Why Does Relationship Fundraising Matter Now?

Ask any fundraiser the secret to their success, and they’ll say one thing: relationships. For more than 30 years, forming deep connections with donors has more or less been the sole course of action — especially for securing major gifts. But as online giving continues to grow, does relationship fundraising still matter?   

In 2015, we published four volumes of research on the topic. Rogare, the fundraising thinktank at Plymouth University’s Centre for Sustainable Philanthropy, collaborated with researcher Dr. Adrian Sargeant, Pursuant (now Allegiance Group + Pursuant), and Bloomerang to dig into the theory, social psychology, trends, and practices of relationship fundraising.  

It’s only been 10 years, but a lot has changed. Amid the rise of GoFundMe campaigns and set-and-forget subscription models, we’re again asking the same question: Is relationship fundraising still important? 

We recently published a new review of the research. The verdict? Relationship fundraising may be more important now than ever. 

What do we mean by “relationship fundraising”? 

Relationship fundraising is an approach that prioritizes donor relationships over any single donation. It is defined by: 

• A longer-term focus on donors, with a belief that they should not be exploited for short-term gain.  

• A two-way flow of information to ensure that both the organization and the donor are mutually engaged in and benefiting from the relationship. 

This differs from transactional fundraising, which primarily focuses on soliciting donations and is more of a short-term strategy. Organizations often use transactional fundraising techniques to get a quick influx of cash. Think, offering a premium for giving, such as a calendar or mailing labels.  

Many nonprofits see great success with transactional fundraising. The problem arises when a drive for quick and easy donations is the only tool in your toolbox. With no relationship to fall back on, donors will have little reason to stick around. 

“Transactional fundraising is not a bad strategy, but if it’s your standalone strategy, the stakes are extraordinarily high,” said Trent Ricker, CEO of Allegiance Group + Pursuant (AGP). “Your churn will be high, which means you have to continue to replace those supporters that you’ve lost. Then your costs go up. If you’re not diving deeper in and trying to build some level of sustainability and loyalty, you’ll be caught in a dangerous cycle.”  

The Stakes Have Only Gotten Higher 

Most donors are overwhelmed with multiple giving requests every day. With so many hands out, people will often choose one or two organizations that best reflect their values. If they’ve only ever transacted with your nonprofit, you likely won’t be on their list. 

Increased competition for donor dollars signals a critical need to move away from a reliance on transactional fundraising and focus on building genuine relationships instead. This approach fosters long-term trust, understanding, and loyalty — key components that will retain donors and further your mission. 

In our review of the research, we identified several factors that call for a renewed and increased focus on relationship fundraising. 

The Impact of the Pandemic

It’s hard to overstate the impact of the COVID-19 pandemic on the nonprofit sector. This challenging time introduced significant shifts in both donor behavior and organizational action.  

While some organizations may have been on the fence about “digital transformation” before, the early days of the pandemic forced fundraising efforts online. The need to adapt (or, famously, “pivot”) away from in-person events brought many fundraisers into the virtual world. They adopted new technologies, digital solutions, and tools quickly — sometimes, literally overnight.   

Nonprofits also had radically different pandemic experiences. Some organizations experienced serious disruption to their service delivery, such as performing arts or social service organizations that relied on in-person programming. Others, like healthcare and food insecurity organizations, experienced an unprecedented rise in demand for their services — and an unpredicted rise in donations.  

While some nonprofits have more or less returned to their pre-pandemic models, others are facing unrealistic expectations from boards and leadership as the “pandemic bump” of donations levels out. When viewed year-over-year, this can look like a sudden and dramatic drop in fundraising, rather than a return to business as usual after a crisis-related spike.  

It’s challenging to go backwards — raising less money is rarely an appealing solution. In this “new normal,” fundraisers need strategies to build the kind of long-term, loyal support that weathers all storms.  

Political and Economic Uncertainty

Politics and economics have become even more central since 2015. Most Americans are worried about the direction of the United States for various reasons, which could influence charitable giving. 

For instance, how does the price of everyday necessities affect the size of donations? Which causes are top-of-mind for your donors due to the news cycle? The political and economic realities that impact your donors will likely trickle into your fundraising efforts and your organization’s budget.  

In this context, it can be tempting to cut back on engagement communications or anything that doesn’t have a quick return on investment, such as acquisition. This is a mistake. Today’s donors, especially younger generations, are seeking deeper connections with the organizations they support. They need to understand how their donations make a difference.  

Nonprofits occupy the enviable position of giving people the opportunity to feel a unique sense of meaning and purpose when they make a donation. This is even more important in uncertain times. The personal, long-term approach of relationship fundraising offers more potential to deliver these warm and fuzzy feelings, helping your donors to feel like they are a valued partner in your mission. 

Philanthropic and Demographic Shifts 

The American wealth gap continues to shape philanthropy. Charitable giving as a percentage of gross domestic product (GDP) has remained relatively stable for the past 40 years. But within that giving, patterns have shifted.  

Mega donations from high-net-worth individuals distort the picture of giving, while recurring giving and participation among lower-dollar donors remains challenging. In 2023, nearly 40% of total charitable contributions were substantial gifts from high-net-worth donors, while small-scale donations under $1,000 declined by 2%.  

Donor behavior isn’t the only thing that’s shifting — demographics are also in flux. The long-predicted “silver tsunami” of aging Baby Boomers has now begun, with millennials and Gen X projected to inherit over $30 trillion in wealth. But these groups have a greater affinity for alternative giving models like mutual aid, crowdfunding, and donor-advised funds (DAFs). The takeaway? Nonprofits can’t rely solely on what worked with previous generations. 

At the end of the day, donors give where they feel connected. A relationship fundraising approach can help organizations build strong connections with younger donors, both for now and for the future.  

Build Relationships, Grow Long-Term Fundraising 

While much has changed since 2015, the importance of relationship fundraising is as strong as ever. Building deep donor relationships can help ensure your organization has a solid foundation for long-term success, no matter what the future brings.  

Our Allegiance Group + Pursuant team can help you develop a relationship fundraising strategy that secures your mission today and tomorrow. To learn more and get started, check out our new guide, “Embracing Relationship Fundraising: A Path to Sustainable Philanthropy.” This free resource will help you turn transactions into connections that inspire lasting support.