“Seeing around corners” is a business term describing how companies spot inflection points and how they react when they do.
Remember Blockbuster? Their business model shifted too late in the relatively quick rise of on-demand rentals. They first got a run for their money when Netflix shipped DVDs to homes, then were eventually decimated by streaming services. Blockbuster didn’t respond quickly to the changing consumer market. And, well, we know what happened to them.
Nonprofits need to see around corners, too.
We are raising funds and doing the work of social good in an economy that still feels like a rollercoaster ride. We face huge unknowns about the impact of Coronavirus on charitable giving (not to mention our daily lives). We don’t know where the 2020 election will land.
Any one of these factors should prompt a pause for nonprofit leaders. How do we face all three together?
A decline in volunteers and donors. Increased preference of donors to give through donor advised funds. The money left on the table by nonprofits who don’t invest in their fundraising capacity and aren’t obsessed with a good donor experience. In business speak, we’d call these three trends “inflection points.” (Whatever we call them, nonprofit leaders ignore them at our peril.)
Here’s what these corners look like, and how we might see around them before it’s too late:
1. Volunteers and donors are declining. This is not hyperbole. It’s a 10-year trend. Research the University of Maryland’s Do Good Institute released last fall showed volunteerism has been steadily declining for a decade. And a special report from The Chronicle of Philanthropy showed that the number of donors in every age group has been slowly shrinking.
See around this corner:
First, take stock of your own donor metrics: What’s your donor retention? What’s your average gift this FY and how does it compare to previous years? Where can you make some inroads in growing retention and upgrades?
Now’s the moment to connect more strongly with your donors through print, electronic, and personal communications. Reassure them that together your important mission continues.
2. Donor Advised Funds (DAF) are here to stay. In 2018, Americans contributed $37 billion to donor advised funds. (That’s a big number, eh?) It’s a preferred way of giving for an increasing number of donors. But just because a donor chooses to make a gift to your organization through their DAF doesn’t mean they don’t want a relationship with you. Whatever you do, thank the donor.
A community foundation recently shared a stories with me of DAF holders who did not get thanked for their gifts. In fact, they shared that they often advise donors to make a test gift from their DAF to see how well they are stewarded. If they don’t receive a proper thank you, they don’t make a second gift.
See around this corner:
Ensure you have a strong stewardship plan for all donors, including those who make gifts through a DAF. This means entering gifts made from a DAF in your database as made by that individual donor (not Fidelity or Schwab, or whoever is managing the DAF).
Ask your donors if they plan to make gifts from a DAF and note that in their records. If you aren’t sure how to communicate with a DAF donor, call the institution that sent the gift. Ask the donor relations staff how the donor would like to hear from your organization. If the donor’s contact info wasn’t shared in the remittance letter, ask if they would kindly forward your correspondence to the donor. Whatever you do, don’t ignore the gift AND don’t credit the gift to the financial institution!
3. A failure to be donor-obsessed. Amazon’s #1 leadership principle is “customer obsession.” Everything the company does aims to create the best possible experience for customers, increasing their loyalty for repeat business.
In contrast, the nonprofit sector isn’t donor-obsessed. How do we know? The average donor retention rate has been stuck at or just below 50% for a decade. Nonprofits get caught in a scarcity mindset that prevents them from building the capacity to create strong donor experiences and stakeholder engagement. We’re not prepared to do what it takes to retain more of our donors.
See around this corner:
Take stock of how your stakeholders feel about your organization and their experience with you. Not sure? Ask them. Send them a survey or ask by phone or in-person about their experiences with you and how they interact with you. Their perspectives may not be just as a donor but also as a volunteer or consumer (if you have a retail arm). All three are interconnected and color their overall perception of you. If their experience has been mixed, find out where the friction has been.
Also make a gift to your organization and put yourself in the donor’s shoes. How easy was it to make that online gift? Did you get thanked? Did you get thanked correctly and meaningfully? Assess where you can create powerful donor moments that make them feel valued and special. Donations must never be assumed. They must be earned.
Taking action now to see around the corners will help ensure that your organization thrives – not just survives – through these tumultuous, uncertain times.
I’d love to hear from you: How else are you seeing around the corners these days?