Tuesday, March 31, 2009, at 12 noon, U.S. Eastern time

As nonprofit groups grapple with the recession, many fund raisers are seeking out new supporters. But what about those who already give? Many fund-raising experts say it is important for nonprofit groups to take extra steps to keep their best donors during difficult times.

What are some of the best ways to improve ties to donors? How much communication is too much? And what are some common pitfalls for fund raisers as they seek to strengthen bonds with supporters?

Related Articles

• Recession Strategy: Keep Close Ties to Donors (2/26/2009)
• Surviving Tough Times: New Research Can Point Out Ways for Fund Raisers to Survive(4/17/2008)

The Guests

Jeremy Gregg is vice president for development at the Center for Nonprofit Management, in Dallas. Previously he served as director of development at Central Dallas Ministries and at the Camp Fire U.S.A. Lone Star Council. He writes the Raiser's Razor, a blog for nonprofit fund raisers.

Stacy Caldwell is executive director for Dallas Social Venture Partners in Dallas. Previously, she was co-founder and communications director for the National Rural Funders Collaborative. Ms. Caldwell has also been a Texas delegate to the National Council of Nonprofits and a member of the Policy Working Group for the Texas Association for Nonprofit Organizations. A transcript of the chat follows.

Maria Di Mento (Moderator):
    Hello and welcome to today's live discussion. Today, we're talking about how nonprofit groups can hold onto their best donors in the current economic climate. Our conversation will focus on some of the effective ways fund raisers can improve ties to their current donors, and how to avoid common mistakes when communicating with both existing and new donors.

Maria Di Mento (Moderator):
    Our guest experts today include Stacy Caldwell, executive director for Dallas Social Venture Partners, and Jeremy Gregg, vice president for development at the Center for Nonprofit Management, in Dallas.

Maria Di Mento (Moderator):
    Before we get started, I wanted to issue a couple of quick reminders. First, you are invited at any time during the discussion to ask questions are post comments on what you are reading. To do that, simply click on the "ask a question" link on this page and type in your question or comment. Second, we will be offering a full transcript of this event after it is complete at http://philanthropy.com/live. You are welcome to refer to the transcript in the future -- and to pass it along to others who might find it interesting.

Maria Di Mento (Moderator):
    Without further ado, let's get started.

Question from Sean Sanchez, Hispanas Organized for Political Equality:
    I prefer phone contact to connect donors to our mission and keep them involved. It is especially effective with major gift prospects. What are some other ways or methods of engaging your constituent base?

Jeremy Gregg:
    I fully agree that phone is better than writing. In general, I think that all fund raisers should follow the rule of "saying thank you seven (7) times for every ask."

However, the power of the hand-written note should not be overlooked. I frequently end my days by writing hand-written notes to my top contacts from that day. I also think that it's worth having other non-development staff write notes (i.e. the program director whose department benefited from the gift).

It's also worth asking a board member to write a thank you note or pick up the phone to call. This is not only great stewardship of that donor, but it helps engage a board in an easy way to make a big impact on your organization. It's like cultivating two donors at once.

Question from Maria Di Mento:
    What are some good ways fund raisers can keep the lines of communication open with previously generous donors who have had to scale back or put on hold some of their donations?

Stacy Caldwell:
    It makes the most sense to continue connecting with them as you have in the past. Over lunch, coffee, a phone call to touch base, however they are used to interacting with you. Keep up the communications but work a little harder to bring something new or fresh to the conversation.

Question from Patricia Philippe, Continuum Health Partners, 5-hospital system:
    What are some unique ways to steward donors?

Jeremy Gregg:
    Let me start by citing a good resource by Lynn Edmonds, who wrote "Five Things You Must Do to Ensure a Second Gift" (available at http://tinyurl.com/cvlmtb). Here are her requirements for cultivating a second gift:

1. Prompt and thoughtful thank-you letters. 2. New-donor welcome kits. 3. Second gift appeal. 4. Offer your strongest renewal appeals first. 5. New-donor first-year anniversary campaign.

Beyond a formal communication process, I would like to offer that it all comes down to building a personal relationship. Think about how you communicated with an out-of-town relative when you were young (and maybe had your eye on a nice Christmas present!). You called them on their birthday and anniversary; sent them holiday cards; maybe even sent them a letter from summer camp. You kept them engaged in your life and let them know that they were important to you.

