The Insights I Have Gleaned by Analyzing over 1,000 Donor Files

One of the privileges I have in my work is that I get to review every donor assessment that we do. Over the last 15 years, I’ve reviewed well over a 1,000 of them. I love reviewing them because it gives me great insight on donor behavior, trends, and how much unrealized potential every non-profit has.

So, after reviewing millions of donor records and analyzing donor behavior, here are some of the insights I have for you that could help you as you consider where you are going to invest in your fundraising program:

1. Most non-profits have no idea what kind of donor value attrition is going on in their file.

Most non-profits only look at bottom line revenue when evaluating their mid or major gift programs. They are not looking at year over year revenue from the same donors. I think this is because you are conditioned by direct response fundraising which really doesn’t track individual donor revenue, but tracks KPI’s by donor lifecycles. Doing that for your direct-response program is great, but not for mid and major gifts. It’s one thing to say our donor retention rate is 50%. But it’s another thing to say we lost $4.2MM dollars to value attrition from FY23 to FY24. It’s one of those “Holy S**t moments.”

2. Once non-profits really understand their value attrition and what that equates to in real revenue, they are ready to listen to why and how to address it.

Typically, a non-profit leader has no idea they are losing revenue each year. This is because all they look at is bottom line revenue from the entire program. And when you only look at that, you only get a small part of the big picture.

3. The donor pipeline is not thriving.

When I look at our pipeline analysis and review revenue by cume giving increments, this reveals how well-rounded non-profits are in creating different revenue streams.

I will either see that a non-profit has done a pretty decent job of acquiring and cultivating low dollar donors, or I’ll see that the non-profit has basically focused on major donors and not considered how they are going to acquire new donors. So, the insight is you must have a balance of both. So many non-profits struggle to acquire enough donors to feed the pipeline.

When I was a young direct-response fundraiser, I had a mentor tell me, “If you don’t feed the alligator, the alligator will eventually bite you.”  And this is what happens in donor files that do not invest in new donor acquisition. They are “pleading” for more major donors because donors are not coming up in the pipeline.

And then there are the organizations who have relied almost entirely on small dollar donors and events like walks and peer to peer fundraising. They have done little to nothing on mid and major gifts. That can work for a while. But, as I see in our analysis, once the acquisition thing dries up or gets too expensive, there is nothing to make up for the lost revenue. YOU HAVE TO INVEST IN THE ENTIRE PIPELINE. Balance is everything.

4. Many portfolios are either too large or too small.

When we do our analysis, it feels like a majority of non-profits have not considered what the value of the portfolio is and what is a reasonable ROI to expect from that portfolio. In fact, it feels like no strategic thinking has gone into it. Here’s what I mean: I will see portfolios of 400-750 donors in a major gift portfolio! When a gift officer has a portfolio that large, there is no way they can know their donor’s passions and interests. So what happens is most of those donors only give through direct response appeals. And because the portfolio is so large the MGO is overwhelmed by the quantity. The portfolio is so large because they are trying to hit some kind of overall goal with that portfolio and most of the donors are not qualified to begin with. Frankly, it’s just a mess.

Or the portfolio is too low. I see portfolios that are made up of 50 donors bringing in $200,000 and they have four MGOs with the same quantity of donors and revenue! Hmm… one must consider the ROI here. With portfolios that low you’re looking at a 2:1 ROI. This is for major gifts, not new donor cultivation!

The insight here is that you should have a major gift portfolio no larger than 150 donors and if it’s a new portfolio, it should be in the 3 to 4:1 ROI range. For a more mature program, there should be an 8 to 10:1 ROI and above range. Remember, major gift should be bringing in your best ROI and net revenue next to planned giving.

Mid-level portfolios should be in the 500-700 donor range.

5. Many non-profit major gift programs are not asking for gifts!

I know this sounds crazy, but when I analyze the data, it’s clear donors are not being solicited personally for gifts. They are either being cultivated through direct mail, sent an “annual fund” renewal reminder, or the organization just expects the donor to give each year. Now, how do I know this? Because there are so many donors in the file that give either the same or similar amount each year and when you ask non-profit leadership for the source of these gifts, this is where it comes from.

6. The potential is great, but so many leaders are missing it.

What I see when we do our five-year revenue forecast is incredible potential in almost every donor file. There is revenue in current donor files that are not being realized. The forecast is the great “ah ha” moment for most non-profit leaders because they are thinking they must go out and find new major donors to increase revenue. And that is simply not the case. The revenue is right under their nose! You just need a very disciplined approach to mid and major gifts, along with solid coaching that provides focus and accountability, and you can realize this potential.

7. There is hope!

This is the greatest insight I can give you from all the donor files I have analyzed. All is NOT lost. The greatest gift we can give a non-profit whether we work with them or not is INFORMATION. And we do know that with the information we provide it has the power to move into action. We have worked with so many organizations that have had the courage to say, “Yep, we need to do things differently and we need help.”  And, if the non-profit is serious about allowing us to help, we see dramatic difference in donor and donor value retention rates and overall net revenue increases in both mid and major gifts.

Those are the main insights I have gleaned from analyzing over a thousand donor files over the years. If you haven’t taken advantage of our free donor file assessment, let me take a look. We would love to give you some amazing information you can use to bring in more net revenue for all your incredible programs and projects you are doing to help change the world.

Jeff

PS – If you’d like to learn more about our FREE donor file assessment and how it can give you this kind of insight, you can apply to start the process here.