The State of Relationship Fundraising – A Conversation, Part II

By Giles Pegram
On April 20, 2015 At 2:00 pm

Category : Best posts Q2 2015, communication, donor service, donors, Latest posts, loyalty

Responses : 3 Comments

This is the second of two blogs looking comprehensively, and provocatively, at the state of relationship fundraising

In the last blog, we defined relationship fundraising, and looked at its implications, strengths and weaknesses.   Today, we build on that, and look at the challenges faced by relationship fundraisers, the lessons we have learned, what we need to do differently, and the future for relationship fundraising.

 

In reading the first blog 10 days ago, the balance seems to be weighted strongly in favour of the approach we call relationship fundraising.  What are the challenges facing fundraisers and Appeals Directors?

Measurement

  • How to change culture from success being about short term income, to being about LTV and satisfaction as well?
  • Specifically, how to get CEOs, COOs, CFOs, and Trustees away from just looking at the performance on a monthly cash basis, and start to look at satisfaction, and LTV?
  • Most charities pay most attention to annual budgets, forecasts, and cash in / cash out. Good charities have three year models.  But relationship fundraising requires charities to have at least a five year time horizon.

Investment or overhead?ScreenHunter_01 Apr. 19 21.39

  • How to get Trustees to think of fundraising as an investment ( in competition with bonds or shares ), not an overhead (in competition with services)? How do we stop CEOs ‘cutting 10% off all budgets’ without thinking that the expenditure on fundraising is what drives income?

Fundraisers

  • How to get fundraisers to think and act in a way that ensures that every communication with a donor should move the relationship on, not just measure by response rate, average gift, and ROI? How do we get the fundraiser’s mind-set attuned to relationships, not transactions?   Don’t just analyse how donors behave, analyse how donors feel.
  • How do we get communications departments to agree?
  • Should we stop asking for money altogether? Should we, at the end (?) of each stewardship communication, ask if donors want to give / upgrade. ( There is evidence that this approach increases response.   Donors who are asked to give / upgrade, feel bad if they say ‘no’.   Donors who are asked if they would like to give / upgrade feel OK if they say no.   They are being given a choice.)
  • Giles_6How much do we spend on acquisition? How much on stewardship / retention?   How have we got the balance so wrong?
  • We don’t take a holistic approach to the experience a donor has of our charity. What drives it?  How can we change?  How do we move away from a ‘donor journey’ which comprises appeals, interspersed with the occasional stewardship communication, to a seamless ‘journey’ that looks at all the communications a donor will get during the year, looking at impact on satisfaction as well as cash in the year?   (And abandons measurement of individual communications as the sole measure of success. )

Supporter Care / telephone fundraising / 1-1 contacts

  • Giles_7In relationship fundraising, supporter care staff become front-line fundraisers. As do telephone fundraising staff.  In-bound as well as out-bound.  (How many reading this have ever monitored staff who deal with in-bound calls from, say, DRTV Ads, on a regular basis? I haven’t.)  In relationship fundraising, we should be paying these staff as fundraisers, getting rid of scripts, allowing the donor to dictate the length of the call.   Unscripted, donor led calls last up to six times longer than scripted calls.   Yet we continue to drive these costs down, which means quality is also driven down.
  • Your supporter service and telephone fundraising staff spend all their time communicating with individual donors. Do we give as much time to supporter care as fundraising?
  • Each of these staff hold the relationship with the donor in their hands. Every contact should increase satisfaction. This principle should be made explicit, with the consequent changes in structure.
  • Are supporter care staff empowered to resolve issues from donors that need resolving? Donors who have major problems that are immediately resolved are 4x more loyal than those who aren’t satisfied.
  • Should we blur the lines between fundraisers, supporter services, telephone fundraising, and just have a team of staff who are excellent at donor relations on an individual basis?
  • Specifically, we know about the importance of saying thank you, but with an operation dealing with 12,000,000 transactions a year, we at NSPCC wrestled with the idea of getting thank yous out to new donors within 48 hours. Yet we know that new donors thanked within 48 hours are 4x more likely to give again.   At NSPCC this was not a strategic priority, and should have been. “You persistently sent me appeal after appeal, but you still haven’t thanked me for the gift I sent two months ago.”

Other

  • Thank donors for the same things you asked them for. If you asked them to feed a hungry child, don’t thank them for fighting world poverty.  Write and design your thanks with just as much passion as you write your ask.
  • Should we create a ‘Donor Champion?’ Someone who checks  all outbound communications with the test:  “How will donors feel after the communication?   Will it increase their satisfaction?”
  • Almost all Annual Reports focus on the size of the need, the scope of the charity’s response, and thank donors for the part they played. In relationship fundraising, the Annual Report would be 49% about the beneficiaries, 49% about the donor, and 2% about the charity.  I have seen just one (http://t.co/PxnLVcP4CU).   This should be the starting point for an Annual Report in relationship fundraising.   How do we get fundraisers to act, and communications staff to agree?
  • How do we get back to the essence of a charity, where donors are a vital part of the Mission, involving everyone?
  • “Fundraising is the gentle art of teaching the joy of giving.”

