Host: Ten years ago, we partnered with Adrian Sargeant and Jin Chang to sponsor some research on relationship fundraising, and the result was four comprehensive volumes, which were dense but super insightful. Now that we’re sitting down to revisit that work a decade later, it’s fascinating to see what’s remained constant in our industry and where there’s room to push the conversation forward. So, Trent, what lessons still hold, and how can we build on them as we head into 2025?

Trent Ricker: It’s interesting that it’s been so long since we worked with Dr. Sargeant. We had a lot of curiosity because, in the early days of legacy Pursuant, we always felt that relationship fundraising was deeper.

Let’s talk about the differences between relationship fundraising and transactional fundraising. Building deeper relationships builds lasting lifetime value between an organization and donors. People will support the things they care most about.

The most transactional type of fundraising might be a bake sale or something like that, where we’re involved with something for our families or kids — a traditional bake sale, where you might bring and sell some things. The people might transactionally want to buy some cookies and don’t care that the money might support something. That event might be people within a PTA or a church group, but it’s fairly transactional — I’m going to give you something, and in return, I’m going to get something. There’s still an altruistic benefit.

The concept behind relationship fundraising is building a deeper relationship with a supporter who has deep-rooted care and concern for the organization’s cause and wants to stay in the conversation. You then have a cycle that includes gratitude, stewardship, and — from a fundraising standpoint — retention and, hopefully, upgrade.

Dr. Sargeant is a leader in our industry and wanted to have some support for his research. I don’t have all that research in front of me, but he validated that relationship fundraising in the long term has a higher ROI and is more valuable. What’s changed since 10 years ago and even in the last decade is that it’s more difficult to acquire new donors than ever. Some traditional acquisition methods, such as direct mail, still rely on list brokers and a cohort of donors that are somewhat conditioned for transactional fundraising. Older generations are used to some of the acquisition and direct mail that are front-end premium–driven.

I want to be clear that transactional fundraising isn’t inherently a bad thing. We can still raise money and should engage in transactional fundraising. It’s a both-and, not an either-or. However, the lists don’t always clearly delineate whether front-end premiums or causes drove the people who responded positively.

Say my mom responds to the XYZ organization because they sent her a front-end premium of mailing labels. She writes a $20 check because she feels compelled — “I need some address labels, and this seems like a good, legitimate cause for a $20 gift.” It isn’t too much to ask if she’s doing that because she received the address labels or felt compelled to support animal welfare. Data might show that my mom supported animal welfare when she really just needed address labels at that time. Conditioning the association between a premium and the supporter can also create a false impression of deep loyalty to that organization.

We still have some clients with successful transactional fundraising campaigns that might include a calendar. The person might want the calendar, and the imagery could align with the mission, which might be of value. But to that supporter, it’s less about supporting the organization or cause and more about buying a calendar annually.

It may be worth discussing front-end and back-end premiums. A front-end premium is something I send you in advance, and you give a gift in return. Sometimes, that’s address labels. Sometimes, it’s gift cards. A back-end premium might be that if you give a gift, we will give you something in return based on the size of your gift. You see this a lot in direct-response television. There’s a transaction: “Become a sustaining supporter of this hospital, and we’ll give you this blanket.” That’s a back-end premium. “Do this, and we’ll give you that.” Some people see that as a compelling offer.

In some cases, with closed-loop versus open-loop philanthropy, the benefit might be deemed premium, but it may not necessarily be transactional. For example, I care about the arts. If I give you money, I might get access to tickets earlier than others or be able to buy season tickets. That’s a premium, and it has a transactional component. But people who engage philanthropically also do so because they love the arts. They’re benefiting and engaging.

One of the challenges we faced 10 years ago and still face today is that acquisition is difficult and expensive, particularly through traditional direct mail efforts. We still have some clients who can get a solid ROI on good response rates with a transactional fundraising premium.

Dr. Sargeant’s studies pointed out that the loyalty, longevity, and lifetime value of individuals who respond to the transactional element are lower than those who respond to the relational element. The second point validated by the study 10 years ago is that retention rates are declining. There are fewer donors around the same dollars.

We might not be counting all those donors because they’re in different places now, from donor advised funds to social media. Retaining them is becoming increasingly difficult. So, if it’s harder to acquire donors and harder to retain them, it strengthens the argument that we need to go deeper with our most loyal supporters — those whose care and concern most align with our mission. To do that, you must engage in a deeper level of relationship fundraising.

Dr. Sargeant’s third point was about millennials being wary of overt asks or asks in general. I think that’s true of the younger generations. Leah, do you have thoughts on that as it relates to acquisition and retention? We’ve talked about that quite a lot.

