Avoid the Donor Death Spiral

Image: Stuart Miles at Freedigitalphotos.net

Image: Stuart Miles at Freedigitalphotos.net

I was talking with the founder and board chair of a local nonprofit last week. We were talking—as we often do—about ways to raise more money for her beloved organization. 

“We need more donors,” board chair Amy said. “How about at the next board meeting I ask each board member to share names of three new people they will invite for a program visit this year? Or maybe we could buy a mailing list and send a letter asking for money. Or we could plan a big event and invite lots of new people. What do you think?”

Donor death spiral

To be honest, I thought Amy was spending her time and energy in the wrong place. And I gently told her so. Instead of trying to find new donors, I encouraged Amy – and her board and staff – to nurture the donors they already have. By building lasting relationships with current supporters, they’ll raise more money in the long run.

When an organization focuses only on getting new donors, they risk falling into the “donor death spiral.” I ran across this term in an article titled, The Problem of Too Many Prospects or Donors.

In a nutshell, the donor death spiral happens when an organization has too many one-time donors or other short-term supporters. One-time donors never get invested in the work and mission of the organization so they don’t stick around year after year and keep on giving. 

Perhaps you have experienced this phenomenon yourself? Organizations that hold a lot of events, often have a high number of one-time event donors. Converting event donors into annual donors is a well-known challenge – one I would argue is due, at least in part, to the difficulty of making post-event connections with a large number of donors. 

Yes, it’s possible to have too many donors! At least, too many with whom you can build meaningful and lasting relationships. 

How many is too many?

This number will vary depending on the size of the organization and its staff. In the case of board chair Amy, her nonprofit has 1,500 current donors and, of these, about 10 major donors. There are another 50 “mid-level” donors who might be inspired to donate at a higher level if they had a closer relationship with the organization. 

And here is how Amy’s small nonprofit teeters on the precipice of the donor death spiral. Rather than cultivate their 10 major donors and 50 mid-level donors, they’re tempted to focus on getting more donors. 

And, next year, this nonprofit will no longer have their 10 major and 50 mid-level donors. According to the Fundraising Effectiveness Project, they are likely to lose 54% of their donor base. Which means they will be supported by fewer than 5 major donors (instead of the 10 they currently have) and 23 mid-level donors instead of 50. Oh my – that’s a big hit for any nonprofit.

Make a plan!

To avoid the donor death spiral and maximize your donor retention draft a stewardship plan – and stick with it!

A well-written stewardship plan will motivate and inspire your donors past their first gift. Stewardship, as you know, is showing your donor the impact of his or her gift on your organization’s work and mission. When you show donors how they are making an impact, there’s a good chance they’ll want to give again. 

Learn how to best prioritize your donors for stewardship here.

So many nonprofit organizations focus solely on getting more and more donors, at the expense of taking care of the donors who already know and love them. Don’t be one of those nonprofits!

What are your thoughts on getting more donors vs. stewarding current donors? Agree? Disagree? Please share your experiences, thoughts and ideas in the Comments box below!

Special gift for you: Conquer Your Fear of Asking for Money, a step-by-step guide, is available here (click).