5 Ways You Can Think Differently about Fundraising to Raise More

5 Ways You Can Think Differently about Fundraising to Raise More

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I was in High School in 1977 when Star Wars hit the screens. Sometime in the first week, my friends and I went downtown to the one theater in Seattle that was showing it. The line went all the way around the block, and was itself kind of an event, excited young movie-goers buzzing with anticipation.

From the first blast of the John Williams fanfare, we all knew: This was big! This was different! Things looked real – space ships, aliens, distant planets – so different from our previous experience of sci-fi on film. It even had some esoteric philosophy we could parrot, sounding wise: “May the Force be with you!”

Since then, we’ve had decades of over-the-top blockbusters with overwhelming visuals – many of them set in space. So it might be hard to imagine the impact that first Star Wars had on mid-70s teenagers. In a way, it changed everything for us.

Afterward, we were jacked up, over-excited. We took the Monorail, a self-consciously futuristic elevated train (built in what people thought the future would look like in the early 1960s) and pretended we were flying above the street. We yelled and cheered and planned our next trip to see Star Wars again.

Since then, I’ve seen more exciting and important things happen. But none that had that sense of something big and new.

Some of you (including Sean) are going to be disappointed to know that not long after that, I “grew out” of Star Wars. My tastes and interests shifted. I saw the next two movies once each. I’ve seen almost none of the many others since. Sorry. But it was amazing to be there when everything changed.

There’s something new happening in fundraising these days. It’s thrilling in a similar way for this middle-aged professional. (And getting involved doesn’t require waiting in super-long lines.)

It’s this understanding of the impact of bequest giving. We’ve been talking about it here on the blog for a couple of weeks. Here’s what changes when this new understanding reaches into our lives:

Donor Acquisition

It’s no secret that new donor acquisition has grown more difficult and expensive in recent years. Direct mail, once the powerhouse of donor acquisition (and cultivation) has been squeezed between rising costs and falling response rates. There’s been a general search for new channels to find donors, with varying degrees of success.

We used to say that if a direct mail acquisition pack got a return-of-investment below 0.6:1 or lower, it was not sustainable. It simply took too long for the initial investment to pay back.

But we weren’t looking at the value of future bequests. We knew it was important, but few of us would have guessed that as much as 80% of donor lifetime value could come from bequests.

The outcome: our old measurement for sustainable fundraising is too stringent. It only counts the value of donors’ subsequent donations. Which is a small part of the value the donor will give over time. Which leads to another big change…

The power of bequest giving

Legacy gifts are not a new thing. Donors have been doing it for centuries. What has changed is the way we see and value it.

It used to be that we thought of fundraising as all about finding and keeping donors by enticing them with motivating offers to make the world a better place with their donations. The fact that a very small percentage of donors put us in their will was a real nice-to-have. Icing on the cake, we thought.

Now we realize there’s a lot more icing than cake – three to four times as much. Remember George Lucas and how he made a deal that gave him more of a share of merchandise sales than of movie revenue? It’s like that: Bequests aren’t a nice add-on; they’re the big part of the investment payoff. If we do things right!

With Star Wars, you don’t get the merch sales if you don’t make the movies. Same thing for fundraising: we won’t get the bequest revenue unless we give donors the chance to give those one-off donations.

But it doesn’t just happen. We need to have an ongoing connection with donors about the value of their legacy giving. Sure, a few of them will just come up with it by themselves and we’ll get a bequest from them. But if we’re talking to donors about it and helping donors see what they can do and how … we’ll get a lot more bequest revenue.

The way we think about donors

This probably doesn’t come as a surprise, but the people most likely to think about the possibility of the world continuing to exist after they’re gone … are older people. Overwhelmingly, it’s older people who have a will and include a nonprofit in it.

Older people make fundraising work. Now that we’ve looked at the numbers and seen the impact of bequest giving, we see that they make it work even more than we ever dreamed!

A lot of people in the nonprofit world have a kind of obsession with “young donors.” They are often thought of as a solution to all our problems if we would just start focusing more on them.

Nope. We’ve known for a long time that younger donors are hard to find, hard to motivate to give, and even harder to get them to keep giving. As for thinking about their legacy and having a will? It’s negligible.

When you take bequests into account the value of older people is order of magnitude higher than that of younger people. We shouldn’t just “tolerate” older donors while we seek young ones. We should focus on older donors. We should be obsessed with them.

The value of direct mail

You’ve noticed that direct mail is getting more challenging all the time. We’re squeezed between rising costs and falling response rates. The recent pandemic-fueled surge in inflation really bloated the cost of direct mail. Response also dropped at a faster rate during the pandemic, partly because more donors migrated their giving to digital channels.

The nay-sayers have been telling us that direct mail is dead for decades. For some of us, it’s starting to seem like maybe they’re finally right!

But hang on: Guess what direct mail is very good at: It’s tops at finding and cultivating those donors most likely to eventually give a large legacy gift! You’ve heard the “experts” disparage direct mail as an old-fashioned medium that works for the elderly – and not so much for the young. They’re absolutely correct, but that’s the strength of direct mail. Not its problem.

If you know someone who’s thinking that way, point them to this example: back in 2013, the American Cancer Society decided to “pause” their direct mail acquisition. No doubt, they already saw how rising costs and dropping response rates were making direct mail less effective. In addition, DM was a fairly small part of their overall fundraising portfolio. The pause must have seemed like a smart, low risk move.

It wasn’t. It didn’t take long to see the damage ripple through their programs. All kinds of “unrelated” programs started to hemorrhage donors and dollars. Possibly most damaging was the drop in bequest giving. It’s difficult to measure something that doesn’t happen, but the revenue loss has to have been in the tens of millions of dollars. And even now, more than ten years later, the loss is no doubt still echoing through their large and sophisticated planned giving program.

We really are in a “this changes everything” moment in fundraising. If you choose to pay attention and adjust, it will be good change for you for decades to come.

Make the change work for you!  Register for Sean Triner’s blockbuster online workshop, A New Hope for Successful Donor Acquisition. Discover the clear path that leads from new donors to breakthrough legacy gifts. Workshops happening this week! Sign up now and get (FREE!) Your Ready-Made Donor Communications Calendar sent straight to your inbox, too!

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