Organizations today rely heavily on donors who make one or more gifts each year either through the mail or online. These donors are often critical to nonprofit success because they can often be used to keep the lights on, pay for support staff, and defray overhead costs. Sometimes we make the mistake of failing to pay enough attention to those donors. In the worst case scenario we ignore them completely. After all, there are donors out there who can make gifts that are five and six-figures. We have finite time on our hands. We need to spend our time cultivating those big donors, right? Well, that is true – but only partially true. We need to also put time and emphasis into stewarding those smaller donors as well. And I mean beyond simply sending them a newsletter. This is why:
Those $25 gifts add up.
In every organization in which I have worked, the donors who typically give $500 and less, in aggregate, gave more than the donors who supported at the $10,000+ level. Obviously those large gifts are exciting and make a significant impact, but in many cases you will find that since there are typically far fewer, their overall benefit is less than the group of “smaller donors.” Remember the donor pyramid – it is smaller at the top. It would be great to develop a donor “water tower.” Out in the country, where we have a lot of water towers, they are usually the same width at the top as they are at the bottom. Wouldn’t it be great to have as many big donors as we have small donors?
Another reason that we need to put the time and emphasis into stewarding small donors is:
In the world of gift planning, it is not uncommon to receive a big gift from someone who has not given more than $50 a year in life.
Just last month I received a letter from a Personal Representative of a deceased donor. He wanted to let us know that they are working on processing the estate, it was kind of a “status update.” Being new to the organization, I wanted to see what I could find out about this donor. Understanding donor attributes and demographics can help us to identify other donors who share similar qualities and who might be inclined to make a gift down the line. As I reviewed the donor’s file in our CRM system, I noted that she normally gave us about $100 a year. She was nowhere near one of our biggest donors, yet we were important enough for her to remember us in her estate plan. This is by no means uncommon. And keep in mind that planned gifts (stock, insurance policies, real estate, trusts, etc.) tend to be significantly higher, on average, compared to your annual fund gifts. Average bequest amounts vary by type of organization, but typically fall within the $10,000 to $100,000 (average) range. Building relationships and good donor research will often help identify giving potential – and past gifts are not necessarily the best indicator.
More donor engagement = More donor support.
In the old days, many donors just wanted to send a gift and they felt as though they had done their part. They trusted that the organization would properly handle the money and that the mission would be accomplished. However, things have changed. With the Internet, it is much easier for donors to get information about organizations whom they support. Also, in this age of 24 hour worldwide news, when an organization fails to live up to its responsibilities the story is disseminated far and wide very quickly, giving all of us a black eye. For these reasons and others many donors want to be involved. They do research on the organization’s website and on sites such as Charity Navigator. They meet with staff of the organization. They volunteer. This is good news, however. The donor who is connected to the organization beyond simply sending a check is a donor who will often give more, give more often, and remain engaged with that organization for a longer period of time. Look for ways to get donors engaged with your nonprofit. Perhaps it is something as traditional as sitting on a board or committee. Another way could be asking donors for their opinion on a potential project or program – sharing their expertise. It could be working with you as a direct service volunteer. Be creative, don’t be constrained by the way “everyone else is doing it.” Sometimes it is good to be different.
The last reason for stewarding small donors is that their giving capacity is sometimes far more.
Most of the $10,000 annual donors that I know started off as $50 donors. The $100,000 donors often started as $5,000 donors. Sometimes we can be so grateful and eager to accept a gift that we “leave money on the table,” so to speak. This is an area where good donor research practices will benefit the organization. Keep in mind that just because they give you $50 a year does not mean that that is all that they can afford to give. Often it means that this is the amount that they give to organizations whom they believe in, but with whom they do not have a real relationship. And if you continue to simply send them an annual fund request in the mail they are not as likely to develop their true potential as a donor.
I know as well as anyone that we cannot give personalized, individual attention to every single donor in our file. The cost of doing that would far exceed the return. There are some donors who are only able to give $50 a year no matter what we do, and that is OK. They are important and their consistent gift makes a big difference. But there are those who currently give $50 who could give $5,000, and by identifying them and engaging them our organizations can make much more progress towards accomplishing our various missions.
Have a great week,
KLM
