Fundraising is perhaps the most important part of successfully running charities. It enables them to pay for their expenses and carry out their missions to make a positive impact on society. However, more often than not charities face various challenges when it comes to raising funds.
Let’s look at some numbers:
The Global NGO Technology Report found that 60% of surveyed non-profits worldwide reported inadequate funding as a significant challenge they face. In the US, the Nonprofit Sector Survey conducted by Nonprofit Finance Fund reported that 76% of non-profits in the country faced a recurring or chronic funding shortfall. A UK Charities Aid Foundation study reported that 62% of charities cited fundraising as their top challenge.
But that is not all.
According to the Fundraising Effectiveness Project Report, overall donor retention rate for non-profits hovers around 45.5%, indicating that a significant portion of donors did not continue their support from one year to the next. Even larger non-profits like Wikipedia report that roughly 2% of their readers donate every year. According to CauseVox, a 10% increase in donor retention increases lifetime value of a donor base by 200%. Yet, as we see very few charities and non-profits make a serious effort to sustain their donor numbers.
As we see, there are two primary challenges within the larger fund-raising challenge:
- Raising funds, and
- Donor retention
Today, we look at some of the key factors that contribute to these challenges and discuss effective strategies to overcome them.
Lack of Planning
Effective fundraising requires careful planning and strategizing. Many charities struggle with a lack of comprehensive planning, which can lead to inefficient use of resources and missed opportunities. The Nonprofit Research Collaborative says that only 40% of non-profits have a formal, documented fundraising plan.
Without a clear roadmap, it becomes difficult to set achievable fundraising goals, identify target donors, and create effective campaigns. Here are some steps to take care of this problem:
1. Develop a Comprehensive Fundraising Plan:
Charities should have a well-defined fundraising plan that outlines specific goals, strategies and tactics to guide their fundraising efforts. The plan should include target fundraising amounts, target donor segments, fundraising methods, and a timeline for implementation. For more information on this read our 3-part series post on Fundraising Goals and Objectives.
2. Conduct Prospect Research:
Research potential donors to identify individuals, corporations, foundations, or grant-making organisations that align with your charity’s mission and values. This research helps charities focus their efforts on potential supporters who are more likely to contribute.
3. Diversify Funding Sources:
Relying on a single source of funding can be risky. Charities should aim to diversify their funding sources by exploring grants, corporate sponsorships, individual donations, events and partnerships. This ensures a more stable and sustainable funding base. We will look at each of these in later posts this month.
4. Cultivate Relationships with Donors:
We explore this in more depth below but building strong relationships with donors is crucial. Charities should focus on donor stewardship, regular communication, and expressing gratitude for their support. Maintaining open lines of communication and demonstrating impact can help foster long-term donor relationships.
5. Create a Donor Engagement Strategy:
Engaging donors beyond the initial thank-you or gift is essential for long-term support. Charities should develop strategies to involve donors in their work through events, volunteer opportunities, newsletters, and updates. This creates a sense of belonging and fosters ongoing commitment.
6. Invest in Fundraising Training and Resources:
Training your staff and volunteers on fundraising techniques, donor management and relationship building can enhance your charity’s fundraising capabilities. This investment in skill development helps create a more strategic and effective fundraising team. Moreover, the skills the team gains help them in the future also.
7. Monitor and Evaluate Progress:
Regularly review fundraising activities and results against the set goals. Assess what strategies are working well and where you can make improvements. This allows you and your team to make adjustments and refinements in the fundraising plan to maximise its effectiveness.
Lack of Relationship Building
Building strong relationships with donors is essential for sustainable fundraising success. However, charities sometimes neglect the importance of cultivating and nurturing these relationships. Failure to establish meaningful connections with donors can result in missed opportunities for ongoing support and reduced donor retention rates. Four things fundamentally happen when you do not build a relationship with your donors.
Four Problems When There is a Lack of Relationship Building
1. Disconnected Donors:
Without a strong focus on relationship building, even ardent donors feel disconnected from your charity’s mission and the impact you make. This leads to decreased engagement and reduced financial support in the future.
2. Lack of Donor Loyalty:
Building trust and loyalty among donors is essential for repeat giving. Without meaningful relationships, donors are less likely to continue supporting the charity over time, resulting in a higher donor attrition rate.
3. Missed Opportunities:
Building relationships with donors allows charities to identify individuals who may have the capacity to make significant contributions even outside of funding. Some donors may have been able to volunteer and train your staff, while some may have helped you streamline your operations. Without a meaningful relationship, even the most avowed donors do not take the first step to help you solve a problem.
4. Limited Referral and Peer-to-Peer Giving:
Donors who feel a strong connection to a charity are more likely to recommend it to others and engage in peer-to-peer fundraising efforts. Lack of relationship building can hinder word-of-mouth referrals and organic growth in fundraising. You do not know who could have introduced you to another person who could have become a repeat large amount donor. Here is how you take care of these problems.
Solving Problems That Arise Due to Lack of Relationship Building
1. Focus on Donor Stewardship:
Develop a comprehensive donor stewardship programme to express appreciation, provide regular updates on the impact of donations, and acknowledge donors’ contributions. Show them that their support is valued and make them feel like an integral part of your charity’s mission. You can build a Donor Recognition Programme where you give them the recognition they deserve – publicly and privately – for their support.
