Strengthening Donor Relationships in Uncertain Times
By Jack Doyle - President, Amergent

If you have been in the Development business for a long time, you've experienced an economic downturn, a weak job market, low consumer confidence and U.S. military action at different points in your career. But you are experiencing all of these things at the same time right now.

It's a challenge to get and keep your donors' attention and support.

You're being asked to cut back expenses in every area because senior management and/or the Board wants to bring down costs in anticipation of dropping revenues. The pressure to tie up loose ends in the short term is intense. Very little discussion is taking place about planning for the financial stability of the organization over the long term.

So let's take a few minutes to review how you got to this moment in time with your donors and what strategies might be considered to put yourself in a stronger position with them so your organization can prepare for better times.

Donors want to help you. You inspire them to support you with the good work you do. They feel good when they learn what impact their gifts have when you constantly thank them for their generous support. Presented with new opportunities to help, they do so willingly and wait to hear who their latest gift helped.

They trust you. You have earned that. They believe you need their help in order to faithfully serve the people who depend on you. There is a clear picture in their mind of what you make possible. It's this confidence in their perception of who you are and who you help that is a strength to rely on through hard times. It's who you are to them.

In uncertain times, it's best to stick with the program as defined by donors. Stay within their comfort zone. Rely on what they like to support. Show them you are grateful for their renewed support and inform them of how the need for your services has increased as more people are affected by the realities of the times.

FYI, this is not a good time to introduce new funding needs when most organizations are struggling to just survive and keep their basic services open and available to all.

The organizations that understand all their donors are not affected equally by the current events are ahead of the curve. They are planning to strengthen the donor relationships with different groups of donors based on those donors' abilities and preferences. Here's what they are discussing:

• The weak economy has cost people jobs; it has increased costs for some basic needs. The winter has been harsh in many regions and people have spent a lot more on heating their homes than previous years. Gasoline is up over $.50 a gallon; that's an extra $10.00 every time they stop for gas for a full size car. The organizations that rely on small donors who give frequently are finding those donors aren't giving as often. They have less disposable cash. Extra premiums and/or more mailings don't equate to higher response and more revenue.

• Organizations that rely on donors and members of higher levels are doing better. The person who regularly gives $50 or $100 is committed to the organization. These donors understand the impact of their giving and they enjoy being associated with the cause. They are grateful for the association. While their savings plans have taken a hit, they might stay home one or two more nights per month, instead of going out to dinner.

• There is a lot of worry over the loss of personal wealth among a lot of the people in the age ranges we rely on for donors. This is really a short-term issue. Their personal wealth is still near the best-case scenario they found themselves in near the end of the 1990's. Yes, it's not as high as it was at its highest point, but it is still better than many of them ever imagined it would ever be. For many donors who are in their 70's, they are still finding they have more disposable income to spend than their lifestyles need. So they give it away.

These same donors are worried about other people, including family and friends. It's important for fundraisers to understand who is concerned about what, and for you to show an interest in the donors. Use your communication channels to ask open-ended questions to understand better your donors' worries. Is it about the military action… many of them experienced the feelings of loss when learning of loved ones killed in WWII, Korea and Vietnam? Are they afraid their grand children won't be able to find jobs? Do they fear they will outlive their savings? Ask them to share their feelings.

Soliciting non-financial responses now will help you learn more about the people you rely on and you will be able to match up to their interests better in the future.

We have observed different strategic responses to fund raising in uncertain times.

There are three approaches that seem to represent the popular choices:

• Raise the most dollars possible and spend the least amount of money - to produce as much net income for general purposes and keep the place open…

• Maximize the number of gifts generated - add emergency and urgent appeals to the mailing schedule to boost the level of gifts and income raised. Get on the phones and call everyone. Increase the number of gifts per person for this one year (not repeatable over time). This is fund raising by spending more money on every approach that produces any level of net income.

• Maintain the population of quality active donors - and quality donors are defined as the group that gives you 95% or more of your annual income. This may only involve 65%-75% of your donors. This is fund raising for the near and long term. Donors give you money. Focus on how many you have going into the fiscal year and put together a plan to come out of the year with as many, or more, good ones.

