Needed: An Incentive To Fight For The Future
The past two days, Roger has written about thank you’s and their importance to retaining donors. See here and here.
Increasing the lifetime value of a donor file by increasing retention rates seems like a ‘no brainer’ when it comes to improving an organization’s fundraising performance. But someone needs to identify and set that specific performance metric as a high priority; then take the necessary steps to attack the goal; and then be held accountable for the result.
Has that happened in your organization?
Or does your nonprofit follow more the scenario described in this post from Analytical Ones, titled The Nonprofit Paradox? There, Bill Jacobs argues that the short-term budgeting focus of many nonprofits can put a squeeze on acquisition funding, with decline of file size and revenue, leading to even less revenue … leading to departure of the fundraiser (voluntary or otherwise).
Jacobs says that these groups have the incentives wrong:
“There is one way to combat this. Development directors need be financially incentivized for growing the organization’s multi-year donor file in their third year of their tenure. The organization needs to do this so that there is an incentive for someone fighting for the future of the organization.”
In whatever way it might be structured, does your organization offer a specific incentive (i.e, reflected in performance pay/bonus) for growing your multi-year donor file, or, as I would put it, increasing the lifetime value of your donor file? (Clearly, I’m not talking: “Tom’s done a good job and his staff thinks he’s a great guy” here!)
Or perhaps I should ask first: is there any kind of financial incentive in your organization for anybody that is explicitly tied to a fundraising performance metric?
Or would you and/or your organization regard such an incentive as somehow crass or otherwise inappropriate in the nonprofit setting?
I’d like to hear your views. Because given the steady decline in retention rates, I’d agree with Jacobs’ basic point … something must be wrong with the incentive system!
Tom
3 responses to “Needed: An Incentive To Fight For The Future”
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It is part of one of unchallenged myths of our sector Tom. No incentives because otherwise you will be driven by greed and not by mission. No incentives because our salary have to be “morally” acceptable, we are not in the profit sector after all. No incentives if you take risks. With the results that you can raise 10 cent or 100 million and you will be paid exactly the same and, worst, you will no really aim at a predictable sustainable income investing in retention because is better to show a new flashy campaign or shoe how many new donors we got.
I haven’t seen incentives much in my many years doing this. I DO think short-term thinking is a problem. I haven’t seen many fundraising colleagues who want to think that way, though. The pressure comes from the budget and management’s concerns, which are often based on the current year. We tend to run on adrenaline.
One concern about incentives might be who gets them. Can we really isolate one person on the team? Aren’t we trying to develop a culture in organizations where everyone considers him/herself fundraisers and relationship builders? So if the list grows, who gets the financial credit?
I do recall one year that the organization I was with did well, across the board. Giving was up, subscriptions were up… and the bottom line was better than expected. Management gave everyone a bonus in the form of a bigger retirement account bonus. That was a nice touch – and, of course, thinking long-term for the staff!
Tom,
You’ve touched a huge nerve. We continually see donor attrition ranging from 60%-70% in the nonprofit healthcare sector. Sadly, most shops don’t know their attrition rate. Would that change if there was a financial incentive?