Do you use sales funnels in your fundraising?

I asked a prospective nonprofit client that question.  She replied "what's that?"

In its simplest traditional business sense a sales funnel is a parameter for identifying the customer or target market that is most likely to be interested in what you are selling.

The value of using it is that it produces more sales for less initial investment in marketing.

Here's an example of what happens when you waste time and money on a campaign that doesn't adequately define a market.

Bill, a very well-to-do businessman, was approached by a nonprofit as a part of their major donor development after he was mentioned in an article as being interested in helping to provide food for needy people in his town.

The nonprofit's mission was to send food to starving people in Africa.

He responded politely to the letter by indicating that he had no interest whatsoever in feeding people in Africa while children, the disabled and the elderly in the United States are going hungry every night.

That should have been the end of it. They tried, he refused, end of story.

Instead he began to get letters and even phone calls asking for his support. After a year or so of that, he hopped on his jet, went to their headquarters and deposited a stack of mail and phone messages on the receptionists desk, with a not-so-polite note to take him off their mailing and call lists or face the consequences.

The problem was that the nonprofit qualified him simply because he was, well, rich and had an interest in feeding the needy.

All that did was to cost them a lot of money and time and made an enemy out of him.

The sales funnel, i.e. their parameters for qualifying major donors for further development was both overly broad and poorly maintained.

It doesn't matter if you are selling cars or a mission proposal…it behooves you to target your efforts to people who are likely to buy what you are selling.

In general, if you are sending out general appeals, monitoring your response ratio for both quality AND quantity and distilling your mailing list or media campaigns down to the essentials will serve you far better than just buying a mailing list. It also helps if your staff takes the time to really read any personal responses they get.

Cross referencing the donations against your contact or mailing lists can save you a lot of money and time, not to mention improving your response ratio from the customary 1 to 3% up to 20% or more.

How should you court a major donor?

Most solvent nonprofits today have long since gotten over the idea that they can exist solely on income from grants. They have developed a diverse funding strategy that accesses funding from various sources, and that often includes major donors.

So what is a major donor?

There is no hard monetary definition of a major donation.  For one organization it might be $1,000, while another may define a major donor as anyone donating over $10K or even $50K.

Of far more importance is the connection, the relationship if you will, of the donor to your organization.

Developing a major donor is not about a predator-prey relationship. It is about developing long-term friendships that can result in contributions to your income stream.

All nonprofits struggle with maintaining a minimum constant income stream. Whether that's $5,000 or $500 million, the income has to at least equal the outgo. Grants are nice, but they don't last. Even fee-for-service or fee-for-performance government contracts or grants have a fairly short life cycle.

Major donors on the other hand can remain interested and involved in your organization for a lifetime.

When I review a new client's revenue sources,  I look for evidence that they have major donors, or at least someone who could become a major donor.  That's why I strongly recommend that you record every donor's contact information, even if their donation is well under the threshold that requires you to give them a receipt.

Let's say you receive a new donation from someone prominent in your community. It's only $50, but hey, it's nice to know they've noticed you.

If you stop there, you could be throwing away a chance to make a long-term friend for your nonprofit.

That person could be a candidate for your major donor database. So, what now?

Of course you want to acknowledge the gift, but you should be doing that for every donor. How do you move beyond the pro forma receipt?

One way is to add a little something extra.  Write a nice letter of thanks, and include some additional information on your program or organization. Invite them to a meeting or a tour of your facility.

Take some time to research the person. If you have any people in common, you might mention that connection. Perhaps they have a personal connection to your mission, such as a family member who once needed the type of help you offer. Or you might invite them to your next event.

Don't get too pushy.  People with money have heard every pitch there is from people and organizations that want to relieve them of some of it. Concentrate on developing a relationship.

One strategy is to develop a list of major donor prospects and send them a special newsletter or invitation to an event. It's not that they won't understand the motivation behind the invite, but if it's done tastefully and the event (or the other attendees) piques some interest for them, they may show up.

Look for areas of common interest.  Maybe someone on your board also serves on a board with the prospect. Perhaps you belong to the same gym or country club. Look for ways to connect where you can share more information on your mission and goals.

In some cases, it might be wise to wait and see if they donate again, which can show some genuine interest in your mission.

In short, you have to do the same things you would do to cultivate any other relationship.  Building rapport and mutual respect will benefit everyone. 

Need donors? Think like a salesman.

One of the hardest concepts for me to get across to new nonprofits that want me to get grants for them  is the concept of producing what you might call a sales pitch when approaching donors. Nine times out of ten, when I produce a grant narrative for them I get it back with the words "we need" added multiple times.

For-profit companies have no problem understanding that while their motive is to make money, they have to create a product or service with market potential and then design a sales pitch to sell it.

Nonprofits, particularly new nonprofits, don't readily make that connection between the mission and the sales pitch needed to fund it.

What makes you decide to spend money on something?  You either need it, want it or both.

If you both need it AND want it, you are far more likely to haul out the credit card or wallet and actually cough up the cash. The trick is in determining which motive is driving your potential donors, and then appealing to that motivation.

That's the somewhat over-simplified reasoning behind approaching donors for money. They have a need, specifically a need to help someone or something, and you have the product (program) that will fill that need.

   

Impulse buyers initially react on the spur of the moment.  They are the ones that hear or see something that strikes a chord and pick up the product (program) and head to the check-out line. For them you need an emotional component to your appeal to get their interest in the first place. I call them Heart, Head, Hand donors, because that's the way they give.

   

Your job at that point is to convert the impulse to a sale. If they recognize your nonprofit's name and associate it with a record of good works, your can be fairly assured they will actually write the check. If not, you need to have resources available to them that prove your legitimacy.

