@fundraiserchad’s Ultimate Guide to Stewardship & Donor Retention

@fundraiserchad’s Ultimate Guide to Stewardship & Donor Retention

How to Build a Simple Stewardship System that Boosts Donor Retention

What is Stewardship?

So what do we mean when we say “stewardship” in the context of fundraising?  Stewardship is defined as “the conducting, supervising, or managing of something; especially: the careful and responsible management of something entrusted to one’s care” (Merriam-Webster). It’s the second part of this definition that we as fundraisers should focus on:  “careful and responsible management of something entrusted to one’s care.”

The bottom line: we need to take care of a supporter’s donation by 1) doing what we said we were going to do with it, AND 2) telling them that we did 3) WHILE expressing gratitude.

A new term has emerged on the fundraising landscape in recent years to express this.  That term is #donorlove (note the hash tag, look it up on any social media platform when you need some inspiration).  According to fundraising guru Jen Love, #donorlove is putting “the donors at the heart of everything you do, at the heart of every interaction you have with them. Expressing what your donors make possible by giving to you, and making them heroes for the amazing things they achieve for your cause.”[1]

We must show our donors that they matter.  We must show them that we can’t change the world without them.  We can’t take them for granted.  We can’t view them as transactions or dollar signs.  We must constantly work to build deeper relationships with them.  We must convince everyone in our organization, regardless of their job title, to do the same.  We must build a culture of philanthropy at our organization.  Stewardship must be everyone’s first priority.

But why?

Why Donor Stewardship Must Come First

Donor stewardship must come first because it is the key to donor retention.  What is donor retention?  Donor retention simply means keeping your donors from year to year.  It is typically given as a rate or percentage.  Your donor retention rate is the percentage of donors you keep from year to year.

And now the bad news … the average donor retention for US charities was only 45% in 2017.[2]  That means that if the average US nonprofit had 100 donors at the end of 2016, they only had 45 of those same donors at the end of 2017!  Donors are leaving faster than the average charity can bring them on board.  You can do better.  You must do better.

Why are donor retention rates so poor?  It’s hard to pinpoint an exact answer, but here’s my theory … While most established charities know the importance of stewardship, it’s hard to find the time to do it well.  And guess what?  No one ever gets in trouble for not doing stewardship.  “You never found the time to write those thank you notes? No big deal.”  Or … “Impact letters are three months behind schedule?  That’s okay.”  For most bosses, as long as asks are going out and goals are being met, it doesn’t seem to matter.  But what you’re really doing is sabotaging your future fundraising efforts.  A lack of stewardship will prevent your donors from reaching their full lifetime value for your organization.  It will also put you on a constant search for more donors, as your current ones move on to other causes.

So what’s the solution?  You need to build a simple stewardship system that puts #donorlove on autopilot and shows your donors that they are more than dollar signs to your organization.  Stewardship activities need to be routine weekly standard business practices, not something that you do when you “have the time.”  Later on in this guide we’ll outline a simple system that will do just that for your organization.

But first, let’s make sure we’re stewarding the right donors.

WHICH DONORS SHOULD WE FOCUS ON?

Contrary to what some nonprofit executives and boards believe, not all donors are actually retainable.  Specifically, transactional donors are often extremely difficult to retain from year to year.  Transactional donors are your event attendees, raffle ticket purchasers, auction item buyers and peer to peer campaign donors.  The common thread with them is that they donated to purchase something or to support someone else, not necessarily because they care deeply about your organization’s mission.  While we should certainly attempt to retain transactional donors and educate them about our mission, they don’t warrant the same amount of effort as our relational mission-based donors.  These are the folks that care deeply about our mission and  would welcome a closer relationship with us.

You may also want to set a minimum donation amount (perhaps $50 or $100 and above) for donors to go into your enhanced stewardship system.  Below that they would still receive a standard gift acknowledgment letter and organizational correspondence – just not the personalized stewardship efforts that we’ll soon discuss.  This is a bit controversial as there is always the classic story of the $20 annual donor that leaves a $1 million bequest because they were treated well by the nonprofit organization.  The key here is to figure out your stewardship capacity.  What percentage of your relational donors can you steward and steward well?  Especially in small shops, it’s probably not everyone.