Host: That’s a great question. Many of the trends we were beginning to see 10 years ago are now practically mainstream. One example that applies specifically to younger donors is the rise of hybrid nonprofit and for-profit models like B Corps or the buy-one-give-one approach popularized by brands like TOMS and Warby Parker.

Younger donors often blend philanthropy with consumer behavior. So, when they buy something like glasses or shoes, they feel like they’ve contributed to a cause without making a separate or traditional donation. This mindset creates a challenge for nonprofits, which often think of fundraising in traditional black-and-white terms. Meanwhile, donors operate on a spectrum balancing personal benefit with altruism.

It’s not always easy for nonprofits to pinpoint what motivates these donors to give directly to their organization.

Trent Ricker: That’s a good observation, even if we reflect generationally. Go back to my mom, who’s in her early 80s. Sixty years ago, when she was in her 20s, the philanthropic journey was very different than today. The community and peer-to-peer were much more organic.

Consider how it’s evolved over the years. Think about the 20-year-old today — where they get their information, how they feel engaged. Younger generations are engaged in making the world a better place, which is great, but they can do that in different ways. Go back to your comment about B Corps. They want to build relationships with companies, which is interesting. It’s not just transactional commerce; it may also be altruistic. If I buy from TOMS and it makes me feel good, it’s a good product. I also know that when I buy from TOMS, they’re doing something good to make the world a better place. That’s relationship commerce that’s transformational.

As we’ve talked about with some of our other podcast guests, this is a way to be philanthropic without writing a check to an organization. They might be providing shoes to people in third-world countries or clean water. They’re being philanthropic through their transactions. So, I agree with you that it’s becoming more complex.

We need to evaluate how we can build relationships. The digital introductions deepen those relationships through the omnichannel strategies we use to communicate with our supporters — being good stewards of how we’re using the funds to advance the causes they care about, continuing to keep the cause in front of them in the case for continued and advanced support.

We’ve talked about working with your supporters so that you become a philanthropic priority of theirs. Most people have five or fewer philanthropic priorities. They may be generous in many different ways, but their philanthropic priorities are more lasting. Those might be the causes they give to, if not consistently, through monthly giving, then regularly. I might not give a monthly gift, but I will probably respond positively annually or more often to your appeals. This usually leads to estate gifts, which is important if we’re engaged in transactional fundraising. However, estate gifts don’t necessarily lead to the same level of planned giving.

We see a correlation between annual giving at the bottom of the pyramid and larger estate gifts that organizations were either aware of because they cultivated them or unaware of. “This donor gave us $200 to $500 a year consistently for 15 or 20 years, and then they left us a bequest of $50,000.” That’s relationship fundraising at its best because it clearly exemplifies that the organization was a philanthropic priority.

Those principles are still more pronounced than ever. Still, they don’t negate transactional fundraising because it may be how we introduce our cause to a prospective supporter with some alignment. Even if my mom wrote a check to compensate for a front-end premium, that doesn’t mean she doesn’t care about that mission work, health work, or animal shelters. It gives us an opportunity to get in their mail.

When people support a closed-loop organization, they usually benefit from their investment. We think about community hospitals, healthcare access, or arts and culture. Membership programs are great examples — being a member of a public media station gives me access to streaming content.

So, there’s a transactional element, for sure. I’m paying for resources. I’m paying to buy a ticket to go to the museum. I’m a member, which gives me premium parking and free guest passes or whatever else it might be. That’s still very positive because, again, you have the benefit and somebody who cares deeply about that. They’re there for a reason. They go to the zoo. They might want to support the community hospital to have high-quality healthcare in their community. Major donors want access to concierge healthcare or other benefits in that closed loop.

Open-loop philanthropy occurs when we give, and someone else benefits from the donation. For example, we might give to an organization that provides clean water in third-world countries or does global missionary work for a ministry or refugees. Poverty organizations are a bit different.

In relationship fundraising, we have to consider the continuum—a less-connected premium versus a benefit for a closed-loop organization versus the altruistic nature of an open-loop organization. However, we still see great success in those organizations that provide appropriate stewardship. I’ve seen calendars, gift cards, and holiday cards work well to keep people engaged. But it’s not about what I provide you that results in a gift. We need to try to build loyalty and depth as it relates to relationship fundraising, and that comes back to the principles you were talking about.

Host: In your experience, why do organizations with this dual benefit often struggle to communicate the open-loop value and the impact on those secondary beneficiaries to their members and donors?

Trent Ricker: That’s a great question. Public media is a good example; you could extend this to the arts and culture sector. You have an annualized membership that has benefits associated with it. For many years, that renewal of membership had created some consistency. However, public media has much more competition today than in 1994, when we had the major networks plus public broadcasting. And on the radio, you had a handful of local radio stations plus public radio.

