Thu, August 27 2015
Filed under: Fundraising essentials •
Last month I had the chance to listen to Professor Judd Kessler of the Wharton School during the Ruffalo Noel Levitz Annual Fundraising Conference in Minneapolis. He shared insight on how behavioral economics can affect nonprofit fundraising.
Wait, what the heck is “behavioral economics”? Think about it as simply understanding the factors and situations that influence behavior and motivate people to take action. Many researchers have tested which scenarios prompt more charitable donations, many of which are illustrated in The Science of Giving.
But behavioral economics isn’t only the territory of PhDs. Professor Kessler encourages all nonprofit marketers to consider themselves to be scientists and to use simple A/B tests as experiments in their fundraising laboratory to sort out what will drive their donors to give more.
So, what are the principles that can affect fundraising for both small and large nonprofits? Here’s a quick overview of six common concepts and how you can use them in your fundraising strategy.
1. Accountability & Recognition
What it is: This is the idea that if someone cares what other people think of them, they may give to appear more generous, responsible, or important.
The research: Gerber, Green & Larimer (2008) showed that voter turnout in Michigan was affected when registered voters received a message that indicated other voters would be notified of their neighbors’ voting habits. In a different study, donors were found to give more when they were recognized as consistent donors to a fund.
How to do it: Accountability and recognition are two sides of the same coin, with recognition being usually perceived as the more positive of the two. Offering public recognition for donors can inspire donors to give to achieve and maintain the recognition, and this same attention can influence others to give to gain the same status. Give donors a special status when you feature giving opportunities on your website, in your newsletter, and in upcoming appeals.
2. Peer Pressure
What it is: In this case, the peer pressure comes from the simple power of the personal ask. If someone personally asks you to do something (especially in person or on the phone), you’re more likely to go along with the request to avoid embarrassment and disappointment, or to win praise.
The research: Meer and Rosen (2009) showed that those who were called in addition to receiving a mailed solicitation were more likely to give.
How to do it: In addition to your direct mail and email appeals, make sure you are calling or meeting with key supporters to make that personal connection and encourage them to complete their gift. Bonus: you’ll likely learn more information that will help you nurture the relationship or fix issues that may have prevented future giving.
3. Social Information/Social Proof
What it is: This is really peer pressure of a different kind. We take our cues on what to do to fit in (and avoid guilt) by looking to social norms—what other people are doing in the same situation.
The research: Frey and Meier (2004) studied the decision to give to student funds at the University of Zurich. When students were told that historically more than half of students gave to the fund, they were more likely to also contribute. Shang and Croson (2009) also showed that when donors were told what others had contributed, it affected the size of their gift.
How to do it: In all of your fundraising materials, make it clear that others support and value your work. Some of the easiest ways to show this social proof include: donation tickers and thermometers, testimonials and quotes from current donors, and charity ratings badges based on positive reviews of your work.
4. Gift Exchange/Reciprocity
What it is: A gift exchange happens when people feel obligated to repay gifts or return a favor, even if they know the gifts are intended to get them to take action.
The research: Falk (2005) found that illustrated cards from street children in Bangladesh increased the relative frequency of donations.
How to do it: Although address labels and totebags come to mind, get more creative when it comes to using the idea of reciprocity in your fundraising. Think about how your incentives or tokens of appreciation tie back to your mission and connect your donors with the end result of their gift. This could mean an exclusive tour of your facilities, a personalized note from a beneficiary, or a custom video from your volunteers. A gift exchange doesn’t need to be expensive, it just needs to be sincere.
5. Identifiable Victim
What it is: When our minds turn to statistics or large numbers, we tend to think about problems in abstract, and feel less connection to them. To be inspired to give, donors need to be able to connect with your ask on a personal and emotional level.
The research: Small, Loewenstein and Slovic (2007) discovered that highlighting an “identifiable victim” made donors give twice as much as when donors were presented with an abstract story or “statistical victim.”
How to do it: We’ve written a lot about this phenomenon on this blog, but essentially it all boils down to focusing on one person to illustrate the human impact of your issue. Tell a compelling story that donors can comprehend, and they’ll be moved to give.
6. Donor Identity
What it is: We tend to think of ourselves in a certain way or with certain ties to our social groups, community, or experiences. Therefore, when we are reminded about the identity, we are compelled to act in ways that feel consistent with it.
The research: Kessler and Milkman (2015) showed that when donors were reminded of their identity as previous donors, they were more likely to give again.
How to do it: In your fundraising appeals, invoke the idea of your donors’ identity to make your ask feel more relevant and personal. This might mean underscoring their connection to a certain neighborhood in your community, a specific alumni group, or a special factor that binds them to your cause.
Tue, August 25 2015
Filed under: Fundraising essentials •
[Editor's note: Today's post comes from Lori Jacobwith, founder of Ignited Fundraising. Lori is a fundraising culture change expert and master storyteller. Be sure to register for tomorrow's Nonprofit 911 webinar to hear Lori tell you all about how you can change your nonprofit's data story.]
