Last week I talked about the admirable foresight that transplanted American Lawrence Johnston had in planting a cedar tree in his English garden that he knew he would never see grow to its full glory. As I mentioned, I think of Johnston often when I am planning ahead for what’s to come here at HBG.
To be sure, that tree is pretty magnificent. It covers a good deal of ground and is situated in a prominent location in an extensive garden. It was definitely a strong capital investment.
Johnston could have planted nothing but Cedars of Lebanon on those empty acres. Hidcote Manor Garden would look kind of weird, but for major impact, you can’t dispute that those trees would be making a statement now. Who needs all those walls and roses and hydrangeas and tulips and crocuses and the hundreds of other plants and bushes he planned for when you have such magnificent trees?
Well, of course, a good garden does. We do.
But building up gardens with just tall trees is what we’re doing in fundraising. Increasingly, the way we deploy our teams is to concentrate on the 1% of the 1%. It’s just good business, right? It’s an efficient use of past donor support to focus on the wealthiest and most connected constituents to cultivate for the near-future generation of mega gifts.
There’s so much mega-wealth these days, it would be silly not to focus on it.
But not to the exclusion of all else.
Research shows that, while the total amount of giving continues to grow, the number of Americans making philanthropic gifts is dropping like a stone, and that’s worrying:
Even as Giving USA has reported record charitable fundraising three years in a row, the share of Americans who donate to charity is falling. In 2014, the latest year for which data is available, 56 percent of American households made a charitable donation. In 2000, that number was 10 percentage points higher, according to the Indiana University Lilly Family School of Family.”
Chronicle of Philanthropy, “Where Are My Donors?” by Nicole Wallace, June 5, 2018
Fundraising software giant Blackbaud’s 2017 survey of 1,042 US nonprofits found that 20 percent of households made 83 percent of all donations. Which makes sense: we’re used to the Pareto Principle holding true for our own constituencies. But what Blackbaud also found was that just one percent of households account for nearly half of all giving.
That’s a pretty small universe, and it’s shrinking. We’re all going for the low hanging fruit. The fruit at the top of the tree may be harder to get, and it’s not quite ripe yet, but if we don’t watch out it’s going to rot and fall. Or be taken by others who are more industrious.
As with all business enterprises, boards of directors, performance metrics, and compensation packages push fundraising chiefs and staff toward the quickest wins, the largest donations. No one is rewarded for concentrating on cultivating the 10-years-distant donor. That’s someone else’s problem.
But the Boomer generation is aging out quickly, and the generations that follow are smaller in number. Combining that with truly awful donor attrition numbers and rising costs to acquire new donors, what’s a nonprofit to do?
As you might expect I’d say, this is exactly where fundraising intelligence can save an organization’s butt.
But we’ve got to stop doing it the same-old-same-old way – and soon. I have serious concerns about how I’m seeing some organizations deploy (or not) prospect development, and what the increased costs will look like if they don’t plan ahead. According to survey results from the BDO Institute for Nonprofit Excellence, twenty percent of all organizations face the “starvation cycle,” – under-funding that leads to leadership under-investing in necessary infrastructure.
As a sector, we’re not seeing the forest for the mega-donor trees. That fecund stuff on a forest floor isn’t called undergrowth for nothing.
Deploying the triumvirate of fundraising intelligence – prospect research, prospect management, and fundraising data science – now in a future-forward, strategic way (in combination – no, collaboration – with other areas like regular giving) will be the way that many organizations will thrive.
Fundraising intelligence might seem expensive in the short run, but nothing’s more expensive than desperate, last-ditch donor acquisition.
Concentrate at least 50 percent of prospect development and fundraising operations resources at all times on prospect identification and maintaining strong records. There is a wide range of simple-and-cheap to very-sophisticated-and-expensive data mining/analytics methods to find great future donors in your database, your neighborhood, and out in the world.
The best prospect-identifying data science (and I would argue, the best fundraising) cannot be done unless you have a robust data set to work from, so put resources behind supporting smart people, a database that does what you need it to, and data-building and hygiene efforts.
Research and assign those newly-identified prospects identified ASAP. This is where prospect management is the engine that drives success – getting those new prospects into portfolios and engaged as soon as possible.
Avoid doing research on the same-old-same-old people (like updating board members every year) unless you’re going to solicit that donor within a month. It’s labor-intensive and strategy-deficient. Instead, use technology to help you stay current on your very top prospects; overlap alert services available through sources like Lexis Nexis, Mention, and search engines, and pull new information to you rather than wasting valuable time and brain-power that could be deployed more strategically.
I’d like to reiterate something I only briefly mentioned above – I am advocating that we in Fundraising Intelligence (especially in larger organizations) make a concerted effort to partner more intentionally and proactively with our colleagues in Annual/Regular Giving. Not to research every $5 donor – but to collaborate creatively and deploy our skills to identify the next generation of donors.
We should continue to keep our eyes on the canopy, of course, but as prospect development professionals, shining light on that undergrowth is the best thing we can do to ensure the future security of our nonprofits.