If you ask someone the most important job of a fundraiser, only a few will answer, building donor relationships. In reality, that is the whole job of a fundraiser. Without these relationships, any donations a nonprofit receives will be temporary and ineffectual. Nonprofits may feel too overwhelmed and understaffed to focus on this critical task.
With only a few internal changes and recurring steps, even the smallest nonprofit can build strong donor relationships and raise more funds for their organization.
What is Donor Relationship Management?
Donor relationship management results are donation amounts, and more importantly, the number of times a donor gives after their first gift. If an organization has good donor relationship management, donors are more likely to continue giving and responding to an organization’s solicitation letters and other donor communication. Donors may grow into volunteers, or even endowments and major gifts for the organization.
Stewardship Vs. Donor Relations
Stewardship is a term often used within nonprofit organizations and nonprofit publications. Stewardship, unlike donor relations, is the internal decisions made by an organization. An organization can only steward a donor’s gift, not the donors themselves.
Donor relationship management is how donors feel when connecting with a nonprofit. Donor relationship management is external and proactive. Donors will see the types of communication the nonprofits send out, the acknowledgment they receive for their gifts, and any one-on-one contact they get from the organization.
The following are examples of good donor relationship management:
- Sending a personal acknowledgment letter
- Giving tours of the organization’s facility or finding other ways to show donors the work being done on the ground
- Inviting the donors to take part in the work done by the organization actively
- Sending regular reports to donors based on their type of gifts
- Educating donors on the needs of the organization
Much of stewardship relies on using donor’s gifts the way the donor intends. By being transparent and communicative with the donor about how their gift is being used, the donor will feel appreciated and vital.
The following are examples of good gift stewardship:
- Sending acknowledgments within the first 48 hours
- Ensuring donor gifts are used as intended
- Conducting audits of gifts use throughout the year
- Send annual reports
- Send follow-up tax letters
Stages of the Donor Relationship
Like all relationships, building donor relationships takes time and effort. Each organization can take steps to build and strengthen these relationships. As time goes on and these relationships grow, the stages and expectations from both parties change and further develop. The following stages are true for most donor relationships regardless of the donation amount.
In every relationship, there is an introduction. In nonprofits, that introduction can happen at an event, through a board member, through a volunteer or other donor, at an open house, or even online. Introductions are important because you only have one chance to make a good first impression. Your introduction to a new potential donor cannot be wasted.
Unfortunately, many nonprofits do waste these opportunities because they see events, mail, and online communication as ways to raise money instead of as a chance to build new relationships. While raising money is essential, an introduction event or communication piece should quickly show people the problem and how your organization is fixing it.
In business, this introduction is called an elevator speech. Every salesperson knows the importance of knowing your elevator speech like the back of your hand. Every nonprofit should use the introduction opportunity to share the organization’s mission. Ensure that every event and communication piece sent out includes your mission.
Now that you have introduced yourself, it is essential to show that you can be trusted. Donors who are interested in your mission will come back and want more information. That does not mean they want to know everything about your history.
Imagine how you would react if your first date with someone went great. On your second date, the person shared their entire life story. It would be a little much and would probably scare you away. The same is true for donors.
Instead, take this stage to show how your organization makes a difference in people’s lives and how their gift can help make an impact. Share stories from your organization’s beneficiaries through newsletters and online social media posts. Offer facility tours and other ways for donors to view your organization in action.
Another way to build trust is by being transparent. Communication is key during this stage, and this communication cannot be one-way. It is crucial to reach out to donors and ask them for their feedback and suggestions. Answer any questions they may have about what you do and why.
If you have introduced yourself, answered questions, and kept communication open and honest with potential donors, the next step will be much easier. In any relationship, it comes to a point when you ask the other person to make things official. With donors, that means asking if they would be willing to give.
It is also essential to make sure donors know how their gifts will impact the organization. What programs will their donations go to, and how can individual lives improve? If you have developed a relationship with your donor and have recorded their interests in your database, you can tailor the solicitation to them specifically.
Donorbox enables nonprofits to collect, analyze, and use donor information through its donor management features. Keeping track of past donations, adding notes, and creating reports, organizations can strengthen relationships and send targeted donor solicitations.
After donors give their first gift, your job as a fundraiser is not done. This is the stage where you can make or break a donor relationship. Best practices say gifts should be acknowledged within 48 hours.
Your acknowledgment should be personal and give specifics on how their gift is being used. Acknowledgments should let donors know that you could not make a difference without their help.
Nurturing is the final stage of building and strengthening donor relationships. Continue to focus on two-way communication. Send personal acknowledge for all gifts quickly and ensure donors know they continue to make a difference.
Do not ignore donors when they are not giving. Send them updates on programs and projects. Connect with them and ask them how they want to be contacted. Send out surveys to ask for questions and suggestions.
Why Donor Relations Are So Important
When asking for large gifts from major donors, most fundraisers have done their research and made an effort to build a relationship before asking for a gift. The idea of building a relationship when asking for large amounts is obvious, but few nonprofits think of it when asking for donations from all donors.
Building relationships should be done with each donor, just on a different level. Whether you are asking someone for thousands of dollars, an event ticket purchase, or to buy a product, the ask is easier if you know and understand your donor.
