Nonprofits need to know their givers better

By Todd Cohen

Nonprofits could raise a lot more money if they paid closer attention to retaining their best givers over the long term.

That means understanding what their givers want, an approach that requires investing in the kind of market research the for-profit world has developed to retain customers.

That is the view of Adrian Sargeant, the Robert F. Hartsook Professor of Fundraising at the Center on Philanthropy at Indiana University.

Speaking to 100 people who attended a Philanthropy Journal lunch ‘n’ learn workshop April 23, Sargeant said the single-most-important factor in determining whether givers continue to give to a particular charity is how the charity’s fundraising staff treats them.

Givers who are more than just satisfied with the way they are treated are much more likely to give again, Sargeant says.

And the “lifetime value” of givers who continue to give can be significant, he said, particularly among those who give at higher levels and whose giving often can culminate in a huge gift they make through their estate, Sargeant says.

Increasing loyalty by just 10 percent among givers can increase the lifetime value of a nonprofit’s fundraising data base by up to 200 percent, he says.

Yet while 60 percent of givers who give to a charity for the first time typically do not give a second time, and those first-time givers typically make only small donations, many charities focus much of their energy on retaining those givers, often by emphasizing the impact their organizations have on their clients.

While focusing on their impact is important in helping givers understand their value, Sargeant said, charities could generate a much better return on their investment by focusing instead on higher-end givers, understanding those givers’ values and needs, and engaging them in the organization.

Many nonprofits, however, short-change their fundraising operations and staff, he said, and allocate to them only those funds, if any, that remain in their budgets after other spending has been determined.

Instead, he said, nonprofits should develop fundraising strategies likely to generate lifetime giving, and should invest the resources those strategies require.

Fundraising is a critical part of a nonprofit’s business, and charities need to move beyond business as usual, stop treating givers as automated teller machines, and recognize that a worthy mission and success in addressing social problems are not enough to attract and retain givers.

Like the customers of any business, givers respond to good customer service.

And like any business, nonprofits must invest in building their customer base by investing in fundraising strategies that focus on knowing, engaging and serving their givers.

“The quality of service they receive as donors is the key driver of loyalty,” Sargeant says. “And yet precious few organizations actually measure it.”