What Can Scrooge McDuck Teach Us About Fundraising?
Do you think Scrooge McDuck, the famously wealthy cartoon character, would be an easy target for fundraising? Maybe you’ve thought that fundraising is just about finding wealthy individuals who are sitting on piles of cash, ready to give. If only it were that simple! In reality, successful fundraising is far more complex. It requires building relationships, understanding donor motivations, and most importantly, leveraging Donor Lifetime Value (LTV) to shape long-term strategies. The Myth of Easy Money Much like the fictional Scrooge McDuck, wealthy donors aren’t just waiting for you to ask for money. They usually have well-developed ideas about where they want their resources to go. This makes the work of a fundraiser challenging, particularly when trying to acquire new donors. But here’s where the power of LTV comes into play. When you focus on the long-term value of a donor, you’re not just thinking about that initial gift but the lifetime of contributions and engagement that follow. A Common Scenario: Maddie and PRoGI Imagine this: You’re the Vice President for Development at a nonprofit organization called Paving the Road with Good Intentions (PRoGI). Your boss, Malcolm Triestodowell, just got off the phone with a concerned board member, Madeleine “Maddie” Gottrocks. Maddie and her husband, Sam, are generous donors, and she’s now raising concerns about the cost of fundraising. “How can we be spending more on direct mail than we’re bringing in?” Maddie had asked. She thinks it’s a waste, and you need to explain why it’s not. Here’s the key: New donor acquisition is rarely profitable right away, but when you calculate Donor Lifetime Value, you can see that what seems like a loss at first can turn into a massive gain over time. The Importance of Donor Lifetime Value When Malcolm mentions Maddie’s concern about fundraising expenses, your response is crucial. You need to explain that investing in new donors upfront often costs more than you initially get back. However, over time, those donors contribute far more than that initial gift. For example, let’s say PRoGI spent $125,000 on a direct mail campaign and only raised $50,000 from new donors. That looks like a loss—until you factor in lifetime value. Those new donors will continue giving in future years, and their total contributions will eventually far exceed the original investment. And it’s not just the individual giving. New donors often bring in others through their networks, helping the organization grow even more. Moving Forward When faced with a situation like Maddie’s concerns, here are some steps to take: Educate your leadership and board about the long-term benefits of donor acquisition. Use specific data to show how past donor investments have paid off over time. Calculate and track your Donor Lifetime Value. Knowing the long-term financial impact of your donors helps you make informed decisions and invest wisely in fundraising strategies. Leverage relationships. If Maddie is passionate about a specific fundraising strategy, consider her ideas, but also explain how your current efforts are part of a broader strategy for sustained growth. By understanding and applying LTV, you can navigate tough conversations with donors and board members and position your organization for long-term success.
The Power of Donor Lifetime Value: A Lesson from PRoGI
“You were right about Maddie and Sam,” Ponos said to Malcolm Triestodowell, president of PRoGI. “Over the years, the Gottrocks have been incredibly generous donors.” This conversation between Ponos, the VP for Development, and Malcolm reflects a key insight that many nonprofits might overlook—the importance of donor lifetime value. It’s not just about the first donation; it’s about the cumulative impact over time. Ponos continued, “Their first gift was $2,500 back in 2008, and there were a few years where they gave only $1,000. But since then, the Gottrocks have contributed a total of $71,500 to PRoGI.” This scenario plays out every day in nonprofits across the country. Organizations often look at one-time gifts, but they miss the long-term potential of those donors. Understanding and leveraging donor lifetime value can change everything. What is Donor Lifetime Value (LTV)? Donor lifetime value measures the total contributions a donor is expected to make over their engagement with your organization. It’s a crucial metric for guiding strategy, determining how much to invest in donor acquisition, and fostering long-term relationships. In the case of PRoGI, Maddie Gottrocks’ initial gift was just the beginning. Ponos explained how Maddie’s outreach to 65 friends in 2016 yielded only seven donations, totaling $3,100. It seemed insignificant at first glance. But fast forward, and those seven donors have now given a combined $51,250. And the ripple