The Bi-Polar Future of Fundraising

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There are two fundraising models that are heading in opposite directions.

The traditional model is that you invest in new donor acquisition and then work to build a long-term relationship with those donors who, in turn, will faithfully support your cause.

The emerging paradigm is a point-of-sale model, where an organization realizes all of its LTV with the donor’s first gift and no possibility of an ongoing relationship.

One model is relational. One model is transactional. I see the industry struggling to “convert” transactional donors into the relational model. My sense is that this could be an expensive and futile effort.

Rather, I believe the better approach may be to create distinct strategies optimizing each of these two very different fundraising approaches.

1 Comment

  1. avatar

    Bill, it is a fascinating topic.

    I would offer up that we, who live in the data and analysis realm, consider that if we applied a more for-profit lens to our nonprofit challenges several clear paths might emerge (each with their own objectives and trade-offs.)

    Looking at each donor as a customer, individualized instead of as a segment, and setting a target return on investment like a corporation would (net margin for example), how many of these relational donors make financial sense? Similarly, how many of those transactional one-and-done donors, financially might it have made sense to try to build a relationship with?

    Look no further than the mobile phone carrier industry – there is a reason why you won’t find a phone plan for less than $40/month these days. Their pricing teams started looking at individual profitability, and not just at profitability as mass universes or segments.

    We should do the same.

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