Wakeup Call to Charities

by Lee Hoffman

Chronicle article

In the aftermath of the recession (if it is the aftermath), The Chronicle of Philanthropy reports nonprofits are shifting their fundraising focus from chasing new donors to building loyalty [emphasis added]. And the reasons are clear. The article states, “Such efforts are needed, charities say, because the bad economy and slow recovery have shown that it was a mistake to simply rely on big donors or new supporters; getting repeat gifts also matters for the long-term bottom line.”

The key findings reported in the article were:

• In 2012 only 39% of donors gave the following year. Down from 46% in 2005.
• The share of first-time donors who gave a follow-up donation declined from a median of more than 34 percent in 2003 to 27 percent 10 years later.

Chuck Longfield, chief scientist at Blackbaud was quoted as stating, “but whether the rates are in the mid-30s or mid-20s, it just doesn’t make any sense to spend so much time and energy on acquiring new donors and then hardly any on keeping them.”

In the article several experts said, “Nonprofits are missing what’s known as the lifetime value of a donor who gives, sometimes in ever-higher amounts, year after year. Annual revenues are taking a hit, too.”

Yes, the experts are right, but let’s add to this planned gifts, which are the result of a taxable event during life or a bequest.

What the article did not say that is so obvious

What if we lived in a world where nonprofits, and government for that matter, planned for the future, understood that they could not rely on future outcomes being the same as the here and now. Their approach to fundraising would be more balanced. Attract new donors, treat current donors well (loyalty), market planned gifts to their aging donors, put some back for tomorrow (endowment).

The reduction of planned giving budgets and efforts over the last ten years may have been a fatal mistake for many. It takes time for any fundraising effort to grow and reach maturity. And then continued effort when maturity is reached. It’s a continuous circle of balanced marketing, yes, marketing.

Going back to the shifting of focus to building loyalty being reported in the article, there is no donor who is more loyal than one who makes a planned gift. Why did planned giving fall to the wayside? In my mind, a rhetorical question if there ever was one. It’s obvious from the article. The attraction of current dollars. For an individual, it’s like going through life thinking planning for retirement is not important. Retirement comes, and so do the ups and downs of the economy and contributions. It’s a balancing act.

Nonprofits who chose to work with allied professionals to leverage their planned gift marketing will increase their chances for success through larger current and future (deferred) gifts. They are adding another layer to the marketing network. They have an advantage.

What do you think? Fact, fiction, somewhere in between? Leave me a comment below or email me personally at editor@pgdc.com.