The Mathematics of Fundraising | Part II: Mine Your Database to Fuel Your Fundraising Engine

New prospects vs. existing donors. Silver vs. gold. It’s a good idea to have handfuls of both jingling in our nonprofit pockets, don’t you think?

Too many organizations prioritize new donor acquisition over retention, however, leading to an exhausting – and not inexpensive – hamster wheel of identifying and cultivating new prospects. It is estimated that organizations can spend up to $1.50 to raise $1.00 from a new donor, while raising the same $1.00 from an existing donor can carry a cost as low as $.20.

While I am not suggesting that we should give up on efforts to engage new donors, a thriving mindset begins with strategically cultivating the potential within your existing community. This is consistent with the core fundraising philosophy of prioritizing donors in a “top-down / inside-out” order. Starting from the top (board leadership) and building from within (your most valued donors) will help ensure robust results early in the game and will provide traction as you gradually move your cultivation and solicitation efforts further out into the community.

In this second installment of our “Mathematics of Fundraising” series, we will build on Part I, where we demonstrated how to create a giving pyramid, by providing a framework for turning your database from a simple list into your most valuable fundraising asset.

Build out your giving pyramid with the number of prospects you need to reach your goal. It’s safe to assume that every prospective donor will not respond to your appeal with a gift. That means you need more prospects than gifts, but how many more? Well, that depends. An organization that is new to fundraising will need a higher ratio; a more mature fundraising program will be able to succeed with a lower one. You might need a higher ratio for the larger gifts on your pyramid, and a lower ratio for mid-level and small gifts.

For the purpose of providing a simple illustration, here is what our $1 million giving pyramid looks like when we incorporate a 3:1 prospect-to-gift ratio:

Using this math, you will need approximately 141 qualified prospects to raise the 47 gifts that will bring you to a $1 million goal.

What constitutes a qualified prospect? Capacity to give + inclination to give to your organization. A major donor in your community might have the financial resources to make a gift, but if they are not interested in your organization, you will want to invest your cultivation efforts elsewhere. Someone very passionate about your mission may have the desire to support your work but does not have the economic means to make a major donation. Both are required for someone to be considered a viable prospect.

Here are three steps for evaluating prospective donors to populate your fundraising pyramid:

Step 1: Begin by leaning into your database. You can’t mine for gold in a messy cave. Bad data leads to frustration and wasted time. What is more aggravating than pulling a list of lapsed donors only to find that their records lack contact information and accurate giving history? At worst, data deficiencies result in missed opportunities and embarrassing mistakes. A modest investment in a fractional expert, such as a More Than Giving Nonprofit Virtual Assistant (NPVA®), can take the pain out of database clean-up to create a reliable foundation for strategic fundraising. Of course, database management is not a one-and-done proposition; an NPVA® can provide ongoing support for keeping your data current, clean and well-maintained.

Step 2: Build out your prospects’ profiles. You’ll want more than basic contact information. Consider each prospect through the capacity + inclination lens. Your newly cleaned database will provide information about their interest in your organization. What is their giving history? Have they volunteered or attended events? Can you pick up on relationships with other people in your orbit, such as working for the same company or belonging to the same clubs? There are services that can help with additional analysis, compiling useful information about estimated salary, assets, and giving to other organizations. If your current database is small, old-fashioned sleuthing by an NPVA® can help build your first profiles. You can sum up your capacity + inclination assessments using an internal rating system. It can be simple or complex, just make sure it is consistent and well understood by everyone on your team.

Step 3: Populate your pyramid with actual prospects and have a plan for moving them up the levels. A thriving nonprofit has a clear plan for raising gifts at every level for the current fundraising initiative, as well as a longer-term plan for cultivating future, higher level gifts. Support from fractional experts can help on both fronts. A fractional major gift professional can help prepare and coach board leaders and chief executives through the solicitation process. A strong fractional development officer can help design a solid roadmap for long term cultivation programs leading to even higher first- and second-tier gifts.

Stop Surviving and Start Thriving!

It is time to trade in the never-ending chase for new donors in favor of a strategic approach to deepening the relationships you already have. Clean data, clear-headed analysis, and a strategic framework for prioritizing your actions will help you build the revenue stream your nonprofit needs to thrive.

But if you are already running on fumes, this might all sound like pie in the sky. More Than Giving can fill in the gaps, quickly and affordably. Don’t have the time or expertise to clean, mine and manage your data? An NPVA® can help. Terrified at the prospect of asking for a major gift? We can have a fractional major gift professional on board within days. Struggling to capture a bigger picture for your fundraising efforts? A fractional development expert who can break it down and chart the path is just a phone call away. Ask me how!

Be sure to tune in for the final installment of this series, which will offer best practice guidelines for turning your giving pyramid into a donor pipeline that produces results.