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Engaging donors: charities aim to be better stewards.

Tracking donors to Easter Seals Southern California in Santa Ana, Mike Flory noticed an older donor over the years had made 60 to 70 gifts averaging $50 to $100 in response to direct mail appeals. So Flow, a consultant to the charity who was its vice president of donor relations, invited the donor to visit an adult day program for people with severe disabilities.

"The donor was so overwhelmed we were providing the service, she immediately called her stock broker and made a $10,000 stock gift," Flory said, a contribution she has since made every year for seven years.

Personal contact "helps people appreciate how their gifts are making a difference and it makes them feel more comfortable making larger gifts," Flory said.

Building strong donor relations, a fundraising task known as "stewardship," is critical but often overlooked or under-emphasized, veteran fundraisers and philanthropy experts said. By investing more time and money in working more closely with donors who already have made gifts, experts said, fundraisers can help ensure that donors give again, give more and eventually make "life-time" gifts.

Stewardship is "the easiest thing to forget and the hardest thing to capitalize on in a development enterprise, particularly those that are squeezed financially," said Michael Rierson, vice president for university advancement at the University of South Florida in Tampa. "People measure you by how you are putting their generosity to work."

Fundraising disconnect

During the late 1990s, looking for better ways to recognize donors, fundraising consultant Penelope Burk discovered that poor donor relations were driving massive donor-attrition rates that "are not spoken about freely in the fundraising business."

Burk, president of Cygnus Applied Research in Toronto, conducted two big surveys of hundreds of donors and fundraisers in the United States and Canada. The findings surprised her, she said, revealing a huge gap between what donors said would prompt them to give more generously, and how charities actually dealt with donors.

Instead of long-term cultivation of donors who already had made a gift, the surveys found, charities were investing their time and money waging high-volume direct marketing campaigns, even though one of two donors fail to give the second time they are asked, and nine of 10 stop giving by the fifth time they are asked Burk said.

"The only profitable donor is a retained donor," she said. "A donor you get only once is a donor you have lost money on. Retaining donors long-term is the only way you really make money."

While more than nine in 10 charities responding to the surveys said they published lists of donors' names, just over half of donors said having their name published would not cause them to be more loyal to a charity, make a bigger gift or be more generous sooner, and that they preferred not to be recognized.

Nearly one in five donors said that while they understood that publishing their names might have marketing value for charities, publication still would not cause them to ratchet up their giving. Of the seven in 10 donors who did not want public recognition, one in three said publishing their names actually might cause them to stop giving.

Asked to identify the three actions by charities that would most affect their willingness to keep giving, donors surveyed by Burk said they wanted prompt and personalized acknowledgement of gifts, confirmation that the charity was using their gift as intended and, before being asked for another gift, measurable results showing the impact of previous gifts.

If a charity took those three actions, Burk said, more than nine in 10 donors said they would definitely or probably give again if asked, more than six in 10 said they would give more, and nearly three in four said they would continue to give indefinitely.

Yet market research shows that only one in 10 donors keep on giving indefinitely, with the biggest loss of donors occurring between their first gift and their first "renewal," said Burk, author of Donor Centered Giving.

Burk tested her survey findings with a client, the Toronto division of the Canadian Paraplegic Association.

In a campaign to renew donors who had made their first gift, members of the association's board of directors phoned every 10th donor.

Nine of the 222 donors in the test group made gifts of roughly $5,000 within 60 days of getting the telephone call, and gifts from the test group overall averaged 39 percent more than their first gifts and, in six solicitations over the next two years, 42 percent more.

Intergenerational wealth

To better tap the trillions of dollars expected to flow between generations and to charity over the next 50 years, Burk said, charities need to retool their business models, expanding their focus from direct marketing and telemarketing to also include the cultivation of donors for planned gifts.

"The more donors you have, the less successful you will be, because volume gets in the way of raising money," she said. "If you're chasing volume, you have no budget left to do the donor-centered things that actually raise someone's gift level to a profitable level."

Engaging donors

Having received a scholarship without which she could not have attended the University of North Carolina at Greensboro (UNCG), Charlotte Roberts during the 1990s bought an annuity to fund an annual scholarship at the school that later was cashed out and became a permanent scholarship fund.

But it was not until 1999 that the impact of her gift became clear to Roberts. The realization came when she delivered the keynote speech at what has become an annual event at the school to connect donors with scholarship students, who heads a Sherrill Ford, N.C., consulting firm that provides executive-team coaching.

As a result, she created an endowment to support a program for an interdisciplinary study of women's leadership, and said that she plans to add to the endowment every year and recruit other donors to make contributions to support it.

"Once I made the connection with UNCG as a donor," she said, "I saw that I could give back what had been given to me."

Patti Stewart, vice chancellor for university advancement at the school, said each donor should be recognized in a way that make the impact of a gift personal. "The donor sees the benefit of their contribution through the eyes of the recipients," she said, "and therefore may be more inclined to give to that particular fund or to start another fund."

Building the base

While stewardship is considered a "less glamorous backroom activity," it is critical to fundraising because it "creates an opportunity to communicate with donors about the impact of their gifts and provides inspiration for their continued support," said Randy Holgate, vice president for development and alumni relations at the University of Chicago.

Stewardship, she said, begins with a "clear understanding between the donor and organization about what the gift is for," clarifying for both sides, in writing, expectations about how the gift will be used.

Armed with a six-volume history that meticulously documents the purpose and financial history of each endowment at the school, the development office provides reports to donors each year on recipients of their funds, and on the funds' financial performance.

The school also hosts annual events on campus for its most important annual-fund supporters and endowment donors to meet faculty members and students, and for scholarship students to spend a day writing thank you letters to donors of their funds.

"Our data shows that our most generous donors are people who give regularly and began giving at lower levels," Holgate said.

Rierson said cultivating donors for the long-term lies at the heart of successful fundraising, and is rooted in clear agreements with donors about how gifts will be used, rigorous reporting to donors on how gifts actually are used, and continuing efforts to involve donors in the organization.

"Your best new donor," he said, "is your existing donor."

Todd Cohen is editor and publisher of Philanthropy Journal, an online newspaper at www.philanthropyjournal.org. He can be reached at tcohen@ajf.org
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Title Annotation:Donors
Author:Cohen, Todd
Publication:The Non-profit Times
Date:Feb 1, 2005
Words:1344
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