Do you know the lifetime value of a donor to your organization? With Americans donating hundreds of billions of dollars to causes every year, it’s a question that directly affects nonprofits. Tracking donor engagement is crucial to understanding your donors and developing an accurate picture of who will donate in the future.
It’s important to understand the main reasons why people donate to your charity.
External Reasons
Beyond the tax deduction, one reason to give money is recognition, and charities tap into that by offering cards, gifts and special mentions on programs and websites. But a recent study in the Journal of Marketing found that the recognitions seem to work only for a small subset of people – those who feel that it’s important to express moral values to other people.
Internal Reasons – Personal Ties
People may donate to organizations because they feel a personal connection. My dad died of leukemia more than 15 years ago, so I am active in the Leukemia & Lymphoma Society, participating in the annual Light the Night Walk to raise money, registering as a bone marrow donor and donating money throughout the year. How do charitable organizations rate someone like me who has been involved for more than a decade in various aspects of their mission versus one-time donors? It’s valuable to understand the difference by recognizing why I’m involved. I don’t need an annual appeal or an awards dinner to change or cause my personal connection to the Leukemia & Lymphoma Society.
People whose values are more internalized (for example, religious beliefs) don’t need the promise of future recognition to be persuaded to donate.
Combination of Internal and External Reasons
Just because generous people are stirred by an internal moral prompting, doesn’t mean all giving is utterly selfless. A University of California study identified the “warm glow” theory of giving. This identified the personal pleasure people feel in knowing they have contributed to a good cause. As human beings, we naturally want to be connected and helpful.
Charities that understand the warm glow phenomenon might be able to increase donations. Nonprofit organizations may find it valuable to test what motivates their donors to give an appeal to social pressures, altruism or personal recognition.
Organizations should analyze the demographic characteristics and donor behaviors of all of their constituents – not just major donors- to better understand what drives their giving behaviors. By tracking donor engagement, organizations will be able to further segment their appeals, personalize their outreach to donors, significantly increase donor loyalty and ultimately improve lifetime value.
