Nonprofit Donor Segmentation Strategies to Increase Fundraising

In nonprofit fundraising, connecting in a personalized way is critical to deepening your donors relationships, expanding reach in your community and getting new donors engaged in your work.

The challenge: finding enough time and bandwidth to personalize communications with every single donor.  There aren’t enough hours in the day.

So, how do you create a personalized experience for donors when you don’t have the resources to do it?

Organize your donors into groups based on behaviors, experiences or demographics so you can personalize at scale.

This is known as donor segmentation.

This strategic approach allows you to tailor your communications in a way that resonates, ensuring that each message feels personal and relevant. Segmentation can help you build more personalized relationships with your donors and increase your donor retention rates.

Impact of Donor Segmentation on Fundraising Campaigns and Donor Retention

For every new donor that an average nonprofit acquires, only 30% of donors will give a second time, according to the 2023 Fundraising Effectiveness Report.

Considering the cost and effort to acquire new donors, this is a huge challenge for the sustainability of nonprofits. It is also a huge drain on your nonprofit’s resources.

The good news: tailored communications can boost the retention rate of first-time donors to an impressive 60% according to Bloomerang.

So, it may seem like a lot of extra work, but keeping an existing donor around is significantly less cost intensive compared to acquiring new ones.

Segmentation Allows for More Targeted Communications

Segmentation enables nonprofits to craft personalized messages making donors feel valued and understood at scale.

An example of this could be recognizing a donor’s previous contribution. When donors are reminded of their previous support it can significantly increase their likelihood of continued support.

Appropriate Fundraising Asks

If someone donated $1,500 to support your work last year, you wouldn’t want to ask them for $25 this year, would you?  Of course not.

By understanding donor history, nonprofits can tailor their fundraising campaigns more effectively, matching requests with the donor’s giving history. This reduces donor fatigue, increases donation values and boosts repeat donations.

Relevant Updates Based on Experience and Relationship Building

If you know that a donor has particular interest in a specific program you are running, then you want to keep them up to date on the progress.

By knowing their interest, your team can regularly update the donor about the particular project. As they feel more connected to that particular project’s impact, they will be more likely to donate in support of that project in the future.

Connecting experiences with fundraising asks can make your campaign significantly more effective over time.

Proactive Engagement Can Prevent Donor Lapse

Get into the habit of creating a regular report of donors that gave last year, but not this year. This is commonly called a LYBUNT report (Last Year But Unfortunately Not This Year).

These LYBUNT reports can help identify donors at risk of lapsing and proactively reengage them before it’s too late.

Each January, many fund development departments will run LYBUNT campaigns to re-engage those donors who are at risk of lapsing. These types of campaigns can drastically reduce the donor churn and continue to maintain your active donor base.

Examples of Donor Segments That Increase Engagement

There are hundreds of ways that an organization can segment their donor database.

Here are a few common segments that may help you get started with your donor segmentation strategies:

1. First-Time Donors: Welcome these newcomers warmly. A personalized thank-you message, a brief introduction to your mission, and an invitation to an introductory event can make them feel at home. Communication should be educational and engaging, focusing on how their contributions will make a difference. Consider creating an automated donor onboarding process that helps bring them into your work and community.
2. Monthly Donors: These donors are your organization’s backbone. Regular updates about the projects they fund, exclusive insights into upcoming plans, and personalized appreciation events can deepen their commitment. Consider sending quarterly impact reports or small tokens of appreciation like branded merchandise. Monthly donors, who are often segmented into a special group due to their regular contributions, can exhibit retention rates as high as 80-90% according to Bloomerang.
3. Lapsed Donors: Re-engage these once-active supporters by reminding them of past impacts and updating them on new initiatives. Special “We miss you” messages or re-engagement discounts for events can reignite their passion. Analyzing why they stopped donating can also help tailor your approach to win them back. If they don’t re-engage after a few attempts, we recommend you remove them from your list completely.
4. Major Donors: These donors typically contribute large donations and expect a higher level of interaction. Offer them personalized tours of your facilities, one-on-one meetings with key staff, and exclusive previews of new initiatives. Regular, direct communication from your leadership and invitations to special recognition events are also key. The amount that makes someone a “Major Donor” is up to your team. But, start with considering the top 10% – 20% of your donors.
5. Donor Volunteers: These are your superstars. Individuals that are willing to give both their time and money clearly love your mission. That said, they may not necessarily be your Major Donors, but it doesn’t mean you shouldn’t make extra efforts to appreciate them.
6. Corporate Donors: This group often has a very different motivation and purpose for supporting your work. Typically corporate donors expect a higher level of interaction and may be interested in more recognition and engaging their employees in your organization. Consider creating a completely different program for corporate donors.
7. Donor Advised Fund: This method of giving is becoming more common in the United States. In many cases, individuals who are able to set up a donor advised fund may also fall into your Major Donor segment.
8. In-Kind Donors: Not every donor is a cash donor. Some donors donate goods and services. Corporations in particular can be big in-kind donors. In this case, it’s worth removing these donors from your typical cash fundraising campaigns.