Donor relations are important because you never know how each donor will give and how their gifts will develop. A donor who gives $100 a year could end up leaving a significant amount to the organization in their will. A volunteer could introduce the organization to several large donors and sponsorship opportunities. Organizations that do not work to strengthen donor relationships will never benefit from these gifts.
Acknowledging gifts, preparing reports, and recognizing donors are essential steps to building donor relationships. Through these actions, and by creating a culture of donor appreciation and relationship building in your nonprofit, your organization will watch gifts grow.
9 Ways to Build Strong Donor Relationships
Throughout this article, we have discussed the stages of donor relationship management and given suggestions on strengthening these relationships. The following nine ways to build strong donor relationships will give your organization detailed steps to take and when to take them.
- Prospect donors
- Segment donors
- Set a cadence for communication
- Encourage face-to-face interactions
- Show donor impact
- Thank donors
- Survey donors
- Act on donor feedback
- Monitor donor retention rates
1. Prospect donors
Prospecting donors is the first step in donor cultivation. When searching for major donors, organizations use many tools to research and prospect donors. Online tools like DonorSearch help nonprofits find donors with the financial ability to become major donors. Other options include using board members and donors to introduce your organization to potential major donors.
Once you have developed your list of potential donors, it is time for the introduction stage. Remember, it is essential to make a strong first impression. Keep it simple. Explain the problem and how your organization is solving it.
2. Segment donors
As donors start to give to the organization, you will begin to see where their interests lie, how much they give, and how often. Successful nonprofits record these gifts and keep track of this information. They also segment donors into specific groups to send targeted communication.
The easiest way to segment your donors is into the major, middle, and smaller donors. Once you know how much donors can give, you can send them targeted solicitation letters with amounts that start at their regular amounts. If worded right, you may even see an increase in donation amounts.
Other ways to segment donors are by programs they support and even demographics if your organization finds it helpful. Donorbox has added new filters to our donors’ page. You can now filter by country, donation frequency, and amount of donations. We have written an article on effectively segmenting donors and audiences to help your organization find the best way to segment donors for your nonprofit.
3. Set a cadence for communication
After segmenting your donors, your nonprofit should determine goals for donor communication before sending out communication pieces. What is your goal for each communication piece? How often should you send it out? How do donors want to hear about your organization?
When sending out communication pieces, remember to keep it simple and target donors with communication that speaks to their desires and segmentation. Donorbox’s Moments feature allows you to create automatic notifications for each donor to make this process easier.
If you have a communication plan that includes the above details, your nonprofit will see a better response rate.
4. Encourage face-to-face interactions
Nonprofits have come to rely on mailed and online communication tools. Many nonprofits only interact with their donors during annual events. This lack of face-to-face contact makes for very shallow relationships.
When planning your communication with donors, personal and face-to-face activities should be based on donor segmentation. Nonprofits are burdened with lower budgets and limited staff. Meeting each donor face to face is not possible.
What organizations can do is decide how each donor can receive personalized communication from the nonprofit. Organizations should always take the time to meet with major donors and those who have the potential to become major donors. Meet with these individuals to discuss the programs that may interest them and find ways they would like to help.
Mid-size and smaller donors can be contacted by phone or through personalized letters. This is a great way to get your board involved in donor relationships. Ask your board members to take part in making calls to donors after they give. Let them learn more about the donors and share their personal stories to provide interest.
5. Show donor impact
Another way to send out personalized communication is by sharing stories from individuals impacted by your donors’ gifts. Donors love to hear how their donations have affected real people on the ground.
Donors will give more to nonprofits where their gifts are making a difference. Sending donors acknowledgments, newsletters, emails, and online communication from the organization’s beneficiaries give donors a sense of community and pride in what they have done.
6. Thank donors
In addition to acknowledging their gifts, there are several ways your organization can thank donors. Why not tweet out or post a thank you online. You can also send out a list of donors in your annual report, newsletters, and a page on your website. Donor walls are an excellent way to thank donors for their gifts. This can be done at your facility or online.
or send a thank you letter to the donors for their contribution. This can be either physical or via email.
7. Survey donors
Surveying donors not only gives a nonprofit insight into what donors want but also strengthens donor relationships. Organizations that regularly survey their donors understand that many will not respond but continue to make the effort to show their interest in the donors’ opinions.
8. Act on donor feedback
When donors do respond to the surveys, your organization sends out, act on that feedback. If there are good ideas from donors or volunteers, put them into action and give credit where credit is due. Donors love to know they are being listened to.
9. Monitor donor retention rates
Finally, as more donations come flowing in, your nonprofit needs to keep track of donor retention rates. Donors that continue to give are a great success. It means your organization is communicating successfully.
Measuring donor retention will give you a better idea of what is working. Measure your event attendance, volunteerism, email click-through rates, website visits in addition to donor gifts. Regularly print reports to keep track of donor history with Donorbox’s donor management platform.
Focus on Donors over Donations
By spending time strengthening donor relationships, instead of chasing after donations, your organization will realize its fundraising goals with more regularity. Taking the steps necessary to build these relationships will help your organization grow and reach its mission. It will also retain donors more donors and improve its image in the community.
For more ways to strengthen donor relations, visit the Donorbox blog for more tips and tricks.