As a master storyteller people often mistakenly think I only tell stories about people. The truth is, I find stories everywhere: In a glance between a client and staff, at board meetings, and even in financial data.
The question is what to do with the stories you find, especially the stories in your data?
One of the best ways to use some of the data you have is to share it in a visual display that paints a clear picture AND gets people to take actions to change the data. That might mean taking action to increase your fundraising, retain loyal donors, maintain an ample cushion of cash on hand at all times or, well, you decide.
The question then is: What actions do you want your staff, board and your community to take?
A good place to start is to create a board activity dashboard based on the actions your board has decided will make a difference.
A few metrics I like to see on a board dashboard are:
- Attendance at board & committee meetings
- Annual financial giving
- Participation in donor stewardship activities: story sharing, thank you calls, guests brought to events
Creating the dashboards is the easy part. Deciding what to show on the dashboards is what takes time and focused conversation.
Here are some simple steps to get you started:
Step 1: At a retreat or during a board meeting, provide ample time for your board members to answer a few key questions. You can refer to this post 5 Questions Every Board Should Ask for some helpful questions.
Step 2: Once the board has determined the ways they will be of most value AND what they want to track, the role of staff is to create a dashboard to support their actions.
Step 3: Make sure your dashboard shows both what has happened in the past AND what actions you want to cause in the future.
Step 4: Review dashboards regularly with time to discuss activity updates and what new actions must be taken next.
Whether you use a traditional bar graph or you use something different (Blue Avocado has an excellent example), your goal is to cause new actions that support your mission and your bottom line.
Simple Board Activity Dashboard
On August 26 on the Nonprofit 911 Network for Good Webinar I’ll take you through a deeper dive into how to Change Your Data Story.
Join me to view samples of what your dashboards should look like and how best to use them to inspire action. I’ll share six of the most common mistakes when designing dashboards and some examples of what you can do differently.
A nationally recognized master storyteller and fundraising culture expert, Lori L. Jacobwith has coached thousands to raise nearly $300 million dollars from individual donors. And counting. Her proven strategies & tools teach nonprofits and their boards to share stories powerfully and easily. Lori holds a BA from the University of Minnesota, has additional training from Indiana University’s Fund Raising School and is a longtime member of the Association of Fundraising Professionals. Follow Lori on Twitter @LJacobwith or Facebook
Mon, August 17 2015
Filed under: Fundraising essentials •
You might have a marketing plan, a shiny new website, and a fundraising appeal that has been triple-checked, but the key to raising more this year will come down to really knowing and understanding your donors.
When you truly understand your donors, you can communicate more effectively with the best timing, more relevant messages, and the right ask. And the only way to get smarter about these critical elements of donor communication is to be able to collect, manage, and efficiently analyze your fundraising data.
Not sure how to accomplish this? We can help.
If you want to get more out of your fundraising and donor relationships this year, tomorrow’s free Nonprofit 911 webinar is for you. My colleague Jonathan Gibbs, Network for Good’s VP of Product, will share the best practices in selecting, implementing, and getting the most out of a donor management system. Jonathan will also offer some smart tips on overcoming the common challenges nonprofits face in managing donor data.
Register for this free session now. (Can’t attend the live session? Go ahead and register and we’ll make sure you get the slides and the recording in your inbox shortly after the webinar.)
Thu, August 13 2015
Are you ready for #GivingTuesday 2015? This annual day of generosity continues to grow, and we expect this year’s event to be even bigger. According to a recent webinar poll, 30% of nonprofits are planning to participate in #GivingTuesday for the first time and 39% are planning to do more for #GivingTuesday than they did last year.
Whether you’re launching your first #GivingTuesday campaign or planning a triumphant return, the first step in planning your success is to set your sights on a clear goal for your team and supporters to rally around.
Total dollars raised is an obvious metric to measure, but it shouldn’t be your only goal, as a giving day like #GivingTuesday is a unique opportunity to boost donor acquisition, re-engagement, and retention. Here are a few other important goals that you may want to work into your plan:
- Number of donors
- Number of new donors
- Number of volunteers/hours (if you are including an activity)
- Number of recurring donors
- % Participation among key groups – like staff, board, alumni, clients
Think about what kind of campaign you’d like to run this year and which goals make the most sense based on your approach.
Where Do You Start? Build a Pyramid
If you ran a #GivingTuesday campaign last year, you have a benchmark you can use to make 2014 plans. If you’re in your first year, you’ll need to base your goals on what you know about your past campaigns and donors.
Another way to plan your overall donation goal by using a giving pyramid. A giving pyramid allows you to visualize and breakdown your donation goal by donor level. Creating the pyramid helps you sanity check your goal by plotting it out, rather than just guessing.
