I can’t get no (remuneration based on donor) satisfaction

My previous blog on 101fundraising earlier this week outlined some of the key theories from social psychology that Rogare’s project to review relationship fundraising had suggested might be usefully applied to the discipline.

I now want to look at a slightly different aspect: the importance of donor satisfaction.

Models of relationships identify three core components: trust, commitment and satisfaction. Fundraisers in the advisory group for our project – supported by US organizations Bloomerang and Pursuant – were very clear on the importance of these three components, especially satisfaction, even if they were concerned that there were not the specialist databases and technology available with which to measure them.

Trust is the belief that the needs of one party to a relationship will be fulfilled in the future by the other party. It ¬lies at the heart of relationships and is integral to customer retention

Satisfaction is the positive affect associated with a relationship of the relative positivity of outcomes obtained in interactions with a partner. It is the single biggest driver of donor loyalty: donors who are ‘very satisfied’ with the quality of service they receive are twice as likely to make a second gift as those who are merely ‘satisfied’. Satisfaction is a big predictor of commitment to a relationship.

Commitment is the intention to persist in a relationship. It too is closely linked to loyalty and in a nonprofit context has two dimensions: active commitment and passive commitment.

In fact, research I did at the Centre for Sustainable Philanthropy last year after we had more or less completed the relationship fundraising project showed that around 90 per cent of donors show high levels of all three constructs.

The learning from this is actually quite obvious. The more donors trust the organisation, feel committed to the relationship and are satisfied with the services it provides, the more loyal to that organisation they will be and the more money they will give to it over the long term – in other words they will have high lifetime values.

And remember from my previous blog, once donors are in a relationship with a charity, their focus shifts from what the charity does for its beneficiaries (during the acquisition stage) to how the relationship makes them feel (during retention/stewardship). So the satisfaction they perceive relates to the organisations customer service, not satisfaction with the impact on beneficiaries. Donors will be satisfied with a relationship with a charity when they perceive that it meets their needs, not the needs of the charity, the cause or the beneficiary. In simple terms, their emphasis morphs from ‘what does my gift do for the beneficiary’, to ‘how does that make me feel’ although the shift may not be a conscious one.

I said in my previous blog that a relational approach might not always be appropriate and transactional methods might be more relevant to some types of donors. But the theory behind satisfaction applies to those donors too, who will be satisfied once they have a high standard of donor care, and therefore be more likely to make future gifts. Transactional donors can still be committed, satisfied, and trust you to do what you say you will do.

Clearly then, donor satisfaction is a proxy measure for how much donors are likely to give over the long term. Yet few nonprofit organisations measure and track levels of donor satisfaction over time.

Our report – Relationship Fundraising: Where Do We Go From Here – strongly recommends that nonprofits start rewarding their fundraisers by how they make their donors feel. However, this means eschewing traditional metrics such as LTV, RFV, meeting income targets etc, and developing a whole new set of consistent metrics against which to measure and assess the set of relationship fundraising/customer care practices. Developing bespoke metrics is an imperative consideration, as is developing the software that on which to record these metrics.

I don’t know of a single fundraiser whose remuneration package is based on how they make their donors feel. Yet if you can focus on donor satisfaction, the money will surely follow.