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Nick Jaffer: Kate, we both know donor stewardship is so important in how we engage, retain and grow our relationships with our donors. But, now, in the context of COVID-19, stewardship has a heightened relevance for us and our supporters.

Kate Robertson: Something that vexes a lot of people is how much time, or percentage of your time, do you spend on donor stewardship.

There is no single answer, other than to say there’s never too much time you could spend on stewardship. In the end, it is a very valuable investment of your time. It’s more cost-effective to keep the donors you’ve got than to get new donors. But I’m mindful resources are tight for many, so it does have to be proportionate, and you have to find the right balance for your situation.

Nick Jaffer: The latest studies have shown a couple of things.

The number one reason around the world why people stop giving is donor fatigue. That’s not entirely surprising in Australia. According to the ACNC [Australian Charities and Not-for-profits Commission], we have about 56,000 charities and a 4% annual growth. So, we have a very saturated market with increasing competition.

The latest stat from Blackbaud Target Analytics shows 67% of donors give to six-plus organisations. And, the 2016 Giving Australia Index found that donors stop giving because they don’t know where the money is going or how it’s being used, which echoes a benchmark Canadian study at the turn of the century on why major donors stop giving.

These stats tell us why accountability and stewardship are so important and why time needs to be allocated to it. If we’re not looking after our donors well, we risk losing them.

The Association of Fundraising Professionals [AFP]compared the private sector with the nonprofit sector. First-time retention of customers for the private sector is 94%, whereas the nonprofit retention rate for first-time donors is 27%, and only 46% of all donors renew. It puts on an incredible amount of pressure, now and ongoingly, if we have such a high donor churn.

Kate Robertson: If only 46% of all donors are going to renew, then it’s really, really important we think about what programs we’re going to start in the first place and how we are going to retain those donors. I’m very conscious during the past several months there’s been many new initiatives to raise new money, but we have to think hard about retaining those donors. Giving Days can be very similar, where there’s a huge amount of effort to bring a lot of smaller donations in on a particular day, but then the efforts to renew and retain those donors is quite considerable, and in small shops that becomes a really significant thing.

Reducing donor losses is the least expensive strategy for increasing your net fundraising gains. With the effort, cost, time, collateral and strategic thinking that goes into finding new donors, you would be better spending your time keeping the ones you already have.

Nick Jaffer: Research from Adrian Sargeant and Stephen Lee shows it costs 10 times more to bring in a new donor than keep an existing one! In the same research, it takes 18 months for a new donor to cover the costs of their acquisition—so if we don’t have a strategy to get a gift in their second year, it’s actually better not to get them at all because your organisation will lose money. We spend a lot of time on donor acquisition but we really need to be thinking about building retention and donor renewal as well.

Kate Robertson: At the centre of your donor stewardship and retention, unsurprisingly, is your donor. We have a notice up in the office that says, “They are not our donor, we are their charity”. It really flips the thinking, and puts the donor at the centre.

I think authenticity is critical. People need to feel a sense of importance and value about their gift. No matter what someone has given, they should feel they have made a difference. It’s impact, not income, we need to be talking about. That’s the motivating factor. If you can tell a good story around how their giving has made a difference, you are more likely to encourage people to consider making larger gifts in future.

I also think  it’s important we facilitate a connection to the institution. It’s not enough for the donor to have a good relationship with you. You need to spread those relationships around the organisation and allow that donor to be excited about the future of the organisation and the part they can play in it, otherwise we’re failing in our duty.

Nick Jaffer: Research from Penelope Burk about donor expectations shows that donors expect to be engaged quite personally.

Ninety-five per cent of donors would appreciate a call within one or two days. Eighty-five per cent have said a call from a board member within days of a gift would influence them to give again.

Donors who were called gave 39% more the next time they were asked compared to those who weren’t called. After 14 months, called donors were giving 42% more. So, if we just did one thing, and instituted this calling program to thank donors, we’d see a measurable impact on money raised and donor retention.

The other advantage is that involving board members can help nurture the internal philanthropic culture within your institution. It can help create champions and may help save you time going forward.

Kate Robertson: I think that’s an important point. And, to implement it, having a really good matrix and a plan for how you’re going to handle donors who give different size gifts helps ease the burden. I’m also mindful that what represents a significant gift is different for every organisation so you need to tailor it for your own circumstances.

