Wakeup Call to Charities

Wakeup Call to Charities

Nonprofits who work with professional advisors can increase their chances for success and yes, survival.
Article posted in Marketing on 10 April 2014| 4 comments
audience: National Publication | last updated: 17 April 2014
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Summary

I believe nonprofits who chose to reduce their planned giving and endowment building efforts to chase current dollars made a mistake that may cost them their very survival. Read what The Chronicle of Philanthropy article reported and come to your own conclusion. It's not at all about planned giving, it's about donor loyalty.

by Lee Hoffman

Chronicle article

In the aftermath of the recession (if it is the aftermath), The Chronicle of Philanthropy reports nonprofits are shifting their fundraising focus from chasing new donors to building loyalty [emphasis added]. And the reasons are clear. The article states, “Such efforts are needed, charities say, because the bad economy and slow recovery have shown that it was a mistake to simply rely on big donors or new supporters; getting repeat gifts also matters for the long-term bottom line.”

The key findings reported in the article were:

  • In 2012 only 39% of donors gave the following year. Down from 46% in 2005.
  • The share of first-time donors who gave a follow-up donation declined from a median of more than 34 percent in 2003 to 27 percent 10 years later.

Chuck Longfield, chief scientist at Blackbaud was quoted as stating, “but whether the rates are in the mid-30s or mid-20s, it just doesn’t make any sense to spend so much time and energy on acquiring new donors and then hardly any on keeping them.”

In the article several experts said, “Nonprofits are missing what’s known as the lifetime value of a donor who gives, sometimes in ever-higher amounts, year after year. Annual revenues are taking a hit, too.”

Yes, the experts are right, but let’s add to this planned gifts, which are the result of a taxable event during life or a bequest.

What the article did not say that is so obvious

What if we lived in a world where nonprofits, and government for that matter, planned for the future, understood that they could not rely on future outcomes being the same as the here and now. Their approach to fundraising would be more balanced. Attract new donors, treat current donors well (loyalty), market planned gifts to their aging donors, put some back for tomorrow (endowment).

The reduction of planned giving budgets and efforts over the last ten years may have been a fatal mistake for many. It takes time for any fundraising effort to grow and reach maturity. And then continued effort when maturity is reached. It’s a continuous circle of balanced marketing, yes, marketing.

Going back to the shifting of focus to building loyalty being reported in the article, there is no donor who is more loyal than one who makes a planned gift. Why did planned giving fall to the wayside? In my mind, a rhetorical question if there ever was one. It’s obvious from the article. The attraction of current dollars. For an individual, it’s like going through life thinking planning for retirement is not important. Retirement comes, and so do the ups and downs of the economy and contributions. It’s a balancing act.

Nonprofits who chose to work with allied professionals to leverage their planned gift marketing will increase their chances for success through larger current and future (deferred) gifts. They are adding another layer to the marketing network. They have an advantage.

What do you think? Fact, fiction, somewhere in between? Leave me a comment below or email me personally at editor@pgdc.com.
 

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Comments

Re: Wakeup Call to Charities

Building client loyalty, diversifying revenue and building a stronger balance sheet are embraced in the business community as sound practices. At YouthBridge Community Foundation, we encourage nonprofit boards to apply these same principles and invest for their future through planned giving and endowment building. The "cause" you are serving depends on it.

Michael E. Howard
Chief Executive Officer
YouthBridge Community Foundation
St. Louis, MO

Re: Wakeup Call to Charities

NPOs are in desperation mode- 80% are experiencing increased demand for their services but declining revenue. Because they have not built up previously through prudent and purposeful planning, they find themselves in disarray. The cure is going to be a bitter pill to swallow. They had to work to build a new plan for long-term revenue growth while at the same time spend energy to get dollars in the door and build current capacity. Difficult work, but it can and must be done.

Re: Wakeup Call to Charities

I have been a champion of this topic for many years and speak regularly whenever the opportunity presents itself and also during the preparation of our budgets. I call your attention to a research article, Underdeveloped, prepared in January 2013 by CompassPoint and the Evelyn and Walther Haas, Jr. Fund for additional insight.

Philip S. Rovner
President & CEO
Tidewater Jewish Foundation
Virginia Beach, VA

Re: Wakeup Call to Charities

Philip - thank you for the reminder - Underdeveloped is definitely a rich resource and points out the 4 big, inter-related issues that are keeping nonprofits in the desperation cycle.

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