Raising money doesn’t have to be complicated. The best fundraisers are volunteer ambassadors who talk about their agencies’ missions and mission impact. Not all dollars cost the same to raise though. To really know if you are making money, you need to measure net, not gross, income.  And, since it generally costs six times more to acquire a donor than retain one, let your donors know you much you appreciate them, beyond the financial transaction.

Talk About Mission Impact

Always put mission first. Always. No matter what the fundraising activity. It is mission that motivates people to enter into donor relationships with you. Individuals want to make a positive impact on an issue they care about. Foundations exist to fund nonprofits who can fulfill their mission. Businesses like associate themselves with nonprofits who have strong corporate identities, that is, the ones that ooze mission. If you want to connect with a potential donor, make sure your agency is all about its mission, in everything it says and does. We talked about the importance of basing your fundraising on your nonprofit’s mission in Successful Nonprofit Fundraising: It’s NOT About the Money.

Go for the Net

Total dollars raised is probably the most common way people measure fundraising success. How often have you been asked, “How much money did the golf tournament bring in?” or “How much did the spring appeal raise?” How do you answer that question? There are two ways.

Most often when people have ideas about what fundraising activities they want to try in the next year, they are basing the amount of dollars that can be raised using a gross income figure. You hear something like, “ABC organization raised $100,000 through their apple festival. Why don’t we do one too?” Gross income is total revenues raised. Board and development committee volunteers are often lured by these numbers. Fundraisers often use this number when they want to prove their worth, like in job interviews and performance evaluations.  The numbers can be impressive when you use gross income as the basis for your fundraising success. But gross income does not give the whole picture. We all have met fundraisers who raise a lot of gross income, but their organizations still lose money.

To really know if you raised money or not, you need to take into account the costs to raise the money and talk about net income. Net income is total revenues minus costs. Net income shows a more accurate picture of the amount of dollars raised. I once interacted with an organization that raised $1 million every year through their gala. Woohoo, right? No. It actually cost them $1.25 million to put on the affair. That means they lost $250,000 on the event. Every year! No wonder the organization was in financial trouble. I can give example after example of this occurring. If you want to start delving into why your fundraising program raises so much money but you are still having financial problems, look at your costs to raise the money. Look at your net income.

When you look at the dollars raised, you want to look at how your fundraising program did overall within a year as well as how much each fundraising channel brought in. That way, you can compare the financial performance of each activity to each other and start to get a feel for what is working for you and what is not. There are other factors involved in creating a fundraising plan and schedule of activities, and you shouldn’t make decisions just based on net income. For example, you may be trying to raise community awareness or provide a venue where your donors can network with community influencers. If this is the case, you want to look at whether the activity meets those other goals too.

Focus on Donor Retention

When you develop your fundraising plans, make sure one of your goals addresses donor retention. And when you develop a fundraising budget, make sure you have resources allocated to improving your donor retention rate. If you spend more money recruiting a donor than retaining a donor, which is the case for most nonprofits, which is more cost effective – recruiting or retaining donors? Indeed, the most cost beneficial fundraising technique you can use to realize increased revenues is to improve your donor retention rate.

Don’t get me wrong. You do need to recruit new donors every year as there will always be some level of donor attrition, just because of donor life changes. You must acquire new donors.  But don’t do it at the expense of your current donors. Retaining current donors is just as important as acquiring new ones.

The number one thing you can do to ensure that donors will give again is to thank them. No matter what size the donation is, that donor is choosing to share their hard-earned dollars with you. They are going without something in order to donate to your organization. They need to be acknowledged and appreciated for that. And thank them a lot. Market research shows that it 7-10 times for a message to be remembered. Thank and thank again. No one has ever been offended by being authentically thanked too much.

And when you thank them, give them more than a simple thank you for whatever dollar amount they donated. Donors are not ATM’s who spit out dollars. They are people looking to make a difference, to impact a community issue. They want to know how their contribution made a difference. If you want donors to give again, show them how they are the heroes in making the difference they desire. We talked about thanking donors Bringing in the Money: The Importance of Thanking Your Donors in Achieving Fundraising Success.

Make it a two-way relationship. Ask questions. Answer questions. Ask them to do something other them donate to your agency. Tell them the results of what they did. Give them feedback so they know their collective impact. Ask for feedback on how the experiences went. Ask them what is meaningful to them and act on their responses. Let them know how important that relationship is to you. Not in financial ways but in ways the donor makes a difference in the lives of the people you serve.

Then go beyond conversation. Listen to your donors and respond to them by structuring meaningful experiences for them. Find out what the motivation is behind the donation and structure experiences involving them that meet whatever is driving them to give. Don’t assume you know what they want. Ask them and then give as much of it to them as you can.

And don’t always ask for money. Donors often complain that the only time they hear from a nonprofit is when it needs money. Donors are more than the money they give. Donors are people who want to make an impact. They have a lot to give. They want to give more than money. Start a conversation with them. Listen to what you hear. Respond in a meaningful way. Treat your donors as a whole person. Know their motivations. Meet their needs. Then they will respond to your requests for money.

Wrapping It Up

The formula is simple. If you want the best fundraising results, teach people to talk about why they have passion for your mission, get for net rather than gross income, and build relationships with your donors as the heroes they are. It is amazing how far the simple things in life will yield the most reward.

What mission are you passionate about? How are your activities doing net versus gross income? What donor retention activities do you invest in? Leave a comment and let me know.