In many sophisticated fundraising organizations, there is still a sharp dichotomy between major and planned gifts. As a fundraising professional, I cannot, for the life of me, understand this how this approach truly benefits the donor. Despite the growing professionalism of the non-profit sector, there is still a lot than can be learned by studying how our for-profit counterparts acquire and service their clients.
Every year, banks and other large for-profit organizations spend millions of dollars trying to understand their clients. Through refined data analysis techniques, these organizations look for evidence that allows them to develop and implement sophisticated methods for acquiring and retaining their clients. While non-profit organizations may lack the resources to conduct extensive data analysis, they can certainly learn a lot by studying the strategies and tactics of their for-profit counterparts.
Donor Acquisition and Donor Retention are two very different functions
In the vast majority of for-profit organizations, there is a clear structural distinction between client acquisition and client retention. Client acquisition is a function of the Sales and Marketing group. This group is primarily responsible for delivering a clear and concise message which asks the potential client to do business with that organization. Once “signed on”, the ongoing service delivery is assigned to some kind of customer service team or a dedicated relationship manager.
In many charitable organizations, there is no distinction between acquisition and retention. Most fundraising charities are organized around programs. In other words, there is an Annual Program team (which often encompasses special events), a Major Gifts team and a Planned Giving Team. Even in organizations with a dedicated donor-centered philosophy, this structure creates confusion for the donor. Let’s look at this through a simple case study.
Mrs. Marion Blake is a long-time resident of Tollville, Ontario. Three years ago, the 81-year old widow decided after a recent stay in the local Tollville Memorial Health Centre that she would like to make a small cash donation to the organization. Up until then, Mrs. Blake stuck to the notion that health care funding was the responsibility of government. But it was her stint as a patient that convinced her that the hospital needed the support of its community to survive and thrive. Incidentally, Mrs. Blake has no children, lives on a modest pension but has a significant estate consisting of real estate and GICs.
A long-time philanthropist, Mrs. Blake wrote a cheque for $100 to TMHC. Three weeks later, she received a form thank you note and her income tax receipt. Later that year, she responded to a direct mail piece and wrote another cheque, this time for $50. The following year, again responding to a direct mail campaign, she sent in another cheque for $50. Each time, Mrs. Blake received her tax receipt and a form thank you letter.
An organization that is structured along “Program” lines is more than likely to miss key opportunities to build a strong longer-term relationship with Mrs. Blake. Why? Because an organization that is structured to reflect programs rather than the donor lifecycle creates problems that invariably reflect upon the donor relationship. Who “owns” the relationship with Mrs. Blake? The annual program? The planned giving program? The capital campaign? Do the directors of these respective programs get along? Do the key success factors of each of the programs reflect a donor-centered environment?
Donors don’t distinguish between Major and Planned Gifts – why should we?
So how should an organization be structured to reflect the best interest of its donors? Personally, the “personal” or “individual” giving approach is one that I really endorse, especially in organizations with an established focus on planned giving. Each donor is individually evaluated. The donor segmentation process can be as analytically rigorous as the organization would like it to be. Donors with a higher propensity to make a larger gift (whether immediate or deferred) would be assigned to a relationship manager. Other donors might receive less attention (perhaps an annual thank you call in addition to the receipt and letter) while others might receive more (personal stewardship by the President of the organization).
So let’s take a look at our friend, Mrs. Blake. In most respects, Mrs. Blake fits the profile of a donor who has the potential to make a planned gift to the organization. So now that Mrs. Blake has been “acquired” (in our case, she was acquired as a result of being a patient but that acquisition might have been the result of a direct mailing, radio commercial, print ad, etc), let’s see what we can do.
Shortly after her first donation, Mrs. Blake receives a “Welcome Package”. Among other things, this package thanks Mrs. Blake for her recent gift and includes information about how it will be used to support health care in her community. It also contains information on recent developments within the organization as well as information on planned giving and the Capital Campaign.
One week later, Mrs. Blake receives a follow up phone call. On the call, Mrs. Blake discusses why she made her gift and her recent philosophical shift with respect to health care funding. She is clearly delighted at the level of personal attention she received as a result of what she considers to be a small gift. Mrs. Blake talks candidly about her personal situation, which leads the staff person making the thank you call to conclude that Mrs. Blake could likely make a planned gift to the organization within a few years. She is assigned to a relationship manager who provides Mrs. Blake with excellent service and attention. Four years later, Mrs. Blake decides to include the TMHC Foundation in the most recent revision to her Will.
Stewardship is everyone’s responsibility
I’ve heard about organizations that live by the mantra that everyone – all staff and volunteers – is a fundraiser. The same goes for stewardship. In the for-profit sector, you’ll rarely see organizations with outstanding stewardship (i.e. client service) say that their corporate strategy is to provide excellent service. Rather, outstanding service is woven so deeply into the fabric of the organization that everyone – from the CEO on down; or the mailroom clerk on up – shares the responsibility of ensuring that each and every client receive an appropriate level of individual attention.
In Mrs. Blake’s case, it was a thoughtful, proactive approach to stewardship that eventually resulted in a planned gift. This approach is typically best served when the organization is structured to reduce the dependency on inter-program communication (i.e. how well does the Annual Program Director communicate with the Planned Giving Director).
A thoughtful approach to acquisition and stewardship need not inhibit your organization’s creativity. In fact, I would argue that an organization set up on the Acquisition-Stewardship model is more likely to be creative because the skill sets of each individual are better suited to his/her functional role. For example, since donor acquisition is a marketing activity, we can place experienced marketers in that role, rather than other fundraisers whose skills are better suited to managing ongoing relationships. Furthermore, I would strongly suggest that building an organization along these lines is a better use of organizational resources since individuals are performing tasks in which they have considerable experience and expertise.
It’s important that an organization (especially larger organizations) continue to retain professional skills (accounting, finance, tax, etc) that allow the organization to function within appropriate legal and ethical parameters. But in the name of donor-centered fundraising, it’s time to move beyond the program-based structure into a more proven and efficient organizational framework.