Increase Your Fundraising with Donor Cultivation Marketing

Marketing in the Nonprofit Sector

Marketing has a ways been a delicate topic in the nonprofit sector compared with the business world. Low staffing, limited budgets, lack of marketing expertise, and concerns about messaging are just a few of the hurdles faced by many traditional nonprofits. At countless colleges, universities and independent schools, marketing was considered a “bad word” for decades because it was believed to convey boasting and self-promotion. However, I have observed these concerns diminishing in education as key services like market research, branding, and social media marketing are hailed as potential cover against the effects of demographic, societal, financial, competitive and global changes.

In nonprofits outside of education, traditional thinking, budgetary limitations and a heavy reliance on inter-personal communications have limited marketing investment. The nonprofit community is wrestling with demographic shifts, changing donor behavior and an explosion in the number of nonprofits with overlapping missions. There is also fierce competition for students in the independent school and higher ed space, and consolidating health systems encroaching on each other

We will examine the types of nonprofit organizations that can benefit from leveraging increasing knowledge of an individual’s interests and preferences toward a strategic marketing program. While these groups of nonprofits share many characteristics, they also have important differences that will affect how quickly and successfully they adopt advanced marketing technology. Along with large, traditional nonprofits like the American Red Cross, United Way, and Salvation Army, there are thousands of small nonprofits such as local house and garden museums, special interest museums, and social welfare organizations as well as hospitals of all sizes, 60% of which are nonprofit,

Major Trends Influencing Nonprofit Fundraising 

The upside-down world created by Covid has influenced many factors in nonprofit governance, events, and fundraising. Here are three significant trends that are reshaping the way donors give, their options for donating, and the very definition of your donors:

• The transition to online and mobile donations: One of the most significant shifts has been building for several years: there has been a 21% increase in online giving in the last year and 32% increase in in just the last three years (source: Blackbaud Institute). The percentage of those online gifts from a mobile device rose to 28%. Is your website responsive and your giving page informative and easy to use? Are you tracking the source of your gifts, including how many online donations are from a cell phone?
• The coming-of-age of younger prospective donors: The profile of a “typical” donor is undergoing a metamorphosis: as younger people such as Millennials (born 1980 – 1995) and Generation Z (born 1996 – mid-2000’s) assume larger roles in society, nonprofits need to understand their missions, goals, and interests. While nonprofits continue to benefit from the largess of Baby Boomers, the new folks are markedly different in their attitudes, the causes they support, their financial position, and their comfort with technology. They are growing up in a mobile, personalized, service-oriented world – is your nonprofit ready to serve their needs?
• Donor-advised funds are the fastest-growing form of philanthropy: Contributions to donor-advised funds added up to $47.9 billion, a 20.1% increase from 2019, and donors sent charities $34.7 billion  from those funds, a 27% increase from 2019. Given the flexibility and immediate benefit of a tax deduction, these funds are believed to have a rosy future (assuming attempts to change the tax laws fall short). For nonprofits, it remains more essential than ever to prove their worthiness to prospective donors, as those who select donor-advised funds can make their gifts at any time.  

How Personalization Is Reshaping Marketing

Facebook knows everything about us. Google tracks our interests and movements. Streaming and music platforms understand our entertainment proclivities, while Amazon knows what products we browse and buy. Meanwhile, marketing is steadily growing more personalized, as new technologies, data tracking, and marketing sophistication mushroom.

Database marketers have understood since the 1970s that direct mail pieces with personalized salutations and references to a recent gift or purchase drive higher donations or response. The power of these individualized touches is proven repeatedly as new technologies and social mores have spawned wireless communications, laptops and notebooks, the internet, social media, marketing automation, and smart TVs and home devices.

Businesses first grasped the potential of highly targeted and personal communications, followed by education, nonprofits, hospitals and other groups. Salesforce was a pioneer in what has become a staple of business marketing: combining known demographic data and individual behavior such as website activity and consumer purchases to “nurture” the prospective buyer, sending highly personalized messages that strengthen the relationship between that individual and the company and repeatedly drive incremental sales.

How Can Nonprofits Deepen Personal Connections with Donors?

For over 15 years, businesses have used new information about their prospects and customers to personalize their emails and, increasingly, web presentations. These targeted emails have led to significant increases in sales and engagement. I have personal experience from the early days: in 2010, I co-developed a "lead nurturing" system that integrated Salesforce (Customer Relationship Management) with Silverpop (Marketing Automation) for my wireless communications company. The project was a major success, increasing new business sales by over 25% and vastly improving the efficiency of the sales team. Similar programs started in higher education admissions over a decade ago, and while many institutions have reported significant success, the adoption remains relatively slow. I believe that many nonprofit organizations can use these strategies and technologies to increase giving, especially in their annual funds – while also reducing marketing costs.

