Friday, March 2, 2012

Research Friday: How Important is Gift Acknowledgement to Donors?

posted by
  Sharon Brooks,
 Development Associate

 United Cerebral Palsy
of Central Arizona

Welcome to Research Friday! As part of a continuing weekly series, each Friday we invite a nonprofit scholar or practitioner to highlight current nonprofit research reports or studies and discuss how they can inform and improve day-to-day practice. We welcome your comments and feedback.

In 2011 I gave to over twenty different nonprofit organizations. From each I received various forms of acknowledgements, ranging from a standard receipt to phone calls to video messages. The type of thank you did not appear to depend on the size of my gift. For example, I gave $20.08 to my alma mater in honor of my graduation year, and have received a thank you email, letter, alumni car decal, and a second thank you letter personally written from a current student at the university. Conversely, I gave $250 to a Christian humanitarian organization and received a thank you letter with an electronic signature. Yet I plan to give again in 2012 to the Christian humanitarian organization and not to my alma mater, a decision which seems to run counter to commonly held assumptions about donor stewardship.

Donor stewardship is often defined as the activities and strategies utilized by a nonprofit organization to cultivate, engage and retain donors. The most commonly talked-about element of donor stewardship is reciprocity, or acknowledging and thanking donors for their contributions to the organization. Organizations have good reason to be concerned about reciprocity. In a 2003 survey, 92% of donors said that a gift acknowledgement from the organization was critically important to the donor.1 It is clear that acknowledging a donor gift is crucial to retaining donors.

Many organizations pour time and resources is into profusely thanking donors. Endless discussions are held over having the CEO personally sign the thank you letters, encouraging board members make phone calls, and even sending token gifts, such as the decal mentioned above.

Research suggests that many donors are apathetic toward the type of thank-you they receive, as long as they receive some sort of acknowledgement. Only 16 percent care if a thank-you is handwritten, and 13 percent care it if is personally signed by a member of the board. Personalized letters do somewhat better, and become more important for larger donations: 21 percent thought a personalized thank-you letter was important, and for gifts over $10,000, that number increased to 41 percent.2 What’s worse, is that the majority of donors (86%!) express a negative view toward token gifts (such as the car decal), regardless of giving level. They call them “worthless,” “not an incentive to give,” and, “a waste of money.”3 This is how I felt toward my alma mater’s recognition strategy. By the time I received a handwritten note from a university student, I figured that my school had plenty of money and didn’t need any more from me. The Christian humanitarian organization who simply thanked me and put me on their email communication list won my favor over a lot more.

This is not to say that spending money on fundraising is not important. In a research study conducted in 18 various universities in Chicago, scholars found that schools with higher alumni recognition costs generated substantially more donations. For every 1 percent increase in spending on alumni recognition, alumni giving increased 0.7 percent (on average $70,000 more was raised when $10,000 more was spent).4 However, it is important that a development office focus their dollars on what donors really want, which is not necessarily hand-written thank-you notes and trinkets, but rather communications on the impact that their gift is having.5 6 The most important thing is to acknowledge the gift in a quick, efficient way, and then keep the donor informed.

As nonprofits continue to grow and become more sophisticated in their fundraising practices, it is time for us to embrace research and reject unfounded common thought: that handwritten notes, signatures and video thank-yous increase giving. Donor management systems and technology allow for organizations to track exactly what campaigns and appeals were successful in raising money. Development departments, therefore, need to focus on what is most important: acknowledging the gift in ways that donors want and communicating with the donor about the impact of their gift.

Sharon is a Development Associate at United Cerebral Palsy of Central Arizona, where she plans fundraising events, as well as assists in coordinating grants and individual giving. She graduated from Arizona State University in 2011 with a master’s degree in Nonprofit Studies and from Northwestern University in 2008 with a bachelor’s degree in Communication Sciences and Disorders. A long-time Arizona resident, her passions include the importance of early-intervention and high quality education for all Arizona children.


Sources:
^ [1] Burk, P. (2003). Donor centered fundraising. Chicago: Cygnus Applied Research.
^ [2] Rizenbein, D.N. (2000). One more time: How do you motivate donors. New Directions for Philanthropic Fundraising, 29 (3), 51-66.
^ [3] Burk, P. (2003). Donor centered fundraising. Chicago: Cygnus Applied Research.
^ [4] Harrison, W.B., Mitchell, S.K., Peterson, S.P. (1995). Alumni donations and college’ development expenditures: Does spending matter? American Journal of Economics and Sociology, Inc, 54 (4).
^ [5] Rooney, P.M. & Sargeant, A. (2010, May 15). Ongoing support: Give donors a reason to stay loyal. The Non-profit Times, 24(9), 8-9.
^ [6] Waters, R. (2006). Applying relationship management theory to the fundraising process for individual donors. Journal of Communication Management, 12 (1), 73-87.

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13 comments:

  1. Thank you Sharon for your insight based on data and experience. I am curious if, in your research, you found any correlation with age to expectations/appreciation of any certain forms/methods of thank you notes or acknowledgements?
    Anecdotally, I recently had a consituent come into my purview because of a misappropriated pledge payment that he emailed my org to correct. After reviewing his record I hand wrote a note to an alumnus donor who doesn't give a lot but has acknowledge and thank him for faithfully giving for 25 of the last 30 years. I included my card and a token gif. He responded with an email saying "thank you" for the note and that he appreciated it.

