The Importance of Individual Donors

It’s no secret that raising money from government, corporations, and foundations is getting harder and harder. It’s a trend that appears to be continuing if not becoming more true in 2017 than in the past. The one constituent that arguably has not gotten any harder to raise money from (and I would argue has gotten easier), is individual donors.

According to this excellent article titled “Benchmarking Individual Donors” from the Stanford Social Innovation Review:

  • Organizations raise an average of 34 percent of their revenue from individuals.
  • About half of individual donor revenue comes from donors giving less than $1,000.

The article starts by saying that because of the improvement in donor databases (and CRM systems) they were able to report on donor retention among small non-profits. The article continues:

83 percent of small nonprofits could report their retention rate and that the average retention rate is about 60 percent—6 out of 10 donors who gave last year will give again this year, suggesting that donor retention for individual donors rests at only 60%

Do you know your organization’s donor retention rate? Do you know it by donation size, and by cohort? How well are you tracking your donors, and what could you be doing differently?

I suggest that 2017 be the year of the individual donor. What we all know about raising money in the arts is that it is different than raising money for other non-profits. The key difference is that in the arts, it’s nearly impossible to raise money from someone that has not set foot in your theatre, hall, or museum.

Therefore, for individual donors, your mission has three parts. First, you have to identify potential individual donors from among your attendees. Then you have to cultivate those people to donate for the first time. Finally, you have to keep engaging them to make sure you retain them as donors year after year.

That analysis is pretty much exactly why I believe that today’s arts organizations need CRM technology that is equally robust with regard to ticketing, fundraising, and marketing. Until you know who your donors are (and you can measure their retention rates) you’ll be hard pressed to take advantage of the most important fundraising opportunity your organization has in 2017- your individual donors.

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