The Role of Donor Stewardship in Fundraising

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Published:

July 3, 2023

Last Updated:

July 17, 2023

Donor stewardship is an important piece of any nonprofit’s fundraising strategy.

But what exactly is donor stewardship? And how can you implement it into your nonprofit’s fundraising practices?

If you’re feeling overwhelmed, don’t panic! We can help.

Keep reading to learn everything you need to know about donor stewardship, including the stages of donor stewardship, as well as different tools and resources that can help you on your stewardship journey!

What is Stewardship in Fundraising?

Stewardship

Let’s start with the basics: what exactly is donor stewardship?

Put simply, donor stewardship is a relationship-building process that begins after a donor makes a gift. The purpose of donor stewardship is to make donors feel acknowledged and valued so that they are inspired to become loyal, long-term supporters of your nonprofit.

Stewardship involves managing gifts the way donors intended, updating donors on the impact of their gifts, and cultivating relationships with those donors to keep them involved with the organization.

Successful stewardship relies on continuous communication and engagement with your donor base, which includes thanking them properly and ensuring their donation is put to good use. When done correctly, stewardship yields loyal, long-term donors that will support your organization for years to come.

When a donor is properly acknowledged, they’re more likely to become repeat donors. Repeat donors are a great way to establish financial sustainability in your organization.

On the other hand, when a donor is not properly acknowledged, they are not likely to make another donation to your organization. Even worse—they aren’t likely to spread the word about your nonprofit and your work to their networks.

Stewardship is critical. Stick with us, and we will show you the different stages of donor stewardship to help you get started at your own nonprofit.

Stages of Donor Stewardship

Stages

There are five stages of donor stewardship that you should be aware of so that you can implement them within your organization.

Stage 1: Gift Acceptance

The stewardship process begins when a donor makes a gift to your organization.

Your organization should have a proper procedure in place to accept gifts—which is where a gift acceptance policy can come in handy.

A gift acceptance policy manages the expectations of donors and guides your organization through the process of asking, receiving, and accepting donations. This is an internal policy that should be board-approved, and that can be shared externally when needed.

This type of policy creates structures around:

  • Reviewing each gift to ensure it can be used the way the donor intends
  • Deciding how gifts will be handled if they can’t be utilized the way a donor wants
  • Tracking gifts so that you know how each one was used and can report that information to donors if they ask

If there are specific types of gifts that your organization can not accept, those can be outlined in a gift acceptance policy as well. This transparency leads to increased trust with donors since they know exactly what they can expect from your organization.

Here’s something to keep in mind: your gift acceptance practices should make it as easy as possible for donors to give.

Ease of giving should be woven throughout all of your fundraising practices, including the use of online giving portals and a “give now” button on your webpage.

If it’s complicated for a donor to make a gift to your organization, you aren’t stewarding them well right from the beginning!

For example, Habitat for Humanity does a great job of showcasing their “donate” button in a bright, contrasting orange color on their website’s homepage.

Habitat for Humanity homepage

Once a donor makes a gift, then what? Keep reading to learn about the next stage of the stewardship process.

Stage 2: Acknowledgement

The next step of the donor stewardship process is acknowledging the gift.

This is important for two big reasons.

  • The first is that the Internal Revenue Service requires it.
  • Aside from that, donor acknowledgment is also a way of saying “thank you” to the donor in a way that makes them feel recognized and valued.

The Internal Revenue Service (IRS) requires nonprofits to send a formal donation letter to donors who give contributions larger than $250. This document acknowledges the donor’s gift and can also be used by the donor to claim a tax deduction.

These acknowledgements must include the following information:

  • The name of your organization
  • The amount of the cash contribution
  • Description (but NOT value) of non-cash contribution
  • A statement that no goods or services were provided by the organization, if that is the case
  • A description and good faith estimate of the value of goods or services, if any, that the organization provided in return for the contribution
  • A statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits if that was the case

While the formal acknowledgement can also include a “thank you,” there are additional ways that you can thank and acknowledge donors that will feel more personal. Keep reading!

Step 3: Personalized Recognition

Nonprofit organizations should respond to each gift they receive with a sincere, personalized acknowledgement. This should be in addition to the formal tax letter required by the IRS.

You can be creative with how you express appreciation to donors—here are some ideas:

  • Promptly follow a donation with an email or phone call thanking the donor. This should occur within 1-2 business days of receiving a gift.
  • Host donor recognition events to cultivate relationships and recognize donors in-person for their contributions to your organization.
  • Feature donors in your organization’s newsletter, social media posts, and/or annual reports.
  • Create a giving society that offers tiered recognition opportunities for donors based on the size of their gifts.