 Two Methods to Personalize Donor Marketing

1.    The first scenario uses known or acquired information on donor giving patterns, demographics and media preferences (primarily email vs. direct mail at this point) to determine how and when to contact donors, with the prospect of saving significantly on reduced mail costs for donors who prefer email and/or always give at a certain time of year. Conversely, nonprofits that had stopped using direct mail for cost reasons may wish to try again with highly targeted campaigns, as it is clear that direct mail is still a major factor in fundraising success.

2.    The second scenario is more akin to deploying lead nurturing in sales or admissions: first learn the key areas of interest for your donors and prospects, then send emails based on that data. Why do they donate to you and what causes or projects do they support? This can be gleaned through your conversations, data from rental lists, surveys or by tracking electronic activity, e.g. what links they click in your newsletter. You may learn if they’re passionate about events, speakers, the arts, the environment, social causes etc., or give to donor-advised funds. Once you have created a "profile" (usually called “persona” in the nurturing world) of these individuals, you send four or five highly targeted messages annually to each individual, testing personalized strategies in direct mail, email, text and gradually web content and video (note: these micro-targeted communications are already expanding their scope into Facebook, print, TV and radio ads). You can also send thank you gifts related to each person’s interests.  Result: these personalized messages have proven to enhance the relationship between organization and constituent, and I believe would lead to increased commitment and donations for your nonprofit.

How To Create a Personalized Donor Cultivation Programs

Option 1: Using Integrated CRM and Marketing Automation Systems

Marketing and information systems are a good illustration of where larger and smaller nonprofits diverge in their capabilities due to financial and operational disparities. Customer Relationship Management systems like Salesforce allow institutions to efficiently manage all their relationships and interactions with constituents through contact management, sales management and marketing interfaces. When paired with marketing automation platforms like Hubspot, these integrated systems allow an institution to track a wide variety of personal and institutional activities and data and then leverage this information to send highly personalized and targeted messages via emails, texts and eventually more robust media. These periodic, highly personal touches have proven to strengthen the relationships, generate more interactions between the organization and its prospects, and typically create more commitment from those constituents, whether it is buying products, matriculating at a school or college, or, we believe, donating.

Examples of Lead Nurturing in Action:

In lead nurturing, the organization uses select demographic, psychographic, and behavioral information about the customer/client/donor to create “personas” that reflect the core beliefs, goals, attitudes and interests, status, and other shared characteristics of each persona. The organization then personalizes email and text communications to those individuals, creating a closer relationship and leading the person down the sales/admissions/ donor funnel. These interactions e.g. the individual’s email or text opens, click rates, journey through the website, and actions help the organization build a “lead score” that ranks the potential of each individual relative to the organization’s goals. Here are some examples:

• In admissions for colleges and a few independent schools, the nurturing philosophy and methodology are similar but the factors differ. What pages did the prospective family view on your website? Did they complete an inquiry, and then an application? Much of the most powerful nurturing comes after inquiry, to ensure they do submit that app. (Note: Innovative admissions teams are also referencing the parents’ financial status and demographics through research and data firms to further refine their family profile). In his or her inquiry, what interests did the student define? Once the institution has created a data record, the personalized communications begins: if he is a soccer player and musician, an email linking to the story of your big win over your rival, then an email with a video of the college band. A budding actress and environmentalist might see a video of the school play and testimonials from community volunteers. Of course, any key points from personal interactions with the prospective student or family became a crucial part of the profile data. While lead nurturing has been relatively slow to take off in higher ed and is still a novelty in schools, its time is coming.
• In business-to-business marketing, the seller rates the prospective company’s fit for its services, the prime contact’s position in the company (senior management, product management, etc.), and the activities of the interested individual as shown by opens of the company’s email, clicks to and on their website, content downloads, purchases, and others. This data is leveraged to fuel ultra-targeted emails and, over time perhaps other key personalized media such as texting and retargeting to continue connecting with that prospect AND further refine the personal connection with him or her even after the first purchase. Lead nurturing and personalization are in the process of revolutionizing business marketing and sales, with many more enhancements ahead.

How Can Lead Nurturing Work in Fundraising?