(For some, the cut-off for a "quality donor" starts at $10; for others it's donors who give $15. We know of one group who get 95%+ of their income from donors of $20 or more and another group who gets 95%+ of its income for donors $25 or more.)

Now is a good time to understand which donors give you most of your annual income and to create a strategy to maximize the retention of their support and to find others like them to replace the names of the donors who won't be able to help in the near term.

By focusing on the number of donors you maintain, getting them to make extra gifts and/or increasing their gifts, will lead you to raising money that may put you ahead of last year, not just struggling to match last year's levels of income. This can still be done without breaking the bank and increasing costs when every budget dollar is tight.

What can you do?

• Stay true to the nature of your mission in your messaging; relate why people need your help now more than ever. Tell the donors they are needed more than ever. Remind then of the impact of their giving on other people. Retell stories that have prompted the donors to respond in a big way; renew their support for issues they believe you do better than anyone, not for new funding needs.

• Add some innovation where you probably haven't made a change in years. Expand your selection and segmentation thinking; make it easier for looking at repeat and lapsed giving patterns. Start indicating which of your donors made gifts in this "quarter" last year, or to this "appeal" last year. Tell them how much you are counting on their loyal, renewed support in this difficult year. Many donors have a pattern of giving that suggests there is a window of opportunity for when they will give you a gift… and when they won't. By separating the donors based on their prior patterns and preferences (and not just RFM), you can communicate differently with people who have or have never given at this time of year before. Why treat them with the same letter when you can do better?

• Carefully review the response reports and get in touch with every donor who did not respond when expected to; don't wait for your lapsed donor program to kick in. If you have active donors who used to regularly give to an appeal in the 1st quarter of the calendar year and you see in April that a number of them did not give, use your best practices to win them back now, not later this year or next year. Rely on your best practices in tough times; just employ them sooner than you have in the past. Let the donors you rely on you miss their help and ask them to do whatever they can so you know you can count on them.

• Be grateful for renewed support at last year's level; cautiously approach the idea of an upgraded gift. It's important to find those donors who are willing and able to upgrade, but do it with more honey than stick. Yes, your needs are greater. But consider that many of your loyal donors may be having difficulty deciding whether to give you anything at this time. Make the ask for a renewed gift the primary message they see; those able to do more will find the upgraded ask if you put one in there in a couple of places (don't forget to ask for more somewhere).

• Ask donors to consider monthly or quarterly giving; they can sign up and forget about it. It allows them to sustain their giving without worry.

• Give your 13-24 month donors a lot of attention. Every month that goes by makes it a little harder to recapture their support. Yet they represent the names you are most likely to get back, of all the names on file. Select those that can make a quality gift response, base on your definition of a quality gift.

• Warmly welcome all new donors acquired under uncertain times. Anyone able to help you out, when so many others cannot, is likely to be able to repeat and renew their support for a long period of time. It shouldn't surprise you if you find out that the new donors acquired this fiscal and last, end up having a higher long-term donor value over 4-5 years than new donors acquired in the late 1990's (when discretionary dollars were easier to throw around). Show them you appreciate their help and suggest they give again; be careful to show them your priority is to serve the people you help, not them. This means showing them respect and communicating with them effectively, but not wastefully. Look over what your new donors have responded to positively in the past and make sure this new group of donors gets to see your best efforts, during their 1st 100 days on file.

Organizations that integrate strategies that get them through the uncertain times, with the greatest percentage of their active donor population intact, will rebound (financially) quickly and will get back into a strong fiscal position. A combination of strategies to bring in short-term income and to renew/recapture and acquire enough quality donors is what's called for in uncertain times.

Not investing enough in the short term can actually put organizations into greater financial hardship in the future, if they fail to keep an eye on the number of donors they are keeping active.

Don't let those in your organization who focus on the cost of fund raising ratios be the only voice heard; those ratios aren't as critical when going through survival mode. Be the voice of reason and lobby for keeping up the base of supporters, in accordance with the present financial realities within your organization, so you'll be in a strong position when things turn around.

Reprinted from April 2003 Special Edition of The Donor Files