Why “Trust” Matters in Fundraising. And What To Do About It.

February 9, 2018      Roger Craver

The 2018 Edelman Trust Barometer reveals that trust in the U.S. has suffered the largest-ever-recorded drop in the survey’s history among the general population.

Even more troubling, trust among the informed public (that would be our donors)  in the U.S. imploded, plunging 23 points to 45, making it now the lowest of the 28 countries surveyed— below Russia and South Africa.

The breakdown of trust isn’t limited to the U.S.  Only 8 nations  reading this in the US to be concerned.  Only 8 countries ( China, India, Indonesia, UAE, The Netherlands, Mexico,  Malaysia and Singapore) fall into the category of “truster” nations.

 

While some folks may take heart that NGOs are a bit more trusted than other institutions (except ‘business’)  please note that in the U.S. among the “informed public” trust in NGOs dropped 22 points over the past year.

Can declining trust in institutions be blamed for the overall decline in personal philanthropy? I can’t claim that although there’s some historic correlation. Nor am I recommending fundraisers attempt to do the job of Independent Sector and urge that individuals give a greater percentage of personal income beyond the current plateau of 2%.

What I’m hoping is that those readers truly interested in solving their organization’s fundraising and donor retention problems dig deeper and realize that an increasingly complex world poses new fundraising challenges that can’t be met by simplistic and pat “solutions.”

Like so many of today’s challenges “Trust” where donors are concerned isn’t some soft, nebulous challenge to be solved by guessing or simple instinct.  Rather, it’s a well-researched concept and the task of enhancing trust, or taking steps to reduce mistrust, while complex and costly, are known and available.  What’s even more costly is not taking the complex steps to address the issue of donor trust.

That’s why today’s post is longer and more detailed than most.

Why “Trust” Matters

In this age of “fake news”, “alternative facts” and general erosion of trust…

….why should we even care?

….And if we care what can we fundraisers do about it?

  • Because “trust” is the lynchpin of a solid and sustainable relationship with a donor;

 

  • Because there is a way to measure trust and identify those actions that can  increase donors’ trust–and significantly increase donor value and an organization’s net income.

In today’s climate of mistrust understanding the importance of trust and identifying what steps an organization can take to build donor trust is more important than ever.

Fortunately, thanks to more than 7 years research, testing and mass application by DonorVoice there’s a clear and proven process for building donor trust and improving donor retention and lifetime value. I believe it deserves a detailed description.

Relationship Fundamentals

Let’s start with some fundamentals about relationships in general and more specifically how these fundamentals apply to donors. In addition to the DonorVoice research that I used for my book Retention Fundraising there’s  a sizable body of work by academics and practitioners who’ve devised a framework called Relationship Theory to determine and describe the dynamics and essential ingredients of both personal and commercial relationships.

Hands-on experience coupled with decades of research make clear that the underlying elements constituting a healthy interpersonal relationship—the one you have with your best friend, your spouse or partner, and trusted colleagues at work—also apply to relationships in business to business (B2B), business to consumer (B2C), and nonpro t to donor (N2D).

There are two key pillars that go into creating a positive nonprofit- to-donor relationship, the very kind that leads to higher loyalty, commitment, and retention:

Functional Connection.

The journey begins with the desire on the donor’s part to establish a basic (what social scientists call “functional”) connection with your organization.

The main characteristics of a successful functional connection are reliability and consistency. The donor comes to know what he or she can reliably expect from you, and that experiences with your organization are consistent.

For example, you acquire a first-time donor using a powerful message to save the baby seals. It’s reasonable to assume the donor has a special regard for animals, in this case baby seals. So your follow-up appeals would naturally focus on your work in this area. That would be consistent. What you shouldn’t do is acknowledge the donor’s original gift with an equally powerful message about the dangers of climate change and then follow up with a well-crafted appeal to help stop fracking.

There’s no consistency there.  And chances are, no additional gifts.

Or, say John Smith sends in his first contribution. His acknowledgment reads, “Dear John Smythe.” He calls and requests the spelling of his surname be corrected and is met with the uncaring voice of a rude clerk.

No reliability. No additional gifts.

If an organization fails to deliver both reliable and consistent experiences, it will fail at building trust.  Fail at retention. Fail at building lifetime value. Period.

Conversely, when the organization achieves a solid level of functional connection, the donor’s level of trust allows it move to the next, vitally important tier of the relationship:

Personal Connection.

This is the more emotional part of the relationship. Personal connections are actions we take to make the donor feel an important part of the cause—things such as giving recognition, seeking the donor’s opinion, sending timely and relevant communications, and offering other forms of involvement.

In the vernacular of the social scientists, personal connection is the fidelity part of a relationship. The bond signifying there’s a two-way street of give and take, of mutual respect, with the donor believing the organization knows him or her and truly cares.