That’s quite a challenge.  What lessons have you learned?

We know that the silver bullet to lifetime value is donor satisfaction.  But how many of us know what drives donor satisfaction?  Why?

We are obsessed with spreadsheets, analysis and segmentation, yet we are not equally obsessed with how donors think and feel about their relationship with our charity.  Why?

I believe there are two answers to these questions ‘Why?’.

Giles_8First, we don’t actually know what to do.  We know we should be “building relationships” but we don’t actually know what that means in terms of what we should be doing differently day by day.  We don’t come to the office each day thinking about our donors.  We come to the office each day thinking about the results of the last mailing, and our plans for the next.

Secondly, in our organisations the Appeals Director’s success or otherwise is most likely to be measured by the Finance Director, based upon the expenditure on fundraising in the year, and the income that that achieves in the year.  Is the ROI, year on year, increasing or decreasing?  This can lead to short-termism; reducing costs, achieving the budget, reviewing the management accounts month by month, and not long-termism, focusing ruthlessly on donor satisfaction.

satisfiedWe know that there are seven key drivers that increase satisfaction, increase commitment, increase loyalty and increase lifetime value.

  1. Donor perceives your organization to be effective in trying to achieve its mission
  2. Donor knows what to expect from your organization with each interaction.
  3. Donor receives timely “thank you’s”
  4. Donor receives opportunities to make his or her views known
  5. Donor is given the feeling that he or she is part of an important cause
  6. Donor feels his or her involvement is appreciated
  7. Donor receives information showing who is being helped

(Thanks to Roger Craver, and his book, Retention Fundraising.)

But they aren’t pinned above people’s desks.

They should be.

There are some specifics.

  • We should communicate with donors often enough that we are part of their lives. If you think you are doing donors a favour by going silent on them, you don’t understand why they are donors.  There is an assumption that people don’t want our communications. Our aspiration is that donors look forward to their next communication from us. Every contact and communication should move the relationship on. Every communication should re-enforce the donor’s decision to be a donor.  Increase satisfaction, loyalty and LTV.
  • Charities are acting in the best interests of their beneficiaries if they think with a 5 – 10 year time horizon, not a 1 year one. We must demonstrate to Trustees that satisfaction and LTV are more important than cash.  Annual cash targets for activities, and maximising LTV, are an oxymoron.   But we need cash.  So there must be a balance.
  • Giving should be about philanthropy, not guilt.
  • We should give donors small problems they can imagine solving, not big problems that emphasize how small they are. People decline to do what they can do because they feel bad about what they can’t do.   Who is the hero?  Our charity, for the fantastic work we do, or the donor, for making it possible? Each communication should be about the donor, and what they will accomplish through their investment.

So what about the future?Giles_10

Building donor Loyalty is the biggest challenge facing us today, and the biggest opportunity.   First, Appeals Directors need to buy in to a new paradigm that embraces LTV as the measure we should be most concerned about, and increasing satisfaction is the key driver of loyalty, and thence LTV.   Then they need to decide what they want to do to make that real.   Then they need to demonstrate this to the Senior Management team.  Once they are convinced, they need to create the tactics for convincing the Trustees.

Retention is the door to the future of fundraising. With acquisition becoming more and more expensive, retention is the only way forward.  And the most significant thing we can do is to improve satisfaction, which we are in charge of, to measure it and improve it.

Hopefully, in ten years time, we will judge fundraising by a different set of metrics, which focuses on satisfaction, loyalty and LTV, not appeal by appeal, whilst recognising the need for annual cash budgets. It isn’t ‘either / or’, it’s ‘both / and’.

At the moment, we talk relationships, but manage short-term performance.

 

 

 

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Giles Pegram (13 blogs on 101fundraising)

Giles is vice-chair of the Commission on the Donor Experience, an initiative aimed at transforming fundraising, to change the culture to a truly consistent donor-based approach to raising money. He is also a trustee of the Institute of Fundraising.


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Comments

  1. Giles what a great checklist – I’ve written the 7 points down, extracted the gem of ideas from within, and shared your post. I completely related to the 5-10 year horizon. And I think there is even more reason why it is so important now. With such a horizon organisations have to set a goal and paint a vision. Having seen and experienced the impact of an ambitious goal I can’t think of single more powerful way that has helped us engage supporters. With such a horizon your message from their perspective becomes consistent. And by looking after them what do supporters of your mission do? They spread the story to their network of contacts. And in this connected world where everyone is a channel you just do not know who people know – so that regular donor could the route to a major gift. This is where relationship fundraising truly takes off and great story telling is core. It really is so simple – but not easy.

    Yet you are right to highlight that pressure is always there – the one year horizon that can push us to behave in ways we shouldn’t. Using techniques that stick to the measurable and the safety of immediate direct response.

    Thanks for sharing.

     — Reply
    • Hi Richard,

      Good to hear from you.

      Thanks for your very kind comments on the blog. Your ideas are so true. How can we focus on five – ten year time horizons when top management and trustees focus on annual budgets, and monthly reporting? The very walls of our organisations whisper ” budgets ”

      Best

       — Reply
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