THE RULE OF 7

There’s one last research-based factor we need to consider before building our simple stewardship system. Research has shown that donors need to be contacted at least seven times between asks, or they feel over-solicited.[3]  This means that you need to reach out at least seven times between your solicitations with something that is not asking for money, or else donors are going to say, “You only ever contact me when you want money.”

So, we need to develop a schedule of creative donor touch points. What’s a touch point? A touch point is a positive non-ask communication with a donor. Seven may seem like a lot, but the beauty of this is that everything counts. Your immediate thank you counts. Your gift acknowledgment counts. An invitation to a free event counts. Your donor newsletter counts (if they read it).  The key here is to develop a system of touches, and schedule them so that you ensure that at least seven happen.

So now that we know what we need to do to make donors feel appreciated and not over-solicited, let’s build a simple stewardship system designed to ensure that systematic, regular stewardship and #donorlove takes place in our nonprofit organization.

A SIMPLE STEWARDSHIP SYSTEM

So, where do we begin? Our goal is to create a donor stewardship system that is triggered as soon as a donation is received and works to make sure a donor feels properly thanked and appreciated the whole way up until the time of their next donation. It should have mostly standard touch points but leave some flexibility so we can be creative and not come across as inhuman.  But the key will be making sure we reach that magic number of at least seven touch points before our next solicitation.

The other side of this is how are we going to do all of this if we work in a small shop?  What if your fundraising operation consists of just one person?  Or maybe it’s a volunteer that completes these tasks for your organization.  We need to organize our system in a way that there are scheduled daily, weekly, and monthly tasks that anyone can complete. This will allow us to put the system on autopilot so we can ensure that donor stewardship is always happening.  We’ll also know that we’re doing everything we can to boost our donor retention rate while we focus on finding new support for our organization.

So, let’s get started. Let’s say we receive a $100 donation from a new donor. What do we do next?

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DONOR TOUCH POINT 1 / The crazy speedy personal thank you

The first step in our simple system may not be what you’re expecting.  It is not the gift acknowledgement letter or standard thank you letter.  That’s our second step.

Some fundraising gurus insist that gift acknowledgement letters be sent 24 to 48 hours after receipt of the donation.  I don’t prescribe to that train of thought because I don’t personally expect that when I make a donation to a charity.  Yes, I want my thank you letter.  But I don’t really expect to receive it for a week or maybe even two.  If it shows up three days later it makes me think “Gee, don’t they have anything better to do than generate gift acknowledgment letters the second they receive a donation?”

So what do I recommend we do instead?  It’s my favorite part of our system … the crazy speedy personal thank you.  This is a short, simple, personal burst of extreme gratitude which you send the same day you receive the donation.  It’s not the gift acknowledgment, that comes next.

Let’s take a look at a sample one:

Dear Sally –

Thank you so much for your recent donation to the Society for the Preservation of Unicorns!

You will receive a formal gift acknowledgment (for tax purposes) in the mail, but I wanted to personally reach out and say “thank you” as soon as possible.

Thank you again for your generous support to ensure that all unicorns have an equal chance of survival in our society.

With Gratitude, @fundraiserchad

[FREE DOWNLOAD: Crazy Speedy Personal Thank You Template]

Did you notice the personal nature of this correspondence?  That’s the key. You’re reaching out one to one as a person, not as the organization, because you care about them.

