Invest-gray 2013Apr19
In my last post I discussed how heartened I was to see non-profits beginning to invest in serving their donors better. One of the areas where I’m starting to see non-profits spending more of their resources is mid-level donors.
At Veritus Group we are seeing  great opportunity with mid-level donors for our own clients’ major gift programs as well.
If you do not currently have a mid-level program, we strongly urge you to consider starting one.  Here are a few reasons why:

  1. Mid-level donors are some of your most loyal —If you review retention rates of your mid-level donors you will see they have some of the highest retention rates of any group of donors on your file.  This is where you really see ROI go way up.
  2. Mid-level donors usually bring in the majority of your NET revenue—Many non-profits with robust direct response programs rely on their mid-level donors for the bulk of the net revenue that goes toward programs.
  3. Mid-level donors are your future Major Donors—Mid-level donors are the pool from which you cultivate major donors.  Good major donor programs have a robust mid-level program providing the fuel for new major gift growth.
  4. Investing more resources into mid-level donor programs can help you retain hundreds of thousands, even millions of dollars each year depending on the size of your donor file.

Okay, are YOU convinced you need a mid-level donor program?  Good.  Now, what the heck is it, anyway?
Good question.  It’s different for everyone, so let me explain.  For some smaller donor files a mid-level donor program may consist of donors in the range of $100-$999 cume per year.  For larger donor files, it could be $1,000-$4,999 or up to $9,999.  For larger files it could go even higher.
The point is—this is a group of donors that are giving you a significant amount of revenue each year.  I mean a ton!  But, while attrition rates may not be as high as your regular donors, it’s still way too high.  So, while you are receiving a ton of money from these donors, you’re also losing a significant amount.
This can change!
The problem is that most non-profits I know of are short-sighted.  Sorry to be harsh, but it’s true.  Here’s something I need you to understand.  Most non-profits are spending the same amount of money on their mid-level donors ($1,000-$9,999 cume) as they are on a donor who gives $25 a year!  In other words, if it costs $20 to cultivate one donor per year and they get $25 from that donor, they make $5 net.  But, they get $975 NET from a $1,000 donor.  That’s great, right?  No, it’s too high of a return on investment.  Huh? “What are you smoking, Jeff?”
Hang with me here.  If you spend $20 to cultivate each of your mid-level donors and they are currently bringing in $1,000 a year, what if you spent $50 per donor a year and they now give $1,500?  Now, apply that to all your mid-level donors.  Not only do you increase their average gift, but you may also reduce attrition by 20% because of the added resources you’re putting toward them. Now you can see how that would quickly equate to a lot of NET REVENUE that you are currently leaving on the table.
And, not only are you bringing in more NET revenue, you’re pushing more donors up the pyramid into your major gift program.
Does it get any better?
But, here is a warning that most non-profits don’t consider.  You CANNOT “move the needle” of your mid-level program by only coming at it from the direct-response discipline.  Meaning, you can’t just mail or e-mail more or send more expensive looking packages to achieve the results you’re looking for.
What Richard and I have learned is that a good mid-level donor program consists of a strong direct-response program (mostly focused on higher level offers and program reporting pieces, not more expensive creative) coupled with a mid-level donor rep who brings in a major gift approach to mid-level donors.  Yep, that’s right…a personal rep just for mid-level donors.
The difference, though, between a Mid-level Donor rep and a Major Donor rep is that the Mid-Level rep is cultivating 500-600 donors (not 150, like major donors) and they are mostly touching them through voice, e-mail and personal notes.  Of course, there is more to it, but you get the big point…Effective Mid-Level programs are a combination of the best of direct-response and the discipline of major gifts coming together.
Okay, have you stuck with me on all this?  To recap, here are the big points.

  1. Every donor file has mid-level donors, it’s just a matter of how large your file is to determine who they are.
  2. There are plenty of great reasons to have a specific strategy just for mid-level donors, but the main reasons are more NET revenue and higher retention.
  3. Most likely you’re spending the same on a $25 donor as you are on a $1,000—Stop doing that.
  4. Invest in your mid-level with a combination of a strong direct-response program AND a mid-level donor rep for every 500-600 donors – a mid-level donor rep who brings the major gift philosophies and strategies to this important group.
  5. Watch your NET revenue go up and your attrition go down.
  6. See your Major Gift pipeline start to fill up.

Don’t be short-sighted.  Investing in a mid-level program, like you have with your major gift program, will reap benefits for years to come.  It will just take some forward thinking by you and your team to invest in it.
And, if you’re already doing this, pat yourself on the back, because you’re way ahead of the game.