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. 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. 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.” 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). 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. 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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