Now in what format should the crazy speedy personal thank you note be sent?  Well, here are your options (in order of most impact to least):

  1. Personal phone call (or voicemail)
  2. Hand written note
  3. Email

Personal phone calls definitely have the most impact.  When was the last time you made a donation to a charity and received thank you call?  Research has shown that this small step alone can increase first time donor retention by as much as 30%![4]  This is also a great way to include board members in the stewardship process.  Their calls are even more effective since they are volunteers and aren’t being paid to make them (but they’ll need a little bit of training and a script).  Donors that receive a thank you call from a board member give 39% more (on average) the next time they give![5]

[FREE DOWNLOAD: Crazy Speedy Personal Thank You Call Script]

I’m a huge advocate for sending handwritten thank you notes for just about everything and donations are no exception.  You don’t receive many these days.  They only take a couple of minutes to write and they have a BIG impact.

Personal emails would be the last choice on the list simply because we receive such a ridiculous amount of email these days.  They still have an impact, just not as much as a call or a note.  The best part of sending emails is that you can use a template which you just slightly tweak each time.  I’ve even used a tool like TextExpander which lets me insert my template into an email with a simple keystroke or two.  It’s very fast and gets the stewardship process started in the right direction.

So, how do you decide who gets a call, who gets a note and who gets an email?  Well, that’s something you have to decide based on your available work time and the quantity of donations you receive.  But here are some general rules of thumb:

  • Call all first time donors (regardless of gift size, it has a huge impact and frequently leads to larger second donation soon after);
  • Call all donors over a certain threshold that you set (typically around $500 or more for most small shops that I’ve seen);
  • Send handwritten notes to the next tier down (perhaps $150 or more);
  • Send emails to everyone else.

One last question often comes up here.  What if I’m supposed to send someone an email but I don’t have their email address?  In this situation, I’ve seen groups successfully use preprinted postcards.  The front has a picture of the organization in action, and the back simply says “You make this possible.  Thank you.”  You handwrite their address and a quick “Thanks Again!” on it and off it goes (with an actual stamp, not an indicia).

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DONOR TOUCH POINT 2 / The prompt, gracious, personalized gift acknowledgement

The next stop in our system and donor touch point number two is a prompt, gracious, personalized gift acknowledgement.  This is the piece that you are already doing (because the Internal Revenue Service requires you to do so, at least for donations of $250+).  In our system it doesn’t have to be sent in 48 hours like many fundraising experts recommend.  That’s because the crazy speedy personal thank you bought us some time.  But it does still need to be sent promptly.  I recommend generating gift acknowledgments once a week (and it’s a glorious mindless Friday afternoon activity).  This allows you to batch process them to gain some efficiency improvements – a rarity in the nonprofit world.

What format should it take?  Most often it is called a “gift acknowledgement letter” because that is the format that it most often takes.  However, what you really want to do is channel match.  If someone made a donation via the mail, then you send them a gift acknowledgement letter in the mail.  But if someone made an online donation, then you match the channel and send them a gift acknowledgment email.  Same text, same everything, just different channels.  I’ve seen online donors get really upset when they receive a mailed gift acknowledgment because you’re “wasting paper and a stamp” – some donors really care about these details.

What should it say? It should give all the particulars about their donation, have the required IRS tax language and talk about what you plan to accomplish with their support.  It only needs to be one page but it MUST show gratitude, impact and #donorlove.  Here’s a list of what to include:

  • A creative first sentence that shows impact and doesn’t start with “On behalf of …” (for example: “Over 50 unicorns will be fed this year, because of you.”)
  • Convey gratitude (example: “We needed you, and you were there.”)
  • Make the donor the hero of the story by using more YOUs than WEs (example: “Because of you …” not “We were able to …”) – this is a key to any fundraising writing and was put won the radar by fundraising copywriting legend, Tom Ahern[6]
  • The amount of the donation and what it was for
  • What will happen next (example: “You’ll hear from us in a few months with an update on this project.”)
  • A contact name, phone number and email in case they have questions
  • A memorable sign off (example: “Yours for a world without starving unicorns, @fundraiserchad”)
  • The required tax deductibility line from the IRS and the value of any benefits received that may impact the deductibility of the gift
  • Any state-specific required language (both this and the IRS language are often best put in a footer at the bottom of the page – that prevents them from messing up your #donorlove vibe)

And while we’re at it, here are a few things not to include in your gift acknowledgment:

  • The same copy that you used in your appeal letter (they just read that copy, be creative and talk about something else);
  • It should not be sent in a window envelope (bills come in window envelopes, you don’t want your expression of gratitude to look like a bill and get tossed before it is even opened);
  • An ask — if you ask for anything (e.g. volunteering, event attendance, etc.) it lessens the value of the thank you. My friend fundraising guru Lynne Wester calls this a “thask” and it is fundraising’s ultimate sin).[7]

[FREE DOWNLOAD: Gift Acknowledgment Letter Template]

The final descriptor for our gift acknowledgment was “personalized.”  What do I mean by that?  In essence, you need to do something to show that it’s not a form letter.  You need to show that a human being touched it and it is sincere.  Here are a few ways you can do that (pick and choose what works for your organization):

  • It is actually addressed to them (not dear friend) and their name is spelled correctly;
  • Address them by their first name (it’s okay even if you don’t know them – they know the organization and that’s who the correspondence is really coming from);
  • It is hand signed by a high-ranking person (executive director, board chair, etc.) – don’t use a scanned in signature (blue ink can often help with this);
  • A quick note is scribbled at the bottom (e.g. “Thanks again!”);
  • And my all time favorite (kudos to fundraising expert Simon Scriver for the idea) … you paper clip a thank you note from one of your beneficiaries to the letter (you can scan it and duplicate it, but the paper clip is the key … a machine can’t do that … a human did).[8]

DONOR TOUCH POINTS 3 & 4 / Creative thank yous

The next few months in the stewardship cycle are when you get to be creative.  You get to do things that are unique to your organization that really make you stand out from the crowd (or at least any other local charity that is following this system / fundraising best practices).

You need to reach out at least two times between the gift acknowledgment (touch point #2) and the impact update (that’s next … it’s touch point #5).  It really doesn’t matter how you reach out, as long as you aren’t asking for anything.  You are reaching out to inform and thank, not for any other reason.  But you do need to make sure your donors actually see it (which is why I don’t really like to count email newsletters, which have an open rate of 20% or less for most nonprofits).  Here are some ideas:

  • Staff update calls (donors that receive an update call from a staff member a few months after their donation give 41% more (on average) the next time they give)[9]

[FREE DOWNLOAD: Staff Update Call Script]

  • Unique impact postcard

[FREE DOWNLOAD: Sample Unique Impact Postcard]

  • One question email survey (e.g. “What program do you care about the most?”)
  • Happy Birthday email (not a facebook message, they get tons of those) or even an actual card
  • Annual report postcard (not a thick book with an honor roll of donors, 75% of charities no longer do them & donors don’t care about them)

[FREE DOWNLOAD: Sample Annual Report Postcard]

  • Invitation to (free) events (e.g. donor thank you reception)
  • Invitation for a tour or observation opportunity (especially if it’s a behind the scenes tour that isn’t offered to everyone)
  • Email impact updates (“Your Support In Action” – send one story at a time, change the newsletter format, your donors don’t have time to read it)
  • Personal thank you video (with impact happening in the background – recorded on your phone & most effectively delivered via text message)
  • Send another handwritten note (they can never receive too many)
  • Get your executive director or board chair to say “thank you” (via handwritten note / phone call / video / in person / etc.)
  • On #GivingTuesday reach out to say “thank you” instead of asking like every other charity in town
  • An invitation to an intimate event in a board member’s home with the organization’s top staffers
  • A thank you letter written by a recipient of your organization’s work (a scan is fine, perhaps with a “Thought you might like to see this …” scrawled on the top)
  • Artwork produced by recipients of your services (especially kids)
  • An invitation to an educational opportunity (like a speaker) that matches your mission
  • A quick (personal … not mass) email with a link to a news feature on the organization (“As one of our most loyal supporters, we thought you might like to see this …”)
  • Public recognition for their support (assuming they want it)
  • Invite them to a town hall conference call with the CEO & senior staff about upcoming organizational initiatives
  • Offer to profile them and their reasons for supporting the organization in your newsletter or on your website
  • Mail an actual printed glossy photo with a post-it note saying (“I thought you might like to see what you made happen last week …”)
  • For event sponsors, a photo book with some shots from the event (including a few of them and their guests enjoying it – these are prized gifts that are often displayed in company lobbies for years)
  • Let a different voice say thank you (if it’s someone fictional, like a mascot, that’s even better)
  • And the one that will have the most impact of all … reach out and schedule an update visit (“I’d love to stop by for 20 minutes and share some recent successes that your support has made possible.”)