Today, there are countless networks and streaming competitors in that landscape. They’re becoming more commoditized. So, to your point, the volume of the benefit needs to be amplified. Arts and culture organizations probably have a bit more of a benefit because you don’t see many private-sector zoos popping up. However, you do have private-sector entertainment popping up. Entertainment complexes and concerts compete with what otherwise might be traditional arts and culture nonprofits related to the opera or other things that might need public support to continue cultural longevity.

It’s an excellent point. Acquiring a donor may be one thing, so let’s hit on that for a minute. The acquisition component being a transactional element may be okay, but what are you doing as an organization to begin having the conversation to transition that supporter into somebody who’s more relational? Some people might fall out, and that’s okay. Some people may become members of that museum because they were on vacation, and it was a good deal to become members and get those benefits. We got them as patrons as opposed to supporters — a big difference.

Think about a gift rather than a donation or long-term support. There’s a big difference between giving a gift and making a transaction versus becoming an ongoing supporter.

Closed-loop organizations probably need to do a better job. Let’s take collegiate athletics as a last example. Much of the value proposition is, “Give to us so you can get access to season tickets for your alma mater football team.” Part of that money funds scholarships to individuals who might not otherwise be able to attain higher education without the athletic program in place. But if I only look at the quid pro quo, how do you transcend beyond it?

Say the University of Colorado athletic department wants me to renew my season tickets. I live in Dallas now, so that value proposition is meaningless to me. I’d need to be convinced to support the University of Colorado. So, you might say they need to recruit the best athletes and have great athletic facilities to stay competitive. At the same time, the athletes benefit from an education — many won’t become professional athletes, so we’re providing this education to them thanks to your generous support of the University of Colorado athletics.

In general, closed-loop organizations need to do a better job with the open-loop concept — the philanthropic nature of what you’re giving for that goes beyond how you might benefit.

Host: Even in the case of college athletics, how often do organizations truly emphasize the philanthropic component of giving? For instance, a support letter might mention that your membership helps fund scholarships as part of a bulleted list of their benefits, but is that ever highlighted as a standalone opportunity? If you’re not attending the University of Colorado games, how often would you receive an email, letter, or call that says, “We know you care about our team. Have you ever considered supporting this dedicated scholarship fund?”

How many organizations pull out that component and offer it as a clear, separate fund for donors to direct their giving in alignment with their values and priorities?

Trent Ricker: That’s right. Going back to relationship and transactional, it’s an important part when we’re dealing with the bottom of the pyramid and talking about annual fund, general giving, and smaller gifts from more donors. However, we’ve also talked about flipping the pyramid so it becomes a funnel.

Let’s not forget that the acquisition through our annual fund at the bottom of the pyramid should create cultivation, whereby we have permission to continue a conversation, and we’re cultivating folks in the mid-level, major giving, planned giving, etc. To that end, I’m a big proponent of making the transaction as easy as possible to get that donor to give their first gift. Then, it’s incumbent upon the organization to get that second gift as quickly as possible by creating a case for why it’s essential. “Thank you for your gift. Here’s what it did. Here’s a little more about who we are, why we’re important, and how you can continue to help.”

Disaster relief is a great example. A hurricane in a part of our country creates a catalyst for people to give transactionally to that need. In most cases, people might say, “Oh my gosh, those hurricanes in North Carolina looked awful. I’m going to make a $100 gift to the Red Cross.” The Red Cross may not be my philanthropic priority, but I will respond when there’s a need. A transaction is taking place.

In a disaster, the Red Cross gets a lot of earned, paid, and owned media. For the most part, they get a ton of earned media — a lot of media exposure — and many gifts. To build a relationship, they might say, “Thank you for your gift to help people in North Carolina. X percent of our relief services go to people in need throughout the year, such as tornado or flood victims. Your ongoing support means a lot. Would you consider a year-end gift or being a sustaining monthly supporter of the Red Cross and our work?”

Some people don’t like giving their personal information and want it to be used judiciously. That’s changed over the years; we must confront that as a nonprofit industry. We need to earn the right to have your permission to continue the conversation. Some privacy laws are trying to restrict that as a default, but even beyond that, some people may say, “I’m going to unsubscribe from communication with you. Please don’t send me any more emails. All I really wanted was the address labels.”

I have no problem with transactional fundraising, but it has to be a both-and. With acquisition and retention being more difficult, we must build deeper relationships with those who are aligned with our mission and send more pointed messages to those with the capacity and proclivity to give to similar organizations.

Host: Given the changes in the philanthropic space, the economy, and consumer behaviors, what’s at risk if nonprofits don’t evolve? Let’s start there. What are the stakes for not making that shift?

