Sunday, September 07, 2008

Your Nonprofit Needs Cash Flow. That Means Your Nonprofit Needs Your Individual Donors. Take Great Care Of Each One...

In such a tough economy, we're all doing what we know best to retain the donors that have given to us already. Donor care, also known as "relationship building" and "donor maintenance", is a powerful way to sustain your nonprofit in tough times.

Nonprofits that plan regularly and on an ongoing basis, that create organizational and program budgets, save money where they can, and put a little away at regular intervals are doing damn good. This is the type of economy that reminds us that we need to spend less, save more, do more through a few extra sponsors' contributions, call on our major donors for a bit more assistance, and rally our volunteers - anything more that they may be able to give is a huge help.

We individual nonprofits, tiny or large, do not want to lose the resource that is American nonprofits' single largest donation source; individual donors. More donations are given to any American nonprofit by individuals and families than any other donation source.

Individual donors are your donors who send a ten dollar check when they can, the local family who runs the store that donates doughnuts and coffee for each of your board meetings, the family who sends a memorial to your nonprofit commemorating a family friend who recently passed. The individual donor may not lavish your organization with tens of thousands of dollars each time that they give, but they give regularly, they are committed to your organization (not just the cause you serve); and their connection to your organization is your nonprofit's lifeblood.

Individual donors respond to your newsletter donation remittance envelopes. They sent a check to your agency years ago, sent a check last year, and will likely send a check this year in response to your annual appeal letter. They may be members of your organization, but they give beyond the membership, and every so often. They've given to your organization for an extended amount of time; maybe years. Their level of commitment to support your organization is worth more than the amount of the check that they write when they do give. Why? Individual donors provide regular cash flow. Do they give in amounts that we dream of raising? Hopefully, but more likely they don't. Lamenting that money doesn't grow on trees aside; there is no greater support any nonprofit can raise than retaining donor who gave yesterday, gave today, and we are pretty sure they'll give tomorrow. It's this last phrase that I'm getting at, in this post. Help make sure that your donors give again. Take good care of each and every one of them.

If we have a commitment from any donor, as a nonprofit, we are getting a guarantee. Can something change, do crises happen, are their misunderstandings, even accidents? Unfortunately, of course. So, we never know without a doubt that a commitment will be kept; but we can up the odds. We can also up the chances that our individual donors will give tomorrow. Healthy nonprofits operate via cash flow. The only way any organization raises regular, reliable, consistent cash flow is by developing their regular (or individual) donors.

Maybe your nonprofit raises mostly grants and only sends an annual appeal to local individuals, families, and small businesses once a year. That's fine. I'm willing to bet, though, that raising grants isn't sustaining cash flow enough that your organization is growing (providing new services in addition to the services you've been providing while maintaining good consistent cash flow). So, to you I suggest that you look over that list of the local people, families, and business owners who have given, and realize that year to year, month to month, through tough times and good growth - they are always there to support your organization (much more often and quickly than any grant donor who has given to your agency). Grant writing is not a quick way to raise funds and grant donors do not necessarily give again in the short term, if they ever do again.

Keeping donors happy involves some basics that are not too expensive for any nonprofit to learn about, instigate as regular operating procedures for the organization, and then maintain (all the while you and pertinent staff should be learning what more could be done for your donors, year to year).

Donors can be kept happy and connected to your organization in a healthy and strong relationship by doing the following:

__ If you haven't been, start recording who you receive donations from. Any and every donor should be recorded (your organization could do so in Excel, in a custom made Access database, in a donor database software system, or even just on recipe cards filed into a recipe box). Every time you receive a donation: note their names (do not just address everything to one individual if the donation is coming from a couple or an entire family - treat people as people - not as ATM's). Note their mailing address, phone number, and the date, amount donated, what they gave for (some will give in response to annual appeal letters, some may give to a specific fundraiser, etc.), and any other information that you know (for certain) about them that might lead to a stronger relationship between them and the nonprofit. For instance, if the Smith family donates $100 in response to your golf tournament and you happen to know for certain that the Smith's own the local hardware store - note it. Some donors give over and over and you'll pull their note card every time that they do, note the pertinent information, and you'll also begin to know the names of the people who are most committed to your agency. If you should receive a call from Mrs. Smith, you could pull the recipe card with their information and while you speak to her - you have information on hand so that you could indicate that your organization knows who she is - she isn't just a cash source, you are aware of their work in the community (besides supporting your nonprofit). Also, be sure to thank her for all of her support over the years. Some donors' giving history will run on for months and then years - these are people demonstrating their commitment to your organization. They are critical to your organization's abilities. Maybe they give $5 each time or maybe they give $2,000 every time. I don't care - they are equal because they are demonstrating a consistent commitment to your organization that it can not do without. Your task could be to increase how much each donor gives but the key is that your constituency is healthy and active.

__ Thank your donors. I am still stunned when my family and I contribute to a nonprofit and no one at the nonprofit has the professionalism, manners, or foresight to thank us. I guarantee you that I know who those organization are and I will never give to them, again. They probably won't know that I am not giving again, but they also don't care much, either. Start a protocol and for each and every donation acknowledge the donor's contribution and interest in your organization. Nonprofits who value the people in their communities who support them (they may give money, volunteer work, in kind donations, etc.) are going to do just fine. It may be expensive to mail thank you letters, but then thank every donor through e-mail, or a phone call. Maybe you feel that only people who give $25 or more should receive letters - fine. But, be sure to acknowledge the retired woman who can only give $5 but gave it to YOUR nonprofit. You need her. Really. Thank all donors somehow. Letters are best as donors need record if they are going to claim the donation for tax deduction purposes, but the most critical and perhaps the simplest maintenance is to take the time and resources to thank your donors. Also, if you run into Mrs. Smith at the grocery store and you know who she is and what she looks like - thank her, then, too. Never give a donor a reason to not give again.

