We’ve talked about a few different definitions this week, and about what is and isn’t important.  Now I’ll pose a question to which I have a possible answer, but I look to you to give alternate definitions.

What is fundraising success?

I’m thinking there are two components:

1. Your organization’s doors stay open and you progress on your mission
2. Your donors’ total lifetime value increases

For this last, let’s remember the lifetime value definition: the total amount of gifts a person will give over their lifetime (less cost of solicitation, communication and donor care.).  If you add up all your donors’ lifetime values, you get the total amount of money you would get if you never acquired another donor and never tried a new strategy – you just hammered away with your current appeal strategy as it exists.

Back in my salad days, I had thought the purpose of fundraising is to get gifts.  And it is, in part.  That satisfies Success Criterion #1.  But this is rather like going to the bank and withdrawing money from your donors’ lifetime values – you got a gift you were often projected to get. Unless you deposit in your lifetime value bank through acquisition, testing, increasing your donors’ commitment to your organization, and so on, you will go to the bank and find you can withdraw less and less over time, until that day comes when you don’t have sufficient funds.

• So that matching gifts campaign with the gaudy response rate that is really crowding out other gifts (as happened, for example, here)? A failure.
• An onboarding acknowledgment that asks for donor identity and commitment level instead of another gift that doesn’t pay for itself, but increases lifetime value substantially from your donor knowledge?  A success.
• The acquisition campaign with a cost-to-acquire of $25 that brought in donors with a lifetime value of $20 on average?  A failure.
• The acquisition campaign with a cost-to-acquire of $40 that brought in donors with a lifetime value of $50 on average?  A success.

I worked with one organization that was acquiring donors very inexpensively.  But in running the numbers, these donors were projected to turn net positive shortly after the universe is swallowed into an unmeasurably small singularity in the Gib Gnab (technical term for the Big Bang in reverse). I remarked that one of four things had to happen:

• Lower cost to acquire
• Increase amount given per donor per year
• Increase retention rate
• Go out of business

And ideally some combination of the first three.  They had been operating like this for a year, with their vendor consistently remarking on how low their CTA was and isn’t that just great.  (Narrator: it was not great)

Thinking this way changes your decision calculus.  Focusing on filling up your donor bank faster than you withdraw funds from it allows for investment in retention and bringing in quality new donors.  It eschews short-term-ism and clarifies the mind on what has to change and what must stay the same.

Yes, you must survive the short-term.  There is no long-term without the short.  But think of this as your organizational marshmallow test – if you can wait, the rewards are all the greater.

What’s your definition of fundraising success?

Nick