Winter is coming to nonprofits. Unnamed, faceless, cold, sparse, biting, relentless, gnawing winter. And not all of us will survive.
There are more nonprofits than ever before and that number is increasing.
The pie of charitable giving is expanding, but not as a percentage of GDP and not as a much as the number of nonprofits are expanding. Thus, the average nonprofit’s funding will be going down.
Retention rates (when controlling for lifecycle as advocated here) are at best flat and often down. Online donor retention rates are particularly alarming.
And it is becoming more expensive to retain donors. In order to hit net revenue budgets, nonprofits increase the number of communications sent. Communications increase in quantity and decrease in quality of results for each piece.
As retention drops, the need for additional acquisition increases, further increasing donor-by-donor pressure to give broadly and shallowly.
Nonprofits flee to what they believe is quality, recapitulating what has worked for others. Donors see the playbook, whether it is address labels or a compelling story.
Everyone has a story and most can be told compellingly. So we do. But it’s enough less and less of the time.
Most nonprofits do most of their acquisition from lists of people who give to other nonprofits. Few bring in new people to the idea of philanthropy, considering it is easier to get the philanthropic to give more.
The tragedy of the commons plays out in a million different households. Maybe ten million. To give to one is to be solicited by that one and by the many.
The donor pool is now an apt analogy, as we are polluting and overfishing these same waters without restocking.
Winter is coming. So what needs to be done first?
One might say let’s prevent winter. One would be correct. It is necessary for our long-term survival. We will talk about converting people into the idea of giving at another time — it would be called stimulating primary demand in the for-profit world.
But one must survive the short term to get to the long term. And thus, there is something we need to do first.
One might say to be donor-centric and to love our donors. One would be correct. The ones who will make it through this winter will be the ones that have stood out from the crowd. Their envelopes will be opened, possibly partly for the free gift, but mostly for the joy they create and reinforce. Their emails will be read possibly partly for a nifty subject line, but mostly for a human connection that they forge. Their calls will be answered because they thanked and thanked well.
But there is a precondition for donor-centric treatment. And thus, there is something we need to do first.
The first thing is to know. We must know who donates. Yes, we need to know their demographics, but also far beyond that. We need to know the world they dream of creating. And we need to tell them about how they are helping to create that world.
These wonderful people are planting seeds. They are planning them so kids have a place to swing, so there is shade, so that people can breathe easier, so we can have apples. We owe it to apple people to know they in it for the apples. We owe it to them to tell them about neither the tire swing nor the shade if they don’t care. Our story to them will be the deep moist flesh that children will pick from their tree and the juices that will stay on their cheeks until banished by a shirt sleeve. We will speak of shade to shade people and breathing to those who value breathing most.
To do this, we need to know.
This week will be focused on how to know. I’ll go into the sausage-making that is gaining donor intelligence. But it’s important we start with the why.
It’s because winter is coming. Only those provisioned with true friends will make it through.
The good news is that we are nonprofits. We face down demons worse than winter.