I was having dinner with a donor recently when he lamented to me his frustration at only being contacted by organizations when they want to ask for money. Fortunately I was not there to make an ask at that time, but his feelings resonated with me. The relationship between donor and nonprofit organization is just that – a relationship. Or at least that is how it is meant to be.

scrooge handoutHave you ever had a relative who only called when they needed money? I have a cousin like this. I will not use any names in order to protect the innocent. No one in my family hears from this particular cousin unless there is some calamity. There is no “hey, I just wanted to check in to see how you are,” or “let’s get together and have coffee so that we can catch up.” But when there is a big problem the phone starts to ring. With the advent of Caller ID it creates some choices about how to react. Let’s discuss that issue another day.

When we do a good job of maintaining good relationships with donors there are some great things that will often happen as a result. Let me be clear, I am not suggesting that we only do the right thing because it will benefit us. Doing right is its own reward. However, sometimes we can get rewarded over and above simply by doing things that we ought to do anyway.

One benefit that good stewardship often brings is increased donations.

It is common for a donor to give to 7-9 organizations. Often times these organizations are different in their missions, and they represent the diversity of interests that donors have. For example, a donor might give to a homeless shelter,Church their alma mater, their church, a health organization, and the library foundation – among others. When the economy is bad or the donor has a change in their financial circumstances, they often have to prioritize that list and eliminate some organizations temporarily (if they do not hear from the organization within a certain period of time, it usually becomes permanent). People give to people. If the donor has a personal relationship with staff at “Organization A”, but “Organization B” merely cashes the donor’s checks and sends a receipt then Organization A is less likely to be removed from the list. The relationship will make the donor feel like an important part of the organization and the donor will do all they can to maintain their support.

Another benefit is that a relationship will make it easier to overlook mistakes.

Let’s be honest, we have all made mistakes. Perhaps we told a donor that we would call them back tomorrow with a piece of information, then the day gets crazy and we don’t get around to doing it. Or we misspell a donor’s name in the Annual Report – this of course tends to be a donor who has given a LOT of money and who actually reads your Annual Report. As organizations and as individuals we make mistakes. I have found that having a good relationship can be a huge benefit because people are often willing to overlook these transgressions.

I once had a situation where a foundation made a schedule change to its annual grants calendar. They published the change on their web site but we did not know about it. As a result, we missed the deadline to apply for an annual grant. In this case the president of the foundation called and said, “Hey, you missed this deadline…” We apologized profusely and submitted the application the next day – and it was funded. Having an ongoing relationship with this funder, beyond simply sending proposals and reports, made a real difference.

Lastly, good stewardship extends the Life Time Value of a donor.

1_HoleInTheBucketHave you ever worked at an organization where they are always prospecting for new donors yet their conversion rate was 10% for second gifts within 18 months? This is an organization that does not understand the importance of Life Time Value (LTV). As an example, let’s say that you have a bucket and you need to fill it with water. This is pretty simple if you have a water hose, right? But what if the bucket has a big hole in it? It is possible to fill a bucket that has a hole if your water pressure is high enough, but wouldn’t it be more cost-effective to fix the hole first?

Acquiring new donors is an expensive proposition. In light of that, you need to keep them for as long as possible. Good stewardship will help with this because donors that have a good relationship and are engaged with your organization will continue to give, and that increases their LTV. Rather than spending money to acquire new donors you can repurpose those dollars to better support your mission.
Successful philanthropy is all about relationships. And just like we put effort into relationships with our children, our spouse, or our friends we must be intentional about developing and maintaining relationships with donors. Good stewardship of these relationships will result in more dollars raised, less cost, and a healthier net revenue to support the mission of your organization.

Have a great week,

KLM

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