Trent Ricker: It’s a dangerous cycle because your churn will be high, so you have a higher coverage ratio of supporters you’ve lost who will need to be replaced. Then, your costs go up, and you’re fishing in smaller ponds containing fewer fish. The stakes are high for those who have traditionally focused on transactional acquisition strategies. Again, it’s not a bad standalone strategy, but the stakes are extraordinarily high if you’re not diving deeper and trying to build sustainability and loyalty. It’s basic economics.

Older generations might have been more conditioned 10, 20, 30, or 40 years ago to interact transactionally with the cards, mailing labels, and other front-end premiums. However, giving habits have changed as they’ve aged. The generations coming up aren’t responding in the same way. I would shift that because sustaining giving, subscription giving, and monthly giving have become more critical over the last five to eight years. Why? Loyalty. People won’t sign up for monthly giving unless they’re philanthropically aligned with that cause. Moreover, costs go down significantly for the organization to renew that person.

An old-school method might be to acquire through renting a list, trying to engage in a transaction to get the first gift, getting permission to have the conversation, cultivating that individual to give a second gift, and running campaigns. We must shift that to a sustaining gift, which today’s consumers have been conditioned to through a subscription-based mindset. “I’m a member of XYZ organization, and that membership comes with a monthly deduction from my credit card.” Commerce has conditioned us, and that’s a considerable focus shift.

It isn’t easy to acquire at a sustaining level for the first gift. That’s why you see it in direct-response television — that’s the only way the value proposition works. To spend that kind of money on direct-response television, you’ll have a negative ROI. In most cases, the positive ROI comes from donors becoming sustaining givers. You’ll see that $19 a month, and the math will play out. Depending on the organization, sustaining giving lasts between 10 and 15 months, sometimes longer. Still, they’re unlikely to give a monthly gift unless they’re missionally aligned — even if there’s the transactional element of a back-end premium.

The focus has changed, and the stakes are extraordinarily high. The retention churn cycle and the need to replace them with a transactional donor who lacks loyalty and sustainability mean your costs will continue to rise over the years.

I’m not totally sold on the idea of the donor pool shrinking; I don’t know that we can track them as easily as we used to because of privacy laws.

Host: But it doesn’t mean the overall pool of donors is shrinking.

Trent Ricker: I think that’s the best way to put it. I still don’t think we’ve lost the philanthropic generosity that exists. And, obviously, there are more people in the country and the world. I still think they’re generous, but they have to know you and give you permission to continue the dialogue. That’s the only way I can build a lasting fundraising relationship with you — to know who you are and be able to have a conversation with you. So, that’s important. That’s how the stakes have changed as well.

Host: That’s a compelling point. It’s not one we should dwell on for too long, but it’s worth highlighting. In today’s disconnected world, there’s a tension. On the one hand, people desire privacy and want to be less known. For instance, when I adjust my privacy settings on Instagram, I see a warning that if I toggle something off, I’ll receive fewer personalized ads. Part of me thinks, “Great. I don’t need more ads designed to take my money.” But on the flip side, irrelevant ads are just as frustrating because they don’t resonate with me, and I’ll see them anyway.

This dichotomy creates a challenge for anyone in advertising and marketing, whether for a for-profit or nonprofit organization. People appreciate being understood and targeted meaningfully but are also wary of being too known. So, how do we navigate that balance?

Trent Ricker: You’re exactly right. Go back to Seth Godin, who talks about personalized, relevant, and timely messaging in his permission marketing works from the early 2000s. It’s still as crucial as ever.

We’re having this conversation a few days before Thanksgiving, leading up to Black Friday, Cyber Monday, and Giving Tuesday. Many Black Friday sales started this last weekend. There’s a lot of shotgun communication from marketers. I might not have heard from a particular merchant for months, but they have very little to lose by sending me an email or text saying, “It’s our best sale of the year. If you’ve ever thought about XYZ, now’s the time.” When I think about privacy in general, getting relevant messages served to us either by text, email, or social media is still extraordinarily valuable. If I’m perusing social media, over 80% of the stuff I get served is pretty relevant. They do a nice job. The merchants don’t violate the inherent trust.

It’s creepy to some extent that they’re watching my behavior, but I also welcome the positive benefit of being served relevant ads that align with whatever interests me. I’m a golfer, and a lot about golf — travel, equipment, books, instruction — would be relevant to me. I may be going through a season of fitness or travel interest in a particular part of the globe, where if you’re not using that data in a relevant way, it becomes noise.

Nonprofits need to follow the lead of the for-profit space as it relates to analytics and insights, although they have a ton more money to apply their marketing insights. The shotgun approach that lacks relevancy can create some brand backlash during this week. Suppose long-tail merchants interrupt me via text message. In that case, I’ll probably have more of a negative brand connotation with them than those who consistently communicate with me in a welcoming fashion because I either have loyalty to that brand or cause. We’ll see that coming up next week for Giving Tuesday.

