Why Donor Cultivation and Stewardship Are Important to Your Endowed Nonprofit
Over the past few years, the pandemic and market volatility have made the already challenging task of fundraising for endowments that much more difficult for nonprofits. Donor development teams have been forced to pivot from in-person events and communications with current and prospective donors to virtual, then to hybrid, and back to in-person. The ups and downs of the market have posed incremental challenges and uncertainty not only for investment managers, investment committees and boards of trustees but also for donors themselves. Despite these difficulties, it remains critical that endowed nonprofits must focus on cultivating and stewarding donors in order to carry out their important missions, while building endowments above and beyond what market growth can provide.
Donor cultivation — forging relationships with prospective donors — is an ongoing and time-consuming process that is as much about communication as it is about persistence. 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 — is another priority for nonprofits that, when done effectively, can lead to donor retention. Both involve building genuine relationships with both current and prospective donors.
Given this backdrop, we discuss several factors in the donor cultivation cycle that can benefit your organization and grow your endowment.
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 lean toward supporting any particular types of 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 to potentially create an endowed gift.
Look for both wealth and philanthropy indicators1 in conducting donor research:
- Wealth indicators, for example, real estate ownership or business affiliations; and
- Philanthropy indicators, for example, people who already make donations to your organization or to others, general interest and support for nonprofits.
It is also helpful to utilize events — from facility tours, to galas, to meetings with your senior leadership or board — to attract prospects while engaging with current donors. These could be 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 forget about volunteers, employees, event participants and previous donors, among others, in the pool of potential donors. If fostered with care, small donors could become major or recurring 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.”2 When done correctly, it 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 will want to know their gifts are being used the way they intended.
Good communication is essential for developing meaningful relationships with all 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 build a relationship and foster a connection, so be sure to acknowledge all contributions. Invite donors to events, encourage them to volunteer or serve on a committee, send thank-you notes, make calls upon receiving a 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 cultivate a culture of trust and transparency. Apprise 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 the compounded impact it is having.
In a volatile economic environment where donor dollars are stretched, a targeted, planned giving strategy could also 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 planning. There are many kinds of planned gifts, including but not limited to, bequests in a will or trust, beneficiary designations, charitable gift annuities, charitable remainder trusts and 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 or life insurance.
The Role of an Investment Advisor with Nonprofit Donors
As an OCIO, Glenmede’s primary mandate is that of an investment advisor — to help nonprofits protect and grow their endowment investment portfolios. But the agents of growth are twofold: first and foremost, growth begins with prudent stewardship of existing assets through effective investment management and fiduciary practices. Second, growth is achieved by organically engaging current and potential donors to contribute to the endowment as means of ensuring the well-being of an organization, now and in the future.
In conjunction with investment services, Glenmede partners with our nonprofit clients as a resource in growing the donor base and stewarding existing donors. In this role, we provide to donor development teams, and to significant donors themselves, information about Glenmede to help them feel confident their philanthropic investments will be well-managed. This process can include written communications, personal consultations, educational workshops and targeted seminars. Some of these topics can include:
- Glenmede’s investment processes and how the organizational assets are invested.
- Current economic and market outlook.
- Charitable gift planning options.
- Development of charitable mission.
- Tax and legislative updates.
- The process of leaving a charitable legacy.
Instilling confidence in donors is an important component of securing endowment gifts, and retaining donors to provide future support to your organization.
Nonprofit organizations are operating in a market environment with distinct fundraising challenges, as many donors remain cautious about making significant donations or long philanthropic commitments. With this in mind, it is more important than ever to cultivate and steward your donors effectively, and partner with an investment advisor that can build confidence in your organization’s governance.
For more information on how Glenmede can help as a resource to your nonprofit organization, please contact EFSolutions@glenmede.com.
1 “Identifying Major Donors: 11 Top Strategies and Tools.” OneCause.
https://www.onecause.com/blog/identifying-major-donors-top-strategies-tools/. (accessed June 6, 2023)
2 Weinger, A. “Creating a Donor Stewardship Plan: Three Best Practices.” Philanthropy News Digest, July 2019.
This material provides information of possible interest to Glenmede’s clients and friends, and does no t provide investment, tax, legal or other advice. Any opinions, recommendations, expectations and/or projections expressed herein may change after the date of publication. Information obtained from third-party sources is assumed to be reliable but may not be independently verified, and the accuracy thereof is not guaranteed. Any potential outcome discussed, including but not limited to performance, legislation or tax consequence, ultimately may not occur due to various risks and uncertainties. Clients are encouraged to discuss any matter discussed herein with their tax advisor, attorney or Glenmede Relationship Manager.