Many nonprofits are spending more than ever on fundraising, but receiving less in return. Sound familiar? Maybe half your money is being left on the field.
There are two categories of fundraising, and nonprofits need both. First, there’s mass market fundraising. The purpose of mass market fundraising is to raise small gifts from large numbers of people. It is hard to have a relationship with more than a few hundred people, so mass market fundraising requires a very technical approach. Here are some examples:
- Direct mail (monthly appeals, newsletters)
- Online (websites, social media, email)
- Broadcast media (infomercials, advertising)
- Events (fun runs, golf outings, banquets)
Mass market fundraising has many benefits. While it can get expensive to produce, once you have a method in place the returns are usually predictable. It typically involves very concrete efforts that are well understood by boards. You can solicit contributions from many, many people with relatively little effort. Plus it is relatively easy to outsource this to mass market fundraising agencies who have the technical systems and know-how. You write them a check, they do the heavy lifting, and the money comes in. What’s not to love about that?
Mass market fundraising has its limitations however. It is difficult to customize in meaningful ways to donors. What works for one may not work for another. It can be very impersonal, and often expensive. It lacks feedback systems to let you know what your donors are thinking or feeling. And, perhaps most importantly, it is not sustainable – since it is by definition a highly transactional form of fundraising, you have to continually “feed the beast” in order to keep the money flowing. In today’s multi-channel information age, it is becoming increasingly difficult (and more expensive) to break through all the noise and capture donors’ attention. Many nonprofit leaders tell us that they are spending more than ever on their mass market fundraising, and receiving less in return.
The other type of fundraising is relational. Relational fundraising is a much more personal, hands-on method. It requires the fundraiser to get to know donors personally through one-on-one meetings, personal letters, emails, phone calls, small group events, and other personalized communications.
Obviously, relational fundraising limits the number of donors you can interact with, hence this form of fundraising focuses on raising major gifts. In many cases, relational fundraising methods raise far more money than technical ones. And this type of giving is typically much more sustainable since relationships and personal experience engenders a much stronger loyalty to your organization. The lifetime value of a donor who gives based on relational experience will almost always be significantly higher than one who simply gives in response to marketing or technical approaches.
So, which type of fundraising is better? Again, this is not an either/or equation. You want to develop both. Technical fundraising will help you acquire new donors and cultivate a broad base of support. Think of it as tilling the soil and planting the field. At the same time, relational fundraising will help you develop larger and more meaningful gifts. In short, relational fundraising helps you reap a much richer harvest.
Make a list of your fundraising efforts and categorize them as technical or relational fundraising. Do you do one type more than the other? Striking the right balance between these two types is often the sweet spot for success in fundraising. We see far too many who are too heavily weighted towards high-cost/low-value technical approaches, and are falling short in potentially higher-return approaches such as major giving.
There are a number of reasons why this is the case, and if you are interested in learning more about why nonprofits struggle to gain traction in major giving, I would strongly recommend that you read Derric Bakker’s insightful series of blog articles, entitled: Five (All Too Common) Reasons Why Nonprofits Fall Short in Raising Major Gifts.
One other big difference? You can’t outsource relationships – you need to develop the talent and competencies in-house in order to experience real success in major giving. Consultants like Dickerson, Bakker & Associates can help, but – unlike direct response fundraising agencies who you hire to do the work on your behalf – our work will be centered on developing your own talent and building your internal capacities. It’s not easy work, but in the end it is well worth the investment.
For most nonprofits, relational fundraising is new and challenging. Dickerson, Bakker & Associates can help you build a more effective relational fundraising program and improve your major giving outcomes. Why not contact us to get started today?