Investor-type donors on the other hand have their own goals, and they expect a return on their money.  In the nonprofit world, that means actually improving a condition that corresponds to the donors mission objectives. You already have a common interest, so you don't need to sell them on the mission. I call them Head to Hand donors, because their hearts are already engaged.

For them, you need to produce a package that shows that you understand their mission, that your program is compatible with that mission, and  most of all that you are in a position to produce results for that mission. It isn't enough to make general statements like "we want to help low-income children" or "give goats to every woman in Africa".

Notice that at no point have I said this is about your needs. That's not to say that you shouldn't have goals for any money you raise, but the appeal can't be about you.

People give to benefit the end users of the money. They already know that you will receive the money, but they aren't primarily interested in supporting your organization unless they are specifically interested in organizational development.

Here's the difference.

When you say "WE need money to help feed children", you break their line of sight to the end result. They want to visualize a happy well-fed child, not your new office furniture.

When you say "YOU can feed little Johnny lunch this month for just $30.00" you are making the donor responsible for little Johnny.

See the difference?

Need help with your appeal?  Drop me a line at rightwords@ida.net. 

Marketing your mission

Companies have both sales and marketing departments and while they may overlap, they aren't the same thing. A sales executive explained the difference to  me this way.

"Sales is when a customer comes to you to buy a product that they already know they need or want and you convince them to buy your product to fill that need. Marketing is making them understand that they need your product in the first place."  In other words, marketing creates the customers, the demand if you will, and sales services those customers, i.e. satisfies that demand.

In the nonprofit world, when grantors open grants for applications, that grantor already knows that they want to support a certain type of philanthropy. They are essentially shopping for the program that best fills that need, but initially they reach out to you, or at least to organizations like yours. They are shopping and you are selling.

When you make the initial contact, you are marketing your program and organization to persons or organizations that may not know the problem you want to address even exists.

                           

If you want to attract more or better support, you have to market. You might call that public relations, community outreach, or donor development, but it is still marketing. For some reason, many nonprofits just don't think of traditional marketing strategies as applicable to them, maybe because they don't understand the underlying strategy.

Like traditional customers, donors come and go. Long-term funding partners may change focus, have a cash shortfall, or just go away. Having a method of developing new donors is not just desirable, it is mission-critical. Marketing provides that capability.

Donor development is more like marketing. People may only know that they have some spare cash and may have a general idea that they want to support a charitable organization. Your job is to develop a desire to use that money for your mission.

In the nonprofit and philanthropic world, that means putting together a package that tells them exactly why supporting you is a good use of their funds, offer them personal satisfaction by telling them what they will accomplish, and then deliver those outcomes. Sometimes you can do that through mass media branding, and other times it has to be targeted to a specific person or organization.

It also means doing a considerable amount of research to identify the best person or firm to approach. If you are selling a car, you wouldn't market to people that want to buy furniture. If you are youth-focused, then pursuing a  prospect focused on building preservation won't work, even if they are right in your city and have stacks of cash.

Too many nonprofits are looking for the magic formula, the words that get them money every time from every type of donor. They rely on canned appeals that only work with certain established donor demographics and wonder why they can never seem to add new supporters.

If that strategy worked, we'd still be buying the original Apple computer kit from 1976, instead of the  iPad®.

Nonprofit marketing is at its core about expanding your customer (donor) base . That concept doesn't change, whether you are a for-profit or a nonprofit. Whether you do it with events, a blog, social media, direct mail or TV ads, your marketing  goal is still the same.

Marketing should definitely be a part of your fund raising plan. If you don't quite understand the theory or don't know how to put it into practice, email me and we can talk about achieving your specific goals.

Community Outreach - Marketing your Nonprofit

Vocabularies vary from culture to culture.  A word that is perfectly acceptable in one area may be absolutely taboo in another. Maybe that's why when I ask a nonprofit to explain their marketing strategy, I get comments like "Well, we aren't selling anything, so we don't have a marketing strategy".

OK, OK I get it.  "Marketing" brings up all sorts of negative "business" connotations.  But dismissing the underlying concept is like saying "We don't care about client or donor participation."

No matter what word you use to describe it, you have to have a strategy that lets people know that you exist and explain why they should care if you do. You are "selling" your organization and its mission. 

One example is the lady that contacted me to ask if I would write a grant for her small animal rescue. On paper she had all the things she needed. The determination letter, a pretty good-looking audited set of financial statements, a fantastic facility, etc. But she didn't have a lot of outcomes to report on, because she really hadn't rescued many animals.

When I commented on that she said "Well, we have trouble finding the animals soon enough to have good outcomes".  She had capacity for over 100 animals on site, was rescuing less than 50 a year and re-homing only a handful.

   

A little investigative work revealed that she had done virtually nothing to let the community know she existed, so I asked her if receiving some funding for management or marketing mentoring would help her. She was initially quite miffed that I would suggest such a thing. She wanted funding for a second van so they could cruise the streets looking for strays.

.

To make a long story short, she eventually realized that she didn't need to go find the strays. There were hundreds of concerned citizens who were more than happy to either bring animals to her or at least tell her specifically where to find the animals.

After showing her how to make the community aware of her presence and mission and outlining a donor development program for her, she has all the animals and more that she could wish to help, a great adoption program and is placing over 100 animals a year. She recently received a substantial grant that will pay for food for 50 animals for a full year.  Her new blog on animal health and training has over 1500 page views a month, donations have substantially increased, and she now has great outcome reports to add to grant proposals.

Whether you call it outreach, development, public relations, marketing or branding, the goal is the same. Connecting to people that need your services and people willing to invest in and use those services is a necessity.

If you need a hand with outreach give me a shout at granthelp@ida.net. I can review your existing plan or help you with a new one.