Nonprofit donor cultivation: How to build relationships with potential donors

It can cost five times as much to acquire a new donor than to retain one, but three out of four new donors leave and never return. These are the challenges of nonprofit stewardship.

If your organization has been struggling with fundraising metrics — either total donations, number of new donors or, yes, donor retention — the figures from a recent Fundraising Effectiveness Project will not surprise you.

Highlights of the annual survey tell us that total dollars raised fell for the second year in a row along with these insights:

• Donor retention rates fell 2.5%
• “Supersize” donors had the largest percentage drop (7.4%) and were the primary driver in the overall fundraising decline
• First-time donors increased by 2.3%

There is a positive outlook in the last figure, depending on how you approach donor cultivation. If your nonprofit is ready to improve its donor retention rate and nurture both those first-time donors and old friends,  follow our overview of donor cultivation, the donor cultivation cycle and donor cultivation strategies.

What is donor cultivation?

Donor cultivation is a step in the donor cultivation cycle, but it also refers to the entire donor relationship. Donor cultivation is the process of continually adding new donor prospects to your solicitation list, motivating major donors to make repeat gifts and encouraging small donors to increase the size of their gifts.

The purpose of donor cultivation is to create connections with would-be donors and inspire them to give again, building your retention rate. Over time, repeat donors will develop a sense of loyalty to your nonprofit. Repeat gift-giving creates a mutually beneficial partnership, offering a positive for the donor by giving them a means to express their values and make a difference.

Stewardship,  which means taking care of something that belongs to someone else, goes hand-in-hand with donor cultivation. Stewardship encompasses updating donors on the impact their gifts make, reporting on their generosity and creating opportunities and activities for them to get involved with your nonprofit.

As Gia Chow points out on the Causevox.com blog, “Donor cultivation is about building relationships that last. It’s about understanding what motivates your donors and engaging them in a way that aligns with their values and your mission.”

“Donor cultivation is about building relationships that last. It’s about understanding what motivates your donors and engaging them in a way that aligns with their values and your mission.” – Gia Chow

What is the donor cultivation fundraising cycle?

Your nonprofit will be more successful when your board understands the donor cultivation fundraising cycle, which consists of the following five parts:

1. Donor identification
2. Research and qualification
3. Cultivation
4. Solicitation
5. Stewardship

Effective cultivation and stewardship plans will turn first-time donors into loyal repeat donors. By understanding the donor cultivation cycle and working on your plan, you have a suitable donor base to keep building on.

Let’s explore each step in greater detail.

Step 1: Donor identification

The first step in the donor cultivation process is to identify new donors. Potential donors could include previous or lapsed donors who might be inclined to give again.

In identifying donors, you might consider categorizing them into monthly donors, planned giving donors and major donors. Each donor’s giving characteristics are essential to consider when communicating with them and determining how often you approach them. In the donor identification process, plan to prioritize each category, so you can maximize the potential of your overall donor cultivation plan.

Here are some suggestions of groups that you can pull from to identify donors:

• Current list of supporters
• Employees Volunteers
• Event participants
• Previous donors
• Lost donors
• Major corporations
• Foundations

Identifying new donors also can be part of your community engagement strategy.

Step 2: Donor research and qualification

The chances are that you’ll have at least some information on your donors. The research step takes information gathering to the next level. A little research on each potential donor will help you discover how inclined they are to give to your nonprofit, how much they may be willing or able to give and what will motivate them to offer a gift.

As you conduct your research, look at past philanthropic activities, wealth markers and factors that connect them to your cause. The answers you find will tell you whether they’re a good candidate for donor cultivation.

Once you build a list of qualified donors, you can move them to the donor cultivation stage.

Step 3: Donor cultivation

Donor cultivation begins immediately after a donor makes a first gift. A donor cultivation plan template is a valuable tool for this step. Utilize the information you learned during the research and qualification step to grab their attention by personalizing communications.

Keep donors engaged according to your donor cultivation plan. Get better acquainted with them and find out what motivates them to continue giving. Invite them to events and offer them opportunities to volunteer for your organization.

Step 4: Donor solicitation

Donors will put more trust in you after you’ve built a stronger relationship with them. That’s the time to solicit another donation.

Personalization is also crucial at this step. In a complimentary way, mention what you know about the donor’s capacity and propensity to give gifts. Give them a donation target amount based on what you learned about them in the qualification step.

Be prepared with a thank you in case they agree to making a gift. Not all prospective donors will say yes. If you get a “no,” come up with a strategy to continue the cultivation process and approach them at a later time.

Step 5: Donor stewardship

There are four parts to the donor stewardship stage: acceptance, acknowledgment, recognition and reporting. How much time and effort you devote to each of them will depend on how you’ve prioritized each donor.

Thank all donors promptly, whether their gift is large or small. A best practice is to thank donors using the same channel in which they made the gift (for example, send an email for online giving, etc.).

Your donor cultivation plan will outline exactly what you need to do to follow through with your stewardship responsibilities according to whether they are monthly donors, planned donors or major donors.

How to cultivate donors

A donor cultivation plan provides the roadmap for your nonprofit to implement effective donor cultivation strategies. Of course, you’ll want to focus heavily on major donor cultivation efforts.

These are just a few of the many donor cultivation ideas you can work into your donor cultivation plan:

• Thank-you notes or phone calls
• Invitations to receptions or galas
• Mentioning them in your newsletter
• Mentioning them on your social media platforms
• Making a personal visit to them
• Scheduling a lunch date

As part of your donor cultivation plan, your board will need to define what a major gift is. Also, you’ll need to identify the major donors you already have and set a target for the ideal gift size. With these things in mind, you might brainstorm how many interactions (calls, emails, mailings, etc.) it will take to build a strong connection with the donor.

How board management software can help with donor cultivation

A high-quality board management tool like BoardEffect has features that can support every aspect of your donor cultivation plan. Here are a few examples:

• A searchable document library provides a central location for all materials related to stewardship and donor cultivation. The board can access these documents from their online meeting agendas with one click.
• Secure workrooms allow teams and committees to work together no matter where they are or what device they use. Teams can discuss prospective donors, fundraising goals and other sensitive information on their own schedules.
• Two-factor authentication and single sign-on give added security for information related to organization financials and donor data.

Donor cultivation is an ongoing effort whose successes can directly affect your mission-driven organization. When you choose BoardEffect, you get board management software that allows your donor cultivation and stewardship committee or chair to develop and document their activities and share them securely with the rest of the board. With a significant focus on retaining new donors, you’ll be able to build on your momentum and move to strengthen your financial standing.