effect continues—one of Maddie’s friends, Mrs. Dineros, endorsed PRoGI for a $25,000 grant from the Scrooge McDuck Foundation. This is the true power of understanding and maximizing donor lifetime value. The Key to Long-Term Growth: Invest Now, Reap Later Malcolm, the CEO, initially saw Maddie’s appeal and other fundraising efforts as short-term disappointments. He couldn’t understand why some campaigns seemed like “losses.” But as Ponos pointed out, the return on investment is not immediate—it’s exponential over time. For example, PRoGI once ran a direct mail campaign that cost $75,000 but generated only $28,000 in initial donations. At first glance, this looks like a $50,000 loss. But those initial donors have gone on to contribute $145,000 over the years, more than covering the initial shortfall. This is why understanding LTV is so important. It helps you see the bigger picture and make informed decisions on where to invest for long-term growth. How to Apply LTV to Your Strategy Focus on Retention: The first gift is just the beginning. How you thank, engage, and steward your donors afterward determines whether they become long-term supporters. Think Long-Term: Immediate returns are great, but the real value lies in building relationships that grow over time, just as PRoGI saw with their direct mail donors. Segment and Prioritize: Identify your high-value donors and focus on cultivating those relationships. Look for ways to move them from one-time givers to major supporters and even legacy donors. Start Building Donor Loyalty Today If PRoGI had ignored Maddie’s seemingly small appeal or abandoned their direct mail efforts, they would have missed out on significant long-term donations. Understanding and applying donor lifetime value enables your organization to Go Big by maximizing the potential of every donor relationship.
The Stew Leonard’s Strategy: Lessons for Donor Lifetime Value
Do you know about Stew Leonard’s, the supermarket chain hailed as the “Disneyland of Dairy Stores”? With just seven locations across Connecticut, New York, and New Jersey, Stew Leonard’s has cultivated an almost cult-like following among its customers. Why? One major reason is their focus on customer lifetime value, with the typical Stew Leonard’s shopper contributing more than $50,000 over their lifetime. What can you and I learn from Stew Leonard’s approach to building loyal customers, and how can we apply these lessons to strengthen donor relationships? The Power of Donor Lifetime Value (LTV) Just like Stew Leonard’s measures the lifetime value of a customer, nonprofit organizations must understand the lifetime value of their donors. Knowing this number provides critical insight into: Strategic Planning: You can make informed decisions on how to allocate resources for acquisition, retention, and growth. Long-Term Growth: Donors are not just one-time contributors; they represent long-term partnerships that fuel your mission. Impactful Stewardship: Once you understand LTV, you can refine your approach to keep donors engaged and inspired. Stew Leonard believed that losing one unhappy customer didn’t just mean losing a single transaction; it meant losing tens of thousands of dollars in potential future revenue. The same concept applies to donors: every donor relationship represents a long-term opportunity for growth. Key Takeaways for Fundraisers Personalized Stewardship: Just like Stew Leonard’s stores focus on delivering high-quality products and customer experiences, nonprofits should focus on meaningful and personal donor engagement. A simple “thank you” or acknowledgment can make a huge difference. Retention is Crucial: Stew Leonard’s motto, “Anytime you are not 100% satisfied, we will refund you as quick as a flash,” shows their commitment to retention. In the same way, nonprofits should ensure donors feel valued and appreciated to prevent attrition. Value in Every Interaction: Every donor interaction should be treated as an opportunity to reinforce trust and deepen their connection to your cause. Consistent communication, updates, and involvement help build long-lasting donor loyalty. How to Calculate Donor Lifetime Value Stew Leonard’s could lose $50,000 by disappointing just one customer. For nonprofits, knowing the value of each donor helps you avoid similar losses. Calculate your donor LTV by factoring in: Average Donation Size Frequency of Donations Donor Retention Rate Planned or Legacy Gifts With this knowledge, you’ll be better positioned to maximize each donor’s lifetime impact and tailor your fundraising efforts accordingly. Start Thinking Long-Term The key to long-term fundraising success lies in understanding and maximizing Donor Lifetime Value. Just as Stew Leonard’s built an empire by focusing on every individual customer, nonprofits can go big by nurturing their donor relationships for the long haul.