Same things with donors. They want to know that they matter not as checkbooks, but as people.

Jeremy Gregg:
    Thanks to the Chronicle for this invitation! As I wait for questions, let me start by saying that donor retention should be the top priority for any fundraising program for three reasons: 1. It is more cost-effective in the short term. 2. It yields greater per-donor return on investment in the long term. 3. It exponentially increases overall growth.

The first is reason obvious, as there there is substantial evidence that the costs of acquiring a new donor can cost 6 to 7 times more than retaining an existing donor. However, many fundraising programs are built around an old model of buying lists, inundating prospective donors with impersonal appeals and hoping that checks arrive in the mail. By contrast, a model that involves targeted mailings, handwritten notes, personal phone calls, agency tours and the involvement of peer cultivation can decrease lapse rates while increasing average gift size.

The second reason requires a longer horizon. Organizations need to make a generational investment in a donor, cultivating them from prospect to donor to fundraiser to legacy donor. The ultimate goal is not to secure a gift, but to become intrinsically linked to their legacy. The only way to achieve this is to focus on building a strong foundation based on trust and mutual respect, followed by more and more advanced stages of gift cultivation and volunteer engagement.

The final reason is the most profound, but also the most overlooked: recurring donors are your best prospects for introductions to new donors. In this model, "acquisition" is actually a form of "retention" for the original donor. By cultivating a strong relationship with a center of influence, they will not only provide you with their time and treasure... but with access to their relationships. This is the most valuable contribution, as it not only introduces you to new funding opportunities but it deepens the original donor's tie to your organization.

This is how you help a donor to build their legacy through your organization. Do not just focus on the end-of-life gift, but on cultivating their connections in THIS life for your organization. The signs of a thriving relationship with a donor are when that donor's friends and family make gifts to your organization in honor of your donor's birthdays, anniversaries, etc.

Question from Patricia Philippe, Continuum Health Partners, 5-hospital system:
    What are some unique ways to steward donors?

Stacy Caldwell:
    I have enjoyed the ability of engaging our donors in new conversations about how our mission can evolve during this difficult time. Innovation comes from necessity. I find an honest dialogue about the needs with an emphasis on the value of their intellectual capital. This facilitates continued involvement in the mission by using a different resource they have to offer.

Question from Maria Di Mento:
    Given recent issues related to investment management (such as the Madoff scandal and others), are donors asking fund raisers more questions about financial management than before, and if so, what types of questions should fund raisers be prepared to answer?

Jeremy Gregg:
    Foundations definitely are. They are not necessarily asking about financial management in terms of investments, but they are asking questions about accounting practices. Many organizations don't follow GAAP (Generally Accepted Accounting Principles), which can get them in trouble with savvy donors.

In addition, donors are asking questions about conflicts of interest policies; whistleblower policies; succession plans for the Executive Director; and other matters of transparency.

Question from Susan Ferziger, Playwrights Horizons:
    Jeremy, what would you include in a "new donor welcome kit"?

Jeremy Gregg:
    I would resist the temptation to load it full of documents. We all produce these beautiful newsletters and annual reports, but that's really not the sort of thing that resonates with a new donor. I would include a personalized note on the cover of a folder that says a simple "Welcome to our organization! You are an important part of our mission, so we're sending you this welcome kit to make you feel at home." In the kit, I would have a personalize letter signed by the CEO/ED, a copy of the Donor Bill of Rights (available for free download at AFP site), maybe a fact sheet about your organization or your best brochure, and then an outline of "How to Get Started" or "Ways to Get Involved" that does not focus on giving gifts. Emphasize volunteer opportunities, public events, and hopefully some good networking opportunities to meet other donors at no cost. Maybe also include a postage-paid postcard that they can send to one of their contacts with a message already written on it: "I wanted you to know that I recently found out about this wonderful organization, and thought that you would be interested. Please take a few moments to visit their site and learn more!" All they have to do is sign it and address it to their friend, and you've already helped them to be a fundraiser for you.

Maria Di Mento (Moderator):
    As we approach the midway point in today's discussion, I'd like to offer a reminder that participants are encouraged to ask questions at any time. To submit your query, simply click on the "ask a question" link on this page and type in your question.

