Nonprofit organizations will be facing some tough times ahead. During an economic downturn, the need for nonprofit services grows while some donors won’t be able to give as much, if at all.
Your first inclination may be to make cuts or continue working with a bare-bones budget with the mindset “we can’t afford this.”
I understand you want to be cautious. But you also want to use caution before you eliminate something you think you can’t afford. It may be something you should be investing in.
This is why you need to make smart investments. It may seem counterintuitive to spend money when you have so little, but if you make the right decisions, these investments can help you raise more money.
Invest in a good CRM/database
A good CRM (Customer Relationship Management)/database is a must for a number of reasons. First, it can help you raise more money. You can segment your donors by gift amount and politely ask them to give a little more in your next appeal – $35 or $50 instead of $25.
A good database can also help you with retention, which will save you money since it costs less to keep donors than to acquire new ones. You can personalize your letters and email messages. Some CRM’s also have an email component. Otherwise, make sure to invest in a good email service provider, too.
Personalized letters and messages mean you can address your donors by name and not Dear Friend. You can welcome new donors and thank current donors for their previous support. You can send targeted mailings to lapsed donors to try to woo them back. You can send special mailings to your monthly donors. You can record any personal information, such as conversations you had with a donor and their areas of interest.
You also want a CRM that everyone on your staff can access remotely. When the pandemic hit earlier this year and most everyone was forced to work from home, organizations that could access their CRM and still communicate with their donors had a clear advantage.
Invest in the best CRM/donor database you can afford, and Excel is not a database.
Invest in monthly giving
Monthly donations are more important than ever now. If you already have monthly donors, or any type of recurring donor, you’ve been receiving a steady stream of revenue throughout the pandemic and economic downtown.
If you don’t have a monthly giving program or you want to grow the one you have, it’s not hard to do. Plus it’s a win-win for your organization since you can raise more money and raise your retention rate as well. The retention rate for monthly donors 90%. That’s significantly higher than other retention rates.
It’s also easier for your donors if they’re worried about their financial situation, but still want to help. They can make small donations of $5.00 or $10.00 a month instead of giving the entire amount at once.
Monthly giving is an investment you must make.
Invest in donor communications and that includes direct mail
Years ago, I was working at a nonprofit and our executive director said we shouldn’t do an e-newsletter anymore because we needed to concentrate on raising money.
I wish I knew then what I know now. Fundraising isn’t just about sending appeals. And to quote Tom Ahern – If you do better donor communications, you’ll have more money.
Yet many nonprofits have a similar view. They don’t want to spend much time thanking their donors and sending newsletters and other updates, even though those types of donor communications can help you raise more money, provided you do it well.
You don’t want to skimp on your communications budget and that includes direct mail. If you never or rarely use direct mail, you’re missing out on an effective and more personal way to communicate with your donors. Think of the enormous amount of email and social media posts you receive as opposed to postal mail. Your donors will be more likely to see your messages if you send them by mail.
Yes, direct mail is more expensive, but you don’t have to mail that often. Quality is more important than quantity but aim for three or four times a year, if you can.
Creating thank you cards and infographic postcards are a smart investment and a necessity, not a luxury. Thank you cards are a much better investment than mailing labels and other useless swag.
A few ways you can use direct mail without breaking your budget are to clean up your mailing lists to avoid costly duplicate mailings, spread thank you mailings throughout the year – perhaps sending something to a small number of donors each month, and look into special nonprofit mailing rates. You may also be able to get print materials done pro bono or do them in-house, as long as they look professional.
Shorter is better. Lengthy communication (goodbye long annual reports) will cost more and your donors are less likely to read it.
Of course, you can use email and social media, but your primary reason for communicating those ways shouldn’t be because it’s cheaper. It should be because that’s what your donors use. If your donors prefer you to communicate by mail, then you should honor their request.
You want to communicate with your donors at least once or twice a month. Use a communications calendar to help you with this.
Don’t limit yourself by saying you can’t afford certain expenses. If you invest in a good CRM/database, monthly giving, and donor communications, you should be able to raise more money.