Unlocking the Power of Donor Lifetime Value
Do you know the lifetime value of your donors? Understanding your Donor Lifetime Value (LTV) is key to unlocking tremendous growth for your fundraising efforts. With this knowledge, you can develop effective strategies that maximize the long-term value of every donor, helping you to Go Big! LTV represents the total value a donor contributes over their entire relationship with your organization. This metric is critical because it allows you to: Invest wisely in new donor acquisition. Enhance donor retention and long-term engagement. Allocate resources effectively for events, major gifts, planned giving, and stewardship programs. How to Calculate Donor Lifetime Value Calculating your LTV helps you build a clear roadmap for growing your organization. By understanding how much a typical donor will contribute over time, you can make informed decisions about: Which strategies will deliver the best return on investment. How to focus your efforts on retention, major gifts, and planned giving. Where to allocate staff and resources to build stronger donor relationships. Knowing your LTV enables you to tailor your fundraising plan to achieve sustained growth, turning one-time contributors into lifelong supporters. Why Donor Lifetime Value Matters When you focus on the lifetime value of your donors, you shift from short-term thinking to long-term success. Rather than measuring success by immediate returns, you gain a deeper understanding of the long-term potential every donor represents. This approach helps you: Boost donor retention by creating meaningful engagement strategies. Cultivate major gifts by building strong, lasting relationships. Identify opportunities for planned giving and legacy donations that can significantly impact your mission. Maximizing LTV isn’t just about raising more money—it’s about creating lasting, transformational change. When you prioritize the donor’s journey and foster ongoing engagement, you ensure the long-term health of your organization. Start Growing Your Donor Lifetime Value By focusing on Donor Lifetime Value, you empower your organization to create meaningful, lasting relationships that fuel its growth. Every interaction becomes an opportunity to build trust and deepen the commitment of your supporters, ultimately leading to larger gifts and increased impact.
The Key to Donor Retention: Plugging the Leaks
Do you remember Ponos? She’s the dedicated VP for Development at the fictional nonprofit, PRoGI (Paving the Road with Good Intentions). Recently, Ponos faced a major challenge—defending her new-donor acquisition strategy to a skeptical board member, Maddie Gottrocks. Thanks to a tip from John Davis, VP of Growth at the Leadership Institute, Ponos was able to demonstrate the value of PRoGI’s long-term donor strategy using a Donor Performance Calculator. Her data showed the enormous power of Donor Lifetime Value (DLV), emphasizing how investments in new-donor acquisition pay off over the long haul. But there was a problem. The retention rates for PRoGI’s donors were worryingly low. While most organizations retain 45-60% of first-time donors, PRoGI was struggling to keep more than 30-35% of their donors coming back for a second gift. Even worse, only 60% of these donors made a third contribution, compared to the industry standard of 80-90%. Why Is Retention So Low? The challenge Ponos faces isn’t unique—many nonprofits struggle with donor retention. As Mitch Nozka insightfully pointed out, it comes down to two things: The “Faucet”: You need a strong strategy to bring donors in. This includes direct mail, advertising, and digital communications. The “Bucket”: You need to keep donors engaged once they give. If there are too many holes in your bucket, they’ll leave. Mitch nailed it. If your donors don’t feel valued, heard, or surprised by your level of care, they’re likely to walk away. Plugging the Holes: Why Donors Leave Retention is all about building strong relationships. Something as simple as a handwritten thank-you note can make all the difference. If donors aren’t impressed or properly acknowledged after their first gift, they may leave without ever realizing their full Lifetime Value. This idea was highlighted in a 2014 experiment conducted by John Davis at the Leadership Institute. By sending $50-99 donors a jar of honey—previously reserved for $100+ donors—he found that gratitude increased future giving significantly. The takeaway? Gratitude matters. And showing it early can stop donors from slipping through the cracks.