Question from Linda Hays Willamette Valley Hospice:
    I am a manager in charge of development for our agency. However development is only 1/8 of what I am responsible for. How do I start to identify my "best donors" and what would be the most effective way to build relationships with limited time?

Stacy Caldwell:
    It is indeed challenging to wear so many hats in one mission. Here is how I would begin to approach this task: 1. Set up a meeting with your supervisor, ED, Board Chair, or all three and determine who has past history as a "best donor" (significant contribution or investing over time) and get their inside take on these individuals. 2. Acknowlege their previous investments over time. Let them know that you know how "vested" they are in the mission. 3. Create a way in which you can send a note along with an article or brief read that shows the impact of your mission. Sometimes the article or report might not be of your mission, but underscores the need that the mission fulfills. 4. Perhaps find a way to have a small "thank you" coffee or some simple way to bring them in your space and appreciate their support.

Question from Sharon Robertson:
    What advice would you give a development manager in the first 100 days at a new nonprofit, as far as connecting with donors?

Jeremy Gregg:
    The first 100 days for a fundraiser are critical! Now is the only time when you can make up for any mistakes that were made by your predecessor (i.e. missed reports or incorrect receipts). You should start by calling all of the board members and asking them to meet you at their office; this way, you start with the closest supporters so that you can learn the most about the organization. Then, reach out to foundation supporters, since you likely have the best ability to speak with them based on your previous experiences. After this, reach out to individual donors. Ensure that all of these people know that this is NOT an ask, but just a way to get to know them and to learn from them. Everyone loves to have their opinions heard. Give them that opportunity, and you can both cultivate current donors and bandage relationships with potentially lapsing donors.

Question from Ben E. Factor:
    Does it make more sense to focus on current donors than new donors? What if you have a very small donor base?

Jeremy Gregg:
    Regardless of the size of your donor base, you absolutely must focus on retention. As I mentioned earlier, the goal is not to secure gifts but to build relationships that can yield far greater abundance over the history of your interaction with them. Truly, the only way to build momentum for your company/brand is not to convert prospects to donors, but to convert donors to fundraisers. You should be in the business of building evangelists for your cause. There is a fantastic article called "One number to grow" by Frederick F. Reichheld and James Allen of Bain & Company (http://tinyurl.com/34jj6y). In this article, the authors cite research that indicates that for-profit corporations thrive not by developing aggressive marketing/acquisition programs, but increasing customer satisfaction through powerful donor retention programs. According to the authors, "The path to sustainable, profitable growth begins with creating more promoters and fewer detractors, making information on them transparent throughout your organization and aligning the business operationally to increase your score. That number, net promoters, is the one number you need to grow. It's that simple and that profound."

Question from anonymous, small nonprofit:
    If our organization has not had especially active cultivation efforts in the past, what are good ways to start cultivating our donors now? We don't want to seem gratuitous, and yet we inadvertently have created a culture where our donors are not used to being cultivated. How can we begin to reach out to them in a way that builds genuine relationships?

Stacy Caldwell:
    One of the best excercises for any organanization to undertake is mapping the stakeholders; who will be impacted by the success of your mission. If you can list the type of stakeholders (beyond client and donor) then you can begin to think differently about the messages and priorites of your different audiences. In other words, by mapping your stakeholders and answering the question: "Why would they benefit from our mission being sucessful?", then you can begin to craft your message for that audience.

Once you do this, then work with your core group of leaders. Find out who your board members know within these stakeholder groups and start with the natural connections. By having a board member or donor make the introduction, you will be prepared with the right message that will resonate with that particular type of stakeholder.

Question from Trudy Loo, small non-profit :
    How much stewardship is too much? We have a portfolio of individual donors who are near and dear to our mission and fundraising goals. Should the donor initiate the conversation of keeping in touch or can we systematically give them program updates, and phone calls just to check in?

