Facing Donor Decline, How Can Fundraisers Shift Their Playbooks?

Too many charitable organizations still rely on outdated, low-dollar fundraising techniques like time-consuming events, telemarketing, mass mailings and blast emails. That’s according to Greg Warner, chief executive of MarketSmart, a Greenbelt, Maryland-based company that offers software facilitating long-lasting bonds with donors. But current realities, he said, dictate a different approach with donors.

In an online presentation, “Fundraising Climate Change and What You Can Do About It,” Warner described changes that make fundraising more challenging. For example, he shared several studies showing a troubling decline in the number of people who give to and trust nonprofit organizations. Among the findings:

Over the 10 years from 2005 to 2015, the number of donors giving small to medium-sized gifts to large nonprofits in response to direct marketing declined by a median 25.1%, according to one analysis. That’s a drop of nearly 3% annually.
The Association of Fundraising Professionals has documented a similar annual decline. For example, 4.5% of donors stopped giving from 2017 to 2018, with additional donor defections since then.
Less than a quarter of all donors make another contribution after their initial gift of $250 or less, according to the Fundraising Report Card based on MarketSmart’s research on giving to thousands of nonprofits.
People’s trust in charitable organizations has waned. In 2018 alone, there was a 9% drop in trust for nonprofit organizations, and that percentage doubled to 18% among informed, wealthy respondents in an annual survey, the Edelman Trust Barometer. Respondents now trust businesses more than nonprofits, recent Edelman surveys have found.

Warner pointed to a key reason behind donor falloff: People are increasingly turned off by the transactional nature of traditional solicitations. “Donors hate junk mail, telemarketing and spam,” he said. Those methods can be costly and generate meager fundraising returns at best. It makes more sense, Warner said, to concentrate on people capable of giving more.

However, today’s affluent donors no longer respond to mass solicitations, which are increasingly ineffective despite their continuing wide use, Warner said. Rather than passively responding to a solicitation, today’s donors call the shots by first deciding if their personal life experiences fit a particular charity’s mission. Then they educate themselves about the organization and decide for themselves how to be involved, he said. They even take the lead in fundraising, telling an organization when they’re ready to give rather than responding to fundraising requests.

Because of these trends, Warner said, charities need to treat existing and potential donors as individuals, tailoring communications to donors’ wants and needs as opposed to their own. “Focus less on your process than on where the donor is,” he said.

While individually tailored plans for donors are far superior to mass solicitations, making the shift to treating donors individually “is no quick fix” and requires patience, Warner said. It also requires the use of technology to promptly respond to numerous, differing donor preferences, such as setting up alerts and automated messages when a donor asks for a particular report. Winning a large gift, he noted, typically takes two years—or even longer.

Warner advised fundraisers to focus first upon a small group of donors who give more to the organization than others. To add more donors to that group, Warner advised seeking referrals from board members and focusing on volunteers. A US Trust study of high-net-worth philanthropists, he noted, found that nearly 60% volunteered at two or more organizations, and 84.3% gave generously to organizations using their volunteer time and skills.

Then, instead of soliciting these current and potential donors, Warner recommended giving them something of value first—at no cost. For example, a university could give its high-level prospects a digitized yearbook and allow them to share stories about their time on campus. Other charities can offer free newsletters, special reports or donor surveys. Donor surveys, he added, can help build relations, but only if organizations follow up with respondents in a personalized way that shows they were heard.

Creating such perks and benefits does not have to be expensive. Warner pointed to a top-tier university that identified 43 new major donor prospects by paying $900 to get people to subscribe to its newsletters on Facebook.

Warner also recommended creating a special “VIP microsite” for an organization’s top donors to “give first-class supporters a first-class experience.” There, they can access specialized tools to help them create a memoir about themselves for loved ones, for example, or share stories about their involvement with the organization. A useful feature to add to the microsite, he said, is a widget enabling visitors to make a contribution from their donor-advised fund with a few clicks. (Warner’s company offers a free DAFwidget, but other organizations do, also.)

To get the most out of such tools, it is vital to keep close tabs on how donors and prospects access free information and other benefits, while also responding quickly to any overture they make to the organization. Charities must “monitor donors’ digital body language,” Warner said.

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