What Makes a Donor Walk Away After Their First Gift?
Have you ever been ghosted by a donor? It’s frustrating, especially when you don’t know why they stopped giving. This phenomenon is more common than you might think—many organizations struggle to keep donors engaged after their first contribution. In fact, barely half of first-time donors ever make a second gift. This statistic highlights a major challenge in donor retention, but also an opportunity to strengthen your approach and build lasting relationships. The Power of Donor Lifetime Value When we talk about long-term donor relationships, we need to think about Donor Lifetime Value (DLV). Every donor has the potential to become a lifelong supporter. Consider the stories of major gifts that started small—like my friend Bill, whose initial $250 contribution eventually grew into a $4 million estate gift. Or the $25 million estate gift from John Engalitcheff, and Joan Kroc’s incredible $1.5 billion donation to the Salvation Army. These mega-gifts aren’t typically spontaneous acts of generosity. Instead, they’re the culmination of years of relationship-building and trust. It starts with the first gift, but the real value comes from nurturing that connection over time. Why Do Donors Stop Giving? Losing a donor after their first gift can cut off not just future contributions, but the potential for a major or legacy gift. So, what causes donors to walk away? We’ll explore the key reasons in the next blog, but for now, I’m curious—what do you think is the biggest reason donors stop giving? Is it poor communication? A lack of follow-up? Or something else entirely? How to Keep Donors Engaged To prevent donors from ghosting you, you need to build a strong foundation of trust, communication, and gratitude right from the start. In the next post, we’ll dive into specific strategies to help you retain those first-time donors and turn them into lifelong supporters.
How to Salt Your Donor’s Oats: Boosting Retention and Engagement
You’ve probably heard the saying, “You can lead a horse to water, but you can’t make him drink.” But what if you could make him want to drink? Enter the concept of “salting the oats.” In fundraising, this idea translates to motivating your donors to stay engaged, give again, and become long-term supporters. So how do you “salt their oats” and inspire continued generosity? Why Do Donors Stop Giving? Before we can motivate donors to stay, let’s consider why they leave. One of the top reasons is poor communication, especially a lack of proper thanks and follow-up. According to a Bloomerang study, 53% of donors stop giving due to inadequate communication — including never being properly thanked. This begs the question: how well is your organization communicating with donors? Are you expressing gratitude and maintaining strong stewardship? Steps to Salt the Oats and Boost Donor Retention Here are some practical ways to increase donor retention and lifetime value: 1. Prompt and Personalized Thank-Yous A simple, sincere thank-you goes a long way. Ensure that donors are thanked immediately after their contribution. Whether through handwritten notes, phone calls, or personal emails, make the donor feel valued and appreciated. 2. Welcome Packet for New Donors First-time donors need an extra push to return. Consider sending a welcome packet that includes a personalized thank-you, information about how their gift is making a difference, and details on future opportunities to engage. 3. Ongoing Communication Don’t let the relationship end with a thank-you. Keep donors engaged by providing updates on how their contributions are being used. Regular newsletters, progress reports, or personalized updates can maintain their interest and make them feel like a valued part of your mission. 4. Build a Strong Brand Your brand is what sets you apart. It helps donors feel connected to your organization. A strong, consistent brand keeps you top of mind and helps foster loyalty. Just as Costco or Chick-fil-A can attract repeat customers through their strong branding, your organization can build lasting relationships with donors by standing out and staying consistent. The Cost of Not Retaining Donors Let’s break it down: if your first-time donor retention rate drops from the average of 50-65% to just 35%, you’re not only losing immediate funding but also sacrificing long-term major gifts. A well-thanked and well-cared-for donor is much more likely to become a repeat donor—and possibly even a major gift contributor. Conclusion: Salt the Oats for Long-Term Success Donor retention doesn’t happen by accident. It requires a thoughtful approach to gratitude, communication, and stewardship. By taking steps to “salt the oats,” you can inspire your donors to stay engaged and keep supporting your cause.
