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Post-Recession Donors Have Changed

09/14/2012 by 3 Comments

Today’s donors have totally changed. And you need to change your approach to them.

Watch the trends. You’ll see major shifts in what donors expect, what they want, and what they are responding to.

Today’s post-recession donors are just plain different.

Here’s why:

They Don’t Trust Us as Much as They Used To.

Donors are generally less trustful of everything: the government, financial institutions, the news media, big organizations – and your local nonprofit.

You can see a sharp decline in Americans’ confidence in major institutions. It’s tracked by many sources: Freaknomics and the Wall Street Journal, for two.

One study even found that even friends trust each other less.

The loss of confidence in institutions is global.

People have simply lost faith.

They are skeptical.

How Does Your Organization Show Up as Credible and Trustworthy?

If your donors are less trusting across the board, how do you get them to believe in you and your cause?

You can rebuild donors’ trust in you by being very explicit about where the money is going and how you are spending it.

Take a look at the photo: “Your Membership Fees at Work.”

My local YMCA had this taped to the wall above the water fountain.

Way to go!

I loved it so much that I took a picture of it on my phone.

One of the most important pieces of information you ever give your donors is a chart that says:

“Your Gifts at Work.”

It should be a prominent part of your web site. It should be a stand alone page.

Today’s Donors Are Mistrustful About Unrestricted Giving.

Here’s what today’s donors are particularly nervous about:

They are really worried about making a gift into the big black hole of “unrestricted gifts.”

Your donor is thinking:

I wonder what their fundraising costs are?

Will they waste my money?

I wonder where the unrestricted money really goes?

How will I be treated?

I don’t want to pay for somebody’s inflated salary.

Here’s the problem: we keep cheerfully and enthusiastically asking our donors for their support.

What Are You Going To Do With The Money?

But we don’t talk a lot about what we are gonna do with the money.

Where can a donor find this out?

I hope they don’t have to go to your 990 on Guidestar to find it!

Here’s a great example of being totally transparent about the money:

Charity: water does a terrific job reporting back to donors.

Check out this email thank you they sent to my friend Kivi Miller recently.

Nothing makes donors feel better than knowing exactly how you spent their money.

The great Penelope Burk said at a presentation recently:

“Donors will give more if you let them restrict their gifts.”

She said it’s a shame that so many nonprofits are beating the drum for unrestricted gifts.

Because most donors don’t WANT to make unrestricted gifts.

Penelope Burk said we could raise so very much more from our donors if we let them target their gifts for specific projects.

And the brilliant Tom Ahern, in his recent INSIDERS Master Class with us, told us:

“You have to be specific about where the money will be used.”

All my fundraising friends say to me: “but, but, but we need unrestricted funds!”

And I know you do!

But see if you can’t shape your unrestricted funds into projects.

Instead of trying to raise money to keep the lights on, why not focus instead on technology, or some current program that has sizzle.

If you raise money for the sizzle program, then that frees up money for the lights and overhead, correct?

Bottom Line:

1. Try being creative about the purpose of your year-end appeal.

2.  Construct some “projects” and let donors fund these.

3.  Let your donors know where the money is going, and why it costs so much.

4.  Be upfront about your finances.

And your donors will pay attention. They will thank you back with renewed investments.

Do you agree?
Leave a comment and let me know!

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  • http://www.facebook.com/debbie.ditton Debbie Griffiths Ditton

    I totally agree! I am even finding that Corporate Sponsors want to have their name attached to a specific part of the event. You are right that restricted funds do free up money to pay for the operation portions that are not as interesting to donors. Good reminder of the need to be better communicators. Thanks!

  • Andy Robinson

    Gail, I’m going to push back on this one. Because nearly all grant sources (government, foundation, corporate) offer only restricted money, we need get better at pitching unrestricted gifts to our donors, rather than create even more categories of restricted gifts.

    One partial solution is outlined above: show ‘em how you spend the money. Another solution: build trust by building relationships.Third solution: better educate donors about how operational costs — financial management systems, staff training, databases, adequate office space, etc.– allow you to use all those grants and restricted gifts more efficiently and effectively. Unrestricted dollars are the vitamins and minerals that allow our organizations to grow up healthy and smart.

    A question for a future column: How many readers have turned down restricted gifts or grants because the gift didn’t fit the organization’s mission or programs? A skilled fundraiser (and his or her boss) knows when to walk away from a bad deal. Let’s try negotiating from a position of strength. Yes, it’s good to study trends in the marketplace, but we also have the power to shape those trends.

    This is also a backdoor plea for more earned income, since most revenue from fees and other earned income is unrestricted money.

  • gailperry

    Andy – love the push back!
    Here’s where I stand: Yup, we do need unrestricted $. But we are lazy. There ARE more interesting ways to talk about unrestricted, and to frame than we are doing now.
    Here’s an example: My colleague Ann runs a huge facility that houses other nonprofits. She is wailing to me: “How do I raise $ for the lights and utilities? I don’t have any real “programs” to promote. Help!”
    I asked her: “how many people come thru your door a month?” She answered, “around 5,000.” I said, “how much does it cost you to run the facility for a month?” She replied with a figure. I suggested – “then can you create an average number that represents how much it costs per person per day more or less? And then can you structure your fundraising around that?”
    She said “yes yes!” And she was really pleased to have a new way to “frame” her fundraising appeals. She was able to move from a generic request to more of a specific request.
    So this is what I mean by framing overhead in terms of something specific for today’s less trustful donor. Maybe I wasn’t as clear as I could have been in the post!