The notorious Willie Sutton once said he robbed banks “because that’s where the money is.” Fundraisers in nonprofit healthcare have long relied on major donors for the same reason, with gifts of $5,000 or more driving a 69% increase in total donations during the past decade.
That major gifts data is from the Fundraising Effectiveness Project compiled by the Association of Fundraising Professionals’ (AFP) Foundation for Philanthropy.
Major gifts remain a pillar of healthcare fundraising today, but cracks in the edifice are starting to show amid signs that giving by big donors might be slowing. The stakes were raised by inflation-adjusted data in the Giving USA 2023 report showing a 10.5% decline in overall giving last year and a 13.4% decrease in individual donations following two years of record-breaking giving during the pandemic.
A return to pre-pandemic levels of giving means kicking the can down the road on the problem of stagnating donor retention and new donor acquisition can no longer be an option, particularly as foundations and institutional donors that stepped up during the pandemic continue to pull back.
“What the Giving USA data show is that the number of donors is down, the number of dollars being given is down, and the numbers of people giving for the first time are all down,” said Beth Hatcher, founder and CEO of Chicago-based digital philanthropy and communications agency Beth Interactive.
The reasons aren’t hard to deduce: “Dollars are tanking because everybody’s been doing one thing for a long time and that’s relying on major gifts. But what they’re missing is the future of their giving programs, which take time to develop,” said Hatcher. “These are not donors giving a lot of money, but it’s about the lifetime giving you’re going to get with these donors over the course of long-term relationships and retention.”
The challenge for nonprofit hospitals and healthcare foundations is to find and keep a wider pool of small to medium-sized donors, to engage these donors through smart segmentation and stewardship, and to employ diversified fundraising strategies capable of providing a strong base for continued future cultivation of these donors. A multi-channel approach to retaining current donors and attracting new ones won’t provide an instant fix, but its importance to long-term fundraising success can’t be overstated. The benefits of this multi-channel approach were the subject of a digital philanthropy seminar Hatcher gave during the recent Association for Healthcare Philanthropy’s annual conference in Orlando.
Most healthcare nonprofits today make use of some form of digital fundraising such as email, social media, and text messaging, even though print continues to bring in more dollars overall, she noted. The balance is continuing to shift in the direction of more digital, but “more” in this case doesn’t necessarily mean “better” if implementation is done via a hit-and-miss approach that lacks structure or coordination with traditional print marketing. This was underscored by the M+R Benchmarks 2023 report that showed the health sector saw a 3% decline in online revenue last year.
Those bucking the trend of declining online revenue did so by deftly employing a strategic mix of digital fundraising anchored in the success of a traditional print marketing program. “One of the things we recommend if you can get your new patients’ emails is to send them an e-newsletter that lays the groundwork for further education and stewardship,” Hatcher said. “Start to educate them by welcoming them to your foundation before you start asking them for money.”
The difference this made was borne out by what Hatcher said were client results last year showing print-only donors without an email address on file produced an average gift size between $120 and $175 per person. By contrast, donors who were engaged via a multi-channel approach of both print and email produced an average annual gift amount of $280 to $350 per person. “Simply adding that second channel substantially increased giving by up to 132% in some cases,” Hatcher said.
Had email addresses been available for all donors, the difference would have raised the total dollar amount of her clients’ year-end gifts by thousands of dollars or more with a total percentage increase amounting to between 12% and 21%, Hatcher said.
The majority – 75% – of patients who became new donors also did so within the first four months of being contacted, suggesting time is literally money when it comes to patient prospecting. “But it also means if you gave up on the others who didn’t donate after four months, you’d be missing out on 25% of your donors,” Hatcher said.
While acknowledging the diminishing returns that come with stale lists, Hatcher recommends continuing to engage with potential donors for up to two years. The takeaways for healthcare fundraisers: “Monitor email engagement as well as giving. Combine education and cultivation with appeals for best results. And continue adding patient and prospect lists to further build your donor base,” Hatcher said.