If you ever gave to a nonprofit, they may text you on Tuesday. My question is, how have the organizations that have built relationships with you and you’re more loyal to been communicating to you via text, email, and social over the last 12 months as opposed to the episodic ask on Giving Tuesday?

I don’t give out my phone number often because I don’t like being interrupted by texts. I have a few different emails. I might give my personal email to those who will be a first-line filter, and I give my secondary email to merchants and others who are one-click removed. People are much more protective of their personal data. So, how do we break through that to go from transactional to relational? It’s a good question, and it’s changed quite a bit over the years.

Host: Before we move on, is there anything else from the characteristics of transactional fundraising versus relational fundraising that would be valuable to touch on? I want to make sure we’re covering the key insights that might help organizations better understand the shift they need to make.

Trent Ricker: We talked about focus. Instead of donor retention, you’d go from single gifts to sustaining gifts. Sustaining is so important. We want to set and forget for them, but not for us because we still need to engage in stewardship and conversation. If they’re sustaining, we don’t have to work as hard to get that subsequent gift.

A few measures are still true because of the short-term ROI. We work with some clients who might be more subscribed to an acquisition mentality related to traditional front-end premiums. They look closely, and it’s important. However, the creativity associated with those must be related to the immediate ROI, where some other investments we make, such as stewardship and conversation, lead to lifetime value in relationship fundraising. You need more of a long game with that to build loyalty.

Timescale makes sense for the short term versus the long term. Orientation makes sense because we’re looking more for the response rate and the size of the gift in the short term versus the longer term. Cumulative giving over the last 12 months. Those are things I still wish organizations would pay closer attention to. The concept of RFM: recency, frequency, and monetary value. How recently did they give a gift? How frequently did they give a gift? What’s the size of the gift? Either the largest or the size of the most recent gift. It’s still very important.

I’d start by looking closely at the value of the cumulative gifts somebody’s given us over a trailing period: 12 months, 24 months, 36 months. The longer the relationship, the more important it is. The concept of stewardship becomes increasingly pronounced and essential, as does younger generations’ need for an almost instantaneous understanding of how the gift will work. Videos from the fields that can be posted quickly are impactful. I would emphasize that a lot.

Even if you start with a transaction, leveraging stewardship to shift toward a relationship is critical today. “Here’s how your gift has made a difference. Here are other ways you can continue to help because the need is still great. Would you consider making an additional gift today or becoming part of our monthly club or membership so you can continue to support those in need?”

Host: I’ve noticed a massive shift in information over the last 10 years since 2015. For example, with Amazon, I can track my package down to the truck it’s on and know exactly when it will arrive. That level of detail builds trust. I can see how my order is handled with care. Yet, in the nonprofit space, many donors still feel like their gift disappears into a black hole and have little understanding of how it’s being used.

Trent Ricker: Part of the reason Amazon does that is to build trust, of course. You may or may not be home, and you’d like to know when your package has been delivered so you can take it off your porch. But they’re also significantly benefiting by engaging you. Their brand is in front of you. You’re opening the app more times. They can serve you relevant ads within their app. They’re now tracking how engaged you are with that brand.

So, let’s consider that from a nonprofit standpoint. I can keep you further engaged through affordable stewardship mechanisms like social media or mobile engagement. I can tell you multiple times per month how your gift made a difference, and it’s inexpensive for me to do this when I don’t have my hand out asking for another gift yet. But now you’re engaging with and seeing my organization’s brand in front of you, and it’s rewarding you. That is a transaction.

People give altruistically, but even if they’re not receiving something of benefit, they’re receiving the feeling of doing something good for others. I can reinforce that through stewardship: “Hey, here’s another way your gift made a difference. Here are some pictures of us delivering food to those in need in North Carolina. If you gave to the food bank, thank you so much. Here’s a testimony from one of the recipients who got a warm meal today, and they’re thankful. Here’s a quick video from the field that’s engaging you with my brand.” It’s stewardship in front of you, and that’s building relationships.

Some people don’t want to support the food bank long-term; they just give because of an acute need. We work with many food banks. During COVID, the number of new donors to food banks rose significantly. We call them “COVID donors” because many weren’t long-standing sustaining donors of human services like food banks, which have an ongoing daily need. However, the food bank network in the United States still has an opportunity to convert those who responded to a disaster and, through stewardship, continue to thank them for giving during a difficult time. “Did you know we help so many neighbors every day?” We can continue to deliver that through stewardship.

We talked about donor service 10 years ago, and I would emphasize stewardship much more now. I’m sure Dr. Sargeant has done some studies on stewardship specifically. It’s a more important part of giving today than ever.