__ Never give a donor (or volunteer, etc.) any reason to not support your organization. If, for instance, your organization mails newsletters, regularly, and Mrs. Smith phones and requests that your nonprofit not send her newsletters anymore as she wants to do all she can to reduce paper use, and reads it online; BE CERTAIN that your organization notes that (on your mailing list). She (and whomever else has requested such) should really and truly no longer receive newsletters. You must provide each donor with customer service - you must follow through. If they are happy they will give again and if you are developing them to do so, they may give more. Your regular (individual) donors are your nonprofit's "customers" and your organization (and everyone in it, representing it, etc.) MUST treat everyone in your community professionally, graciously, openly, and accommodate people. They are your nonprofit's people! Initiate and require excellent customer service (provide training regularly) of your volunteers and staff. Your volunteers and staff must make room for and help everyone who wants to support your organization. No nonprofit can afford to pick and choose who will receive excellent care. Not one. We've all heard the urban myth story of the old gentleman who gave a local nonprofit $5 each and every month for years; and when he passed on, he left the organization $10 million. These things happen. All I can say: he must have been treated really well by the organization's volunteers and staff for his consistent dedication to the nonprofit. Imagine if there was a time when all the organization needed was $250 more that month to make budget; $5 goes a long way.

__ Listen to your donors. Pay attention to what they are donating to and in larger or smaller amounts compared to recent years. If they are demonstrating through their giving patterns that there is no interest in that five year old special event that your nonprofit does annually, you would be wise to research why people aren't attending it. If they aren't interested in the special event, you'd do well to find out what they would enjoy and provide them with it. All things being equal, you must account for costs, viability, etc. but if your donors want to attend, for instance, a 1950's style Bunny Hop and your organization's been holding a formal black tie ball - that change isn't difficult to provide them with.

__ Analyze your donations, your donors' giving history, what events raise what amounts, what time of year you raise the largest and smallest amounts, etc. and make changes as necessary. Run analysis regularly every year. Compare, year to year. For instance, if you have regular donors who give in larger amounts, they're indicating a certain amount of dedication and giving ability. These folks could be now (or become) your organization's major donors. Learn what a major donor program is and how to develop these people into consistent donors who happily give at larger amounts. Remember, donors give for a reason. They are connecting with the issue that concerns them and have chosen your nonprofit as a solution that they support. Ask them what they are concerned about (relating to the issue), and ask them how they came to know about your nonprofit. Ask if they'd like to get more involved. Remember, if you ask them for $50,000 for the new program two years away - they always have the right to say 'no'; but if you don't ask, they won't give.

__ Learn. If you don't know how to build better relationships between your organization and its individual donors, or how to do something, would like to achieve some donor threshold goal, or fundraising goal, or how to do X, or when to do Y - LEARN. There is no point in your career that you know it all or are 'done' with needing to know the latest and best practices. Always learn.

I often place caveats in my post, and this one has one, too. I need to be sure to state clearly that no nonprofit should give any one donor carte blanche. If your organization has decided to, for instance, build a new building and give naming rights to the major donors who contribute to it (e.g. Mr. and Mrs. Smith gave $500,000 and want the library to be named The Smith Library) that is fine IF your organization's bylaws, articles of incorporation, current leadership, and perhaps even your lawyer are OK with it. If your organization, for instance, is a public school that is pushing nutrition and has decided and initiated that no sugar drinks or junk food will be made available in vending machines; you may have an established policy stating that your organization will not accept any donation (no matter how large) from any donor that requires that your school place their sugar laden or junk food products in your cafeterias in order to receive their $500,000 grant. Having boundaries is paramount, even for nonprofits. Your organization exists to achieve its mission statement - not to serve any one person or peoples' desires.

Donors are any nonprofit's lifeblood. The source of the most of any American nonprofits' donations is individual donors. Be sure to retain them as they already have 'buy in' to your organization - you can't afford to lose them. Take good care of them.

4 comments: said...

I'd like to add that you shouldn't limit individual donations to any specific amounts. Once I received a phone call from an org supporting police, who asked for a 25, 50, or 100 dollar donation. At the time I was strapped and said I could offer $5, which they not so respectfully declined.

Erika said...

I so agree in taking care of the donors for non profit fund raising programs. Make sure that everything that a donor gives will surely benefit those that the organization are supporting. Be transparent to them and honestly tell them every activity that the organization is planning or going to do for the betterment of the program.

Arlene M. Spencer said...

Here, here, Erika! Thanks for reading and for posting! Arlene

Arlene M. Spencer said...

VERY good point! It is one thing to recommend amounts to give based on the donor's giving history (e.g. they gave $10 last year to the annual appeal letter, let's see if they want to give $20 this year). It is wholly another thing to expect donors to give in certain amounts. Imagine if the organization who was so unprofessional and rude to you had graceously and gratefully accpeted your donation (what nonprofit can afford to turn any support away?!). They would have your loyalty. THAT is more important than the amount to every single nonprofit. For instance, perhaps you'd be donating in higher amounts, now, some time later; or maybe you would have become one of their most dedicated volunteers. Who can turn a small donation - much less any DONOR away?! It says something about that nonprofit. I hope that you located a much better run organizaton serving the same cause to give your contribution to.

Thanks for reading and commenting!