Development Planning from Scratch – Segmenting

Posted by on Aug 2, 2016 in Development Audit, Donor Cultivation, Featured, Foundations, Membership, Plans and Budgets, Staff Development, Uncategorized | Comments Off on Development Planning from Scratch – Segmenting

Development Planning from Scratch – Segmenting

A few weeks ago, I started a series on planning (See Development Planning from Scratch – The BIG Picture). In that post, I emphasized the importance of starting with a GOAL. If the purpose of fundraising activity is to return a Net to Program, it will be important to first know how much Program actually needs. That Net, together with the cost associated with raising money is the Fundraising Goal.

Step 2 is to segment your donor pool and plan for each segment separately. This week, I’m going to discuss how to do that conceptually.

Imagine that all of your actual donors were all together in a large room. Notice that everyone in the room is a person. We don’t have buildings in this room. Or institutions. No employee programs, or foundation boards. They’re all people, and each one is a gift-giving decision-maker for their business or foundation or family or personal interest.

Conceptually, we clearly define a particular subset group, or segment, and pull them out of the room. Then we set a fundraising goal for each group such that the sum of the segment goals is about 120% of the larger Fundraising Goal. That way, we’re hedging against things going wrong.

The first group we’re going to pull out is the Board of Directors. Note that I’m pulling them out even if they give through their family foundation or their business. Every gift they give during the year will count against this segment goal, even if the purpose of the gift or the timing of the gift would otherwise support something else. For example, if they typically renew their membership and sponsor the Silent Auction, both gifts will count against the Board goal. The Silent Auction sponsorship should still be recognized, but it does not get counted in the event accounting. This is a conscious choice. I choose to count their gift toward the Board goal, because it will matter more to have a larger Board goal.

In this sense, solicitation and recognition strategies can be different. In the example above, the Board member’s business may still be recognized as an event sponsor, even though their gift is not counted toward the event.

THERE IS ONE EXCEPTION! Several organizations with which I have worked have been blessed/cursed by a single board member who gave more than everyone else combined by a considerable amount. By definition, this scenario is not sustainable, and I do not think it is particularly healthy either. However, if you find yourself in this position, I recommend treating him/her almost as if they were two donors, one making an annual Board gift (more in line with what everyone else is giving) and one making a very generous major gift.

Also, just to be inclusive, some organizations include all past Board members in this segment, too – again for the purpose of treating them specially and being able to present a larger percentage of the total budget coming from the board.

The second segment is a group I call the Top 100 list in Major Gift training. Each donor in this segment is selected because of their financial capacity and their documented interest in the organizational mission. Through thoughtful, systematic, and sensitive cultivation, they may very well be able to make something big happen. Again, these donors are selected and removed from the larger group, and a goal is established for their current year giving.

A third group is made up of people making annual gifts above some arbitrary threshold. The specific threshold may differ for different organizations. For some, it may be $250. For others, $1,000. And for some others – perhaps $2,500 or even more. As before, these donors are selected and removed from the larger group, and a goal is established for their current year giving. (Note that no Board members or Top 100 prospects will be included in this group – they will have already been removed from the room.)

The next two groups represent businesses and foundations. These are fairly straightforward, except for two sensitivities. First, if the giving decisions are really being made by a single person, and that person is just using their business or family foundation to make the gift, I would treat them, and cultivate and solicit them, as an individual. And second, if the money being given away each year is connected to corporate profits in any way, I would cultivate and solicit that institution as a business, even if they use the word “foundation” in their name. Thus the Consolidated Papers Corporation Foundation is a business, whereas the Doris Duke Charitable Trust is a foundation.

And finally, I would segment everyone left in the room based on recency of their giving: people who gave last year, people who gave the year before but not last year, and people who have not given for several years (if ever).

Thus, you end up with eight segments:

  • Board members
  • Top 100 donor prospects
  • Annual Giving leaders
  • Foundations
  • Businesses
  • Current donors
  • Lapsed donors
  • Potential donors

Obviously, you could have more, and many organizations will, but the planning work I will write about in the next few weeks and months will be based on these eight segments. An important feature of this methodology is that each segment is removed from the larger group IN ORDER.

Next week – we’ll start in with Board Members.

Cheers,

-da

 

Photo credit: Heartleaf Arnica by Walt Kaesler.

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Check out this blog post from Michael Rosen, Do You Know That Planned Giving is Bad for Fundraising? In it, Rosen reports on marketing research done by Russell James.

 

To find the strongest marketing term, James asked people to imagine they were viewing the website of a charity representing a cause that is important in their lives. In addition to a “Donate Now” button, the following buttons appear on the website:

  • Gift Planning
  • Planned Giving
  • Giving Now & Later
  • Other Ways to Give
  • Other Ways to Give Smarter
  • Other Ways to Give Cheaper, Easier, and Smarter

 

James asked participants to rate their level of interest in clicking on the button to read the corresponding information. The winner?

“Other Ways to Give Smarter.”

 

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Fundraiser’s Almanac
Here’s what I’ve been thinking about for August. What are YOU thinking about?

 

Taking A Hike!

In fundraising for land conservation, we often say that “the land sells itself.” By this we simply mean that if you can get a potential donor out on the land to see, smell, touch – feel – for themselves, often that’s all you need. Here’s the thing, though – it works for US, too. Don’t just report what someone else has told you about how things work. Go experience it yourself. Replace your ability to narrate in the third person with an ability to testify in the first person.

 

Joining Your Own Organization

With that same concept in mind, I respectfully suggest that you join the organization you support. Send a check in one of the standard mailing envelopes. Donate on-line. Try the monthly donation program with a credit card. Or send a check in a plain envelope. And then track what happens and report back to the organization what it’s like from the donor perspective.

 

Saturation Mail

The essence of Saturation Mail is that the same piece is dropped in every mailbox within a defined area. It is addressed to “Postal Patron” or “Current Resident.” And the cost is about 12 cents each. The only catch is that you have to mail it at least to everyone in a carrier route – usually about 400-800 addresses. Where we get hung up is generally in the scope of such an effort. But consider this: you do not need to saturate your entire service area at the same time.

 

Membership Drives and Recruiting “Renewals”

Here’s an out-of-the-box thought: Instead of thinking about recruiting new members, let’s think about recruiting new renewals! A new renewal would be defined as a person making their second gift – their “first” renewal. I think membership recruitment lends itself to a Membership Drive strategy.