Host: Absolutely. Let’s shift to discussing case studies of organizations we’ve helped transition from transactional to relational fundraising. Shifting to a relational approach requires a radical change in mindset, goals, alignment, communications, metrics, tools, and expectations. What were the key milestones and mindset changes in that journey?

Trent Ricker: It’s an arc. We learned some lessons in testing with some of our clients. It’s not easy to just remove transactional fundraising altogether. Where do we acquire today? Where do we have an opportunity to have conversations with prospective new supporters?

Some of that’s organic. If you’re a health organization, you’ll have prospective inbound new supporters. If you’re a hospital, you’ll have patients that could become supporters. If you’re a cancer-fighting organization, there will unfortunately be people diagnosed with cancer today, and they and their families are going to look for information first. They may then take the fight on and say, “I want to support organizations that are trying to either care for or cure this awful disease.” So, there’s a pipeline of new supporters. You must think about where you’re acquiring.

On the flip side are some of the other traditional, tactical ways of fundraising acquisition, like list rentals. We do a lot of digital advertising for clients, which is appropriate because you can now get more relevant marketing messages to specific individuals we know are aligned with the positives we represent. That’s a better use. But if you’re not running lists in those cases, you must get permission to have a conversation that may lead to a mail piece or direct-response television ad asking for a gift. Go to this website, scan this QR code, or call this number.

Digital acquisition is a bit different. It bridges that chasm first to get permission to continue a conversation and then ask for a gift or sign this petition. “Take a stand to fight hunger. Would you consider bringing a can of food to the football game with you this weekend or signing this petition for the farm bill? Would you consider giving a gift to North Texas Food Bank?” I can engage you further to become a supporter and build a relationship in many ways. It’s a radical change in the sense that our old-school way of traditional acquisition is changing.

We need to think about an arc. Getting that first gift might be transactional, but how are we then stewarding that gift and working toward the second one? After my first gift, how soon I can get the second one or convert somebody to sustaining is critical. Then, how do I engage in stewardship in a way that keeps you engaged and loyal to me? We call them “key multiyear donors.” If they’ve been donating for three years or more, they’re key multiyear donors.

The metrics and expectations are important, but the communications in that strategy have evolved as it relates to relationship fundraising in general.

Host: I agree. It requires a long-term focus from the outset of the relationship. The key is figuring out how to capture their loyalty right away.

Even with premium-driven fundraising, it’s possible to tap into emotions. However, given the intense competition for attention and resources today, it’s crucial to be much more intentional about incorporating emotional appeal regardless of the fundraising model used.

Trent Ricker: It’s a numbers game. Say you have 1,000 donors giving you $10 each, so that’s $10,000. Traditionally, if it’s transactional, I might be lucky to keep 30% of those donors and get a second gift, which means I have to replace 70%. I won’t dismiss transactional fundraising as a way to get the first gift, but how we engage is essential. I need to lift my retention rate. If I only have 500 supporters, but they’re giving me $21 on average, my ROI is already higher. I have half as many donors but more dollars: 1,000 times $10 versus 500 times $21. That’s what we’re talking about — today, there may be fewer donors, but they’re giving you more dollars and are more deeply engaged.

In some tests with our clients after the study, we learned that removing some of the premium from the transaction too quickly may not be a traditional acquisition. The March of Dimes still includes a dime with their packages, and it still works very well. Don’t mess with something that’s been proven.

Here’s the question: Knowing that some of the more transactional people may give one gift and be done, how will you convert them? Lifetime value is how you keep a positive ROI in the long term. How do you do that? You must have a relationship fundraising strategy to get to the second gift or a sustaining gift as quickly as possible. Move them to a multiyear donor or key multiyear donor beyond that.

Host: Shifting our focus to more practical applications, what services and strategies would we offer an AG&P client looking to make this transition?

Trent Ricker: Data is more important and more readily available than ever. An omnichannel approach to acquisition is critical. Through GivingDNA, our proprietary software platform, we can access the general population and refine some segments and lookalike cohorts from your existing loyal donors. One of the first things you do is ask, “Who are loyal donors, and what do they look like? Where do they shop? Where do they live? What are their political beliefs? What are their other interests? What other organizations might they give to?”

Ten years ago, that data was pretty expensive. Today, it’s not nearly as expensive. Acxiom is one of our data providers that informs GivingDNA. We once had over 400 data points and would pick some of the most relevant to inform generosity. One of the most important things is to let data drive some of your strategy, whether acquisition from a digital platform or direct mail.

Second, you must diversify your donor set if you have an aging donor file. Meaning you need to connect with next-generation donors. You can’t rely only on traditional direct mail list rentals, which are filled with later-generation supporters. It’s a both-and, not an either-or. You have a declining constituency in that they’re not giving as much as they age, especially in this economy. People in their aging years may choose to be more judicious with their savings, given inflation and uncertainty with Social Security benefits. You don’t want to acquire a bunch of 75-year-old donors.