The Power of a Thoughtful Thank-You: Building Donor Lifetime Value
Have you ever received a thank-you note that really made an impression? A genuine, thoughtful message that stayed with you long after you read it? That’s the kind of thank-you that builds Donor Lifetime Value. In fundraising, your first interaction with a new donor is incredibly important—but the follow-up is what cements the relationship. Saying “Thank you!” promptly and sincerely can be the difference between a one-time gift and a long-term partnership. Why Gratitude Matters Donor acquisition is tough. With countless organizations vying for attention, it takes a lot to stand out, secure a first-time gift, and make your donor feel confident in their decision to support you. But the work doesn’t stop once they give. Studies show that 50% or fewer first-time donors give again, which means you need to take extra steps to retain them. A heartfelt thank-you is the first step in ensuring that your donors feel valued and confident in their decision to support your cause. Creating a Strong Thank-You Program So, how do you build a thank-you program that truly resonates with donors? Here are some key components to consider: Be Prompt: Timing is everything. Send your thank-you as soon as possible after receiving a gift, while the donor’s generosity is still fresh in their mind. Personal Touch: Personalize the message—whether through a handwritten note, a signed letter with a thoughtful P.S., or a quick phone call. The personal connection makes all the difference. Involve Others: Don’t be the only one saying thank you. Involve others in your organization—board members, beneficiaries, or team leaders—to show how widespread the gratitude is. Special Welcome for First-Time Donors: For new donors, consider something special to welcome them into your organization. This could be a standout publication, a progress report, or a small token that sets you apart. Follow-Up with Progress: Show your donor how their contribution is making a difference. A few weeks after their gift, send an update on how their funds are being used. The Cost of Not Saying Thanks Consider this: if you’re too busy to say thank you, what message does that send to your donors? It tells them that their contribution isn’t as important as it should be. In turn, they may choose not to give again. The cost of acquiring new donors is high, so investing in retaining the ones you already have is crucial. Without a strong thank-you program, you risk losing your most valuable asset—your donors. Conclusion: First Impressions Matter If you haven’t already, now’s the time to build or strengthen your thank-you program. Start with simple steps, such as immediate thank-you letters, personal phone calls, or handwritten notes. Your donors will appreciate the thought, and you’ll set the stage for long-term relationships that help you Go Big! in your fundraising efforts.
The Power of Brand Loyalty: How Costco Wins Big
What if your organization had 125 million loyal supporters, paying $60 to $120 annually, and 90% of them renewed their commitment year after year? That’s the kind of success we’re talking about when we look at Costco—a brand that has mastered the art of cultivating raving fans. Let’s dive into what makes Costco’s brand so powerful and how these lessons can transform your fundraising efforts. The Costco Approach: Strong Branding, Loyal Fans Costco’s brand success isn’t just about selling goods. It’s about delivering an experience that keeps people coming back. Here’s what we can learn from them: Category Ownership: Costco has carved out a unique space in the marketplace. When people think of high-quality products at low prices, they think of Costco. Their membership model ensures that customers feel part of something exclusive. Consistency and Trust: Whether you visit a Costco in Bozeman or Kailua Kona, you’ll find the same reliable experience. This consistency builds trust with customers, who know they can count on the brand to deliver value. Brand Differentiation: Costco isn’t just another retailer. Their friendly staff, bulk deals, generous return policy, and even their famous $1.50 hot dogs create a customer experience that’s hard to match. Now, think about your organization. How’s your brand working for you? Are your supporters passionate enough to talk about your cause to others? How to Apply Costco’s Success to Your Fundraising Costco’s approach to building brand loyalty can inspire your fundraising strategy. Here’s how: Define Your Unique Category: What’s your organization’s special offering? What makes you different from others in the nonprofit space? Identify your unique value and communicate it clearly to your donors. Consistency is Key: Just like Costco delivers the same experience at every location, your donors should recognize your organization’s work and feel the same impact across all your communications and events. Create an Experience: Beyond asking for donations, provide your supporters with an experience that shows their contributions matter. Whether it’s through personalized thank-yous, impact stories, or exclusive updates, make them feel like they are part of something bigger. Build Raving Fans: When your brand is strong, your donors become your biggest advocates. Encourage your supporters to share their experiences and bring others into your cause. Their word-of-mouth endorsement can be a powerful tool for growing your donor base. Conclusion: It’s Time to Build Your Brand If you want to Go Big! with your fundraising, start by focusing on building a brand that inspires loyalty and trust. Look at how Costco, Chick-fil-A, and other top brands have created raving fans by delivering consistent value and an unforgettable experience.
