The Goldie Company

Donor Recognition and Stewardship Practices Survey

Wednesday December 8, 2010

The Goldie Company in association with Collis & Reed Research developed and administered a survey to query nonprofit and charitable organizations from across Canada on donor recognition and stewardship practices. The main objective of this project was to construct a profile of how these organizations go about thanking and stewarding their donors. 

Specifically we looked at:

  • The most common stewardship and donor recognition practices that are used.
  • Strategies that are perceived to be the most successful.
  • Practices that have not been successful.
  • The challenges recognition programs face.
  • The extent to which organizations with strongly developed stewardship programs have been impacted by the current economic situation.

A brief overview of the survey sample:
The survey was administered as an online questionnaire that could be accessed from March 1st to May 31st. Participants were informed about the survey via an e-mail that included a link that could be clicked on to directly access the survey.

A total of 207 nonprofit and charitable organizations from across Canada took part in the survey. Sixty percent of participants were from organizations that were headquartered in Central Canada while 25% were located in Western Canada. The remaining 5% were from Eastern Canada.

Region Frequency
Western Canada (MB, SK, AB, BC) 35% (71)
Central Canada (ON & PQ) 60% (121)
Eastern Canada (NF, NS, PE, NB) 5% (10)

Organizations taking part in the survey categorized themselves according to the sector they serve. The two largest sectors were health care and education.

Type of Organization Frequency
Health Care 30% (62)
Religious 6% (12)
Education 15% (31)
Arts & Culture 9% (19)
Community Services 27% (55)
Other 14 (28)

Slightly less than half of the organizations taking part in the survey employed less than 10 staff:

Type of Organization Frequency
Ten or less staff 47% (93)
Over ten staff 53% (105)

The sample was evenly split between organizations requiring $1,000,000 or under in annual revenue, organizations requiring between $1,00,000,000 – $5,000,000 and organizations requiring over $5,000,000 in annual revenue.

Type of Organization Frequency
$1,000,000 or less 35% (68)
$1,000,001 to $5,000,000 (47) 30% (59)
Over $5,000,000 (66) 35% (69)

Over half of the respondents reported an increase in revenue during 2009 compared to 2008.

Type of Organization Frequency
Donation $’s increased in 2009 56%(111)
Donation $’s stayed the same in 2009 18% (35)
Donation $’s decreased in 2009 27% (54)

An overview of the survey results:

  • 70% of organizations have different programs in place to thank donors depending on their level of contribution.
  • 81% of organizations have a program in place to thank and steward major donors.
  • Major donors are defined as donors of $5,000 or more (median value).
  • Donors are most frequently thanked through mass distribution approaches such as thank-you letters, reports and newsletters. Major donors are acknowledged through more personalized techniques such as arranging one-on-one meetings with organization representatives, invitations to special events and telephone calls from high-profile people within the organization.  These three techniques used to interact with major donors are also viewed as having the most impact, though not all organizations have experienced success using these strategies and some have discontinued these practices due to a lack of results. In addition, organizations indicated that they used a larger number of techniques to thank their major donors compared to their annual campaign donors. Further, there is greater variability in the number of stewardship techniques used by stewardship programs compared to donors.
  • The majority of organizations contact their major donors 3 to 5 times a year. Defining a well-established stewardship program as one that contacts their major donors 3 or more times a year, 59% of these organizations experienced an increase in dollars donated in the tough economic climate of 2009 compared to 2008, whereas those organizations that contact their major donors 1 to 2 times a year, only 43% report an increase in gifts during 2009.
  • Five years (median) is the length of time that organizations have had a dedicated program in place to thank and steward major donors.
  • The median number of Full Time Equivalent (F.T.E.) staff working on stewardship initiatives is one (1).
  • Communications and resource issues are the two most frequently reported challenges faced by stewardship programs.
  • 62% of organizations have changed their marketing strategy over the past two years.
  • 70% percent of organizations seek out new information about fundraising on an ongoing basis. The most common sources of information reported were conferences, memberships in associations, networking with other fundraising professionals and attending workshops.
  • Respondents rated their agreement as to whether their organization had:
    • A strong and realistic Case for Support.
    • A fundraising team that is seen as champions for their cause.
    • An effective strategy in place to cultivate donors for future gifts.
    • An up-to-date and well-managed database.
    • A system in place to inform and engage major donors.
    • A well-run donor recognition program in place.
    • A coordinated and active media communication strategy in place.
  • Overall, on a seven-point scale from strongly disagree (1) to strongly agree (7) respondents on average rated these characteristics on the border between neutral to somewhat agree (4.65).
  • A strong and realistic case for support received the highest average rating of 4.97 (somewhat agree) while a well-run donor recognition program is in place received the lowest average rating of 4.39 (neutral).
  • Respondents attribute low ratings to ineffective strategy development, lack of resources and organizational commitment.
  • Demographic differences were explored for the following variables: geographic location, increase/decrease in revenue between 2009 and 2008, type of program, staff size and the amount of annual revenue required. The most prevalent differences observed throughout the survey results were among organizations that require annual revenue of under $1 million dollars, compared to organizations requiring greater sums of annual revenue.

