1. The Donor Development Process
Presented by
John Elbare, CFP
Florida Philanthropic Advisors, LLC
Copyright 2013 Florida Philanthropic Advisors, LLC

2. Donors or Donations?
What is more important in your organization, donations or donors? Your answer has a lot to do with your success!
Copyright 2013 Florida Philanthropic Advisors, LLC

3. Transactional Approach
Transactional approach is inherently inefficient. It provides no positive reinforcement for the donor. It misses out on most of the economic value of a donor: a large gift at the end of life.

4. The Problem
A fund raising strategy based mainly on raising funds usually results in revenue stagnation. Why? Lapsed donors. Donor who make a gift and never give again.

5. Donor-Centered Approach
Recognizes the economic value of a donor’s giving over a lifetime Focuses on helping the donor feel involved with the mission. Encourages a sense of investment in the mission

6. Why is This Important?
The key to sustained success is a base of loyal donors. If you do not retain your donors, you are spinning your wheels.

7. A Typical Case Clarence donates through Giving Challenge -- $50.
He becomes a steady donor at $100/year
He is personally solicited and starts giving $1000 annually
He leaves his home as a gift in his will

8. The Economics
Year one……… $ 50 Years 2 – 6 = $100/year Years 7 – 14 = $1000/year.... 8,000 At death = $125, ,000 Lifetime Giving 133,550 Average per year: $ 8,900

9. Questions: How would this donor be treated by your organization?
Would you have noticed him?
Would have cultivated a relationship with him?
If not, why not?

10. What is the Real Value of a Donor?
This year’s gift? Past Giving? Current Giving? Potential for Future Giving? An Entire Lifetime of Giving?

11. Development Pyramid Larger Gifts Planned Gifts Major Gifts
Smaller Gifts
Annual Gifts
New Donors

12. What’s the Solution?
Growing a Loyal Donor base This is the key to building a growing, sustainable source of revenue.

13. A Critical Question
What does it feel like to be a donor to your organization?

14. Warning Signs
You have a high donor lapse rate (or you do know your lapse rate)
You do not know why your donors drift way
Your revenue is not increasing substantially every year.

15. So, How Do We Do It?
By intentionally building strong relationships with our donors
By helping them feel good about their support and involvement
By providing positive reinforcement
By providing opportunities for involvement

16. What Does A Donor-Centered System Look Like?
Donor Acquisition
Donor Retention
Donor Upgrading
Major Gift
Planned Gift

17. Donor Acquisition
Continuous new donor acquisition is essential for long-term success in fund raising.
Your organization needs a steady flow of new donors to grow your donor base.
Without a growing donor base, your revenue decline, not increase, over time.

18. The Acquisition Challenge
A donor’s first donation is usually:
That donor’s smallest donation
The hardest donation to get
The costliest donation to raise
A way to test the charity
So, why don’t we work hard to keep the new donors we do acquire?

19. Donor Renewal
It is far easier to retain a donor than to go out and find another one to replace a lapsed donor.
Personal renewal letters
Exemption from frequent solicitations
Reports on the organization’s work
Donor recognition club
Opportunities for involvement

20. Your Opportunity
Every gift is an opportunity to provide positive reinforcement and strengthen the relationship. It is also an opportunity to harm the relationship and send the donor elsewhere.

21. Why Do Donors Give?
Donors give because they care about your charitable mission. Your success in fund raising depends on how well you make your case for support.

22. Positive Reinforcement
A behavior strengthens if it is immediately followed by a positive reinforcer (reward)
A behavior reduces if it is not followed by any reinforcer (extinction)
A behavior is suppressed if it is followed by a negative reinforcer (punishment)

23. Gift Acknowledgment Use personal thank you letters
Get their names right
Connect the gift to the cause
Get letters out fast
Treat every donor well, despite gift size
Make follow-up phone calls
Involve Board Members
Find out how they want to be involved
Begin relationship building with the first gift
Use a new donor kit

24. Keep Good Records You need a good information system:
Record of all transactions
Donor giving histories
Gift acknowledgments
Mail sort capability
Contact management

25. Goals of Good Donor Relations
Make sure every donor is properly thanked after each gift.
Proactively manage your donor renewal and upgrading process
Identify donors who are ready for personal cultivation and begin that process
Work to maximize each donor’s lifetime support for your organization.