What’s Holding You Back from Going Big?
In your everyday fundraising and marketing efforts, what do you think is holding you back from achieving transformational success? Is it knowing what to do? Or is it knowing how to do it? Perhaps it’s both. Understanding these barriers is the first step to moving forward. Let’s start with something as simple as the donor thank-you. While it may seem small, gratitude is one of the most crucial elements of donor stewardship. So, what’s holding you back from developing a first-class thank-you process? Why Gratitude Matters in Fundraising Saying “Thank you” isn’t just about being polite—it’s about building trust and showing that you value the donor’s investment in your cause. Gratitude helps motivate donors to continue giving, enhances your brand, and strengthens your relationships. Here are a few questions to help you assess how you’re currently handling donor gratitude: Did you immediately thank your donor after they made a gift? If not, how long did it take? If you weren’t with them in person, did you give them a quick call or send a thoughtful email? Did you follow up with a handwritten note or at least hand-sign the letter you sent? Was there a second thank-you from someone else in your organization—perhaps a board member or program beneficiary? Did you send them a small token of appreciation or an impactful publication to set yourself apart from other organizations they support? These are simple steps, but they can make a big difference in donor retention and engagement. Why Timing and Personalization Matter In his book, Retention Fundraising, Roger Craver emphasizes that one of the biggest drivers of donor commitment is how well you express gratitude, especially for first-time gifts. A timely, personalized thank-you goes a long way in building trust and ensuring that the donor feels appreciated. Imagine this: A donor makes a contribution, and six months later, they finally receive a thank-you. Not only is it late, but it also feels mass-produced—impersonal and insincere. What kind of message does that send? Unfortunately, this happens more often than it should. As Craver points out, “Why spend resources on donor acquisition when you don’t have the systems in place to keep these new donors?” How to Implement a Successful Donor Gratitude Program Knowing what to do is one thing; figuring out how to implement it within your organization’s limited resources is another. The key is to design a process that’s manageable and sustainable for your team. Here are some suggestions: Create a System: Establish a streamlined process for thanking donors, from automated thank-you emails to handwritten notes. Personalize the Message: Use the donor’s name, refer to their specific gift, and explain how their contribution is making an impact. Involve Your Team: Encourage other leaders in your organization to participate in the thank-you process. A note from a board member or a program director can add a special touch. Follow Up: Send a second thank-you weeks or months later with a progress report or newsletter to keep your donor engaged. By focusing on these steps, you’ll build stronger relationships with your donors, making them more likely to stay loyal and increase their giving over time. Conclusion Gratitude is the cornerstone of any successful donor relationship. A well-thought-out thank-you process not only shows donors that you appreciate them, but it also motivates them to continue supporting your cause. Take the time to implement a system that works for your organization, and watch how it transforms your donor engagement and fundraising efforts.
