Fundraising Q&A: Donor recognition and stewardship

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We want to improve our donor recognition and stewardship programs. What would you recommend?

Thanks for your question; you have chosen one of my favourite topics because it's an area that can make or break your fundraising efforts. I've often joked that my first lesson in strengthening donor relations came when I was six years old and my mother said, "Cynthia, if you don't thank Granny for your Christmas present, don't expect a birthday present!"

According to the Association of Donor Relations (PDF), their definition includes four components:

  • Gift acceptance and management
  • Acknowledgement
  • Donor recognition
  • Reporting (which includes stewardship)

Penelope Burke says "effective donor relations is an organizational philosophy, advocated by decision-makers and practiced by everyone." Her point in this article is that ideally the activity is integrated into all that we do and not relegated to one person's job description.

Relationship building is key

In order to grow both human and financial resources, we need to nurture the relationships we have established with donors and volunteers. According to a 2009 article entitled "Mutual Appreciation" in AFP's Advancing Philanthropy "finding new donors and dollars is on the decline, retention of first-year and multi-year donors is falling and recruiting new donors can cost up to ten times more than retaining existing ones."

If you recall my column on the cost of fundraising, donor acquisition is the most expensive activity so we need to ensure that we build rapport and investment. "Location is to real estate as relationship is to philanthropy" (Effective Donor Relations - Janet L. Hendrick).

Communicating results

In the Muttart Foundation's 2008 Talking About Charities study, the research indicated that Canadians want communication:

  • 98% think it is important (very or somewhat) for charities to provide information on how they use donations
  • 98% want information about the programs and services the charities deliver
  • 97% want information about charities' fundraising costs; and
  • 96% want information about the impact of charities' work on Canadians.

In order to communicate effectively with our audiences, charities need to have measurable goals. The ability to speak that language relies on an up-to-date strategic plan where the board and chief executive have defined time-limited and specific objectives. Together they must monitor the progress of the organization, adjust the strategy if need be and ensure there is tangible evidence of their accomplishments. For more information about the relationship between strategic planning and fundraising refer back to my article on that subject.

Penelope Burke's donor research on effective communication found that:

  • 93% would definitely or probably give again
  • 64% would give more
  • 74% would continue to give indefinitely
  • 70% of donors would increase the overall value of their philanthropy if charities were more effective at acknowledging their gifts and communicating results

Spend wisely

My experience with major individual donors in particular, is that they don't want the charity wasting funds on appreciation trinkets. If you've ever had the pleasure of visiting these people in their homes it's understandable why their aesthetic senses may be offended...Trophy Time's plaque just doesn't match the ambiance they've created with the original artwork that graces their walls!

Acknowledging gifts more promptly and personally or improving your charity's capacity to report results back to donors is not expensive. The most effective way to communicate today is through the internet. Be sure to ask for email addresses on your donor reply forms so you can save postage costs while still keeping donors engaged and informed.

Businesses and service clubs may want more public recognition than individuals and foundations. Brainstorm what your charity can offer without incurring unnecessary expenses or making promises you can't keep. Instead of stating news coverage for a cheque exchange, all you can guarantee is that you'll name the donor in a press release and then it's up to the media (and what's newsworthy that day) as to whether it's printed.

Arts organizations can be easier than some when it comes to defining benefits. In a former job, a very popular offering was made to major corporate sponsors to host a post-performance reception. This meant not only had they paid $25,000 to underwrite the evening, but they were now given the privilege of inviting their guests to meet the performers and cover all those costs too. In contrast, social service organizations may have a harder time coming up with comparative options, but rest assured, your goal is to help donors feel like they're part of the family. It may or may not be appropriate to meet your charity's clients but inevitably there are grateful "graduates" who will happily share their victories with investors.

What success in donor relations looks like

  • Board creates, approves and adopts a donor relations philosophy/policy
  • Customer-service focus means the entire team — staff, board and volunteers play a role in relationship building
  • Investors receive a prompt thank you and receipt (whether for charitable tax purposes or not)
  • Receipts comply with the Income Tax Act and the board reports to Canada Revenue Agency annually to maintain charitable status
  • Ensures gifts are used for their intended purpose
  • Accountability in action — funds are tracked (which requires adequate software)
  • A functional database and trained staff who can mine the information
  • Implies a burden of trust
  • Timely and appropriate reporting to donors
  • Involves and engages donors in the charity's work
  • Builds understanding of the need and provides solutions for the donor to help
  • Recognition reflects the gift size
  • Benefits are not costly or extravagant
  • Shared responsibility between the charity and donor

Walk the talk

In order to truly understand what a valuable endeavour donor relations is, we need to experience it firsthand. Many of us already support our favourite causes and for those who don't (yet), choose a charity that lights the fire in your heart, make a gift and identify the feelings that arise. In the words of Kim Klein, did they thank before they banked? Do they now address you personally? Are they managing the above-mentioned success factors well? You will soon find out which organizations take this vital fundraising component seriously. We need to learn from the best because the costs are too high to take our donors for granted!

Other resources

Tony Poderis: Building Donor Loyalty

Top 10 Tips for World-Class Donor Relations

Cynthia Armour is a freelance specialist in fundraising and governance. A Certified FundRaising Executive (CFRE) since 1995, she volunteers as a subject matter expert with CFRE International. She works with boards and senior staff to ensure that strong leadership will enhance organizational capacity to govern and fundraise effectively. Contact Cynthia directly at 705-799-0636, e-mail answers@elderstone.ca, follow her on Twitter at @CynthiaJArmour, or visit www.elderstone.ca for more information about her services.

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