26. The Giving Decision People give from the heart
They give to help people they empathize with
People do not give because your organization has needs

27. Opportunities for Involvement
Tours of your programs, facilities
Lunches with the CEO
Opportunities to meet clients
Opportunities to meet/shadow staff
Opportunities to volunteer
Good communications
Invitations to all events

28. Donor Recognition Clubs
Avoid a lot of levels
Recognize both annual and cumulative giving
Annual recognition event
Publish an Honor Roll
Consider a Donor Wall
Offer Certificates
Avoid Expensive Gifts

29. Donor Upgrading Monitor donor giving histories
Raise the ask amount, based on past giving
Tie the new amount to service levels
Consider a monthly giving program
Move to personal solicitations when loyalty is established.

30. Personal Cultivation
Donor acquisition, retention and upgrading is designed to produce a steady flow of loyal donors for personal cultivation. Virtually all large gifts are obtained through personal, face-to-face relationships.

31. The Donor Relationship Cycle
Identification
Cultivation
Stewardship
Solicitation

32. Some Important Metrics
Number of new donors
Lapse rate
Average gift size by donor
Cost of raising funds
Years of consecutive giving (loyalty)
Number and timing of mailings

33. Fund Development Plan
A written plan is essential for reaching your goals. A failure to plan is a plan for failure.

34. Your Plan Keeps You Focused
Often, the fund raising staff is:
Under-trained and overworked
Given unrealistic goals
Given insufficient resources
Given little or no board support
Provided with no systems, plan or policies
Yet -- they are expected to raise money!
Copyright 2013 Florida Philanthropic Advisors, LLC

35. Benefits of a Development Plan
Stay focused on priorities
Obtain sufficient support
Engage the Board
Use resources wisely
Ensure feasibility
Maintain balance
Provide accountability

36. Characteristics of a Good Fund Raising Plan
Strategic in Scope
Written
Feasible
Clear Objectives
Defined Activities
Measurable Outcomes
Easily Evaluated

37. Strategic in Scope Your fund raising plan reflects your strategic plan
You are making your case for your vision

38. Making the Case Making the case for support requires both:
Factual Reasons – why a gift is a good investment in a charitable cause.
Emotional Reasons – how a donor can empathize with the people who are served.

39. Investment in the Program
Without adequate investment, a promising fund raising program is doomed to failure.
Undercapitalization is the biggest reason for business failure – applies to fund raising as well.

40. ROI for Fund Raising Strategies
Low ROI:
Acquisition Mail
Special Events
Renewal Mail
Thrift Stores
Memberships
High ROI:
Monthly Giving
Personal Ask
Major Gifts
Planned Gifts
Capital Campaigns

41. Typical Giving Patterns
Initial Gift
$25 - $100
Renewal Gift
$50 - $500
Major Gift
$ $50,000+
Planned Gift
$ 25,000+

42. Cost of Raising Funds Initial Gift 50-100% Renewal Gift 25-50%
Major Gift
10-20%
Planned Gift
5-10%

43. Feasibility
The best fund raising goals are feasible yet ambitious Unrealistic goals can destroy your fund raising effort; they build in a sense of failure and demoralize your staff and volunteers

44. Fund Raising Systems
A system ensures that policies, procedures and practices are consistently followed. A good fund raising program is system-dependent not people-dependent.

45. Examples
1. We need your support for our home nutrition program. We serve 580 seniors and now need to purchase a new van and hire 3 more staff. 2. Your gift will help feed homebound seniors in our community. With your help, we will make sure no senior goes hungry.

46. Elements of a Plan Strategic Goals Donor Development
long-term and short-term
Donor Development
Acquisition
Renewal
Upgrading
Personal cultivation/solicitation
Major/planned giving
Stewardship
Metrics & Reporting

47. Example of a Goal
“Our goal is to raise $500,000 this year to establish an endowment fund that will provide on-going support for client assistance every year. A $500,000 endowment will provide approximately $20,000 each year in client assistance funds.”

48. Sample Activities
Target Group: Loyal Donors who have made a gift every year for the past 4 years and/or who have a cumulative giving of at least $ 1000.
Activities:
Compile prospect list
Hold prospect review sessions, rate prospects
Send approach letter and follow-up phone call
Seek personal visit
Solicit gift after appropriate cultivation
Expected Outcome: letters & calls per week; 3-5 visits per week; 2 solicitations per week; two gifts per month, avg. $ 7, = $180,000/year
Expenses: Mileage, meals, postage, printing = $6,000
Staff Time: 25 hours/week
Timeline: Start Oct 2005, then continuously

49. Are your reports focused on the money or the donors?
Indicators
Watch these data:
Number of new donors
Number of lapsed donor
Lapse rate
Renewal rate
Size of donor base
Growth (or decline) of loyal donor segment (5+ years of annual giving)
Are your reports focused on the money or the donors?

50. Florida Philanthropic Advisors, LLC
Planning Pays Off!
Florida Philanthropic Advisors, LLC