Donor Cultivation: Strategies, Cycle, and Priorities for Nonprofits
It can cost five times as much to acquire a new customer than retain one, and the same is true for donors, making a donor cultivation strategy a high priority for nonprofits.
Donor cultivation has a direct impact on donor retention. This report shows that for every $1,000 that nonprofits raised in 2018, they lost $93 through gift attrition. What’s even more striking is that nonprofits lost 105 donors for every 100 donors gained. You may also be interested to learn that recurring donors give up to 42% more than single gift-giving donors.
If your nonprofit is ready to improve its donor retention rate, we’ll lend a hand by providing an overview of donor cultivation, the donor cultivation cycle, and donor cultivation strategies.
What Is Donor Cultivation?
Donor cultivation is a step in the donor cultivation cycle, but it also refers to the entire donor relationship. Donor cultivation is the process of continually adding new donor prospects to your solicitation list, motivating major donors to make repeat gifts, and encouraging small donors to increase the size of their gifts.
The purpose of donor cultivation is to create connections with would-be donors and inspire them to give again. Over time, repeat donors will develop a sense of loyalty to your nonprofit. Repeat gift-giving is a mutually beneficial partnership.
Stewardship, which means simply means taking care of something that belongs to someone else, goes hand-in-hand with donor cultivation. Stewardship encompasses updating donors on the impact their gifts make, reporting on their generosity, and creating lots of opportunities and activities for them to get involved with your nonprofit.
What Is The Donor Cultivation Fundraising Cycle?
Your nonprofit will be more successful when your board understands the donor cultivation fundraising cycle, which consists of the following five parts:
- Donor identification
- Research and qualification
- Cultivation
- Solicitation
- Stewardship
Effective cultivation and stewardship plans will turn first-time donors into loyal repeat donors. By understanding the donor cultivation cycle and working on your plan, you have a suitable donor base to keep building on.
Let’s explore each step in greater detail.
Step 1- Donor Identification
The first step in the donor cultivation process is to identify new donors. New donors could include previous or lapsed donors who might be inclined to give again.
In identifying donors, you might consider categorizing them into monthly donors, planned giving donors, and major donors. Each donor’s giving characteristics are essential to consider when communicating with them and determining how often you approach them. In the donor identification process, plan to prioritize each category, so you can maximize the potential of your overall donor cultivation plan.
Here are some suggestions of groups that you can pull from to identify donors:
- Current list of supporters
- Employees
- Volunteers
- Event participants
- Previous donors
- Lost donors
- Major corporations
- Foundations
Step 2- Donor Research & Qualification
The chances are that you’ll have at least some information on your donors. The research step takes information gathering to the next level. A little research on each potential donor will help you discover how inclined they are to give to your nonprofit, how much they may be willing or able to give, and what will motivate them to offer a gift.
As you conduct your research, look at past philanthropic activities, wealth markers, and factors that connect them to your cause. The answers you find will tell you whether they’re a good candidate for donor cultivation.
Once you build a list of qualified donors, you can move them to the donor cultivation stage.
Step 3- Donor Cultivation
Donor cultivation begins immediately after a donor makes the first gift. A donor cultivation plan template is a valuable tool for this step. Utilize the information you learned during the research and qualification step to grab their attention by personalizing communications.
Keep donors engaged according to your donor cultivation plan. Get better acquainted with them and find out what motivates them to continue giving. Invite them to events and offer them opportunities to volunteer for your organization.
Step 4- Donor solicitation
Donors will put more trust in you after you’ve built a stronger relationship with them. That’s the time to solicit another donation.
Personalization is also crucial at this step. In a complimentary way, mention what you know about the donor’s capacity and propensity to give gifts. Give them a donation target amount based on what you learned about them in the qualification step.
Be prepared with a thank you in case they agree to making a gift. Not all prospective donors will say yes. If you get a “no,” come up with a strategy to continue the cultivation process and approach them at a later time.
Step 5- Donor Stewardship
There are four parts to the donor stewardship stage – acceptance, acknowledgment, recognition, and reporting. How much time and effort you devote to each of them will depend on how you’ve prioritized each donor.
Thank all donors promptly, whether the gift is large or small. A best practice is to thank donors using the same channel they made the gift for example send an email for online giving, etc.
Your donor cultivation plan will outline exactly what you need to do to follow through with your stewardship responsibilities according to whether they are monthly donors, planned donors, or major donors.
Donor Cultivation Strategies
A donor cultivation plan provides the roadmap for your nonprofit to implement effective donor cultivation strategies. Of course, you’ll want to focus heavily on major donor cultivation efforts.
These are just a few of the many donor cultivation ideas you can work into your donor cultivation plan:
- Thank you notes or phone calls
- Invitations to galas or receptions
- Mentioning them in your newsletter
- Mentioning them on your social media platforms
- Making a personal visit to them
- Scheduling a lunch date
As part of your donor cultivation plan, your board will need to define what a major gift is. Also, you’ll need to identify the major donors you already have and set a target for the ideal gift size. With these things in mind, you might brainstorm how many interactions (calls, emails, mailings, etc.) it will take to build a strong connection with the donor.
Donor cultivation is the backbone of your fundraising efforts for your major donor cultivation plan. When you choose BoardEffect, you get board management software that allows your donor cultivation and stewardship committee or chair to develop and document their activities and share them securely with the rest of the board. With a significant focus on retaining new donors, you’ll be able to build on your momentum and move to strengthen your financial standing.
