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Growing Philanthropy: Moving From Donors to Partners (Part 1 of 3)

Charitable giving is estimated to be only 2 percent of average household disposable (after tax) income in the U.S. This number has remained unchanged on average for the past 40 years. A new report called “Growing Philanthropy,” based on a recent summit of nonprofit leaders, offers ways to change how nonprofits approach fundraising. AFP will present the recommendations in a three-part series.

(Nov. 8, 2011) What if donors were capable of so much more, but it was up to nonprofits themselves to see their potential? What if people were seen as more than merely donors? Offered here is a snapshot of an idyllic scenario--entirely achievable--wherein philanthropy grows to be a larger part of people’s finances, and their lives.

“Forty years of increasingly sophisticated fundraising practice, the development of planned giving vehicles, the appearance of the Internet and the rise of new digital channels have done nothing to move the needle on giving,” write Adrian Sargeant and Jen Shang of Indiana University. How can we move the needle? The first step is to better understand the people who make what we do possible.

Partners, Not Piggy Banks

The first recommendation is to redefine relationships from donor relationships to individual relationships. People do not want to be seen simply as sources of funds. More and more the people we call “donors” are looking to be much more: volunteers, service providers, advocates.

Even through their giving alone donors are looking to connect with a cause. The money is more than money; it is an expression of their very selves. It is those “selves” that nonprofits need to get better at understanding, say Sargeant and Shang.

“In seeking to grow giving we should be striving to find new and creative ways through which individuals can discover and express their own philanthropic identity and thus experience the joy of giving,” they write. In other words, giving begins, rather than ends, with the transaction of money. Seeing donors as transactions cuts short their deeper interest, further involvement and future gifts.

Measuring Lifelong Value

Once we break ourselves away from the donor/transaction mentality and address the whole individual, working to understand their desires and motivations, the next step is to realize this is more than a one-time or one-year process.  Nonprofits would have to change the way they measure success.

“The continued use of performance measures such as response rates, immediate ROI, and total amounts raised by a given campaign is crippling the long-term performance of the sector’s fundraising programs,” explain Sargeant and Shang. These simplistic metrics need to be replaced by measures indicative of longer term value. This might be captured directly by “lifetime ROI” or “supporter lifetime value,” or indirectly by measuring those aspects of donor behavior that drive these figures, such as supporter satisfaction, commitment and trust, they argue.

Giving Again and Again

What does it take to retain a donor, to assure that they will have loyal support for your charitable work? It requires the steps listed above: connecting with individuals and holding the highest regard for their long-term, lifelong support.

“The strength of relationship an organization is able to cultivate with a person who believes in its charitable work is really the only measure that matters in the end,” said Andrew Watt, FInstF, president and CEO of AFP. “If a person feels connected, knows that they have a voice, sees the impact that their gift has, then they will give wholly of themselves and most generously. It’s really that simple.”

“A 10 percent improvement in attrition can yield up to a 200 percent increase in projected value, as significantly more donors upgrade their giving, give in multiple ways, volunteer, recommend others, and ultimately, perhaps, pledge a planned gift to the organization,” write Sargeant and Shang.

Tearing Down the Walls

From a supporter’s perspective, an organization is an organization. People are working together for a clear and unified purpose. Yet the way the fundraising department and the organization overall is set up often leads to the silo-effect. As the authors note, no one supports a single nonprofit because they happen to have an annual fund or an endowment. It is not the vehicle that matters to donors; it’s the difference they can make in society.

Put simply, are you aware of what is happening in other parts of your organization? The more communication that takes place, the more likely you will be to engage a supporter in a more holistic way.

Finally, the authors suggest giving supporters greater control over the relationship, particularly as it applies to communication and forms of engagement. Why pretend we know better? A donor will be more satisfied if we reach them on their terms. All we have to do is ask.

Recommendations (Part 1)

The following is the list of recommendations made in the Growing Philanthropy report based on the first theme, “Enhancing the Quality of Donor Relationships.”

  • Redefine relationships from donor relationships to individual relationships.
  • Re-orient toward longer term measures of fundraising performance.
  • Enhance focus on retention and building supporter loyalty.
  • Develop a more integrated approach to fundraising.
  • Break down organizational silos and encourage greater collaboration between teams.
  • Give supporters greater control over the relationship.
  • Promote the development of shared back office facilities.
  • Tackle high turnover rates in the fundraising profession.
  • Educate all stakeholders about the necessity of a longer term and integrated approach.

The recommendations of the report Growing Philanthropy in the United States are based on a summit held in Washington, D.C. in June 2011 with 35 leading U.S.-philanthropy experts, including nonprofit leaders, technology suppliers, consultants and executives from foundations and associations. To download the full report, click here.

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