters its prime employment and household-formation years, targeted appeals tend to place more emphasis on Generation Y, or the “echo boomers” — those technologically savvy individuals born after 1980 — and the baby boomers themselves, for their obvious size and spending power.

One of the many arenas where online giving has established a foothold is higher education, maintains Peter B. Wylie, a data analyst, consultant and author of the book “Data Mining for Fund Raisers: How to Use Simple Statistics to Find Gold in Your Donor Database (Even if You Hate Statistics).” (See the January/February issue of FundRaising Success magazine for a preview.) “Most colleges and universities now have sophisticated Web sites, and many of them have made it fairly easy for alums and others to make electronic donations,” Wylie says. “But who are these donors? How prevalent are they? How do they differ from the

Eight hundred million. It’s a big number and a lot of money. But if you want to grasp the real magnitude of it, give that number a human face.

According to statistics released by the United Nations, 800 million represents the number of people worldwide who are chronically hungry.

Simply put, people who are comfortable shopping and paying bills via the Internet are more likely to donate money online to your nonprofit organization, says Michael Johnston, president of Toronto-based nonprofit consultancy Hewitt and Johnston and author of “The Fund Raiser’s Guide to the Internet” and “The Nonprofit Guide to the Internet.”

There are many ways to measure the performance of a donor program. Gross and net revenue, the number of active donors and their corresponding lifetime values all are critical. But the rise of donor attrition is one insidious statistic that, if ignored, will rob a new donor program of needed growth and put a mature program on a plateau.

Newsletters, especially of the online variety, allow fundraisers to build and maintain relationships with stakeholders long before they even think about anteing up the greenbacks. Donors and prospects alike can now get engaged more often, and with more personal relevance — making it easier and more cost effective for nonprofits to forge links with individuals primed for giving.