Concluding Remarks:

  • Given that this was a voluntary survey, it can be assumed that participants who have an existing stewardship program in place, or are in the process of creating such a program, would be more inclined to take part in this survey. Therefore, it is likely that the 81% of organizations reporting a separate program in place to thank and cultivate major donors is an inflated statistic. Two unique findings in the data might be explained by this assumption of self-selection of survey participants. First, unlike other recent surveys of the charitable and nonprofit sectors, a majority of our respondents report that revenue increased during 2009 compared with 2008. This may suggest that stewardship programs play a role in cushioning the impact on organizations during challenging economic times. On a related note, despite the majority of these organizations not being impacted by economic tough times as other organizations, most respondents provided lower than expected ratings on the organizational characteristic scale questions. This may be an indication that these respondents are particularly aware of the importance of these characteristics and as a result tend to have a much higher criterion of successful implementation of these characteristics.  They are, in a sense, more self-critical of their efforts.
  • The results of this survey presents an interesting picture of how stewardship is evolving in the nonprofit industry. Developing a program to thank and steward donors is a relatively young fundraising practice in Canada. Respondents report a median age of 5 years of operating organized donor recognition and stewardship. In contrast to how organizations thank their annual donors, where there are a small number of techniques that are known to be effective and are used by most organizations, the survey results indicate there is no prescribed way that thanking major donors is carried out. Methodologies appear to vary from organization to organization. How effectively these strategies are executed also appears to vary and it is highly dependent on the size and resources available to these organizations.

Beyond the fact that formal stewardship programs are relatively new compared to standard donor recognition (e.g., donor walls and annual reports), it is also a far more complex process as well.  Stewardship involves the interaction of many operations including:

  • Assessing and acting upon the key motivating factors that will help turn a donor into a major donor:

There has been considerable research into motivational factors associated with giving behaviour (for example, the works of Penelope Burk and Kay Sprinkle Grace that specifically relate motivational factors to donor behaviour) and a wide assortment of social psychological research that looks at motivation in more general terms. Motivational factors associated with stewardship include a mix of internal factors such as emotional ties to a cause (e.g., emotions associated by being an alumni of a university, a patient/family member in a hospital) and ego, the recognition a donor receives for making a substantial donation. External factors include social impact (how the donation is going to make a difference) and personal benefit (how the donation might help the donor’s status in the community). A stewardship approach would require organizations to look at the potential internal and external motivating factors related to their cause, and the audience most likely to respond, then build a message and communication strategy that touches on key internal and external factors in order to increase the probability of success.

  • Building a real bond between the organization and the donor:

While the message is important, it can be lost if not delivered by a person that lends credibility to that message. People involved in stewarding donors must be “champions to the cause.” This might be high-profile individuals in the community who are connected to the cause, or directors or organization leaders who have a long-term commitment to the cause.

  • Sustaining the bond:

By definition stewardship is a long-term process. Successful stewardship usually requires multiple interactions with major donors to build a relationship. It is necessary to insure a bond is developed and sustained over an extended period of time.

  • An organized and well-executed implementation:

The message, the bond, and sustaining the bond is dependent on an organized and well-executed implementation. There are many factors related to an organized approach. These include developing, maintaining and using a database where information about donors can be stored and retrieved in order to personalize interactions; the ability to deliver a well- executed fundraising campaign with “champions to the cause” interacting with donors and the community in an organized, consistent manner over time; and delivering a message that is in line with the organization’s key message developed through analysis of motivational factors that would most likely lead to major gifts.

These four factors interact together and play a significant role toward successful stewardship. Given that organizations are likely not to be equally strong in all of these areas leads to variability of stewardship success. This variability is evident in the survey data. For example, while some organizations report success implementing special events as a key part of their stewardship strategy, others report that such a strategy has been discontinued due to lack of interest.

It is also clear that a serious implementation of the four stewardship factors requires a significant investment in resources (in terms of both personnel and capital). Further, because stewardship by definition is a long-term approach used to grow the number of major donors, there is a considerable lag between implementation and a return on investment. As expected, the study results show that most organizations with larger budgets (for example over $5 million annually) have more extensive stewardship programs in place. The majority of small- and medium-sized organizations that participated in the survey report having smaller scale stewardship programs in place. The survey results indicate that these smaller organizations might benefit from the development of best practices geared to accomplishing similar stewardship outcomes using fewer resources.

Acknowledgements

For some time, Gina Eisler and I had been expressing our concern about stewardship programs in Canada, wondering how organizations were practising stewardship and how these stewardship programs were faring. Our sense was that stewardship was largely misunderstood. Our hope was to acquire some statistical data that would give us some insight, a current snapshot of stewardship in Canada. So I wish to thank Gina first and foremost for her shared interest in this topic and her enthusiastic participation throughout the process. To Ron Collis, an immense thank-you for designing the survey, conducting it and compiling the findings. To Neil Hannam for reviewing the results and the report, your feedback and recommendations were invaluable. To Susan Taylor-Simpson, my grateful appreciation for all of your assistance, and to Jim Hilborn, I heartily thank you for your encouragement.