The Top Fundraising Mistake Your Nonprofit Should Avoid

When it comes to fundraising mistakes, there’s a top faux pas that fundraisers everywhere need to avoid — one you’ve likely made yourself, many times:

According to the website House of Names, “In the United States, the name Friend is the 1,930th most popular surname with an estimated 17,409 people with that name.” So, with the estimated population of the United States at 331,893,745 as of July 1, 2021, for every 100,000 people in your database (if your database is that big), five might actually have the name “Friend.”

So why does anyone address a letter to “Dear Friend”?

The number one fundraising mistake that nonprofits make is not knowing your prospective donors, or worse yet, your current donors.

What does “knowing your donor” mean?

It means knowing who gives to you now. There’s an important distinction between who gives to you now, and who you want to give to you.

For example, an environmental nonprofit was sure that its donors came from young urban loft dwellers in the newly-gentrified, “cool” section of their city. That’s who they noticed (remember that word — noticed) at their events and who the staff engaged with most after the fact.

Analysis of their database told a very different story. Their most numerous and frequent contributors came from the city’s upscale suburbs. They were largely female and usually had small children.

Why were they so wrong? Because they noticed (there’s that word) who they wanted to be their donors, and how they saw themselves. Did the urban loft dwellers give? Yes. But it wasn’t until they looked at the real numbers that they saw who made up their most financially valuable supporters.

We all do this. As humans, we see what we want to see. It’s a survival strategy. If you are sure that something is a threat, you’ll see more of it, just like if you think something is beneficial. You’ll see more of that, too. That way you get what you want and avoid what will harm you.

The key is breaking your paradigm so that you can maximize what’s beneficial (like more fundraised money) and minimize what’s detrimental (such as wasted donor visits or mailings to people who don’t care about your mission). You may think, logically (although humans are not known for their logic) that if you show someone the numbers, they’ll change. Not so fast. A lot of people will either think that the numbers are wrong, or see what they want in the numbers, and not what the numbers really are saying.

That’s why in fundraising, and especially when defining your donors, you need to be open to seeing the real donor — right in front of you. This is part of what Nonprofit.Courses’ guide to building a fundraising strategy calls “strategic donor cultivation efforts.”

But how do you see the real donor?

Seeing The Real Donor

Ask yourself, “If our ideal donor were to walk into your office right now, would I recognize them?”

Chances are, no.

For example, say a woman with diamonds on her fingers and a toy Yorkie in her Gucci purse takes up most of your afternoon with her idea of a grand ball for your cause. While welcome, and you’d certainly be courteous, she’s probably not your ideal donor — at least in terms of who gives the most and at the highest frequency. But how would you know?

It starts with research.

Who in your database is giving you the most money, the most often, and most recently? In business, what you’re doing is an “RFM analysis,” or evaluating Recency, Frequency and Monetary Value for each donor.

Once you’ve defined the top RFM score donors, start to look for what they have in common. Do many of them live in a certain area? Are they college educated or not? What’s their ethnicity, gender, or kind of work? Do they live in urban, suburban, or rural areas? In apartments, townhouses, or stand-alone homes? What’s their age? Do they have a family? Do they like sports, theater, or music? What do they remember from growing up?

It’s important to really drill down on their characteristics. Why? Because when you know your donors’ characteristics, you’ll start seeing them more.

Try this unconventional nonprofit professional development idea. Have some fun and dress someone up just like your ideal donor — full costume and even what your research tells you are their personal characteristics, such as voice, mannerisms, likes, and dislikes. Will there be some unfair generalizations? Yes. Will you be 100% accurate? No, but in time you’ll get better.

Now, introduce them to your staff, board, and volunteers — especially your fundraising staff and volunteers.

Your objective is to imprint their brain with what to look for. Will this caricature look exactly the same as a real donor? No, but close enough to give you and your fundraisers someone to keep in mind as they write letters, select people for visits, plan special campaigns, and start scanning the community for new donors.

This isn’t just a once-and-done exercise. To be effective, the caricature needs to evolve as you find more information, whether by analyzing your database more carefully or by personal observations of real donors.

Can you have multiple ideal donors? Yes, but be careful. Every target donor caricature needs to have its own fundraising strategy for solicitation, and ideally someone to carry out that strategy.

For example: What if you want to build an endowment for the long-term security of your nonprofit? You know that a great way to build an endowment is to promote planned gifts — such as bequests, annuities, and trusts. By all means, create an ideal planned giving donor character. This person may have a lot of similarities to your standard donor character, but they won’t just be older. This person has unique characteristics, and if you ignore them, you’ll only find fundraising disappointment.

By the way, building characters doesn’t have to be limited to your donors. Think about who your mission serves, too. What’s that ideal? What if your ideal donor met your ideal mission recipient? Would your donor give even more?

You can have a lot of fun with this — and you should. Just make sure that when your “Dear Friend” walks into your office, you recognize them as your ideal donor.