New Year, New Thinking! Assessing Your Donor’s Behavior

A three-part series to start the New Year right

It’s January and it’s the best time of the year (after your books on 2024 close) to start evaluating your donor file. Why is this so important? Because you want to understand your donor’s giving behavior over time; your donor retention and donor value attrition rates; how well your donors are migrating up the donor pipeline by detecting clogs in it; what the value is of each of the portfolios of your mid and major gift officers, and their individual performance; and based on all that information, what is possible with your current donor file for mid and major gift growth.

Knowing all this information at the beginning of the year will allow you to adjust, make additions, and greater investments into your program… all with the intention of building a strong relationship-based fundraising program.Let’s take a look at some of these metrics that will give you greater insight. 

1. Donor Value Attrition—first off, very few non-profit organizations ever look at this metric. They typically look at bottom-line revenue from mid and major gift programs to tell them if they are being successful. This is short-sighted. And, bottom-line revenue only gives you part of the story of what is going on with your donors. You want to know if the donors who gave four years ago are still giving today. And then, what did they give three years ago? Two years ago? Last year? You will be shocked on how much revenue is going away. It could be somewhere between 40-60%. The question then is, why? Are you reporting back on impact to your donors? Are you thanking properly? Are you asking properly, or are you just relying on direct-response tactics? Do you have a mid-level program? Do you have a disciplined major gift program that has a structure?  Knowing this metric and asking these questions will help you understand what might be happening with your donors.
2. Donor Pipeline Report—this report will reveal how many donors you have by each cume giving level and how much revenue that level is producing. For example, 0-24.99, 25-49.99, 50-99.99, etc., all the way up to $1MM plus. You will notice some “clogs” in that pipeline at different cume levels. Why? Do you need to communicate more with your donors and ask more often? Have you created barriers within your organization that make it difficult for donors to give to their hearts content? Do you have a mid-level program? Do you have a membership program that started as a strategy and is now a department? Are KPI’s set up that de-incentivizes the fundraising team to move to mid and major gifts? There are so many barriers’ non-profits inadvertently create that limit the donor’s ability to give.
3. Assessment of each frontline fundraiser—just like assessing the entire file, you also will want to do the same type of assessment for each portfolio. Do you know the value attrition? Donor retention rates? Are you tracking the growth of the total value of the portfolio and the revenue per donor each year? Why do you want this information? Because you want to see each fundraiser and each portfolio mature over time. As fundraisers develop strong relationships and trust with the donor, you should be seeing revenue per donor in their portfolio rapidly increase.
4. Five-year revenue forecast—after you have assessed where you are, you need to know where you’re going. Creating a five-year revenue forecast gives you a solid vision for how your program can grow, how many frontline fundraisers you will need, and give leadership insight into how the investments they make now will impact your future revenue. 

All of these areas for donor evaluation and insight are critical as you start the new year. They will force you to look at the facts of your donor’s behavior and help you to critically assess it and look for areas of opportunities for improvement and growth.

It’s a new year and with it comes new thinking. If you can focus on building relationships, doing some self-reflection, and assessing your donor’s giving behavior to start the new year, you will be well on your way to a successful 2025 and beyond. 

Jeff

P.S.  If you’d like to learn more about Veritus Group’s FREE donor assessment, click on the link here and start your New Year off right!