The National Parks Foundation does a great job of recognizing donors in their annual report—check out this screenshot.

National Parks Foundation

Step 4: Communicate Results and impact to donors

It’s undeniable that donors appreciate when their gifts are promptly and properly acknowledged. But they also want to see the impact of their support!

It’s important to communicate results and impact back to donors. There are a handful of different strategies you can use to communicate results to your donors, such as:

  • Sending campaign updates via email or direct mail
  • Featuring success stories in your newsletter. See the example from End Youth Homelessness below. They do a great job of showing impact through storytelling!
End Youth Homelessness
  • Sharing updates on your social media platforms, website, and blog
  • Creating short video montages about your impact

When a donor can see the impact of their gift, they will feel more inclined to continue lending their financial support.

Step 5: Cultivation

The final stage of the donor stewardship process focuses on cultivation. The emphasis in this step is on relationship-building, not solicitation.

To cultivate your donors, you need to know what they value, how they want to be contacted, and what they are passionate about. When you have this information, there’s no shortage of ways you can connect with them to cultivate a stronger, long-term relationship.

Here are a few basic cultivation tactics that you can weave into your stewardship strategy that will help foster a deeper connection between your donors and your organization:

  • Share future plans for programs or projects that donors have contributed to in the past
  • Suggest new programs or projects that are related to or in alignment with donors interests and values, based on their past giving habits
  • Ask donors to spread the word about your organization’s work via social media
  • Invite donors to an onsite event or tour so that they can see the results of their gifts firsthand

Incorporating these five stages of donor stewardship will help you cultivate strong relationships with your donors—and will hopefully yield long-term, repeat contributions to your organization.

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Stewardship Tools and Resources

Digital Tools

Now that you know what donor stewardship is and why it is so important, let’s dive into some tools and resources that can help you as you begin building a donor stewardship plan at your organization.

Donor Stewardship Plan Template

A donor stewardship plan template provides a great jumping-off point for your organization as you begin focusing on cultivating relationships with donors.

Using a template simplifies the process by telling you exactly what to do and when allowing you to build stewardship activities into your annual fundraising plan and communications calendar so that you don’t have to overthink things!

BoardEffect provides a free donor stewardship plan template on its website that you can tweak and adapt to meet your organization’s needs. Check it out!

BoardEffect

The Donor Pyramid

The donor pyramid is a tool that helps you visualize the composition of your donor base.

The size of your pyramid will fluctuate depending on the size of your organization, but the image below is an example of what a donor pyramid might look like.

Donor Pyramid

Typically, you will have more first-time donors than recurring donors, which is why first-time donors are at the bottom of the pyramid. As you move up the pyramid, the number of those types of donors will decrease.

Your goal as a fundraiser should be to move donors up the pyramid—from first-time to recurring, to major, and so on. That way, you’re not only retaining donors, but you’re increasing their value to your nonprofit.

In practice, you can work with your Board of Directors to segment your existing donor base into the appropriate categories so that you know how many donors you have in each level of the pyramid.

You can then determine an appropriate stewardship plan for each level. Remember—all levels of the pyramid are not the same! You might need to work a little harder to create a lasting relationship with a first-time donor than you would with an existing, loyal donor. That’s okay! This pyramid will help you figure out where all your donors fall and where you should get started.

Donor Management Software

Donor management software is a valuable tool that will help you collect donor information and set stewardship expectations.

It also can help with other donation-related processes, such as setting up donation pages on your website, processing donations, and automating donation receipts.

Most donation management platforms will allow you to automate stewardship processes as well. For example, every donation received could automatically get an acknowledgement letter via email within 48 hours. Donations over $5,000 could be set to receive a personal “thank you” from a Board Member.

See the chart below from Qgiv for more ideas on how online giving software can help automate stewardship processes.

Qgiv

Donor management software can also help you keep track of relationships with donors, record donor data, and segment donors into key groups.

Keeping this information located in a central database is helpful—you can access it any time you know you might be interacting with a specific donor so that it is fresh in your mind.

You can also share this information with your development team so that everyone is on the same page and can stay up-to-date with all donor interactions and communications.

There are a lot of options out there for donation management software, depending on your size and your budget.

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Wrapping Up: The Next Steps

Handshake

Now you know: donor stewardship is an important piece of your organization’s overall fundraising strategy.

Donor stewardship is a process by which you acknowledge and cultivate donors with the goal of developing them into loyal, long-term donors.

There are five stages to the donor stewardship process, which will help you achieve this goal, including gift acceptance, acknowledgement, personalized recognition, communicating results, and cultivation.

By now, you have everything you need to embrace donor stewardship and use it to boost your fundraising success!

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