That doesn’t mean we wouldn’t still take on a transactional component; however, recognize that the omnichannel component of digital acquisition will also be necessary, which changes the game about the short-term ROI. You must invest in brand recognition and permission-based communication, which allows you to continue the conversation via email, text, and social media.

One of the easiest things to do is get people to sign up, follow us, and like us because then we’re in their feed. As they interact more with us in their feed, we can lead them to an ask at an appropriate time, like Giving Tuesday. When we come to Giving Tuesday, many listeners will likely see a solicitation in their social media feeds. They haven’t given regular donations to those organizations but have followed them or given one gift.

An acquisition strategy is critically important for learning how to acquire donors who will be loyal to your organization. I would rather be smarter strategically and acquire from a smaller pool of donors who are more likely to give me subsequent gifts and be loyal to my organization than use the old-school shotgun approach, where I have to get a strong response rate on this piece of mail and a certain average amount on this one gift.

The next strategy we would provide for an organization would be a communication strategy for the post-first gift welcome and cultivation series. “We appreciate your gift. Here’s how your gift made a difference. Here are other things we do and other ways you can help.” This is the incubation period for first-time givers leading to the next ask. What’s the next desired action we want that constituent or supporter to take?

In an acquisition, it’s the first gift. In a digital acquisition, it might be to give us permission to have a conversation with you. The next action might be giving that first gift, and the following might be becoming a sustaining giver. What’s the ultimate desired action? It may be for them to make an estate gift or become a brand ambassador and amplifier, sharing your social media so you can lower your costs and reach more people. Regardless of the specifics, it’s an acquisition, cultivation from the first-time gift, stewardship, retention, and then upgrade.

In strong relationship fundraising, it’s essential to fish from the right pond of those more likely to be loyal supporters and get first-time gifts from those more aligned with our mission and with a higher capacity to give. Leverage campaigns that are more specific to the lower or mid-level. Say someone has given a $50 or $100 first-time gift, and then we recognize that they’re philanthropic to organizations like ours. How do we then make the case that our organization is worthy of more of their support?

In many cases, I like to think in terms of abundance. People can give more if the case is adequately presented, and generosity is inherent in all of us. But don’t kid yourself. There’s competition for those dollars — lots of competition for cancer organizations, animal welfare organizations, food banks, etc. It’s competitive out there for giving.

Host: The landscape will only get more competitive, especially with talk of privatizing services and potential government spending cuts. With all these changes happening, nonprofits need to stay adaptable.

Donor expectations are shifting, and sticking to business as usual probably won’t cut it. Instead of assuming things will stay the same for the next five or 10 years, it’s essential to plan for change and be ready for whatever comes next.

Trent Ricker: Absolutely. You hit on something important. We’re in a post-election cycle. Most Republican administrations are typically for less government, which sometimes means fewer services that the government has otherwise provided and now must be privatized through nonprofit organizations. So, take your politics out of this and recognize the opportunities to communicate to your constituency.

We live in a politically polarizing world right now. It’s less about that and instead saying, “Hey, our cause is more important than ever because of these reasons.” It’s the difference between a transaction and this concept of “rage giving” — “Look what happened; give now.” It’s very episodic. I have no problem with rage giving or Giving Tuesdays or giving days. It’s what you do with it next to engage that supporter and filter out those more likely to be a continuing supporter of your organization at a deeper level.

It also goes back to the data from the Fundraising Effectiveness Project. Again, we might not be keeping track of all those donors, but the data shows more giving from fewer donors and headwinds related to the top-line number. Most of our organizations have fewer donors, but their top lines continue to grow. The only way that happens is to get more gifts from the people you have.

So, during the acquisition process, why not engage in a relationship fundraising mindset and be smarter about leveraging analytics? That’s what I also love about digital acquisition. We can be very judicious about where we put our message. We can be very specific about geotargeting in our social media messaging and try to get people to take action and engage in that first transaction, leading to relationship fundraising.

Host: We talk a lot about being donor-centric, and that’s at the core of everything. Even when we’re focused on acquisition, the language we use still matters. Premiums and packaging, especially in direct mail, are key to getting people to open and engage with our materials. But more than ever, the copy must make a compelling case for support. It’s all about connecting with the donor’s motivations and making them feel like their contribution truly matters.

Trent Ricker: If I’m giving you something for free, whether it’s a front-end premium, a back-end premium, or benefits associated with a closed-loop organization, I have to work less at my case for philanthropic support.