Did any of these resonate?  Before you pick your two favorites, here are a few things that you shouldn’t do:

  • Don’t send a tchotchtke, freebie, thank you gift (or whatever you want to call it) – it lowers their next donation by 46%;[10]
  • Don’t send a picture of you accepting or giving a jumbo check (it’s not about the money, it’s about the impact);
  • Don’t ask for anything … NO THASKING … I can’t repeat this enough (even soft asks like placing contribution envelopes in newsletters or asking them to volunteer can sometimes mess up this entire process – there’s a time and a place for that. It’s not in your stewardship system).

DONOR TOUCH POINT 5 / The impact update

The next step in our simple stewardship system is to send the impact update.  This letter (or email, if and only if the donor made an online donation) should arrive halfway between the date of their donation and the date you plan to solicit them next (6 months for an annual appeal, 3 months for organizations that solicit twice per year, etc.).

This letter is similar to the gift acknowledgement in format and appearance; however, it doesn’t have any IRS mumbo jumbo on it.  It starts out with “It’s been [insert number] months since you so generously supported [name of charity], and we wanted to let you know what we’ve done with your support.”  It’s best written in the first person, telling a story about ONE specific person that benefited from their support.  If you can include a photo of that person (or the project, or almost anything), even better.

The key with the impact letter is that it asks for nothing.  It is simply closing the loop on their donation.  It is showing the donor that you have put their donation to good use and something has changed for the better because of their support.  Don’t cheapen that by sneaking in a survey, golf tournament brochure or invitation to volunteer.  Just show impact and say THANK YOU!

 [FREE DOWNLOAD: Impact Letter Template]

DONOR TOUCH POINT 6 / One more creative thank you

We’re starting to wrap up or system, but we’re not quite at the magic number of seven donor touch points, so what’s next?  One more creative thank you should be sent a month or two after the impact update.

You can do something new from the list we provided for touch points 4 and 5, but better yet spend some time brainstorming your own idea that is tied to your mission and truly unique.  What is an expression of #donorlove that only your organization could do (or at least you’re the only one in your community that could do)?

[FREE DOWNLOAD: Sample Donor Touch Points]

Also, you might want to try mixing up the channel at this point.  If you’ve mostly been sending postal mail, then try something digital, or send them a text.  If you’ve mostly been doing digital, then try giving them a call.  Multichannel fundraising is stronger fundraising (as long as they want it … and you have to reach out to find out … there’s another touch point right there).

DONOR TOUCH POINT 7 / The priming thank you

With the final step in our system, it’s time to set our next fundraising ask up for success, with the priming thank you. This piece of correspondence should arrive one month before our planned next ask arrives. It should be a short, simple thank you. It should be completely out of the blue. Your goal is to put your organization in the donor’s mind one final time before you’re going to ask them to support the organization again.

This is one piece that you don’t need to over think, but you should be creative. A letter probably won’t do the trick. Something like a die cut postcard, a personal video message, or anything totally unexpected will have far more impact than a simple letter. Your goal is to create a joyful disruption where they get drawn out of their normal day-to-day thinking.  They are reminded about your organization, they smile, and they go right back to what they were doing. The donor now feels appropriately thanked and is ready to make another commitment to your organization.  We have reached the magic number of seven.

