Donor Cultivation and Stewardship for Your Endowed Nonprofit

Market growth alone cannot support the growth of endowed nonprofits. Rather, cultivating and stewarding donors can build new endowment capital and  perpetuate your organization’s mission. There are several factors in the donor cultivation cycle that can benefit your organization and grow your endowment.

Understanding Donor Cultivation and Stewardship

Donor cultivation — forging relationships with prospective donors — is an ongoing process that is as much about communication as it is about per sistence.  Stressing the importance of an endowed gift that will provide legacy support to the nonprofit can be a lengthy but fruitful process. Donor stewardship — helping current donors understand the impact of their gifts — can help you retain donors and encourage them to make larger donations to your organization. Both involve building genuine relationships with current and prospective donors and are integral parts of the donor cultivation cycle.

Identifying New Donors

Prospect research can help identify potential donors by learning about their backgrounds. For example:

• What is their history of charitable giving?
• Do they have explicit or implicit preferences for any causes or specific organizations?
• Have they attended organizational events?
• Do they have friends, colleagues and community ties to a nonprofit?
• Are they active as board or committee members?

Effective research can also help target individuals who may have the capacity to be major donors, create an endowed gift or champion a specific endowed initiative. This is especially important given the steady decline in prospective and first-time donors.² To help identify major donors, thoroughly research prospects to identify high- and ultra-high-net-worth individuals whose philanthropic interests align with your mission and values. Leverage existing connections to identify potential major donors using programs such as CauseIQ, a web-based tool that helps nonprofits research organizations and find funding.

Capitalize on events, including facility tours, galas and meetings with your senior leadership or board members, to attract prospects while engaging current donors. These could be either small or large in-person events, depending on the prospect pool, and can provide an opportunity to share your organization’s mission and programs.

Do not overlook volunteers, employees, event attendees, partners/vendors and previous donors, among others, in the pool of potential donors. If fostered with care, small donors can become major or recurring donors over time.

Look for examples of both wealth and philanthropy indicators1 when researching donors:

• Wealth indicators: real estate ownership or business affiliations.
• Philanthropy indicators: previous donors to your organization or others with a similar mission, or those that show an interest in supporting nonprofits.

Stewarding Donors

Donor stewardship can be defined simply as “the process by which an organization builds strong, healthy relationships with existing donors long after their initial donations have been received.”³ When done effectively, stewardship encourages repeat gifts, engages donors, maintains the appropriate donor retention rates and helps ensure your donors have a positive giving experience.

Begin engaging donors once they make a gift. A gift acceptance policy will help manage donor expectations and guide your organization through the process of asking, receiving, accepting and tracking donations. Donors may want to know their gifts are being used the way they intended, but there may also be opportunities to ask if the donation may be considered unrestricted.

Good communication is essential for developing meaningful relationships with donors so they can become repeat or possibly major donors. Just because a donor makes a gift once does not mean they will support your organization again. It takes communication and engagement to foster a connection, so be sure to acknowledge all contributions.

Invite donors to events, encourage them to volunteer or serve on committees, send thank-you notes, call them as soon as you receive their donation, reach out via email and connect on social media. Remind donors of the work your organization is doing and how funds are being distributed. This will help foster a community of trust and transparency. Tell donors when their contributed dollars begin funding portions of the organization, share case studies and stories of individuals or communities impacted by your organization’s work, and clearly articulate the impact of donor support. For endowed gifts, provide an ongoing summary of the gift value and its compounded impact. Without such best practices in place, your nonprofit’s reputation may suffer from the perceived ambiguity around its efforts.
In an economic environment where donor dollars are stretched, a targeted planned giving strategy could make a difference. A planned gift can be made during a donor’s lifetime or as a bequest as part of their overall financial and estate plan. There are many kinds of planned gifts, including:

• Bequests in a will or trust
• Beneficiary designations
• Charitable gift annuities
• Charitable remainder trusts
• Charitable lead trusts

Depending on an organization’s gift policy, acceptable types of assets could include stocks, mutual funds, land, art, real estate, business interests, cryptocurrencies and life insurance.

How an Investment Advisor Can Help

As an outsourced chief investment officer (OCIO), Glenmede’s primary mandate is to help nonprofits protect and grow their endowment investment portfolios. We believe that growth:

• Begins with prudent stewardship of existing assets through effective investment management and fiduciary practices.
• Is achieved by organically engaging current and potential donors to contribute to the endowment, helping to ensure the well-being of an organization, now and in the future.

In addition to providing investment services, Glenmede partners with nonprofits to grow the donor base and steward existing donors. In this role, we share information about ourselves with donor development teams and significant donors to help them feel confident that their philanthropic investment will be managed well. When donors are confident in what you are doing, they are more likely to provide regular support to your organization.

For more information on how Glenmede can help as a resource to your nonprofit organization, please contact EFSolutions@glenmede.com.