Here’s an example of a giving pyramid for #GivingTuesday:
- Dollar goal: $8,000
- Existing donors in your database: 1,500 donors
- Achieving a 3% response rate: 45 donors
Map out a giving pyramid using your dollar goals and your number of donors. If it feels ambitious but achievable, then it is a great place to start with a first year goal. If it seems too easy to achieve, boost the dollar amount. Too much of a stretch? Dial back.
Want to build your own #GivingTuesday donor pyramid? Download our template and input your goals, number of current donors, and expected response rate and we’ll do the calculations for you.
Tue, August 11 2015
Today, donor relations expert Lynne Wester will join us for a free Nonprofit911 webinar: Donor Retention Isn’t Speed Dating. You don't want to miss it! Register now!
Lynne is not only an expert on donor retention; she has spent her career in donor relations and is known as the Donor Relations Guru. Earlier this year I published a Q&A with Lynne about her new book, The Four Pillars of Donor Relations. Enjoy this encore blog post and don’t forget to register for Lynne’s webinar!
If you aren’t familiar with Lynne Wester’s work in donor relations, you are missing out. Last year she presented an amazing webinar (one of our highest attended!) on donor relations and ever since then I’ve been hooked on the topic of donor relations and Lynne’s wise words on this important work that many fundraisers don’t (unfortunately) know much about.
Since the webinar, Lynne has published a book, The 4 Pillars of Donor Relations. It’s a great resource for any fundraiser who wants to increase their donor retention rate (aka everyone).
I did a quick Q&A with Lynne so you could understand what the book is all about.
BONUS: She shared the names of a few organizations who are excelling at donor relations. If you want to see what a great donor experience looks like, consider giving a small gift to one of the organizations she mentions.
How did you first get interested in donor relations?
Lynne Wester: I guess you could say I’ve been in donor relations since I was a child and my mom made me write thank you notes before I could play with my Christmas and birthday presents. But in reality, as a career, it came at Rollins College where I got my start writing thank you notes for leadership and my career blossomed from there. I am so blessed to be able to spend a lifetime helping others express gratitude.
Of the four pillars of donor relations (acknowledgement, stewardship and impact reporting, recognition, and engagement) where do you see nonprofits struggle the most?
LW: By far, it’s in stewardship and impact reporting. Nonprofits don’t take the time to tell the donor the impact and power of their gift, where the money went, and how it was spent. Instead, they’re too eager to obtain the next gift which leads to horrific retention rates.
We have to make the donor the hero and tell a story, not overwhelm them with news and information about the organization or ask them for more money. First we have to thank them, and then tell them the impact their money had. It’s a simple formula, really.
We get this question all the time and I think you’re the right person to weigh in: what is a GOOD donor retention rate?
LW: If the average first-time donor retention rate is 27%, and that’s the average, I would want to keep at least HALF of my first-time donors. It has nothing to do with the size of the organization, but rather the mindset and the attitude of gratitude that one possesses. Large or small, holding onto half of the people that invest in us shouldn’t be too high of a goal.
If your “team” that is responsible for donor relations is just one person, or 50% of one person’s workload, what do you recommend they focus on first? What has the potential to have a big impact in a short amount of time?
LW: The first thing is thanking without an ask. There is NO such thing as a soft ASK, that’s like being partially pregnant. So, sincerely thank your donor in a timely manner and then, once you’ve spent their funds, tell them the story of the impact their funds had on the people your organization serves.
I always tell my clients the amount of the gift is the LEAST important thing. The behavior is the MOST important thing. To have bottom line ROI impact focus on two groups first:
- first-time donors
- loyal or consecutive donors
This will really move your needle. You have to hold onto your first-time donors, otherwise they will never become loyal donors.
What is the most meaningful message you’ve received from an organization after a gift was made?
LW: I would have to say that the most meaningful messages I receive in a consistent manner come from the folks at charity:water. They make me feel important, they show me the impact of my donations, no matter how large or small and they make me feel very valuable and essential to the process.
Do you have any good examples of monthly giving programs that were branded as a “society” or “member” vs. a monthly giving program that had no separate branding? Do you know of any research that shows this works well or not?
LW: I give monthly to two organizations that do a great job of this. I’m a member of charity:water’s Pipeline, their monthly giving program, and I think this does a great job of keeping me informed, telling me why my support is important, and making me feel inextricable to their mission. Also Make-a-Wish does a great job with their monthly program and it has a brand. They call it the “wishmaker” club.
But honestly, being a part of a club is not why I give monthly. Just as powerful is my monthly gift to Livestrong, as a cancer survivor, they don’t need to brand me with a moniker or anything like that. They do a great job ensuring I have a sense of belonging and importance to them. Their donor relations and impact communications are spot on and I’m so proud to support them.
If we want to see what a great donor relations experience looks like in reality, who should we make a small donation to and experience it ourselves?
LW: charity:water, Whitworth University, Livestrong, and Kalamazoo College
Thanks to Lynne for giving us a peek into the topics covered in her book and for sharing her recommendations with us. For more of Lynne’s thoughts on donor relations, follow her on Twitter.