[FREE DOWNLOAD: Sample Priming Thank You]

AUTOMATING THE SYSTEM

Now that you know what to do, how are you going to actually remember to do all of this and hold yourself accountable?  You need to put these tasks into some type of task management system.  My recommendation is to put these tasks into a digital task list (like Todoist) and set them up to repeat as indicated:

  • Every Day
    • Send crazy speedy personal thank yous (calls, emails & postcards);
  • Once a Week
    • Run gift acknowledgement letters (you get the efficiency of batch processing these since you already sent a crazy speedy personal thank you);
    • Block time for any creative donor touch points due to be sent;
  • Once a Month
    • Run impact letters (these are not expected so again you can be efficient and batch process them);
    • Run priming letters for asks planned next month;
  • Once a Quarter
    • Update your templates with new stories & organizational details (this is key … you don’t want a donor receiving the same gift acknowledgment or impact letter).

INFRASTRUCTURE

So what do you need to pull this off?  There are three main elements that drive stewardship success …

  • Staff and Volunteer Time
    A staff member does not have to do all of this work, but it typically works best if a staff member is driving the ship. Many of these tasks can be assigned to volunteers or other staff members.  You need someone to process the mail, review online donations & send crazy speedy personal thank yous daily.  You need someone to run gift acknowledgements weekly.  You need someone to run the impact and priming letters monthly.  You, as the lead fundraiser, need to update the templates and stories quarterly and you’re usually the best person to brainstorm and execute the creative touch points as well.
  • Technology
    You don’t need the glitziest database ever, but you do need to know if someone is a first time donor and know when someone makes a donation above your thresholds for getting a phone call or a handwritten thank you note. You’ll also need to be able to generate mailing lists for monthly letters like impact updates and priming letters and know when creative touch points are due.  This can be done with spreadsheets and to do lists, but it’s much more efficient if you have even a basic fundraising database.  Someday I’ll get around to writing @fundraiserchad’s Ultimate Guide to Fundraising Databases but until then you can check out my current favorites over on my Preferred Vendors page.
  • Awesome Impact Stories
    You can’t show your donors the impact of their support if you aren’t routinely being exposed to it. In small shops this is typically pretty easy, the incredible work is going on just down the hall and you see it every day.  In organizations where the program is delivered offsite and interaction with program staff is rare this can be more of a challenge.You need to show program staff members the value of fundraising and how it supports their work.  You need to convince them that everyone in the organization has a fundraising role, and theirs is relaying awesome impact stories to you.  But how do you get them to do this?  A few suggestions that I’ve seen work well:
    • Once a month, bring in a box of donuts and put it in the break room.  Then send out an email to the program staff telling them that they’re there.  Then spend your morning sitting by the donuts and asking the program staffers “Tell me something incredible that has happened in the last month.”  It will be time well spent.
    • For more in depth stories, meeting with program staff members one on one is often best.  And doing so outside of the office seems to work even better.  So, I recommend story lunches.  Take a program staff member to lunch once a quarter and dig deep.  Do you see a trend here?  Food seems to be the key to getting those amazing impact stories.

That’s it.  That’s our Simple Stewardship System that any shop can implement.  Even small nonprofits with just volunteer staffing can make this happen.  It just takes a dedication to #donorlove and putting the donors first in your organization.  Organizations that do this certainly reap the benefits with loyal donors that stick with them for years and years.  No excuses, get busy … your donors deserve it.

[1] Jen Love, Agents of Good, The 7 Lessons of #DonorLove, Bloomerang (2017)
[2] Fundraising Effectiveness Survey Report, AFP Fundraising Effectiveness Project (2018)
[3] Penelope Burk, Donor Centered Fundraising (2003)
[4] The Agitator, 2013
[5] Penelope Burk, Association of Fundraising Professionals, 2018 International Conference presentation
[6] Tom Ahern
[7] Lynne Wester, Bad Decisions with Donors- THASKING!, Donor Relations Guru (2016)
[8] Simon Scriver
[9] Penelope Burk, Association of Fundraising Professionals, 2018 International Conference presentation
[10] Roger Dooley, Charities: Don’t Thank Your Donors with a Gift, Forbes (2012)

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