• In fundraising and advancement work, I believe this powerful combination of marketing strategy, technological capabilities, and donor/prospect familiarity can reshape fundraising. Similar to the above scenarios, the nonprofit would use a lead nurturing system to track key data about a donor’s interests, giving habits such as causes, time of year and method, e.g. mail-in versus online versus mobile. By using a similar strategy as organizations that are further evolved in marketing, nonprofits can leverage their intensive knowledge of the prospect’s and donor’s personal passions; the causes that motivate them, from life-saving healthcare to social justice to artistic freedom to historic homes. Such attention to the donor’s needs and innovative storytelling would also distinguish many nonprofit organizations from the crowded competition.

Caveats to Adopting an Integrated Lead Nurturing System

Nonprofits who see the potential in personalized communications and lead nurturing must be aware of these pre-requisites for success:

1.    The financial capability and/or commitment to investing in marketing technology, initial training, and ongoing support of these relatively complex programs.

2.    Marketing resources with the skills to set up a lead nurturing program and develop a compelling “flow” of messages and “next steps” to drive donors and prospects to action based on their interactions with your institution. This most likely means significant trial and error and testing as you define personas, assess clicks and donations and periodically optimize your nurturing program to accelerate activity and gifts.

3.     Solid technical understanding of your CRM and marketing automation tools, data structure, and connectivity between the systems. Most nonprofits can accomplish this requirement using a single person who knows the CRM and marketing technology you choose, or could be hired to help you make those decisions. An alternative is to use an outside consultant to get you started, then quickly train a full-time team member to take on those responsibilities when ready.

Many smaller or less-sophisticated nonprofits can surely attest that this level of investment and technology is unproven to achieve a positive return or not currently feasible. For those groups, there is an alternative:

Manual Personalization and Nurturing Options

For smaller nonprofits, those short on cash flow, or lacking in technical resources, there is a crude but workable alternative: recording the donor’s or prospect’s key data in a spreadsheet and creating three or four sets of personalized emails manually. Let’s explore this possibility. I see these duties being handled by an advancement rep who wants to work extra hours, or a moderately-skilled temp; the idea requires some spending but vastly less than an automation platform, and a number I expect would be vastly outweighed by incremental donations.

Executing the “Manual” Approach

The organization continues to retain key data like the donor or prospect’s interests, giving habits such as time of year, and donation medium of choice. Without a CRM that manages this data for systematic reference, the nonprofit can create a basic spreadsheet that contains the key fields to use in targeted personalization: the amount and frequency of gifts as well as timing, what giving medium the person prefers, and what interests, causes, social trends, and the like motivate him or her. Next, the nonprofit’s leader or marketer would need to determine how many market segments and content “streams” to develop (perhaps four or five), how many emails to send (perhaps three to five) and when to send them. This gives the periodic worker(s) a roadmap to create the emails, videos, stories and/or links to key activities. Then the final step is adding the gift data to your spreadsheet and analyzing it periodically to compare the success with previous activity from each of your test donors.

Best Conditions for Donor Cultivation Marketing to Thrive

• The nonprofit organization recognizes the potential of personalized marketing to materially increase donor and prospect engagement and giving.
• The nonprofit staff has already built close relationships with many donors.
• The nonprofit organization has the financial and operational resources to build a donor nurturing system OR sufficient staff or temporary workers to test the manual program option.

Takeaways for Your Institution/Organization

·      Determine if you are open to reassessing your fundraising strategies and operations in pursuit of increased philanthropic support.

o  If yes, analyze your marketing, operational and financial capabilities to decide if you wish to invest in marketing platforms or prefer to test “manual” nurturing programs.

• Speak with all members of your team to explain your new approach, how it will affect their roles, and answer any questions.
• Set aggressive but feasible goals to achieve in incremental numbers of gifts, donors, repeat percentage, conversion of prospects, and other key metrics.
• If you choose to pursue a technology-driven approach, ensure you have set clear marketing goals and have the financial and operational resources to create an actionable lead nurturing system, including the strategy underlying your segmentation, messaging, and trigger points.
• TEST…TEST…TEST: every campaign, medium, message, prospect source and other variables must be tested, frequently. Then – use the results! An amazing number of marketers think about interesting and potentially valuable tests but don’t leverage the results due to their lack of time, analytical skills, and/or understanding of the importance of testing.

Change in marketing isn’t just coming – it’s here and spreading from tech companies and the business world to colleges and schools, hospitals, and other nonprofits. I hope this article has helped you see how personalizing your fundraising strategy can lead you to significant increases in your donor commitment and giving totals!

Acknowledgements: The author greatly appreciated to valuable insights of Geoff Handy, Jay Angeletti, Kevin Ralph, and Dutch Barhydt in their suggestions for this article.