Jeremy Gregg:
    Trudy, this question is near and dear to my heart! I have always hesitated to "bug" people, but I think that I have done so to my own detriment. People love to be thanked. However, you have to know HOW to do so. They don't always want a phone call. There is a great article by Hildy Gottlieb called "The Sound a 'Thank You' Makes" (http://tinyurl.com/d868ut). She talks about an experience with a donor who thought she was calling to make another ask -- it worked out well for her, but I have actually had some bad experiences like this that turned sour. I once called a $1,000 donor to thank them, and before I could get the words out, they said, "Look, I JUST donated! I am not interested in another gift." and hung up. I sat there in horror... and finally decided to send them a note. I tried a couple more notes, but that person did not come back. Eventually, I had the CEO call them and leave a message, but to no avail. So, there ARE risks with overly cultivating someone. That's why it's important to have multiple approaches. Send them an email, then a note, then a call, then mail them an article that you thought might interest them, etc. To answer your question about responsibility, I think that you have to take responsibility and not leave it to the donor; however, you also need to take queues from the donor as to what they like/expect.

Question from Janet, AICAD school:
    Do you have some suggestions for how to help encourage and promote hand-written notes from senior members of the organization?

Jeremy Gregg:
    Give them the notecards with an envelope that is already hand-addressed and stamped. If you need to, give them a script to write, or at least tell them who this donor is and why they are being thanked. They can do this at home if they have to. Make it a part of your routine. Schedule 10 minutes on their calendar each week to pick up last week's notes and give them more: but make it a manageable number. Start them off with one note. Let them succeed, then give them two. Build up from there. However, the critical factor will be to let them know when you hear back from the donors to whom they wrote notes. Imagine if you ran a report that showed that they wrote notes to 100 donors last year, and that 85 of them returned compared to your average of 65%. Those kinds of "on the ground results" can really motivate people.

Question from Sharon Robertson, medium community action agency:
    What are some good communication ideas for moving consistent donors giving smaller gifts ($50/month) to consider larger gifts?

Stacy Caldwell:
    I would start by acknowledging their cummulative investment over time and the value it has had on the mission. Because they are consistent donors, I would be sure to understand what the mission means to them personally. Perhaps interview them and capture their story for a publication or PR opportunity. Consistent donors should be appreciated for their commitment and perspective towards the mission. Event if it is just a quote and a picture. As you get to know the personal reasons why the mission is relative, You might find a natural opportunity to set a new annual gift challenge for their "legacy" in the organization (which they have already begun).

Question from Megan Vance, Director of Development, Archives of the History of American Psychology:
    As a development officer, as well as having an interest in the psychological aspects of donation behavior, I am interested in gender & age in terms who give more, men or women? What is the median age of donors? I am hearing buzz that donations are not always driven by cause-worthiness. What is your opinion? Thank you!

Jeremy Gregg:
    My background was in advertising, and we always talked about how women were the deciders for what a household purchased. I think that the same holds true for donations, although the numbers are a little bit more even when it comes to disretionary expenses (which includes donations). According to www.WomenPhil.org, 'nearly half of all foundation CEOs and 70% of program officers (are) women,' so I think that speaks directly to the influence that women have on the sector. As far as age goes -- major gifts are still coming from people who are over the age of 40, but younger generations are donating much more actively than older generations. I think that what we will see over the coming year is that gifts from retired people begin to decline as they worry about their nest eggs; the real money will likely be donated by people who are still actively earning money but are advanced in their careers (late 40s throught 50s).

Question from Ishell Linares, American Red Cross OC:
    Due to the challenging economy, we have decided to forgo our donor recognition event this year. While I'm sure that our donors will not only understand but appreciate this decision, what are others ways recognize their contributions at the end of the year?

Jeremy Gregg:
    Rather than forego it, I would scale it back. There are a number of good articles out there about organizations that have scaled back major fundraisers and actually used that exercise as a form of cultivating donors. For example, they dropped the benefitsw but decreased ticket price in order to get people in the door. My organization is doing that with our big annual gala. In your position, you might consider asking a board member to host a reception at their house or their company for major donors. Or, you could have a "virtual event" -- maybe host a conference call that is a sort of "state of the union" for top donors. The CEO or Board Chair could take questions and talk about the road ahead. However, you absolutely must do somethign to make donors feel special. You should communicate to them why you have stopped the event, but DO NOT do so in a way that makes them lose hope in your organization. Definitely avoid saying "Due to budget cuts, we have cancelled our donor thank you event." Rather, say, "In order to maximize the amount of your contributions that go to support our mission, we are going to replace this year's donor recognition event with an open house at our organization. Please drop by to meet some of your fellow donors as well as some of the families whose lives you've touched!" Donor do not want to be thanked... but they DO want to feel a connection to your mission. In-person events are the best way to do that, so think twice about totally cancelling it.

