The Donor Management Process: The Secret To Building Unreserved Donor Loyalty

Published on February 3, 2021

Why do you need an effective donor management process in place? 

The answer is simple; it provides a better ROI. 

Wondering how? Research shows that it costs you ten times more to acquire a new donor than retain an existing one. 

While you shouldn’t give up on new donor acquisition completely, it’s essential to have an equally strong strategy for retaining and upgrading existing donors. 

That’s where an efficient donor management strategy or process helps you. And this post will show you exactly how to develop one. 

What is donor management? 

Donor management refers to the process of tracking the details of your interactions with donors and prospects and using this data to inform your strategies. 

These strategies comprise actions your organization takes to move the prospect through successive stages of the donor life cycle, i.e., from an individual to prospective donor to a first-time donor to an upgraded, renewing or major donor. 

How does a donor management process help you?

The key to a nonprofit’s success is strong donor relations. And that’s what donor management helps you with. 

A systematic donor management process helps you deepen your relationship with prospects and existing donors. This, in turn, helps you:

  • Enhance donor engagement: With the data procured from each interaction, your communication can be more personalized and engaging. 
  • Boost donor retention: The more engaged your donors are, the more loyal they will be to you. 
  • Drive repeat and upgraded gifts: Retaining donors makes it easier for you to get them more closely involved with your mission, which in turn drives repeat gifts or upgraded amounts. 

Most nonprofits create a rough plan for donor management and carry out actions on the fly. But rudimentary planning leads to inefficiency, which is why you need to lay down a well-detailed plan for the process. 

Developing the donor management strategy

The specifics and the actions of your donor management strategy vary from organization to organization. However, they are based on the same foundational strategy, which includes the following steps: 

  1. Donor prospecting
  2. Cultivation and solicitation
  3. Stewardship and relationship building.

Let’s look into each of these in detail. 

Donor prospecting

Donor prospecting is the process of identifying potential donors you want to target to achieve your goals. All nonprofit fundraising efforts begin with donor prospecting, which is why it’s the obvious first step of donor management too. 

There are two aspects of donor prospecting:

1. Identifying your target audience

Before strategizing how to manage donors, you need to determine your target audience. To do that, you’ll need to start with a specific objective in mind. This could be anything like: 

  • Acquiring new donors. 
  • Getting first-time donors to upgrade their gifts. 
  • Getting supporters to run fundraisers for you. 

These goals will help you narrow down your target audience. For example, you’ll need to create ideal donor profiles for each objective and target people who match those characteristics through mass communication channels like social media.  

If your objective is to get more supporters to run fundraisers for you, you’ll need to dig into your database to shortlist your strongest supporters using multiple donor data points. Note: Sync all the information you get from various touchpoints in your donor management CRM for up-to-date profiles and communications.

2. Gauging their interest or donation ability

Next, you will need to gauge the donor’s interest and ability to help out more using the donor data at hand. This will help you narrow down your list even further. To do this, you’ll need to collect data on: 

  • How often do they donate (not only to your organization): More donations they make, the higher the chances they will give again.
  • Their average gift amount: Higher amounts indicate deeper donor engagement and higher intent to donate. 
  • What are their philanthropic interests: Interests aligning with your mission can drive repeat gifts or larger gift sizes. 
  • Their occupation: This indicates their ability to give. For example, business owners may be able to make a major gift or even start a matching gift program. 

This donor data can be collected through feedback forms or general survey forms sent to new donors to engage them. For existing donors, you may already have most of this data from previous interactions. If not, call them or send them an email or text blast asking them to fill out a donor survey

With this data at hand, you can further narrow down your target audience to include only those of the highest priority. Here’s a flowchart to help you with that:  

Efficient Donor Management Process donor funnel infographic

Donor prospecting can be a complex process. If that’s the case, you can always get a nonprofit communication consultant to help you with it. This is their forte, so it would be worth the investment. 

Cultivation and solicitation of potential donors

Once your target audience list is ready, the next part of the management process is the ask. However, you can’t just jump into it. To achieve more positive responses, you need to build up to the solicitation. Here are the steps involved. 

1. Segmentation based on donor data

The lack of personalized communication is one of the core reasons that donors stop giving. 

For better donor retention, you need to personalize all your communications. This is achieved through list segmentation, which includes grouping donors in terms of: 

  • Frequency and recency of giving. 
  • Interests and affinities. 
  • Demographic information, etc. 

This information must be added to your donor management software or donor management CRM at the beginning of your communications. Sync your tools with these databases and update information based on tags and surveys automatically.

You May Also Like: How Donor Data Can Boost Your Fundraising: Tips and Strategies

2. Setting objectives for each segment

At the beginning of the donor management process, we start with a relatively broad goal. After your segments are in place, you need to set separate objectives for each of them to help you achieve the final goal. 