You can be flexible but, broadly speaking, if you set out a plan that’s got rough parameters around what you’re going to do for what level and by whom, that will help you enormously.

What donors want is a prompt response to their gift. They want it to be personal so that it’s clear that you understand who they are. They want to know that their gift is making a difference. Think of your strategy in terms of being prompt, being personal, being powerful.

Nick Jaffer: I recently interviewed a person as part of a study and she was quite irked the organisation didn’t communicate with her like they knew who she was. She’s a donor and a former long-time board member, but the acknowledgement she gets doesn’t recognise she has this deep history and relationship with them.

Kate Robertson: When you have staff who have stayed in their roles for a long time you get to know those relationships. But actually data is a tool that we must use. Making sure you’re using your CRM effectively is going to make your stewardship so much easier. But, more than that, use it to segment your donors and devise your strategic programs according to size and type of gift and to the area of support. It speaks to the donor, their experience and the sense you actually do have some understanding of who they are and what they care about.

And if you don’t have a CRM that’s particularly robust, start to think in terms of groupings of people and how that’s going to determine your stewardship plan and the way you can manage relationships.

Nick Jaffer: There are many ways you can slice and dice your donors up into segments and here are a few.

We’ve talked already about size and value of the gift. You could also segment your donors based on where they live, for example your home city donor versus a regional or interstate donor.

Donor giving history is another example. You could look at someone based on their longevity of giving, what their future giving is going to be, and whether there’s a potential for a gift-in-Will. Rather than looking at dollar amount, you’re looking at the length of their relationship. Or you could look at their potential capacity, based on their career or their area of study, taking into consideration average income levels.

If you do any prospect rating or if you use LAI – linkage, ability and interest – to evaluate your donors, you may create a different stewardship program based on the potential gift from someone who has a higher ability.

There might also be a different type of stewardship based on type of gift, for example major gifts versus bequest commitments.

There are a lot of ways you can segment, but the key is to find one which simplifies managing your time while connecting donors to your institution in a meaningful way and which drives strategy for it.

Kate Robertson: One strategy I would highlight is looking at how your stewardship is responsive to the way donors are making gifts. If they’re giving online, then sending out paper receipts is not necessarily the right approach. If they’ve given through a social media initiative, then there’s a completely different way you can connect with that donor.

Some donors can be overwhelmed or surprised if they’ve given a relatively modest gift online and you then send them a pile of stuff through the post. Their immediate thought is, “Hang on, all of my money has just been spent on the stuff you’ve sent me”. Donors are sensitive to the cost of the stewardship they’re experiencing.

It’s actually okay to talk to your donors directly about what kind of stewardship is effective for them and how they’d like to be communicated to. Particularly at the higher end of your donor scale, where a deeper dive can help to develop your program.

Do you know your donors’ passions, hobbies, what’s really driving them? If you don’t understand your donor, your ability to look after them, or indeed to talk to them, is going to be weakened. We can get too transactional about our stewardship. You mustn’t ever lose sight of trying to understand what’s important to the donor and what motivates them.

Nick Jaffer: This leads nicely into the importance of the fundraiser’s role in stewardship. Research by Adrian Sargeant shows the quality of service by your fundraising team, and the quality of your interactions, increases donor loyalty. Quality of service and interactions also boosts donor satisfaction. And, according to his research, very satisfied donors are twice as likely to give than just satisfied donors.

But it gets even better than that. Satisfied donors don’t just give you more or are likely to give you more, but they give to you for a longer period of time. So if we keep our donors engaged and satisfied, report back, provide that accountability, not only do we increase how much they will give, and the likelihood they’ll give, but we increase their relationship with us over a longer period of time. This of course can lead into a potential gift-in-Will. It’s not a one-off transactional engagement, but something long-term.

Kate Robertson: To finish off, my top tip for the most effective stewardship practice is be a donor to your institution, because you learn pretty fast whether that works and how that feels.

Nick Jaffer: I think one of the things you should do, if you haven’t already, is conduct a stewardship audit. You can use an outside firm like ours but you don’t have to. It can be as simple as directly talking to a range of donors to get a sense of how satisfied they are and how they would like to be engaged with your institution. It’s also important to compare your stewardship program to others. I think it gives you a sense of how you can be better and how to take the program forward.

Kate Robertson: My last tip would be that it is better to do fewer things well and reliably than to do lots of things badly. Setting up lots of things that you can’t continue is problematic, so quality rather than quantity is really important.