Question from Patricia Philippe, Continuum Health Partners:
    What about Foundations? They have specific guidelines regarding how and when they want to be contacted as well as what information they receive? Are there ways of applying the same donor retention principles to Foundations? What are some recommendations?

Jeremy Gregg:
    You have to be careful. We had foundations on our newsletter list, and some of them actually sent back decline letters. This shocked me, because I thought it was clearly not an "ask," but you have to be careful. Here are two ideas: 1) Send unsolicited program updates on the types of programs that you think they might fund; in the letter just let them know that you understand their policy, but want to share with them some of the results you've achieved. Make sure this is not a puff piece, but a substantial report with progress. 2) Send them cut-outs of articles that you think might interest them. Everyone loves to know that someone understands them. This is a great way to do that. Include a quick note that relates this back to you: "Attached is a great article from the Chronicle of Philanthropy about a foundation that reminded me of your work with our organization. I thought you would be interested."

Question from Patricia Philippe, Continuum Health Partners, 5-hospital system:
    The challenge however is sufficient staffing as well as getting existing staff to commit to doing more stewardship. Any ideas?

Stacy Caldwell:
    My world is all about engaged philanthropy. I see amazing work happen within the mission's internal structure, by my donors. It can be challenging at times, but there is no better way to keep people "owning" the outcomes. So, look to those donors who can be engaged in buiding comunity around your mission and use their help.

As for existing staff. It is very important to keep energy and moral high. I am always in conversation about the areas our staff wants to develop professionally and nurture those experiences inside the organization. It is important to allow experimentation without having to commit to a new job description. If staff is delivering in the areas they are responsible, then allow them to experiment in other areas such as Social Media, Networking, Event hosting, etc. Donor cultivation and stewardship can have many channels and is developing in new ways. Each staff member has something to offer, if it is in the area they are comfortable in working. One staff member might prefer keeping the twitter feed, one staff member might enjoy facebook, one staff member might like to attend the various org events, and another might enjoy networking outside of the agency. Get to know who is comfortable at what and allow them to develop that professionally.

Question from Anonymous, New England non-profit:
    How do you approach a donor that has indicated he/she is not able to donate to your organization due to the current economy?

Jeremy Gregg:
    Money is only one way to contribute. They can still give their time: everyone wants to feel hopeful at this terrible time, and volunteering is a great way to lift the spirits. If you help them get through this difficult time, they will remember you fondly in the future. Also, let them know about alternate giving programs like recurring monthly gifts by credit card or electronic funds transfer from their bank account. These are 'painless' ways of giving that might help them to make the choice. However, the best way to get them back in the fold is to engage them in a personal way; throw a small open house and invite them to meet other donors, and let them know that they will not be asked for money. Or, ask a local bar or restaurant to give you 10% of proceeeds one night; donors have to eat, so invite them out and say that they will be supporting your organization while enjoying a nice meal at the same price they would have paid otherwise.

Question from Patricia Philippe, Continuum Health Partners:
    What about on-line communications? There's a lot of talk today about using Social Media such as Facebook or sending e-newsletters. How can we utilize these tools while continuing to make it feel personal?

Stacy Caldwell:
    This is an important conversation to have and be proactive about. The good news is these tools will help your organization feel more personal to donors beyond a brochure. The next generation of donors want to know the personality behind the mission. This is a way to reach those future supporters and build your brand culture at the same time.

Question from Greg Schlichter CFRE, Independent Consultant:
    What are the risks of posing the question to donors of how and how often they wish to be contacted? Would you recommend that or not?

Jeremy Gregg:
    I think that as a matter of stewardship, you should ask them whether they prefer electronic or print communications. That can then tie you into the green movement by showing them your commitment to the environment (as well as cost efficiency). As far as asking them about number of times to be contacted, I would only ask them if they prefer a receipt after each gift or just once per year. Again, this is just good stewardship of resources if not a form of donor cultivation. But don't give them an opportunity to tell you not to call them.