On Giving Tuesday, most of the value proposition will be around matching gifts, as it should be because it’s a sale. “Give us $50 today, and through the generous support of some of our other donors, that $50 is turning into a $150.” So, it’s basically a discount. “You can make a $150 donation today for only $50.” But once the offer fades, what’s compelling me to give to you without you giving me a benefit in return so that I’m truly giving altruistically?

That can also take place in relief during a major disaster. If an organization says, “We’ve had a very generous donor step up. If you give over the next week, your gift will be matched up to $1 million.” That creates urgency and timeliness, two essential elements to everything from fundraising to commerce.

However, I do think we need to do a better job at packaging and copy — making it less about the premium or what I’m giving you. Otherwise, we’re conditioning the individual to say, “If I’m going to give you a gift, what are you giving me this month?”

In arts and culture or public media, there are members and member-donors — those who have donated beyond their membership giving level. These are more valuable because they understand the philanthropic need beyond the benefits they get as members. Obviously, the benefit doesn’t correlate to the size of the gift. That won’t improve my seats at the opera or an athletic event.

Host: We had this conversation last week with a smaller group focusing on hospital donors. In the hospital space, there’s often a strong emphasis on the idea that donors want to give simply to see their name on a plaque or a wall. It’s still a very transactional mindset for some. Donors can feel it’s important to have their family’s name recognized as part of a larger giving campaign.

Even when organizations solicit larger gifts, they can still approach it transactionally, focusing more on recognition than cultivating a deeper relational connection.

Trent Ricker: It’s a good point. I don’t want nonprofit organizations to think that anything transactional is bad. But suppose we become overly dependent upon the transaction, overcoming the true case for philanthropic support. In that case, you’re conditioning everything from the supporter to your board and program in a way that’s hard to sustain. The stakes are very high, and it’s getting much more expensive to do that.

So, if you have a benefit, provide it because it should close the deal. As you work your way up the pyramid, the benefit becomes less important than the altruistic nature of what people are doing and their mission aligning with their support. That goes back to being smart about where we’re acquiring donors. I want us to acquire donors who are more likely to transcend beyond the transaction. There we go: transcend beyond the transaction.

A transaction isn’t a bad way to get that first gift. Let’s try to fish in the ponds that already have people who might align with what we provide. Grateful patient programs are obvious. If someone had a patient experience at a hospital, hopefully, they would recognize that the outstanding medical care they received is worthy of attention. We try to capitalize on that. Sometimes, it’s “thank a doctor,” “thank a nurse,” or “recognize them for the work they did.” Then, it could be, “Did you know we engage with world-class research to help here?” Or if it’s a community hospital, “We help those who might not be able to pay their medical bills.” “Our foundation helps provide services.” “We’re trying to become a healthier community.”

Engagement is another aspect that drives relationship fundraising. What can we as an organization do to have constituents engage with us more deeply, whether virtually or physically? As they engage with us, their likelihood of continuing to support us increases.

We spoke with charity: water not long ago about its immersive experience. It’s difficult to take people to third-world countries, and it’s a significant expense and time investment. But we know that people give more when they can experience acute needs and support outcomes. The organization is investing in virtual experiences to bring that to its supporters.

That comes back to engagement and stewardship, completing this arc from acquisition to repeated giving and then the lifetime value of a truly engaged, sustaining multiyear donor.

Host: The key word here is intentionality. When we think about the true meaning of a relationship, there’s always a sense of purpose behind it. It’s about understanding the outcome you want from putting time and emotional energy into connecting with someone. Whether it’s a partner or a friend, it’s about looking at the long term, knowing that the investments might be small in the beginning, like getting to know each other. But over time, the relationship grows into something unique that benefits both people.

Sure, there might be small exchanges like bringing soup when someone’s sick or dropping off a lasagna when they have a baby. But even in those moments, there’s a deeper connection. It’s all about starting with the end in mind and acting in a way that nurtures the relationship over time.

Trent Ricker: Maybe this is a good place to end. You reminded me of the old JFK quote, “Ask not what your country can do for you but what you can do for your country.” That’s the end goal for the most loyal supporter — that their mindset shifts from “What I can do for you?” or “What you could do for me?” in a closed loop to “How can I move beyond just this gift?” “How can I support you more broadly?”

An ultimate relationship supporter is an ambassador for your organization. They’re amplifying your message, and you’re equipping them. So, when they get your social post on Giving Tuesday, they repost it without prompting and say, “I’ve been proud to support XYZ organization, and I encourage you to do the same during this season of giving.” They’re being true ambassadors.

It goes beyond that first gift when we had to ask if someone would consider giving us a gift for all these reasons. It shifts so that a donor might ask, “How can I better support you beyond the loyalty of sustaining financial support by also being an ambassador and amplifying your message?” This is particularly true today when I can click a button and extend a message from an organization that means a lot to me to hundreds, if not thousands, of people in my network.Additional Resource