by Amelia Aldred
Hellos dear readers! Thank you for your patience with the pause in posts. To pull back the curtain a little: my job at the University of Chicago was revamped so that I will be researching more trends and issues in philanthropy for University leadership, which is fantastic and means that I can bring more research to The Philanthropologist! However, it also means that I will have a busier work schedule and more responsibilities, which means that I may not be able to devote as much time to outside projects. I will do my best to keep bringing you useful content about fundraising and social science, but it may be a little touch and go for a while.
On that note, I recently compiled a literature review on research about stewardship. In-house researchers at fundraising shops are rarely asked to investigate stewardship practices. However, there is substantial evidence that stewardship influences donor retention by increasing or maintaining loyalty and commitment. Given this, it could make sense for prospect researchers to add stewardship preferences to a typical prospect profile or briefing. This would require that researchers partner with stewardship staff at their organizations and that researchers develop a better sense of how a donor’s stewardship background and preferences fit into their overall philanthropic profile.
After reviewing the most recent research on stewardship practices, I’ve summarized the highlights below:
- There is strong evidence that U.S. nonprofits have low donor retention rates and that this reduces their net growth in donors and dollars. There is also substantial evidence that stewardship influences donor retention by increasing or maintaining loyalty and commitment.
- Presently, there is limited research comparing results of different stewardship activities at nonprofits, but researchers have identified several aspects of effective stewardship, including repeated thanks from multiple entities, customizing stewardship activities, and aligning donor expectations and experiences of stewardship.
- Low retention rates have serious consequences for nonprofits’ net growth in fundraising. Nonprofits must replace lost donors and dollars as well as acquire new gifts in order to increase their annual fundraising revenue. In contrast, high retention rates have the potential to increase growth, not only by maintaining giving from year to year, but by increasing donors’ lifetime giving to the organization.
- Besides increasing net fundraising growth, enhanced retention rates may allow nonprofits to improve their prospecting operations. According to multiple marketing studies conducted in the 1970s through the 1990s, it costs less to retain an existing customer than to attract a new one (Harley 1984) (Petersen 1997). Similarly, there is evidence that returns from existing donor development activities are higher than returns from donor recruitment activities (excluding major gifts) (Sargeant and Kaehler 1998).
- If a nonprofit retains donors from year to year, they do not need to rely on prospecting in to order to simply maintain their fundraising revenue. Instead, the organization could focus on prospecting for special initiatives, or other areas that need growth.
- A major debate in scholarly research about stewardship is the definition of donor loyalty and its exact relationship to giving behavior. The concept of donor loyalty is borrowed from marketing research, which defines customer loyalty as repeated, regular shopper patronage at a specific retail store chain and brand loyalty as repeat purchasing of a branded product (Wymer 2013). Early research in donor loyalty, retention, and stewardship assumed that loyalty was directly linked to retention (Sargeant and Jay 2004; Wymer and Alves 2013). However, in the last five years, researchers have argued that measuring donors’ feelings and behavior as if they are the same does not account for all reasons for giving behavior (Wymer & Rundle-Thiele 2016).
- Despite ample evidence that stewardship is a key factor in donor giving behavior, there is little research that systematically compares different types of stewardship to giving outcomes.
- There is some evidence that fitting stewardship strategy to donors rather than doing the same thing for everyone is positively correlated with donors giving more. Customization can be performed at different scales and take many forms.
- Most fundraisers believe instinctually that thanking donors is important and empirical studies support that instinct. It is also important to note that thanking lapsed or less frequent donors can increase these donors’ future gift intentions and strengthen loyalty.
- One notable study: An in-depth interview project with thirty major gift donors at higher education institutions found that managing donors’ expectations, especially those created by the institution through external communications, is an essential component of attaining perceived quality stewardship. However, the expectations that donors bring to stewardship affect their evaluations of its quality: the higher the expectation, the higher the delivered service must be to be perceived as high quality. In their results, the researchers stated, “Taking the high road by raising donor expectations and then meeting them may in the long run reap the benefit of more donations [but] letting donors know what is and is not possible and the reasons why also helps donors establish realistic stewardship expectations” (Grant and Wolverton 2003).
Based on this research, some key takeaway questions for fundraisers are:
- What is the cost of attracting a new donor vs. stewarding a donor at your organization?
- What other resources could you reallocate if you didn’t need to bring in as many donors to replace lost donors?
- Why do donors give to your organization and why do they stop giving? If we don’t know why they give or stop giving, it is difficult for us to problem-solve!
- Do you know what your donors’ stewardship expectations are? How aligned are their expectations with their experience? How do you know how they want to be stewarded?
Reading List for Stewardship Research:
Blackbaud. 2018. 2017 DonorCentrics Annual Report on Higher Education Alumni Giving. Annual Report, Charleston, SC: Blackbaud, Inc.
Boenigk, Silke, and Christian Scherhag. 2014. “Effects of Donor Priority Strategy on Relationship Fundraising Outcomes.” Nonprofit Management and Leadership 24 (3): 307-336.
Education Advisory Board Advancement Forum. 2015. Strategies for Annual Giving: Donor Retention. Research Brief, The Advisory Board Company.
Grant, Angelique S.C, and Mimi Wolverton. 2003. “Gaps in Stewardship Quality at Three Institutions.” The CASE International Journal of Educational Advancement 4 (1): 45-64.
Harley, D.R. 1984. “Customer Satisfaction Tracking Improves Sales, Productivity, Morale of Retail Chains.” Marketing News 15.
Issenberg, Sasha. 2012. “How Obama’s Team Used Big Data to Rally Voters.” MIT Technology Review, December 19. Accessed March 20, 2019. https://www.technologyreview.com/s/509026/how-obamas-team-used-big-data-to-rally-voters/.
Levis, Bill, Ben Miller, and Cathy Wiliams. 2018. 2018 Fundraising Effectiveness Survey Report. Fundraising Effectiveness Project and the Association of Fundraising Professionals. Accessed March 20, 2019. http://afpfep.org/wp-content/uploads/2018/04/2018-Fundraising-Effectiveness-Survey-Report.pdf.
Merchant, Altaf., John B. Ford, and Adrian Sargeant. 2010. “‘Don’t forget to say thank you’: The effect of an acknowledgement on donor relationships.” Journal of Marketing Management 26 (7-8): 593-611.
Petersen, J. 1997. “The Statistics of Loyalty and Satisfaction.” Journal of Targeting, Measurement and Analysis for Marketing 6 (1): 65-75.
Pressgrove, Geah. 2017. “Development of a Scale to Measure Perceptions of Stewardship Strategies for Nonprofit Organizations.” Journalism & Mass Communication Quarterly 94 (1): 102-123. Accessed March 20, 2019. https://journals.sagepub.com/doi/pdf/10.1177/1077699016640221.
Sargeant, A., and J. Kaehler. 1998. Benchmarking Charity Costs. Report, West Malling, UK: Charities Aid Foundation.
Sargeant, Adrian. 2008. “Donor Retention: What Do We Know and What Can We Do About It?” White paper.
Sargeant, Adrian, and Elaine Jay. 2004. Building Donor Loyalty: the Fundraiser’s Guide to Increasing Lifetime Value. San Francisco: John Wiley & Sons.
Wymer, Walter, and Sharyn Rundle-Thiele. 2014. “Supporter Loyalty: Conceptualization, Measurement, and Outcomes.” Nonprofit and Voluntary Sector Quarterly 45 (1): 172-191.