Examples of Donor Demographic Segmentation

As you saw, we can segment your donors based on their previous giving history and behavior. You can also segment donors or prospects based on other attributes.

Consider some of these demographic segment examples:

• Demographics: Age may influence how donors prefer to be contacted and the ways that they like to give. It may also influence the messages that resonate with them most. Younger donors might be more responsive to digital campaigns and social media interactions, while older donors may appreciate more traditional methods like direct mail and personal phone calls.
• Behavioral: Look at past donation patterns to predict future behavior. For example, event attendees might be more receptive to invitations to similar activities. On the other hand, frequent small-amount donors might be encouraged to join a monthly giving program.
• Communication Preferences: Some donors prefer email, others respond better to text messages, direct mail or social media posts. Segmenting by preferred communication channels ensures your messages are seen and acted upon.
• Location: Many individuals have strong ties to supporting your work in their own communities. Location can be a very powerful way to motivate donors to give. If you do have active projects in a particular area, consider sending special campaigns to donors who live in that area.
• Engagement Level: Identify who regularly interacts with your content, who volunteers their time, and who advocates for your cause on their social media. Tailored messages that acknowledge and thank them for their specific types of engagement can boost further involvement.

Running Segmented Campaigns

So, you have your donor segments, now what?

There is no one answer for this. You can do all kinds of different things with donor segments. You can run one campaign with variable messaging to multiple segments.

You can also run campaigns just to one segment (for example LYBUNT campaigns mentioned above).  The sky’s the limit with how you approach this work. The important thing is to develop a strategy ahead of time.

Always consider who should and who should not be included in a campaign and why.

Tools and Techniques for Implementing Donor Segmentation

An accurate and clean database is vital for effective donor segmentation.

Regularly updating donor information and maintaining high data quality prevents errors that could lead to miscommunication and donor attrition.

Also, don’t hesitate to delete records from your database if you know that the data is inaccurate. If you know that an email bounces, or that a direct mail piece consistently gets returned, there is no point in sending that campaign to that location again. Delete the record and move on.

Clean data saves you time, money and makes your campaign more efficient.

Maintaining Clean Data for Successful Donor Segmentation

Consider implementing these best practices when it comes to managing your donor data:

• Regular Data Audits: Schedule systematic checks to update and correct data, ensuring accuracy in donor details.
• Address Clean-up Services: Once you have a larger donor database, it may be worth sending your donor addresses to an address clean-up service. Not only will they flag outdated donor locations, but they may even be able to provide the donor’s new location so you can keep them engaged.
• Data Standardization Rules: Apply consistent data entry standards to avoid discrepancies and facilitate easier data management. Document and train staff and volunteers who manage your data regularly.
• Automated Tools: Utilize CRM software like Salesforce for nonprofits. These CRM’s can actually automate many aspects of data cleaning and segmentation.

Explore Advanced Techniques in Donor Segmentation Using AI

Artificial Intelligence (AI) is revolutionizing donor segmentation by predicting future donor behaviors and personalizing donor interactions at scale. The magic of AI can help you spot trends before you know that they are trends.

AI is also helpful in reviewing your donor data to elevate donors who may be major donor prospects.

By cross referencing publicly available data, AI can help your team identify patterns, interests and opportunities to deepen existing donor relationships and reach out to prospective donors in your community.

Elevating these opportunities can help enable nonprofits to tailor their fundraising strategies more effectively and engage donors in a more meaningful way.

Conclusion

Donor segmentation is an essential strategy for building stronger relationships with your supporters.

By understanding and implementing effective segmentation techniques, you transform your donors from passive givers to active participants in your mission.

Start refining your donor segmentation strategy today and watch your nonprofit’s community grow stronger and more engaged. Ready to make a difference? Let’s begin now!