Philanthropy & Funding

To Boost Individual Donor Giving, Nonprofits Need a Plan

A new report shows that creating a fundraising plan is paramount for organizations looking to increase individual donor gifts.

There’s a lot of advice out there about how nonprofits can raise money from individual donors. But many nonprofits remain overwhelmed and confused about the best options for their work.

Last year, I studied 29 nonprofits with budgets under $2 million to identify opportunities for small nonprofits to strengthen individual donor contributions specifically. My big question going into this year’s project—which included research from 87 organizations—was, what exactly makes an individual donor fundraising program successful?

I hypothesized that board involvement or the relative experience of the person primarily responsible for individual donor fundraising were the greatest influencers of success. But it turned out that the clearest predictor of success was something else: having a formal fundraising plan. Now, a fundraising plan can take many forms. For some organizations, it’s an annual calendar of activities such as events and mailings; for others, it is a set of goals and strategies for revenue streams, such as individual donations, private foundations, and fee-for-service work. But in all cases, the nonprofits I studied that were most successful took the time to create a written plan; they didn’t simply react to fundraising opportunities as they arose.  

The fact is that if you have a plan, other investments you make in your fundraising program—more staff, higher-paid staff, or more one-on-one meetings with current and potential donors—naturally lead to bigger impact. For example, at organizations I surveyed that had a formal fundraising plan:

  • Investments in staff paid off in more individual donor dollars. Every $1 increase in salary for an organization’s individual donor fundraiser led to an average increase in individual donor income of $4.25. Put another way, for every $10,000 investment an organization made in the salary of their fundraiser, they saw $42,500 increase in individual donations. For those organizations without a plan, there was no correlation between salary and fundraising results.
  • Devoting more staff time to individual donors led to more donations. Each full-time person working on individual donor fundraising raised an average of $280,000. This holds true at any level; people working 25 percent of their time on individual donor fundraising raised an average of $70,000. For organizations without a plan, there was no correlation between staff time and fundraising results.
  • Face-to-face meetings with current and potential donors resulted in increased donations. Every donor meeting led to an average individual donor revenue increase of $5,000. That’s not to say that every donor gave $5,000 (wouldn’t that be great?), but total revenue went up by $5,000. If an organization did not have a plan, there was no correlation between donor meetings and revenue.

Ongoing Trends

This year’s research also showed that some aspects of individual donor fundraising have stayed the same for the past two years. For example:

  • The average smaller nonprofit raises 36 percent of its annual overall income from individual donors.
  • Individual donors give about $435 a year on average, whether big or small, online or offline, recurring or one-time.
  • Smaller nonprofits are raising 17 percent of their annual individual donor income online. We expect to see that number creep up, but it’s been steady for the past two years.
  • Organizations raise about half of their annual individual donor income from donors giving $1,000 or more.
  • On average, about four of every 10 board members take an active role in individual donor fundraising—by making introductions to potential donors, attending donor meetings, and taking on other activities.

This year’s project also identified a number of other useful data points for smaller nonprofits including:

  • The average online donation from an individual is $210 per year. This is about half of the overall average gift ($435), so organizations transitioning to more online campaigns will need to recruit even more donors to raise the same amount of money.
  • On average, organizations that have a recurring donor program—where donors can set up an automatic monthly or quarterly gift payment—raise about $23,000 from 50 donors each year. The average recurring donor gives $520 over the course of the year, which makes this type of donor solicitation more lucrative for organizations than other methods.
  • Finding the perfect donor-tracking database continues to be a challenge for smaller nonprofits. The highest-rated database options are Little Green Light, DonorPerfect, Salesforce, and NationBuilder. (Note: Little Green Light helped sponsor this research.)
  • The average organization meets with 17 donors face-to-face throughout the year—only about nine percent of their donor base. That low number means that there’s a great opportunity for organizations to meet with donors and potential donors in person to make the case for support and generate significant new income.

What Next?

Keeping this data in mind while your organization determines where it might focus fundraising energy may help improve outcomes. If you have a small recurring donor program that could blossom with a little more attention, for example, it might be worth spending resources there. But most importantly, if you don’t have a fundraising plan, the first step is to create one. Even a simple outline detailing your individual donor strategies and goals over the next few months could help you achieve better results.