There can be multiple objectives for one segment. 

For example, say your final goal is to upgrade the gifts of one-time donors. One of the donor segments you’re working on is the lapsed donor group. The objectives for this segment would include: 

  • Re-engaging these donors and getting them to interact with you more actively. 
  • Addressing their concerns about why they stopped giving.
  • Making a low-barrier ask to get them more closely involved with the organization. 
  • Sending out a donation appeal. 

3. Creating an action plan to achieve these objectives

You sorted out the “Who” during the segmentation and the “What” when determining the objectives. Next, you have to settle the “How.” How are you planning to achieve the objectives you laid out above? 

Based on your objectives, your action plan should inform the following: 

  • Outreach efforts: The type of communication you want to use. 
  • Messaging: What should your communication entail? This could have multiple layers – for example, a different messaging to re-engage lapsed donors, and different messaging when making a small ask. 
  • Timeline: When should each activity be carried out. 
  • Next steps: What do you need to do when someone responds positively and if responses are not positive.

Keep in mind that this section of your donor management strategy would be the most comprehensive and time-consuming. Therefore, it’s recommended to assign a team or individual to take complete ownership of the task to prevent needless confusion later. 

4. Making the ask and tracking

Lastly, implement your action plan that leads up to the final ask. This appeal would differ based on the donor segment and goal. 

For example, for new donors, donating would be the final ask. For small donors, the final ask might be an upgraded gift. 

During this step of the donor management process, there are a couple of things that you need to keep in mind:

  • Maintain transparency: To avoid any overlap of your donor management team’s efforts with that of others, make sure that everyone is in the loop about what’s happening. For example, you don’t want your marketing team putting out ads for lapsed donors when you’ve already gotten most of them actively engaging with your content. That would be a waste of resources. Instead, you want to build donor relations with those who are likely to engage.
  • Track everything: Document all interactions in a spreadsheet, donor management software, or your donor management CRM along with the data collected in those interactions. 

Stewardship and relationship building

A successful donor management process doesn’t end with the gift. The key to sustainable fundraising is good stewardship. 

There are two ways your ask can go:

  • They say no. 
  • They respond with yes.  

Stewardship for both cases would be slightly different but equally essential. 

Stewardship for those who said No

Even though they say no, you can’t assume that they have lost interest in supporting you and ignore them. You got this far with them, which means they are interested. 

But, maybe it’s not a good time for them, or they still have their doubts about making another (or first) gift. In any case, you have to understand the problem and act accordingly. Here are a few ways how:

  • Inquire if there’s anything specific stopping them: Be straightforward and ask them why they are not comfortable giving. Address the concerns they have.

    For instance, if they are not convinced about your efforts, send them a beneficiary testimonial. If they aren’t motivated enough, invite them to an event to let them talk to other donors. You’ll be surprised at how easy it is to get to the root of the problem by just asking.
  • Ask them if they would like to help in other ways instead: Donations (or asking for larger gifts) can be a huge ask. Donors may not have the confidence in you or the affinity towards the cause to respond positively to the ask.

    Getting them to help you in other ways, like volunteering or spreading your message, will get them more closely involved with your organization and build their confidence in your work.

Stewardship for those who said Yes

Donor stewardship with those who respond with yes is slightly more straightforward, given the positive start. Here’s how it should go:

  • Donor recognition: Start by thanking the donor for their gift. If you planned for donation incentives, send them out with the thank-you. Make the donor feel good about the donation.
  • Showcasing impact: Apart from the thank-you’s, you also have to assure donors that they made a good decision. This means showcasing the impact through your nonprofit’s impact reports, telling them exactly how their money was used, and inviting them to volunteer to see your work first-hand.
  • Consistent communication: Keep in touch with your donors and provide them with regular updates about your organization and work. Check in on them, not to ask for donations (you don’t want to make them feel like an ATM for you) but to have a conversation, get some feedback or more data on them. This applies to those who said no as well. 

At this point, you should be at the end of your donor management process. You can track your progress while continuing the conversation with your donors and note what worked and what didn’t. 

Once you’re done with that, start right up again at the donor prospecting step to upgrade these donors. 

Keep in mind that the key to successful donor management is collecting and maintaining donor data from every touchpoint. The next step you need to take after the interaction is largely decided by this data’s insights.  

However, while collecting it is pretty straightforward, keeping the data clean and organized is a challenge all nonprofits face. The inability to maintain clean records renders the data useless as you’ll not be able to group it, analyze it, and understand patterns. But you can avoid this by following a few best practices. Check out this post on Donor Database Best Practices to learn more.  

Featured image source: ThisIsEngineering