The ‘nonprofit’ descriptor bothers many in the association community because ‘profit’ is not a dirty word. Associations must earn a healthy profit if they have any hope of fulfilling their mission. As the saying goes, ‘nonprofit’ is merely a tax status.
Associations share the ‘nonprofit’ tax status with charitable organizations. Like associations, this nonprofit sector had its share of ups and down during the pandemic. But even before the pandemic began, charitable nonprofits were seeing shifts in donation trends.
7 promising practices from the top fundraising nonprofits
The Chronicle of Philanthropy identified the 100 nonprofits that received the most charitable donations in 2020. Their stories, successes, and challenges illuminate trends and practices you should know about.
#1: Build brand loyalty via subscriptions
In recent years, nonprofits raising the most money relied upon the brand loyalty of their donors. Top nonprofits Compassion International, World Vision, and Save the Children benefit from monthly payments from donors who sponsor a child.
Monthly giving programs increase donor retention rates for nonprofits. According to Network for Good, new donor retention rates average less than 23%, but monthly giving programs have retention rates of over 80% after one year and 95% after five years. The average monthly donor gives 42% more in one year than those who give onetime gifts.
These programs are essentially a subscription. Many associations already enjoy a loyal customer base thanks to learning subscription programs. Individual and company subscriptions helped The National Alliance for Insurance Education and Research quadruple their professional development revenue.
#2: Demonstrate the value and impact of your programs
Charities and associations must demonstrate the value of what they do or provide, especially when the pandemic has caused a global rethink of what’s worth someone’s time and money.
Child sponsorship programs send donors tangible proof of their impact—letters and photos from their sponsored child. Associations can share stories too. Ask program alumni and credential holders to share their success stories. What impact did the program make on their career and life?
Testimonials put social proof to work for your programs. Share testimonials via multiple channels: website, social media, newsletters, videos, and podcasts. Here are two statistics from the charitable world that validate the power of social proof.
• 67% of donors are most likely to hear about new causes through word of mouth from friends and family.
• 61% of Gen Z donors and 62% of millennials are likely to learn about causes on social media.
Play up the impact of program revenue on your association and industry. 73% of recurring donors continue giving when they understand their donations’ tangible impact. Remind members and customers how their purchases help your association achieve its mission on behalf of the whole industry. Wouldn’t they rather spend their budget with you than a for-profit?
#3: Appeal to emotions
Purchasing decisions are driven by emotions. Think about those commercials featuring abused dogs. The organizations count on appealing to your heart, not your budget-focused mind. Letters and photos keep donors attached to the child they’re sponsoring. Only a heartless person would cancel their monthly donation, right?
We’re not suggesting emotional manipulation, but you should consider the concerns and aspirations of your different target markets when developing marketing messages. Do you see career anxiety? Aspirations for promotion or business expansion? Staying relevant and employable? Remind people of the bigger picture for them. How will professional development bring them long-term satisfaction?
#4: Focus on retention
Food banks and hunger organizations had an influx of new donors during the pandemic. Since the local news no longer runs stories about long food bank lines, they worry about keeping those new donors. Feeding America created a Stewardship Center staffed by communications and donor-relationship professionals who focus on retaining donors. “The center will focus on building ties with people who made their first gift—no matter the dollar amount—during the pandemic.”
Associations also expanded their audience during the pandemic. Think about all the new people who accessed pandemic-related resources on your website or attended your virtual conferences. How do you keep them engaged? How do you convince them of the need to continually develop their skills and knowledge?
Design and implement a retention campaign for education customers. If you hosted virtual conferences in the last two years but are returning to in-person only, don’t expect your virtual attendees to show up on site. Many of them don’t have the budget, schedule, employer permission, desire, or ability to attend in-person events—that’s why they showed up for your virtual ones.
Keep nurturing this audience. Email them relevant resources based on what you know about their interests. Send them a promo code or special perk for an upcoming program. Help them become loyal customers, don’t expect them to do it on their own.
#5: Analyze purchasing data and trends
In a major shift to their donor pool, the United Way Worldwide’s workplace giving program has been declining for years. Because they now increasingly rely on a small group of large donors, they’re attempting to connect with small donors outside the workplace.
Analyze your purchasing trends.
• Who’s buying? How much from each market segment?
• Who’s paying? Individuals? Employers?
• What’s the size of your customer base?
• How many are return customers and how many are new?
• What’s the average purchase per customer and per member? Per individual paying themselves and per individual subsidized by their employer?
If you keep up with purchasing trends, you can see shifts coming and adjust program development, marketing, and resource allocation.
#6: Dedicate resources to the biggest budgets
Many charities expect the reliance on the wealthiest donors to continue. But Doctors Without Borders has a cautionary tale. One of their donors started contributing $100 a year, then upped it to $1,000 a year. In 2020, she donated $500,000. Last year, she made a $9.3 million gift of Tesla stock. She caught the organization completely off guard. They had never properly engaged with her and knew nothing about her interests or intentions. Now they dedicate staff to donors at different levels.
What do you know about the wealthiest donors in your industry—employers? A close relationship with just one employer could mean the business of hundreds of customers. Start investing more in these relationships. Meet with them to learn about their training and development challenges and needs. How can your association help? Can you license existing programs to them? If there’s an industry-wide need for specific skills, can you develop programs with the guidance of an employer advisory group?
#7: Watch the competition
The biggest threat to the bottom line of many charities is donor-advised funds (DAFs), which are managed by commercial banks and community foundations. In 2020, one of these DAFs, Fidelity Charitable, took in more than $10.7 billion, almost triple the $3.6 billion United Way Worldwide raised—the top charity on the Chronicle’s list. Donations to DAFs grew by 467% from 2009 to 2019, while individual donations only grew by 58%.
Many uber-wealthy donors give to DAFs because they can offload appreciated assets and receive an immediate tax break without incurring capital gains taxes. But DAFs are not required by law to distribute these funds to working nonprofits on any sort of timeline. You can only imagine how true charities feel about DAFs.
Who are you competing with? Is education a commodity in your industry? Are purchases merely driven by price? Or can you differentiate your learning experience and capture more of the market?
Education is a hot market these days. Just look at how much LinkedIn is investing in their learning and credentialing programs. Watch what competitors are doing in your market and what for-profit competitors, like LinkedIn, are doing in the larger marketplace.
Because workloads in the association world are so heavy, association professionals can’t be blamed for keeping their eyes down on what’s in front of them, but that would be a mistake. Besides keeping your eyes on the competition, look at how other industries attract, nurture, and engage their customers. In times like these, organizations need extra curiosity and creativity to get ahead in the market.