The Recipe for Trust.

When donors are both functionally satisfied and personally connected to your organization, they recommend you to others, stay with you, and are willing to forgive the occasional mistake (the two-month lapse in correcting the spelling of a name, for example). In short,  they trust you because your actions have demonstrated you care about their needs.

And “trust” is the linchpin for securing a solid, sustainable relationship.The kind of relationship that moves the donor to overlook shortcomings, give greater share of wallet, promote the organization and go out of his/her way to engage with it.

Why and When Does Trust Break Down?

Using “functional” and “personal” connections as a framework or guide, we can begin to understand why that 1st gift  often never materializes into a 2nd gift. How about the poorly executed or missing ” thank you?”  If there was ever a specific, concrete action to build the bridge from functional to personal, this would be it.

And what about a firmer functional foundation? If the donor’s 2nd contact with the organization is another, largely or entirely unrelated solicitation how likely is that the donor will form a sense “reliability” of what to expect when interacting with you?

To compound the “undoing” of what is generally the loose relationship knot that is the first gift, the organization may not acknowledge the first gift before asking for the second. How can the donor be expected to think the organization knows them (a key part of personal connection) when they are treated like a stranger? And how can the seed of trust planted with the first gift be grown if there is no reference to how it was used to help the cause?

And this example is taken just from the microcosm of the first to second gift scenario. When you extend this thinking to all the other “touches” (e.g. call center, email marketing, website, social media, traditional media) your organization has with the donor it is almost impossible to imagine a relationship being established unless the organization is actively, consistently, strategically and tactically pursuing one.

Identifying the Trust Builders and Trust Busters

All those years of DonorVoice research I mentioned earlier have produced a process by which the “good”, the “weak” and the “bad” experiences an organization offers to its donors can be identified and financially quantified.

This approach utilizes a sophisticated methodology that measures what are generally “unobservable” psychological “parts” of a donor that cause his or her positive or negative behavior –trust, satisfaction, reliability and reciprocity.  From this the interactions or touchpoints that harm or help giving behavior are identified.

Here’s an illustration of one such DonorVoice analysis:

Click here for an enlarged view.

So What?

In addition to identifying those parts of the donor experience in need of improvement and those that should be scaled up or simply discarded,  the system also identifies individual donors’ level of “Commitment”.  This Commitment Score, unlike RFM, is a leading indicator capable of predicting a donor’s future giving behavior.

Here, for example,  is how the Commitment Score is put to work in file segmentation and targeting.  Note the 4 X difference in High Commitment vs Low Commitment donors.

This, in black and white,  is the difference “trust” makes.

Remember, our missions only exist because people elect to support them. Building a relationship of trust with those supporters should be considered an obligation not a burden  – an obligation that happens to pay for itself many times over.

Roger

2 responses to “Why “Trust” Matters in Fundraising. And What To Do About It.”

  1. Claire Axelrad says:
    February 9, 2018 at 3:28 am

    I LOVE this post Roger. I’m kind of geeky about applying principles of neuroscience and psychology to fundraising, and you’re so right that many of the principles of relationship science apply in spades to nonprofit sector work. I find the initial ‘thank you’ to be so important in setting the functional, satisfaction-based foundation for trust. Then all the subsequent communications and interactions, especially the personal ones, fulfill the relationship-based foundation that develops into love and loyalty.

    I think if more organizations understood this better, they wouldn’t consider donor acknowledgment a ‘low-level’ function. And they’d actually put someone in charge of relationship-building! Thanks for always shining a light.

  2. Michael J. Rosen says:
    February 9, 2018 at 6:04 pm

    Roger, The nonprofit community doesn’t often talk about “trust” because the assumption is that the sector is automatically entitled to it by virtue of the work it does. However, charity scandals and scientific research reveal that that is not the case. Just as with every sector of society, the nonprofit sector must EARN trust. Your post is an excellent reminder of this.

    While you focused on the development process as a means of building trust, you did not directly mention that ethics is another essential part of the equation. When organizations demonstrate sound ethical conduct, they are more likely to engender trust. The same goes for the sector as a whole.

    Sadly, even if a given organization does everything perfectly, it can still be harmed indirectly by the misdeeds of another charity that erodes public trust in the entire sector. So, not only do we need to be vigilant about the behavior of our own organization, we must also fiercely defend the integrity of the entire nonprofit sector.

    Research shows that the level of trust one has in the nonprofit sector determines whether or not someone will give. Furthermore, it determines how much someone will give. Small enhancements in trust can have a massive impact on giving.

    For example, Independent Sector found that those who have “a high confidence in charities as well as believe in their honesty and ethics” give an average of 50 percent more!

    For more detail about the points I’ve made (along with research sources), readers can checkout my article “Doing Well by Doing Right” http://bit.ly/WLlD48 .

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