The Fundraising Dilemma: People Donate, Continue Donating, Then Never Donate Again. Nonprofit MBA Podcast 3.26
Summary: In today’s podcast guest Tom Ahern from Ahren Communications speaks with Stephen Halasnik from Financing Solutions about the fundraising dilemma and how people donate, continue donating, then never donate again. The podcast talks about important issues such as people only donating one time, how to get people to donate more than once, and the “thank you” process which is a nonprofit’s response after someone donates. Executive Directors often combat these issues by developing a nonprofit fundraising plan.
What is the Issue?
One thing that small nonprofits do wrong is that they are not good at thanking for their response. Based on data, the main issue is of first-time donors is only 3 or 2 of them make second gifts and it has consistently been shown over time. It has gotten even worse for peer-to-peer fundraising which is sponsoring someone else who raises money for charity. The problem is nonprofits are not going back to people for more donations. There is no particular motivation for a donor to stick with a charity if they never hear from the nonprofit again. Some nonprofits don’t have a nonprofit fundraising plan for trying to get donors to keep donating.
Another issue can be responding because they never hear back from the nonprofit ever again. Charity is basically an impulse purchase because you typically only donate once after seeing an ad and never again. The problem is that these people never really intended to make a second gift in the first place.
One way these issues can be fixed is by first trying to get the right people to donate in the first place. These people are different because they have stronger emotional reasons to identify with the charity. Another way is to make a nonprofit fundraising plan by emphasizing monthly giving over annual giving because most donors do not make a second gift, so that is why you try to sign them up for multiple gifts.
The Right Donors
When bringing in new donors it is really hard to get a response out of people. For nonprofits sending out appeals, there is only a 1% response rate. For example, if you send out 100 appeals, you are going to get one gift back. In direct mail, getting even one gift back is a success because of how tough acquisition is. As part of the nonprofit fundraising plan, you are going to put in more than you get until people start donating 2-3 times.
With the right donors who give more than once who are a part of that 1% response rate, the question is what is next? The first gift is always a small gift. On average, the first gift is about 25 dollars and people gradually give more as they learn to love your nonprofit. The nonprofit has to make an effort to try to keep getting donors to give so they also need to show love to these donors, this is also a part of the nonprofit fundraising plan.
People with less money still donate but they donate in smaller amounts than someone who has a lot of money. People age into their prime giving years which is around age 55. Until that age, a lot of people save up money until they can afford to donate some of their earnings to nonprofits. You need people that have surplus income which means they can afford to give away money to nonprofit organizations.
The Struggle With the “Thank You’s”
The “thank you” process is just what a nonprofit is supposed to do after someone donates. This is considered the last step in the donating process when the customer has already donated. The process of donating makes people not want to donate after gifting an organization once. One reason is because of how long the donation process is. The main reason is personal experiences the customer has had with nonprofits. This has largely to do with the customer service an organization may have. There are ways to make this process better than it is now.
Nonprofits do not realize the importance of the “thank you” part of the process. There are 3 important steps to donor communication. Asking for help, thanking them for the help received, and feedback of the philanthropy. The number one doubt customers have is about what the charity will do with that money. Some organizations’ nonprofit fundraising plans do a bad job of reporting back to the customer when they donate. The biggest problem is people thinking it is much easier to do nothing than something.
Nonprofits need to focus on the “thank you” portion as much as them trying to get more donors in the first place. The problem is how nonprofits execute the idea rather than being ignorant to it. For example, if you call a new donor 48 hours after thanking that donor, you are much more likely to get a second gift from that donor. This is because it is an unusual, surprising thing to do that catches people off-guard. Thanking a person for their donation makes them want to donate again. The “thank you” portion of the process of donating is the core of the nonprofit fundraising plan and is very important when it comes to getting second donations.
Why Do People Donate?
A question that arises to the mind is why do people make that first donation in the first place? Many donors have different motivations behind the way they donate in the first place. There are a lot of reasons why people donate, some of them can include someone’s value, personal experiences, or out of hope. The first gift is always triggered by something inside themselves that makes people want to donate. The more you understand the motivations behind why people donate the more likely you can say things that mean something to them.
Small Nonprofits and the “Thank You” Policy
Small nonprofits tend to not have a “thank you” policy in place. There are two policies involving the “thank you” policy in a nonprofit fundraising plan. The first policy is responding to someone who is a first-time donor and welcoming them to the family. The second policy is the mechanism when reporting back to them after they make a donation. Something as simple as a friendly personal letter from the executive director of the nonprofit. Catching up with people and letting them know that they’re a part of the family can go a long way.
About the Guest Tom Ahern from Tom Ahern from Ahern Communications
The New York Times called Tom Ahern “…one of America’s most sought-after creators of fund-raising messages.” He is the author of six well-regarded how-to books on communicating profitably with donors.
About The Host Stephen Halasnik, Financing Solutions
Stephen Halasnik is the host of the popular, The Nonprofit MBA Podcast. The Nonprofit MBA podcast’s purpose is to help nonprofit leaders. Stephen is the Co-founder and Managing Partner of Financing Solutions, a leading provider of loans for nonprofits in the form of Lines of Credit to nonprofits. Stephen is a best-selling Amazon author and is considered a leading authority on building great, purpose-driven businesses. Stephen lives in New Jersey with his wife, Gina. Mr. Halasnik’s number one purpose is raising his two boys, Michael and Maxwell, to be good men.
10% of profits from Financing Solutions is donated to charity.