Assessing Your Nonprofit’s Donors and Prospects: Annual Fund Segmentation Strategies

Annual fund segmentationSolicitation strategies start with assessing the current situation. Do you treat all your prospects and donors the same? Should you?

Now, more than ever, you should have a development plan for all prospects and a stewardship plan for all donors.

But, you should not plan on having the executive director “meet” with every donor. How can a nonprofit engage each prospect and donor when there are thousands? Annual fund segmentation.

Start annual fund segmentation by considering how they give.

  • Are they a Prospect or Donor
  • If a donor, are they
    • Current
    • Once-a-year Donor
    • Monthly Donor
    • Major donor
    • mid-level donor
    • mid-level donor you are trying to upgrade
    • 10-year donor
    • 25+ year donor
    • first time donor
    • LYBUNT
    • PYBUNT
    • Someone who gave to a
      • specific event
      • end-of-year mail or email campaign
      • other mail or email campaigns
      • sponsorship
      • special campaign donor
      • restricted gift donor
      • peer-to-peer campaign on behalf of a friend
      • also a volunteer
    • If a prospect or a donor, are they also a
      • Recent graduate or services beneficiary
      • 10-year alumnus\a
      • 25-year alumnus\a

Additional key points to keep in mind include:

  1. It costs 4.5 times as much for the nonprofit to find a new donor than retain one
  2. Donors don’t usually give a major gift in the first year they give to a nonprofit. Cultivation and stewardship over years (3-5 years minimum) is what will get you to the point you can ask for a major gift. *This assumes they have the capacity and had been stewarded properly during the time since they made their first gift.
  3. When you start accounting for lifetime giving, someone who gave $50/year for 20 years gave $1,000 to your nonprofit. How would you treat someone who gave $1,000?
  4. Break it down specifically for your organization. Should:
  • major donors get more personalized interaction than other donors?
  • monthly donors get a different appeal than once-a-year donors?
  • PYBUNTS or LYBUNTS get the same letter as new prospects?
  • members get the same email as non-members?
  • alumni get same event invitation as prospects?
  • parents get the same Facebook post as the students?
  • ____ get the same ____ as _____ (fill this in for your nonprofit)

Each organization will have its own set of segmentations.

And contrary to popular belief, segmentation was not created to give you more work.  Instead, it gives you more directed work. And a path to raising more money (which is the point, isn’t it?)

It may seem easier to send the same fundraising letter to the 1000+ people on your mailing list and move on.  But what are you moving on to? If you rely on your annual fund to support your organization, this must be a priority for your development team. Even if it is a team of one.