Because the ability of high-end donors to give to nonprofit organizations has been hampered by the current economy, there's rarely been as important a time to approach them the right way.
"High-end donors, by any definition, produce a huge share of the net revenue in any fundraising program," says Mal Warwick, founder and chairman of Mal Warwick Associates in Berkeley, Calif. and author of the recent book, "Fundraising When Money Is Tight." "During tough times, when so many donors are shrinking the size of their gifts and reducing the number of causes they support, it's doubly important to stay close to your most loyal and generous donors. This is no time to cut back on stewardship."
Renee Simi, an independent fundraising consultant based in Berkeley, Calif., strongly agrees. "For most organizations, 20 percent of the donors provide 80 percent of the income. In this economy, we've been seeing a big falloff in high-end giving. We are getting the same number of gifts, but donors are downgrading and giving less. And one or two missing gifts makes a big difference in the percentage falloff."
Here's how to prevent further falloff.
1. Give Them Special Treatment ... or a Special Place
Warwick explains that many nonprofits remove high-end donors from their membership or direct marketing programs. Nonetheless, many direct mail fundraisers still treat high-end donors little differently from those at the bottom of the pyramid. He calls this a shortsighted approach. "High-end donors require special treatment, including frequent cultivation, copy that respects their intelligence and sense of self-worth, and special giving opportunities beyond those open to rank-and-file donors," says Warwick.
In general, two types of approaches can be made, according to Simi. "Some clients use the same direct mail copy as the low-dollar group and just upgrade packaging and ask amounts. Other clients prefer to take a softer approach or provide a lot more information than a low-dollar letter," she details. Because these high-dollar files are smaller, it's more difficult to test these approaches, but still may be worth trying to test.
2. Use the Bad Economy
The economy is in the back of practically every donor's mind, especially those high-end donors with stock market investments, so don't pussyfoot around; mention the tough times that equally affect these crucial causes. "Our approach has been to recognize that this group of donors is committed to the mission of the organization, and we've been trying to show how the economy is making delivering on that mission more challenging thus, their help is needed more than ever," explains Simi.
3. Reinforce the Positive
Simi's work lately has consisted of stepping up cultivation, such as calling this critical group of donors to thank those individuals for their giving, soliciting feedback on the nonprofit's work or whatever they want to talk about. She says most are just pleased to be thanked.
What are the more cutting-edge ways today to approach high-end donors? Are messages more personalized? Are packages of nicer quality? Are ancillary materials like newsletters more important?
Warwick says it's key to treat those high-end donors as special, using enhanced personalization and other techniques to reinforce their natural tendency to philanthropy.
4. Enhance the Personalization
Perhaps the top technique to use for such high-end donors is improved personalization, going well beyond the first name approach and mentioning donor history and relevant copy. Warwick gives two examples below.
Example 1: Limited personalization
Dear Ms. Sample,
I want you to know how very grateful I am for your continuing generosity. As a member of the [Hi-$ club], you are one of Our Charity's most loyal and responsive donors, and that means a lot to me and my colleagues here.
Example 2: Enhanced personalization
Dear Ms. Sample,
I want you to know how very grateful I am for your continuing generosity and for your willingness to share your personal information with me and my colleagues. Your $[X] renewal gift on [Month Day] renewed your membership in the [Hi-$ club]. You have been one of Our Charity's most loyal and responsive donors since [Year], and that means a lot to me and my colleagues here. I'm also especially pleased to know of your particular interest in our programs in [region or issue area].
"To my mind, after 30 years in direct mail fundraising, it would be difficult to imagine that the second example wouldn't elicit a stronger response than the first," states Warwick, who says that when appeals are restructured to incorporate this degree of personalization throughout a fundraising program, they routinely double or triple the annual revenue.
Simi concurs, "In our thank-you letters, we've been trying to go beyond 'you gave a gift of $X amount on Y date,' but show that we understand that they have been giving for a long time or give multiple gifts a year or whatever information we have on their behavior and preferences to make the letter more personal than a receipt."
5. Make It a Multichannel Relationship
"Contemporary experience consistently shows that donors who will engage with a cause or institution through multiple channels are far more valuable than those who communicate through one channel only," says Warwick. Although most high-end donors continue to favor the mail for their contacts with the nonprofits they support, he says they are increasingly making use of online communication tools as well—and this is a major positive, for contacts with donors through multiple channels reinforce one another.