Do you know that Donor Engagement Is the KEY to your Nonprofit’s Fundraising Success?
The key to fundraising success is donor engagement. Even if you’re not in fundraising, the fact that 70% of first-time donors never make a second gift is all you need to know as to why donor engagement is critical.
Let’s back up before diving deeper into donor engagement. It’s helpful to frame the Nonprofit sector as a whole which provides context to why donor engagement is so critical.
The Urban Institute estimates there are 1.54M 501(c)3 organizations in the US employing 12.5M Americans – that’s 1 in every 10 working Americans. This makes the Nonprofit sector the third-largest employment sector in the US according to Johns Hopkins University. To put this in perspective, let’s compare the Nonprofit sector to other employment sectors in the US economy:
- Nonprofits employ more than twice as many workers as the nation’s finance and insurance industry
- Nonprofits employ 81% more workers than the nation’s construction industry
- Nonprofits employ @ 100,000 more workers than the nation’s manufacturing industry
- Nonprofits employ 80% as many workers as the U.S. retail trade industry
From an economic perspective, the Independent Sector estimates that the Nonprofit sector contributes 5.5% of GDP. In fact, according to a W. K. Kellogg Foundation report, if Nonprofits were a country, they would have the 5th largest economy in the world!
Given the size of the sector, it’s natural to assume most Nonprofits have multi-million dollar budgets and many employees. This is not the case!
According to the U.S. Bureau of Labor Statistics, 77% of Nonprofit organizations have annual budgets less than $1,000,000, with 67% having a budget less than $500,000, and 56% of Nonprofits have less than 10 employees.
Philanthropy New Digest reports that during 2020, 40% of Nonprofit organizations experienced declines in revenue, 57% cut overall expenses, 64% suspended services, 44% reduce programs or services, and 44% reduced the number of people served versus 2019.
Despite necessary cut-backs in services and expenses, according to Giving USA 2021 fundraising revenue increased for the Nonprofit sector increased during 2020. Overall giving increased 4.1% in 2020, while online giving grew by 12.1% (with an average gift of $204), foundation giving increased by 17% over 2019, and the median donation amount for gifts below $1,000 was $20.
These facts speak volumes to the challenges the majority of Nonprofit organizations face as they strive to develop and implement post-pandemic strategies for growth, and in many cases, organizational survival given the cut-backs encountered in 2020 and 2021.
The sheer number of 1.54M Nonprofit organizations vying for funding definitely requires differentiating a Nonprofit’s value proposition to past and prospective donors. It means engaging your current, past, and prospective donors.
But what is donor engagement?
No, we won’t turn to Webster’s Dictionary – donor engagement is a catch-all term for quite a bit of activities, ways of thinking, platforms, and most of all – it’s multi-faceted.
Here are just a few facets of donor engagement – from phone calls to emails to face-to-face visits with donors; to finding out what issues are programs are specifically important to each donor; to understanding a donor’s motivational triggers for giving; to finding out more about a donor’s other philanthropic interests; to identifying, cultivating, soliciting, and providing stewardship to donors; to mapping the “donor journey” across your organization; to making it easier for donors to give; to your keeping accurate and comprehensive records; to immediately recognizing and acknowledging every donor’s gifts; to keeping track of all touchpoints and moves with your donors; to ensuring you know a donor’s communication preferences, — the list goes on.
We can’t tackle donor engagement in one blog post – that’s why we’ve created a series of blog posts to take a deep-dive into specific aspects of donor engagement.