Question from Andra Ferguson - consultant - self employed:
    what are some ways to engage donors that you want to invest in arts education at the University level.

Jeremy Gregg:
    That is going to be a tough sell at this time, when everyone seems to be emphasizing basic needs. I would encourage them to come experience the benefits of the arts education: meet the students, see their artwork, attend a recital, attend a guest lecture by a visiting artist at no cost. Have them experiecne the mission, and then remind them that art is the means by which we keep hope alive. Help them to understand that while it is important to support basic needs so that life can be sustained, it is also important to support the arts so that life is worth living!

Question from Charlie McNamara, Riverview School:
    Are you finding that (due to the economy) there is an opportunity - not that in that there are more donor dollars available, but rather that organizations are being sensitive to their constituent base and asking less. In a sense missing opportunities?

Stacy Caldwell:
    This one was asked of Stacy, but I wanted to respond too. I like what Warren Buffet said about investing: "Be careful when others are being greedy, and be greedy when others are being careful." If other orgs stop communicating with donors, now might be the time to swoop in and grab more mindshare!

Question from Heather, small to medium nonprofit:
    What are some strategies to employ when your best donors are corporate ones? We have relatively few individual donors who give over $100 per year, but have developed some relationships with assorted businesses in the community. We are struggling to figure out how often to ask and how much to ask for. We are planning an appreciation day for one of our strongest supporters - to invite their staff in to see our facility and hear about what we are doing, while enjoying treats and accolades - as a way of hopefully increasing those individual donations. Are we on the right track?

Stacy Caldwell:
    Make sure you know your numbers when dealing with the corproate donors. Stories communicate to individual passions, but numbers and impact speak to the corporate goal of connecting with sucessful mission that is having impact.

Within your existing business relationships existing corporate events or activities that you can connect your mission on as a benificiary. For example, something as their annual picnic, to a holiday campaign/partnership, to a professional staff day. Try to work within the systems they already have in place and try to leverage a partnership that features your mission. There also might be a community activity in which you could share a collaborative opportunity. (Share a booth at a festival that gives out their extra marketing swag, while you take donations and talk about your mission) This could take some exploring, but a mutually benefitial way to develop that relationship.

Jeremy Gregg:
    One last piece of advice re: thank you letters. Look back at your most recent thank you letter to a donor. Circle every "I" or "we" (or the name of your organization) -- and then rewrite the letter so that you replace as many of those first person pronouns with the word "you," particularly when it's at the beginning of a sentence or a paragraph. Force yourself to begin the letter with "You" instead of the boring "On behalf of the board, the staff and the thousands of starving, blind, crippled, poor orphans who somehow manage to wheel their way uphill, through the snow and into our office each day...." See how the whole feel of the letter changes from being yet another bragadocious piece of fundraiser-marketer drivel to a relationship-building engagement piece.

Maria Di Mento (Moderator):
    Our time is up. Thank you to everyone who joined us today. I hope you found the conversation useful. Thanks, also, to our expert guests, Stacy Caldwell, and Jeremy Gregg. Both of you brought some great ideas to the table and we appreciate the time you spent with us today. Please join us a week from today at noon Eastern time when we discuss how nonprofit groups can recruit volunteers and built a permanent volunteer base. See you then.

Question from Ben E. Factor:
    Does it make more sense to focus on current donors than new donors? What if you have a very small donor base?

Stacy Caldwell:
    Clearly if you have a large base of current donors, most of your energy should be put into retaining those. However, there are folks out there who are wanting to give back and looking for a good cause. Keep cultivating the conversation with new donors and getting your message beyond your base. Just don't forget about those who are already in the door.

Final Words:
Don't forget that some of our donors are experiencing some of the roughest waters they have ever had to navigate financially. Do NOT forget that they are human. This is a time for the best of our sector to show. If someone says they cannot give this year, try something like this..."while money is important to our mission, you are more important...how can I keep you involved in the important work we are doing". Let them know that they represent more than money to your organization. Some things you can do to show that respect might be...featuring in a newsletter, taking to lunch and introducing to another colleague or donor they might connect with, having a board member take them to lunch, or just a quick email that says you were thinking about them today and hope all is well. The passion that drives the mission of our organizations can now transform into compassion.