Which Way Are You Growing Your Donor Pyramid?

February 12, 2018

I work at a fundraising agency that does all types of direct response fundraising with Canadian charities. Here at Good Works, we often receive Requests for Proposals (or RFPs as they’re known in the trade) that invite us to bid on consulting work with a potential new client.

When we receive an RFP, we’re asked to put together a plan to move the charity toward its objectives.

This is where I often shake my head in quiet disbelief…

Let’s take a direct mail RFP as an example. We recently received one from a charity stating that their primary objective is to double their donor population within the next five years. Now, I’m sure that any fundraiser reading this would LOVE to have twice as many donors – not to mention the new revenue that would go with them.

But here’s the rub…

  • The direct mail marketplace has been slowly shrinking for years now. I would estimate that the number of direct mail donors in Canada is eroding by about 2% per year.
  • The direct mail marketplace is already TOTALLY saturated with charities. There is no question that the number of charities and solicitations far exceeds the number of donors and gifts to meet them.
  • So this leaves a curmudgeonly old strategist like me to ask “If the market is already crowded, and the donor pool is actually shrinking, why do you think you can double your number of donors?

In this case, the charity issuing the RFP has probably not taken a critical step in the strategist’s best practice. They have not ‘learned the landscape’ before deciding on their objective.

Let me present this idea very briefly. Great military strategists, from Alexander the Great to Napoleon Bonaparte always surveyed the landscape before mapping out their battle plans. They would take advantage of sloping ground, weather, rivers, forests and any number of topographical features in decided how they would deploy their troops.

Know the landscape

Just as the general needs to know the physical landscape, the marketing strategist needs to understand the landscape of the MARKETPLACE. So this charity, for example, would want to know what kinds of people give through the mail. Are they male and/or female? Young or old? Well-educated or not-so-much? Religious, spiritual or neither?

For years, I’ve been a big fan of American demographer and fundraiser Judith Nichols (if you haven’t read her book ‘Global Demographics’ you should check it out!). I remember seeing Judith speak at a conference about fifteen years ago – and for the first time I heard a fundraiser say “in the future, we need to go deep more than wide”.

Judith was describing the pyramid of giving. In the heyday of direct mail (the 1970s to 1990s), it wasn’t hard to grow a donor file. Trade your donor list for new prospects. Send out pretty good donor acquisition packages. And, in come the new donors.

Those days are long gone…

Today, that charity that issued the RFP probably would have been much wiser to say that their objective is to ‘double net revenue from a constant donor population’.

How might they do that?

To start the conversation with them, I would ask them if they thought it was possible to:

  • Increase their donor retention rate by 10%.
  • Convert 10% of their single-gift direct mail donors to monthly giving.
  • Convert 3% of their ‘everyday’ direct mail donors to intermediate or leadership giving.
  • Over time, persuade about 5% of their donors to make bequests to the charity.

If this charity was able to accomplish these four tasks, they would MORE THAN DOUBLE their net revenues without having to grow their donor population.

So, the next time your finance or fundraising committee is making a strategic fundraising plan, make sure to survey the philanthropic landscape first. Then, like a smart general, take advantage of that landscape to earn lots of new money.

Have fun!

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Fraser Green

Fraser Green

Former political campaigner and current fundraising strategist with a knack for understanding how audiences will react to messages.