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    Replies
    1. Sharon,
      Reading your blog about donor stewardship was very insightful and now I look at this subject matter in a different view. Usually, I would think that an individual to be expecting to receive a hand written note, car decal, or anyway to show that they helped that particular organization in someway. But, based on your studies, I now realize that what really matters is the information on how did they help, and in what area of the organization. I recently donated $20 to the Petsmart Charities and I know exactly that my donation went towards an animal to receive surgery for getting spayed or nurtured. I would love to have known which particular animal it was an maybe a little insight of his/her background. I did not receive a hand written thank you note, or car decal (even though I would have loved the car decal). But, just the fact of knowing that I helped an animal was an awesome feeling. Also I still receive e-mails on how to keep contributing and informational facts about the organization.

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    2. Contessa SanchezMarch 8, 2012 at 5:21 PM

      Thank you for sharing this. I had no idea that handwritten notes are an unfounded common thought when it comes to thank yous. But it definitely makes sense that keeping the donors updated on your work would be an excellent form of thank you.

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    3. Hi Keith,

      Thank you for your reply. One aspect that I was not able to get into in this blog, which I would have loved to, was the element of donor segmentation.

      There is research that shows that young donors appreciate car decals more than older donors (I am actually an outlier in this way, and think I would have appreciated the car decal, had I not also received three other thank yous), and that first time donors appreciate the car decal more than repeat donors. Therefore, it is important for development officers to begin to segment their donors and start to send different thank yous to different donors, not only based giving levels but also on age, how often they give, and other such demographics. Of course, this more complex segmentation requires a more complex CRM system that many nonprofits are not incline to adopt quite yet! In the end, however, I believe the return on investment (and studies support this) would be worth it.

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  2. Stephanie SalisburyMarch 8, 2012 at 3:27 PM

    Yes, thank you, Sharon for sharing this information. The research provided has somewhat surprised me, and I think that this truly depends on the individual. I agree that it is imperative that non-profits acknowledge the donor in an efficient manner and through a means that shows gratitude. The donor wants to feel that they have helped the organization; they will get this through the non-profit that simply sends a quick "thank you." The decals for many may be unnecessary, due to the fact that they do not want to be "reimbursed" for what they donated, but rather recognized for what they have contributed. Sending a decal can be seen as negative because the donor wants the money that they gave to go to the cause, not to a gift showing the organization's acknowledgment. I wonder like Keith if demographics has anything to do with these opinions shown in the research. Regardless, this is significant information that aids non-profits in their ultimate mission to practice more effectively and dexterously.

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  3. I agree totally with what you are saying. I think that a person is more likely to give to an organization that they feel close with, and something they feel connected to. Sending a nice thank you card is polite, however sending multiple cards and like you said getting the decal, I think could become a little too much. I think having a nice card with a hand written signature would be best, though. It makes it seem more personal, and I would be more likely to give again if I got that. I think after giving a donation you should most definitely get a thank you card, but anything more than that is not necessary.

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  4. That is interesting research regarding donor stewardship. If a donor feels emotionally connected to the organization by being kept updated on what their money has done to help, they will continue to donate. I agree that the hand written thank you cards and token gifts could be seen as annoying or worthless but a I would say some sort of gesture is necessary. I am suprised that 86% of those researched view them as negative. I would want my money to help the organization and not spent on the gifts in which are unimportant to me. I think it is nessecary for organizations to know research information such as this to aid in donor stewardship. I enjoyed reading your blog, thanks for sharing this information!

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  5. I had never put very much though into this topic, but now that i consider it, I agree completely. I donated to The Leukemia & Lymphoma Society a few years ago, and they send me little gifts, such as return address labels, but this doesn't necessarily make me want to give them more money. I really appreciate the gift, but have not done anything else for the organization since the first time a couple of years ago. I do think that sending some sort of thank you is important, just so that the person knows they are appreciated and to encourage them to donate again.

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  6. The point you made in this post was great. I completely agree that being acknowledged encourages me to give more to a nonprofit. Also, I like the idea of being updated and informed about how my donation has helped. I think this helps the donor feel more connected to the cause which will encourage them to donate more. Greatly written post!

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  7. It’s great to hear about CRM and data management when talking about NPO’s, but I wonder how long it will take NPO’s to fully integrate the use of this technology and use data mining techniques to establish or further enhance a Development Strategy. It would be interesting to see a study of the NPO’s that are consistently using data mining and CRM management to show results of their success or to see how quickly they adjusted from one strategy to another based on the interpretation of the data output. Also, I do believe that the “thank you” has its place when balanced within a multi-level stewardship/development plan.
    Thank you for your Research Friday Post.

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    Replies
    1. Thank you for your comment on the importance of CRM systems. After my research on stewardship, my number one suggestion was to invest in an effective CRM system. Unfortunately, many NPO's do not yet seem to be willing to invest in many of the costlier CRM systems and are settling for more "cost-effective" systems. These cost-effective systems may actually be costing them more money in the end, as the organizations are potentially losing out on potential donors from the lack of donor mining capabilities and the lack of ability to truly track campaign success and donor giving.

      I do agree that an interesting study would be to see how many NPO's that are using advanced CRM's are actually adjusting donor fundraising strategies based off of CRM's statistical results or if they are just tracking data.

      Thanks for your comment!

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  8. Thank you Sharon for your insight on the subject matter. I have never really thought about it in the way that you presented it. I never really thought about the material aspect that can seep into situations such as those, I have always felt that a lot of people would actually enjoy getting things that would make them feel like what they did is appreciated. Instead, I do think that it is important when donating money that you do it knowing that you could receive nothing in return. Those who feel that they need to be thanked for the funds that they gave out, shouldn't even be donating anyway. Because donations are not about what you get in return it's about the thought, and the passion about the place you are donating to.

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  9. I also think this depends on the individual as well. People are always most likely to give to institute that they feel very passionate about. For example someone who's life was saved by the American Red Cross through blood donations, may do the same thing later in life. You can never beat the emotional significance of a well though out, hand-written thank you letter which I believe is an art that has been lost due to technology advances.

    ReplyDelete

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