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Retaining Donors — The Importance of Donor Stewardship

Donor Stewardship Best Practices

Many non-profit organizations have excellent donor prospect programs. They know how to convince donors to give a gift. After that first gift, however, many nonprofits don’t know what their next move should be. Other than thanking the donor and keeping in touch with them in the hope that they might give another gift, they never make concrete plans as far as donor stewardship is concerned.

What is Donor Stewardship

What is Donor Stewardship?

Donor stewardship refers to systems and methods aimed at demonstrating fiscal accountability, expressing appreciation and reporting on the impact of philanthropic efforts to donors. The process is geared toward building a relationship and fostering communication between the donor and the organization.

Donor stewardship occurs just after a donor gives a gift to an organization. It updates donors on the progress and impact of their donations. But the ultimate goal of the stewardship is to forge a lasting relationship with the donor in the hope that they will give more gifts.

Why Donor Retention Matters

Some important donor retention trends are creating the urgency for nonprofits to focus on donor stewardship.

Nonprofit Donor Retention Trends

  • In 2106, donor retention hit a 9 year low of 46 percent. That means, that for every 1000 donors a nonprofit had 540 donors did NOT make a donation in 2017. That’s a big loss in funds to support programs.
  • Only 19% of first-time donors will donate to the same charity the following year. A lot of money was spent to attract new donors, but many of these donors did not form a long-term connection or relationship with the nonprofit.
  • Recurring donors give an average of 42% more than one time donors.

What is a Donor Stewardship Program?

It is a series of events and processes that focus on communicating and building relationships with donors. Each organization should create a strategic donor stewardship plan with very clear goals in mind. Donor acquisition is expensive and resources are limited. Nonprofit organizations need to focus on retaining the donors they already have and fostering donor loyalty. In addition, they should consider implementing strategies that create recurring donations (monthly or quarterly).

Donor Stewardship Program

Steps for Creating a Donor Stewardship Program

1. Update Your Donor’s Database

You need to know everything you can about your donors. Having a clean database will make things easier. Ensure that their contact information is up-to-date and identify how they wish to be contacted. Keep track of recency of donation, the frequency of donation, the value of the recent donation and total amount they have donated to date.

2. Define Stewardship for Your Organization

What does your nonprofit consider to be excellent care and service? It could be annual reports, customized thank you notes, phone calls, newsletters and/or social media shout-outs. How you choose to communicate to donors matters. Remember your donors will have different preferences. One may prefer one phone call in a month while another may like two emails every week. Some like to attend events, while others like to donate their time and money. The key to donor stewardship is to understand the makeup of your donors and their preferences and then create a strategic plan to foster the relationship.

3. Develop Strategy Based on Goals

Your donor stewardship program starts with goal setting. What do you want the program to do for your organization. Your goals should be SMART:  specific, measurable, achievable, realistic and timely. SMART goal setting brings structure and trackability to your donor stewardship program. For many nonprofits, their stewardship programs are focused on the following:

• Getting new donors to donate a second time.
• Getting existing donors to continue donating.
• Getting donors to donate more per donation.
• Getting donors to upgrade the amount they give annually.
• Getting donors to become advocates and refer new donors.

Specific: What do you hope to accomplish?  Be clear about your financial goal and how achieving it will impact your organization. Example of goals:

• Get 15% of first-time donors in 2018 to donate a second time to raise $15,000
• Next year increase the average donation amount of our mid-tier donors from $100 to $115 to raise $10,000

Measurable: Determine how you will know when the goal is accomplished. You need to identify key performance metrics that can be measured. You want to know how successful you were in your efforts and be able to refine your strategy going forward. For example, if you are focusing on getting one time donors to be repeat donors, you would track the number of first-time donors, number of first-time donors that donated a second time, amount of their donation and donation channel (mail, website, mobile app, event, etc.)

Achievable: How can the goal be achieved? What steps need to be taken and do you have the resources to accomplish the goals. Do you need to spend less on acquiring new donors and allocate resources toward donor stewardship and retention? What do you want your budget ratio for acquisition and donor stewardship to be? For example 75% acquisition and 25% donor stewardship? Or can you get more bang for your buck if you spend more money on keeping the donors you have and nurturing the relationship? Perhaps 66% acquisition and 40% donor stewardship are more appropriate for your organization. How you allocate your budget all goes back to your nonprofits’ goals and the potential return on investment.

Relevant: Is the goal of your stewardship program in line with the long-term goals of the nonprofit? Is their buy-in across the organization to support the effort? Is this the right time, or are there higher priorities?

Time-Bound: Your stewardship program will include short-term campaigns with start dates and end dates. In addition, it should include benchmark KPI of where you started and milestones along the way.

Donor stewardship is an integral part of fundraising. Apart from thanking and recognizing donors, it promotes donor retention, encourages them to give larger gifts and can help bring new donors into the organization through referrals.