The Importance of Donor Stewardship

It is a common axiom in the business world that it costs 5 to 25 times more to acquire a new customer than to retain an existing one.* Similar results are seen in the non-profit world as well - it is much more expensive to acquire new donors than it is to keep current donors making repeat gifts to your organization. With this in mind, and with all due respect to the multitudes of nonprofits doing crucial work (and doing it well!) in our communities, why do some organizations fall short when it comes to donor stewardship? 

GiveTeam recommends a diverse array of nonprofits of varying sizes, missions, and geographic focus areas to our donor clients. After all other considerations, one of the last questions we ask is how well the organization stewards its donors. How do they thank them? How do they keep current donors involved and feeling like they are making a real difference? 

Below are two stories - one of a nonprofit that did this incredibly well….and one that did not, and how both approaches had big repercussions.

*Note: This statistic is often attributed to research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score).

First, a success story:

A rural mentoring program gets a new life thanks to a phone call.

This donor was passionate about education. She grew up in an impoverished rural part of the country. Her mother had instilled the importance of self-reliance, and had pushed her to pursue post-secondary education despite family trauma and financial constraints. Our donor knew first hand that college or post-secondary education of any kind was often out of reach for students due to lack of finances, lack of resources, and often both. 

Decades later, after attending a vocational training school and years of careful saving and hard work, the donor created a small private foundation with the goal of helping impoverished rural students pursue an education and improve their job prospects after high school. This individual, through her private foundation, had the capacity to be considered a major donor ($100K+ gifts) for most nonprofits, but the donor wanted to establish a relationship with the organizations she supported first. She wanted to see her impact, and explore how she could support chosen nonprofits for the long run.

The first step in this process for her and her small foundation board was to make a smaller ($5,000) gift to a nonprofit and see how the organization responded. GiveTeam helped this donor find an organization whose mission aligned closely with her priorities - providing mentoring, college scholarships, and career guidance to students in one of the state's most economically disadvantaged and under-resourced rural communities. 

Upon receiving the donation from our donor client in December, the nonprofit’s Development Director not only sent a timely thank you letter and tax receipt, she picked up the phone and called the donor to thank her and her foundation board personally for their generous gift. Upon finding out that the donor wanted to learn more about the organization, the Development Director and her team invited them to the facility for a site tour.

GiveTeam recently was made aware that thanks to this organization’s responsiveness and willingness to engage with the donor about the impact of her gift, the donor’s foundation has committed to creating a long-term funding partnership that will allow the organization to grow one of its most critical mentoring programs, creating opportunities for young people well into the future that might not have been realized without this support.

And next, a story about a missed opportunity:

When a donor feels ignored, it rarely ends well.

GiveTeam recently worked with two donors - a retired husband and wife - who were passionate about wildlife conservation. Having recently retired and moved closer to their adult children in Colorado, they were looking for an organization to support both financially as well as through volunteer work that they could possibly engage in with their granddaughters. 

GiveTeam recommended a small organization with a great reputation for science-based conservation efforts preserving the habitats of local wildlife, especially that of an endangered  animal that the wife was particularly drawn to. The couple was thrilled when GiveTeam introduced them to this great organization, and within a few weeks, they made a $5,000 donation (which, considering the small annual budget of the organization, was a significant gift). 

After initially being excited about getting to know this nonprofit, they were disappointed, more than a month later, when they had not even received a thank you note (nor the required tax receipt) for their gift. Needing the gift acknowledgement for tax purposes, they tried a number of times to contact the organization’s Development Director. They also wanted to explore volunteer opportunities, but became frustrated when calls and emails were not returned. While attending a local event hosted by the organization, they mentioned this experience to a staff member, who promised to make sure someone contacted them. After another month of no communication, the Development Director (who, it turns out, had been sick and out of the office for an extended period of time) emailed them to apologize. 

While these donors finally received the gift acknowledgment they needed, they understandably decided not to renew their $5,000 gift to this organization, instead shifting their support to another local conservation nonprofit. 

Of course, it’s most important that organizations are focused on their programs and fulfilling their mission, but this example is a powerful reminder about how important thank yous and donor engagement can be. The thank you does not need to be elaborate, but it needs to be timely (sent within a week of receiving the donation). Donors want to be thanked, and they want to hear that their gift is making a difference. These donors were ready to engage, and could have been a key source of long-term support for a small organization doing important work. And nonprofits, if your Development Director (or whoever is in charge of donor stewardship) is unavailable for an extended period of time, make sure someone else is checking their email and responding to donors who want to support you!

The moral of this story is, thank your donors, nonprofits! Return the email. Pick up the phone. Make them feel appreciated - and if they want to be engaged through volunteer work or simply by learning more about your impact, that’s even better! An engaged donor - a donor who feels like they are making a difference by supporting you - is a loyal donor, and those are the ones you need to keep.