A database of contacts is somewhat like a building and can be valued similarly. A building returns rent and the rental income times a multiplier gives you the value of the property. Similarly, a database of supporters returns "rent" in the form of donations and volunteer hours.
A common multiplier is 8 or even 10. So, the value of the database is the annual income it generates times perhaps 8. This makes your database an asset with an assessable value. Building and maintaining that asset or database is the subject of this essay.
We know fundraising is a long-term business. A fundraising programme of any type can take years to mature. Almost any programme will take at least 3 years to show its true potential. The Board needs to be patience! Rarely is there a silver bullet or crowdsourcing campaign that will fund your deficit and give you a trust fund to provide you with on-going income. Mostly the business of funding a charity is the hard day to day grind of running multiple strategies that reach out to a community of funders and donors that invariably have many other organisations asking for their support at the same time.
That community of funders can include government contracts, corporate sponsorships, trust and foundation grants, high-nett worth individuals and public or individual donations. Behind all these pathways are people. Your communications, engagement and accountability strategies are the links between you and those people. There are driven from your database.
Markets, times, tastes and people change. Your search for the magic messages that describe your relevance, urgency, effectiveness and detail your credentials, never stops. Look at the New Zealand population by Age Range (All graphs and numbers come from Figure NZ unless otherwise stated).
Although 600,000+ are 65+, about 2.5 Million are less than 40. If we break this down by age cohorts Generation Z, Millenials, Gen-X, Baby Boomers and the redoubtable survivors of the Responsible Generation (now in their late eighties and nineties), we can drill down a bit and see where our donors come from. These people are also the Trustees we encounter or the Corporate Sponsors we pitch to.
It is worth talking about "lifetime value". The crudest "Lifetime value" of your average donor is calculated as the sum of all donations divided by the number of people who have ever given you money. For vega clients, the average lifetime value of a donor varies from about $1,000 up to $5,000 for mature programmes. This is not reflective of the size of the organisation, but rather the maturity of the donor engagement programme.
That means that every contact you don't recruit as a donor is a loss of at least $1,000 and up to $5,000 to your organisation. This also gives you an idea about the amount you can spend on recruiting new donors and still show a good lifetime surplus contribution to your mission. You can be much more sophisticated and divide lifetime value by donor types such as one-off, regular giver, trust, corporate, event, high-nett worth and more. But lifetime value however expressed is important as a baseline metric.
More than 50% of charitable income comes from individual donors, but as I said people on your database make up links to corporates, trusts and government. Every communication with every contact is important in building and strengthening your brand recognition and therefore your credentials.
Coming back to donor journeys and donor lifecycle, the willingness to give changes with income or capacity to give. This used to translate to donors in their thirties with a stable income, as the most reliable recruits to donor databases. Females willing to respond to need, giving small amounts were "classic" first-time donors.
Source: Posted by Michelle Norton November 20, 2019
This landscape has also changed with many Millenials of both genders now earning good incomes and being willing to express their values through event participating, purchase decisions even donations. But think micro-donations through a smartphone and you are more likely to reach and engage Millenials and increasingly Gen-X. It is still safe to say that our commitment to charities deepens in our thirties and peaks in our forties, with the type of charity changing as we age, or as people, we care about age.
With Lifetime Values for donors at $1,000+, we can agree a contact or donor database is desirable? This applies to tiny organisations with hundreds of supporters equally with organisations with hundreds of thousands. An organisation come to Vega with a tiny database of public supporters. Yet this organisation has 80,000 incidents each year that highlights the issue. Capturing just a percentage of this awareness will result in a good database of support and in time, income.
BUT HOW DO WE START
But how do we start, or how do we adjust to the changing demographics that for instance see many direct email programmes declining? Firstly, every name is important. But you need a journey for each name. What happens to each name that enters your database? This may depend on the source of the name. Do you try to survey each name? Asking a few non-intrusive questions that enquire about the reason the person contacted you or gave a donation at this time is the start of good stewardship of your relationship with the donor.
You are seeking to give the contact what THEY want, but also giving them an opportunity to share in the life and success of your organisation. To find out what they want, you ask them. Modern engagement platforms like Vega will help you do that at the right time in the dialogue with the contact. Letting them share in life and success of your organisation means presenting regular "calls to action" that emphasise what YOU need from them. It takes time for your messages to be absorbed, so don't stop. Keep putting your messages in front of your contacts. Consistency is important.
Many of your supporters will come from social media or be active in social media. There are restrictions on exporting your social media contacts directly into your database. But you can and should invite anyone on your Facebook page to register on your website. Remember people are not on Facebook or other social media, to buy or donate. People are on social media to for social reasons, so your "Call to Action" button should be perhaps "Find Out More" or "Find Help" or others as appropriate to you. The important thing is to get people to register on your website and start a journey of induction that will benefit you and them.
Events are another great source of new contacts. Again, it is vital that names and contacts details are transferred quickly into your main engagement database. Think days not weeks.
The donor journey that leads to Donor Lifetime Value in the thousands of dollars, is planned, responsive and organic. The technology platform that underpins this journey needs to make it easy for you to:
- Allow you to find out a bit more about the contact, every time you interact with them, think micro-surveys.
- Respond to changing signals from the donor. Allow rules-based responses automatically.
- Alert you if something needs your attention.
- Needs to help you engage the contact with simple but pleasing calls to action.
- Needs to respond to the donor where they are in their journey of life.
When the survey the not-for-profit landscape, we see organisations that are responding to the changing market place. They are building value and growing their income as a result. But there are also organisations that are struggling to adjust. These are running down assets that took years to build.
A vibrant not-for-profit sector is vital to the social fabric of New Zealand. With traditional media in decline, with sources of truth under attack, the voice and issues raised by the not-for-profit sector are vital. It is all our responsibility to adapt to changes in our society and to respond to the world as it is, not as it was. That is why we started Vega. To give every organisation no matter what size, the opportunity to reach out and engage with their possible community of support, today's community.
Planning your donor or contact journeys and finding a technology platform that will help you manage those journeys is an urgent and worthwhile journey for you.
By Tony Lindsay | founder-director | firstname.lastname@example.org
Tony is the co-author of "Paradise Saved" the story of the New Zealand Conservation Sector. Published by Random House NZ in August 2014, and the founder of vega works limited.
He has spent his life working in the non-profit sector in New Zealand and overseas. In a long career, Tony has worked as technologist, consultant and fundraise in a diverse range of New Zealand and overseas based organisations.
Tony's first successful fundraising and political campaign was opposing the construction of a Nuclear Power Plant in southern Ireland in 1971. Today, Tony is still a practising fundraiser on behalf of vega clients.