Do You Have a Diversified Donor Portfolio?

​In the world of financial planning the concept of having a diversified financial portfolio is so common it is almost cliché.  If you are managing or have an advisor who is managing your money it is highly unlikely that all of those funds are being invested in a single kind of investment fund.  Most financial managers put some money in aggressive funds while other portions are placed in more conservative and predictable funds in order to protect your investment and ensure more consistent growth. 

Diversification is equally important in the world of fundraising.  If an organization becomes too dependent on one source of income they too could risk stagnation of income or at worse reduced income altogether.  The best nonprofit organizations utilize multiple sources of income in order to grow their base of donors, develop the donors they have already acquired and be prepared for the inevitable ebbs and flows of the economy that directly and indirectly affect donors’ ability to support their mission. 

The following is an overview of different income sources and ways your organization can diversify its portfolio in order to ensure sustained financial growth that will lead to increased impact:

​1.  Direct/Digital Fundraising:  Direct mail has been one of the most successful means of fundraising over the past century.  With the addition of digital mail organizations have been able to reach more donors on a more regular basis and at a lower cost.  Direct mail is the way donors start their journey with your organization as they make more modest gifts.  Whether those gifts continue or increase is up to the recipient organization.  If you have a direct mail program, make sure you are responsive with acknowledgements and continue to communicate with those donors.  They are the seeds that, if nourished and nurtured, will blossom into some of your best major and planned gift donors.  If you do not have a Direct Mail program you should consider investing in prospecting for donors.  When you do they will build a stronger foundation and help replace and enhance the Major Donors upon which your organization currently depends.​

2.  Major Gift Fundraising:  A major gift is not a defined monetary amount but rather means different things to different organizations.  For a smaller organization a $1,000 gift may be major whereas for an American Cancer Society a major gift might be closer to $25,000 or $50,000.  Major gifts are harder to raise but can have the most significant impact on an organization’s growth.  Organizations who depend heavily on direct mail would be wise to do a wealth screen of their donor lists to identify those donors who have the capacity.  One of the risks of a direct mail program is that donations can fall during economic slowdowns.  Having a loyal group of major donors who may be able to ride out the slowdown can increase their giving to help stem the tide.  Major donors are also your best candidates for planned gifts.

3.  Planned Gift Fundraising:  Over the next 40 years the Baby Boom generation will transfer trillions of dollars to the next generation.  Nonprofits that are not actively marketing planned gifts through their direct mail or discussing them with their major donors are potentially leaving millions of dollars on the table that could increase their impact.  The best planned gift prospects are those donors who loyally give to your organization year in and year out no matter what the amount.  Organizations who have a mature planned giving program are annually receiving millions of dollars a year that can be used to fill in the financial gap in down economic years while also growing current programs or inspiring new opportunities in those years when other funding sources are robust.  Make sure that your direct mail communications include information and stories about how donors can impact your organization by including it as a beneficiary of their will and train solicitors to include planned giving options during their interactions with major gift donors.  

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