The Smart Nonprofit

CHAPTER 9Fundraising

INTRODUCTION

Fundraising is a particularly promising area for smart tech to help staff become better and smarter fundraisers, but it also holds great peril by potentially supersizing existing bad practices.¹ This chapter will provide a brief history of how and why transactional fundraising became the norm for too many organizations and the ways that smart tech can help organizations identify new donors, personalize fundraising for all donors, and improve retention rates.

THE LEAKY BUCKET PROBLEM

Conventional wisdom says that finding new low dollar donors will lose money, but that money will be more than made up in the subsequent years. This isn't true. Sometimes wisdom is conventional and wrong.

There is an enormous, malignant, too often ignored problem in fundraising created by the impersonal treatment of donors. We call it the leaky bucket problem. Far more donors lapse than renew their donations, causing a frantic race to find new donors to fill up the bucket. Acquiring new donors does, indeed, lose money, often estimated at 50% of the initial gift.² However, according to Blackbaud, fewer than a quarter of those initial donors will renew their gift. The math gets even worse in out-years, as 60% of donors lapse year after year.

Here are facts about the leaky bucket problem:

• Fewer than a quarter of donors renew their gift a second time.
• 60% of donors lapse every year thereafter. Until …
• After five years, just 10% of the original donors are left.
• Contrary ...