How was your January, fundraiser friend?
I view January as a test run of sorts, before we really embark on a new year and new resolutions. This may feel especially true as we’re still figuring out what happened in 2018. Last year we saw lower year-end fundraising results. We saw a decline in the number of donors who give in the lower to middle end of the giving range. And whether those have anything to do with changes to the law remains a question.
In February and beyond, three key trends will affect our work.
1) We’re becoming more data-driven and technologically minded.
We now have good tools that analyze a donor database to help nonprofits to sharpen their approach. Data analytics can identify those groups of current or inactive donors who are more likely to increase their engagement level – and hopefully their gift level. Analytics show us giving trends not just to ascertain likelihood of future gifts, but also to recommend gift ask amounts and to flag donors who might be good future legacy donors.
Also watch changes to online giving services. These include the arrival of Give Lively, which offers free online fundraising tools for text-to-give, peer-to-peer, widgets, integration with social media such as Facebook, event fundraising, and more.
Then there’s Alexa, who now helps donors verbally make contributions up to $10,000. While the cohort of participating nonprofits is still small, if we know anything about the Amazon growth model this is a trend that will stick.
Take advantage of this trend:
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Ask yourself how well you know your database. If your answer is something like, “Well enough, but we just need more donors,” you will benefit from a database assessment to find the hidden potential right under your nose. Use analytics to segment your audience and focus on increasing their interest in you. Opportunities like monthly giving and giving societies are nice ways to invite them in to a long-term relationship.
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Create a welcome series of emails that go out over a 4-8 week period that celebrates every first-time gift, provides more information about your organization, and asks questions to learn more about your new supporters. Technology can be especially useful in building a strong relationship with new donors from the very start.
2) The rise of Donor Advised Funds.
As 2017 ended, contributions to Donor Advised Funds skyrocketed like never before. According to National Philanthropic Trust’s The 2018 DAF Report, in 2017 there were 463,622 individual donor-advised funds across the country. Donors contributed $29.23 billion to these donor-advised funds and used them to recommend $19.08 billion in grants to qualified charities.
What’s particularly worth noting?
The number of individual donor-advised funds increased by 60% in 2017, to 463,622. The spike in growth is almost entirely due to one new program that launched in 2017 for smaller DAFs with an average size of less than $5,000. Guess what caused this spike? Changes to the tax law. Creating a new lower threshold for DAFs attracted those smaller to mid-level donors who found themselves scrambling to minimize tax liabilities in an uncertain new set of tax laws.
DAFs are here to stay. It means we must change how we look at and talk to our donors about their gifts.
Take advantage of this trend:
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Make sure your donor database can track soft credits. And train your staff to know that a gift from Fidelity or Vanguard, for example, isn’t likely a gift from that company, but rather a donor’s DAF managed by them.
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If you know the donors who are now giving to you through their DAF, still steward them as you always did. Consider having a conversation with them about how the timing of their gifts might change. Donors who give through their DAFs are more likely to bundle their giving, meaning they may not give every year. In fundraiser speak, they will move from being a LYBUNT to SYBUNT. It’s important for you to know how they intend to continue to support you, so you don’t mark them as lapsed unnecessarily.
3) Focus on donor retention.
This is one of my personal soapboxes. And with nonprofits on average losing almost 60% of their donors each year, you can understand why I’m so passionate about it.
Maybe 2018 was a wakeup call for the nonprofit sector. Less than stellar year-end fundraising results and a slow erosion and disappearance of lower to mid-level donors should be deafening alarms that the way we fundraise must change.
Where does this fit into your fundraising this year? It should be the cornerstone!
Take advantage of this trend:
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Do you know what your donor retention rate is? If not, run a report from your database to get your starting point.
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Then, make donors feel informed, seen and valued, and satisfied that their gift is making a difference in your work. As Penelope Burk writes in her book Donor-Centered Fundraising, “fundraising under-performance is a failure to communicate.”
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Check out my Power Up Your Fundraising resources to access webinars, templates, and e-guides that will help you increase your donor retention.
By understanding 2019 trends and finding practical ways we can respond to them – starting right now, TODAY! – we’ll be nimble in response, ready to make the most of new challenges and opportunities. What do you think will be trends that will most affect your nonprofit this year? Drop a note in the comments below.
