Nonprofits find greater success with donor segment levels. Utilizing donor or volunteer management software can help organizations accurately, efficiently, and consistently divide up constituents, generating a greater return on marketing and fundraising efforts.
As any charity can recognize, not all donors are the same. Some give small amounts frequently while others contribute one large gift annually. Creating donor levels helps the organization track gifts and contributors. At the same time, it offers constituents a better understanding of their role within a charity.
Identifying donor types
Nonprofit Hub recommended segmenting donors into four categories based on the length of time they’ve been giving and the size of their contributions. It’s important to first calculate what the average donation looks like for the organization as a reference point. Then, break the donors into levels:
- New donors giving average gifts or below
- Returning donors giving average gifts or below
- New donors giving above average gifts
- Returning donors giving above average gifts
While Nonprofit Hub has recommended these four levels, each nonprofit has to determine for itself which denominations make the most sense. Charities must look at their size, scope, purpose, and goals before choosing specific levels. If these four categories don’t work well, consider the 0-10-90 rule.
The 0-10-90 approach requires NPOs to take a look at incoming donations over the past two years and determine which constituents have given 0 percent of all gifts received, 10 percent and 90 percent. It’s recommended to then focus only on the contributors that make up the 10 and 90 percent categories. Otherwise, time, energy, and marketing materials are wasted on those that are highly unlikely to give again.
Organizations should be focusing their marketing efforts on mid-and lower-level donors. These may include those who have given 10 percent of a charity’s earnings or fresh donors who were inspired by a recent fundraising campaign. Nonprofits need to reinforce the significant role these donors play toward meeting the charity’s goals. New donors giving for the first time should always receive a message thanking them for their contribution, whether through email or the U.S. Postal Service. It may benefit an organization to create certain perks or host events for newer contributors. After giving once, it may please a donor to know they’re already part of the organization. Once that second donation is acquired, retention over time is much more likely.
Developing level titles
Often, a small group of select donors makes up 90 percent of a nonprofit’s earnings. These constituents, whether returning or new, give large gifts willingly and thoughtfully. Marketing efforts for these folks are working and shouldn’t be altered.
The one thing nonprofits should do for these high-level donors is create a special recognition society or title for them. Major Giving Now recommended awarding donors who give above a certain amount membership in a program that simply recognizes the helpful contributions they’ve made. For example, The Center Theatre Group segments donors into Fans, Friends, Contributors, Enthusiasts, Associates, Advocates, Fellows, Patrons, Benefactors, and Guardians. What worked for The Center Theatre Group was breaking down donor levels into smaller, specific brackets, each with its own label and benefits. This way, not only can the organization more easily promote their giving opportunities, but donors can view exactly what types of contributions they can make.
Implementing donor and volunteer management software can drastically improve the donor segmentation process. Quickly identifying which constituents gave in the past two years, how much and how often is crucial to determining the best level system for a charity. Organizations looking to improve donor retention and the giving experience and to increase understanding of where their funding comes from should invest in donor management software.