Why Appreciating Gifts of All Sizes Matters

Dear Kim:

We have thousands of individual donors and recently decided to stop sending thank you notes to people who give less than $15.  One of our board members heard you speak and said that you said everyone should be thanked, regardless of size of gift.  The cost/benefit of this eludes me.  We have done a very thorough breakdown of costs in our development office and discovered that, when you factor in everything, a thank you note costs $5 to send.  When you factor in the costs of the newsletter and renewal letters, each donor costs us $12 per year.  I think someone giving less than $15 would want to think their money is being used for program and not used to thank them, thus using most of the income from the gift.  These smaller donors, while valuable for morale or heartstring pulling stories of small donors, are a drain on the bottom line.  As a consultant, you don’t have to worry about that, but as the head of development, I do.  Now I have to put out a fire with this board member who is all over me about the small donors.  Can you clarify your meaning? 

~Irritated in Illinois

Dear Irritated:

You may not believe this, but I have a lot of empathy for what you are feeling.  You are under pressure to raise money and may have little say in how the goals you are assigned are determined. Your office has done an excellent job of figuring out your “fulfillment costs.”  (Readers should note is an important cost to calculate as best you can, and that $12 per year per donor record is reasonable.) You have made a reasonable decision based on the bottom line, and other organizations with lots of donors have made similar decisions. 

However, I hope you will consider the following:

1)     Fundraising is about building relationships and donors start relationships in a variety of ways.  Some give $10 because that is what they can afford and we should honor that with a thank you.  But some start with $10 to see whether an organization treats its small donors respectfully.  I have had many wealthy people tell me that—they test with $10 or $15 and then give much more.  We don’t want to fail that test.  And, finally, $10 is one gift but not the only gift—a person could start at $10, go to $20, go to $10 a month, go to $1,000—we don’t know where the relationship will end, but we can bring it to an abrupt halt if we don’t indicate any appreciation.

2)    Studies show that when donors are thanked they are more likely to give again and to give more.  If thank you notes were not necessary, large organizations like yours, which are constantly trying to refine costs and increase income, wouldn’t send them.  You can experiment with this yourself. Randomly divide all donors who give less than $15 into two categories:  those who are thanked and those who aren’t.  See if your retention rate holds equally and if there are any other measureable differences between the two groups.  You will then have evidence on which to make a decision. 

3)    Donors who give small annual gifts are often the ones that leave large bequests.  Many people have hard assets they cannot give away during their lifetime but will give on their death. 

4)    Donors who give any amount of money (large or small) should be encouraged to give more and to give more often.   The first gift is just that:  the beginning of the relationship.  Think about making a new friend—you have coffee, then you have dinner, then you invite her family over to your family.  You talk on the phone.  Someday maybe your families go on vacation together.   The process is gradual and this is true of donors as well.

Finally, if you do stop sending thank you notes, you will not save the whole $5 you have calculated it costs you to thank someone.  You will still have to enter their information in the database, deposit their check or process their credit card, and decide whether to send them more appeals or not.  Your staff will have to look at the donor record to see what other gifts this person has made:  I have often gotten gifts of $10 in honor or memory of someone from a donor who may well give $250 or $500 otherwise.  Then you have to decide whether to thank the donor for this extra gift.  Sometimes $15 will come from a board member’s mother or a staff person’s cousin and that person must be thanked because of their relationship with the board member.  The time you spend trying to decide whether to save the $5 will use up a good part of the $5. 

At the end of the day, most organizations don’t have thousands of donors under $15.  If you never suggest that amount on your donor string and if you try to quickly move your smaller donors into monthly giving programs or offer incentives to give slightly more, these very small gifts will not be such a big deal, and the relationships you build with these and all your donors will increase your bottom line and your morale.