Plan for the Future With These 3 Steps to Nonprofit Growth Planning

 
Drawing by Amanda Swadlo, Senior Designer atTrueSense Marketing. All rights reserved.

In fundraising, the unicorn goes by another name: growth planning.

Even seasoned fundraising professionals have all but given up on planning for growth in any meaningful way. Much of development is about “hoping for last year’s numbers, plus a few percent more.” Sound familiar?

True fundraising pros have discovered that, though the unicorn is a myth, growth planning is real. Growth can be planned and — in generally every case — achieved.

Step 1: Know Your Fundraising Data

Knowing where you’ve been is essential to visualizing where you want to go. Here are essential questions you need to ask (and the reasons why):

• How many active donors do I have, and how many will I have next year — assuming no new ones show up?
  This is the basic population of people who are likely to support you at the highest levels. They’ve already proven their commitment, they are recently engaged, and are expecting to continue a relationship.
• What is the value of a rookie donor and a veteran donor?
  On average, the annual value of a donor increases three times by their fourth year of giving. It is critical to understand these benchmarks for your charity so you can plan investment and return strategies. (How many veteran donors did I lose last year?) When you lose your most valuable assets, they must be replaced as quickly as possible. Learn more about long-term donor value in our popular blog post: Long-Term Value Is a Donor’s Most Important Metric — Here’s Why!
• What is the value of that loss in donors?
  This is the KEY number: You have to cover it to stay afloat, and you must exceed it to grow.
• What does my program need in five years to sustain or grow its effectiveness?
  Dream the dream! What is the character of your mission, and what will it need in five years to fulfill it?
• How many veteran donors will I need in five years to hit that number?
  Now we are getting to the actual number of people you need to support that mission.
• How many new donors will I need each year to hit that number AND make up for the natural loss in veteran donors?
  This is a NET number: Active Donors – Lost Donors = New Donors Needed
• What is the cost to bring on one rookie donor?
  Math again: Acquisition Cost / New Donors Acquired = Cost Per Rookie (New Donor)
• How can I make the investment in rookie donors today, knowing their veteran value tomorrow?
  This is where dialogue is necessary. Most organizations are willing to wait one, two, or even three years for the new donor to “pay for themselves,” because they know if they can keep them active and growing, their value increases exponentially. Pain tolerances for this investment vary, but should be set at least at an 18-month breakeven.
  

Once you have a sense of your organization’s unique donor movement, you can begin to see the path more clearly. There is a natural order to the acquisition, investigation, commitment, and eventual disappearance of donors. It is, in most times and in most climates, very predictable. The more mature and trusted the brand, the more you can count on this predictability.

Step 2: Duplicate Success

There is an expression in marketing that goes: If you want your customer base (donors, in the case of nonprofits) to stick around and even grow, feed them what they eat.

This means finding fresh ways to serve what they like, because they love what you’re making. Too often, fundraisers want to deviate from the basic tenets of their stated existence because of some imagined idea of cause-fatigue.

There are a lot of organizations worthy of support, but you happen to have one that your donors love. Why? Because you’ve told them over the years about the work you do — the real, life-changing, daily work in the lives of people THEY want to reach — not because of anything else. Keep telling that story, because it’s real.

NOTE: Donors never grow tired of hearing how their gifts made an impact. Keep serving them stories that prove their generosity is making a difference.

Step 3: Expect to Wait

Because the veteran donors — those who have supported you for three or more years — have TWICE the value of rookie donors, you need to wait until your rookies become veterans, and that takes investment and patience. Is it worth it? Of course it is!

But guard against complacency. Many organizations have been losing their best donors for years without much worry. Perhaps they were confident in a few angels coming to the rescue with large gifts … or that those donors who left would miraculously return … or (the worst possible alternative) they cut their programs, thereby inhibiting the very reason their organization exists: to serve others.

The answer? Make a plan, and stick to it!

Here are the three truths to growth planning:

1. People want to help other people. Most are compelled to do so from within. Make it clear they have that opportunity with you, and praise them when it happens.
2. You can actually build your model of donor movement. Know the ROI of each of the donor lifecycles, and know the gain/loss of each donor group.
3. Leadership wants to see growth, and so do you.

These plans are proven. It’s why some organizations have grown and others have not.

Growth planning is all about understanding the numbers, and applying both the logic and the fortitude to see it succeed. It’s a tricky and delicate business — one that entails science (data-driven analytics, high-level planning) and art (innovative offers, resonating stories, warm affirmation). It requires a balance between a confident patience and the agility to mid-course correct when needed.

Like the unpredictable but magical unicorn, growth planning is hard to capture. But once tamed, its value is priceless.