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COMMENTS

  • I would also like to note that there is a shift happening in the traditional giving model. now there are free ways to make giving a part of your donors everyday life. like KarmaKart.com. This income doesn’t even come from the donors but from big retailers in the form of commissions and a good way for donors to give back without really giving anything but a conscious effort to switch methods of shopping.

  • BY Anne Sherman

    ON December 2, 2015 11:01 AM

    There are some interesting findings here. I’d love to know whether the author has any insights about the extent to which some of these trends apply to larger nonprofits (say $10M or less)—or don’t.

  • Lara Pimentel's avatar

    BY Lara Pimentel

    ON December 9, 2015 01:36 PM

    Heather, did you find that having a particular planning format increased results?

  • HeatherYandow's avatar

    BY HeatherYandow, Third Space Studio

    ON December 10, 2015 05:09 AM

    Anne: I don’t have any data on organizations with budgets larger than $2 million, but my experience says that the positive impact of having a plan is present in larger organizations as well.

  • HeatherYandow's avatar

    BY HeatherYandow, Third Space Studio

    ON December 10, 2015 05:11 AM

    Lara: We did not explore the plan format in this year’s project, but will be digging in to plan components in next year’s research.

  • MarshallCapDev's avatar

    BY MarshallCapDev, Capital Development Strategies LLC

    ON December 15, 2015 12:40 PM

    Heather, very interesting results.  Great that you were able to conduct this analysis.  Always useful to have data that backs up what many of us tell nonprofits on a regular basis!  A couple of questions - where were these organizations based? Large metro areas? All throughout NC?  Be interesting to know.  And secondly, it is amazing that we are still having such issues with smaller nonprofits struggling with finding good data management solutions.  Did you get a sense as to what’s contributing to that? I’ve not heard of Little Green Light actually, but I would add Neon and Bloomerang as other systems that I’ve seen smaller nonprofits use.

  • HeatherYandow's avatar

    BY HeatherYandow, Third Space Studio

    ON December 16, 2015 04:37 AM

    Thanks for your questions! The organizations came from all across the country and concentrated their fundraising at various geographic levels (read more in the report on page 42).

    And I did not gather data on the reasons behind organization’s data management challenges. We did collect a long list of databases and user rankings, which can be found on pages 38 and 39 of the report.

  • MarshallCapDev's avatar

    BY MarshallCapDev, Capital Development Strategies LLC

    ON December 16, 2015 07:21 AM

    Thanks Heather!!  Just downloaded the report. Can’t wait to read it.  From one fellow nonprofit management “geek” to another - hooray for cool data!

  • BY Mavis Early

    ON December 17, 2015 05:26 AM

    Excellent & helpful info. Thanks!

  • I am a Fund Advisor in Milwaukee Wisconsin responsible for managing grant awards to small to medium nonprofits. I have seen a major trend in request for fund development planning and a wide array of consultant work plans. I would love to talk with you about coming to our city to speak with consultants who do this work. I think we need some level of consistency in what makes for an effective and impactful fund development plan.

  • BY Jennifer Ott

    ON December 28, 2015 08:03 AM

    Really interesting stuff! In addition to the regions served by the 29 nonprofits you studied, can you tell us how they break down in terms of categories (arts, social services, higher education, e.g.)? I’d be amazed if there aren’t wide variations between different kinds of nonprofits. Either way, Heather, I’m confident I speak for many when I say thanks for all this great information.

  • HeatherYandow's avatar

    BY HeatherYandow, Third Space Studio

    ON January 8, 2016 08:56 AM

    Denise: So glad you are interested in this work! Please be in touch at heather (at) thirdspacestudio.com with any questions.

  • HeatherYandow's avatar

    BY HeatherYandow, Third Space Studio

    ON January 8, 2016 08:57 AM

    Jennifer: Good question! The breakdown of issue focus - and impact on giving - is on page 13 of the full report. There’s definitely some differences among the focus areas!

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