2. Personalise Communication:
Tailor communication and interactions with donors to make them feel valued and understood. Personalised messages, such as handwritten notes or customized emails, can go a long way in building relationships and demonstrating genuine care.
3. Provide Meaningful Engagement Opportunities:
Offer opportunities for donors to engage directly with the charity’s work, such as volunteering, attending events, or participating in focus groups. Create experiences that allow donors to see the impact of their contributions first-hand.
4. Regularly Communicate Impact:
Share stories, testimonials, and impact reports that showcase the difference donors are making through their support. Highlight tangible outcomes and demonstrate transparency in how funds are utilised. This may seem not the right thing to do but it is. When you tell someone how their funds are helping you and where their contribution is being used, you go a long way in establishing a long-term rapport with your donors.
4. Foster Two-Way Communication:
Encourage open and regular communication with donors. Seek their feedback, listen to their suggestions, and involve them in decision-making processes whenever possible. Make them feel like valued partners in the charity’s mission.
Lack of Written Processes
Having well-defined and documented processes is crucial for efficient fundraising operations. Charities that lack clear written processes may face challenges in maintaining consistency, ensuring accountability, and effectively managing fundraising activities. This can lead to inefficiencies, duplication of efforts, and missed opportunities. For more details on why this is important and how to get this done, read our post on Principles to Run a Successful Non-Profit or a Charity.
Lack of Follow-Up
Following up with donors after receiving contributions is vital for fostering continued engagement and cultivating long-term relationships. Unfortunately, many charities fail to implement effective follow-up strategies. Neglecting to express gratitude, provide updates, and engage donors beyond the initial contribution can diminish donor trust and decrease the likelihood of future donations.
We look at some practical tips to get this done:
1. Develop a Donor Communication Plan:
Create a comprehensive plan outlining the frequency, channels, and content of follow-up communications with donors. This plan should include a mix of personalized messages, updates on the charity’s impact, and opportunities for engagement.
2. Implement a Donor Management System:
Utilise a donor management system or customer relationship management (CRM) software to track donor interactions, set reminders for follow-up activities, and maintain a centralised database of donor information. This helps ensure that no donor falls through the cracks and enables efficient follow-up.
3. Express Gratitude Promptly:
Send timely and personalised thank-you messages to donors after each contribution. Expressing gratitude promptly shows appreciation for their support and sets the stage for ongoing communication.
4. Provide Regular Updates:
Keep donors informed about the charity’s progress and impact through regular updates. Share success stories, project updates, and relevant news to maintain their interest and involvement.
5. Personalise Follow-Up Communication:
Tailor follow-up communications to individual donors based on their preferences, interests, and giving history. Personalised messages demonstrate that the charity values the donor’s support and recognizes their unique contribution.
6. Utilise Multiple Communication Channels:
Reach out to donors through various channels, such as WhatsApp, Telegram, email, phone calls, social media and direct mail. Adopting a multi-channel approach ensures that donors receive follow-up messages through their preferred communication method. In case you don’t know how to get this done, sign up for our online marketing solutions for charities.
7. Provide Donor Engagement Opportunities:
We are repeating this as it is important and not even considered by most charities. Offer meaningful ways for donors to stay engaged with the charity’s work. This could include volunteering opportunities, invitations to events, participation in advocacy campaigns, or joining a donor advisory group. Engaging donors beyond their financial contributions strengthens their connection to the cause.
8. Conduct Donor Surveys:
Periodically gather feedback from donors through surveys to understand their preferences, motivations, and expectations. Use this feedback to refine follow-up strategies and improve donor satisfaction.
9. Assign Dedicated Staff or Volunteers:
Designate individuals responsible for donor follow-up to ensure consistency and accountability. These staff members or volunteers can be trained in effective communication techniques and relationship-building skills.
10. Evaluate and Adjust:
Continually assess the effectiveness of follow-up strategies and make necessary adjustments based on donor feedback and response rates. Adopt a data-driven approach to optimise follow-up efforts instead of the easy gut feel.
You will not be able to tick off each one of these points but starting with one and continuing with at least 2-3 others will be a good start.
No Understanding of Human Psychology
To effectively engage donors, charities need to understand the psychology behind giving. It is essential to recognize the factors that motivate individuals to support charitable causes. Without this understanding, charities may struggle to create compelling campaigns, connect with potential donors on an emotional level, and inspire them to take action.
Note: We will cover this point and the next one in a more specific post next week.
Psychology of Giving
The psychology of giving involves understanding the underlying motivations and drivers that influence individuals to donate to charities. Research has shown that altruism, empathy, personal values, social influence and emotional connections play significant roles in shaping giving behaviour. Charities that harness these psychological factors can create more impactful messages, tailor their appeals to resonate with potential donors and increase their fundraising effectiveness.
To Sum Up
Fundraising challenges are a reality for charities, but they can be overcome with careful planning, relationship building, written processes, effective follow-up, and a deep understanding of human psychology. Start by addressing key areas and you will be able to improve your fundraising efforts, build stronger donor relationships, and make it easy overall to run your charity and make a positive difference in the world.
You can read the next part of the series on the Psychology of Giving here.
