Direct Marketing and Annual Giving

Dependency Quotient

According to a recent study by the Fundraising Effectiveness Project renewal of smaller gifts are down in 2018. This study was highlighted in a Washington Post article that noted “the number of donors fell 4.5 percent last year.” However total giving year over year was slightly up. What gives? Well it seems that organizations are concentrating on the top of the pyramid while ignoring the bottom.

While this path seems the fastest and easiest to make your goal and even increase your organization’s total giving it is not sustainable. Play this scenario out in long-run. Your organization continues to increase their year-over-year giving as your number of donors decrease. What happens when these donors either stop funding your organization or pass-away? How many new or increased donors are then needed to make-up for that one gift – let alone several of them? The Board Source refers to this as your Dependency Quotient (Sum of Contributions from the five largest Donors or Funders ÷ Organizational Expenditures = Dependency Quotient).

I understand the pressure that development officers are under, especially those in smaller shops and in the end, it comes down to how much time we have to get things done. We must strike a balance on our “To Do” lists every day. Just remember that we need those lower level donors for the long-term health of our organizations. I am sure in the short-term the temptation is there to rationalize that you will not be at the organization when that times comes when the pyramid no longer produces the results needed to sustain the organization. You may very well not be, but hopefully your predecessor didn’t think that way at your new organization.

Annual Giving and Direct Marketing

Program review, staffing and revenue and expense analysis along with data analytics and segmentation are key to developing strategies to acquire new annual donors, steward and retain current donors, and upgrade donors to higher levels of giving. S. Sutton & Associates Inc. has the technical expertise to work with your team to maximize your potential.

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