05 Dec The Way We Think About Donating Is Dead Wrong: Part I
It’s a simple concept but most entrepreneurs don’t understand how this works, so I’m going to break it down.
Time, advice, and money.
In basic terms, those are the 3 things you have — right now — to give.
(RELATED: How To Get Your C-Suite on the Giving Bus)
In this series I’m focusing specifically on giving money because the vast majority of people approach this concept all wrong…
… Or maybe it’s not that they approach it all wrong, it’s that they don’t approach it AT ALL.
We talk ourselves out of giving money all the time. In fact, if you look at the most precious of our resources, time is #1. (Which is why there’s a tremendous amount of merit to volunteering.)
We figure we can replace giving time with giving money… but that doesn’t sustain us. We stop giving because we’re not happy with our giving. Nonprofits start to lose money and aren’t happy either. Now everyone loses.
That’s the simple version of it, but to truly understand what’s happening we need to go behind the scenes. We need to smash the myths about donating money one-by-one if we ever want to solve society’s problems and grow our businesses.
The 1st Myth: Donor Fatigue
You say: “There’s nothing I can do about donor fatigue.”
I say: “Your feedback loop is broken.”
You say your donors are getting tired of always getting hit up. This statement is dead wrong.
Donor fatigue happens because the feedback loop is broken.
Nonprofit: it’s YOUR fault.
You’re tired of communicating with your donors because you’re scared that you’re annoying them. You start pulling the reigns on your communication with donors and as a result, you’re left with a self-fulfilling prophecy.
Donors actually DO get fatigued!
Your donors are getting fatigued because they don’t ever get the stories or the feel goods signaling that their money made an impact to begin with.
Donor fatigue happens when you don’t communicate impact.
When it comes time to donate again, how do you expect your donors to want to write another check when they have no idea the impact that their money is making? That’s when you see engagement levels go down.
You don’t need to overthink the solution. The solution is providing your donors with a feedback loop. The trick comes with finding the right circumference of that loop.
Finding the Right Feedback Loop
It’s all about giving feedback to your donors. You’re giving back to them with positive stories and experiences. If you always ask from them, you’re just depleting the donor and their desire to give.
There are a few things to consider when providing the right feedback loop.
Some feedback loops take an entire year. Or two years. Or three years.
Other feedback loops need to be immediate. We’re talking NIGHT OF kind of immediate.
And there’s everything in between.
Donors need to see the impact of the money they’re giving.
They need to be told in simple terms:
“Here’s what you’ve done: XYZ. Thank you for very much.”
The feedback loop is also a matter of magnitude.
How big is the feedback that you’re giving your donors?
Well, how big was the impact? A bigger impact obviously means that your feedback needs to be greater.
This is a huge struggle for a lot of nonprofits. How do you tangibly provide feedback to your donors?
Nobody reads newsletters anymore. Putting together the copy and the formatting of a PDF newsletter is so antiquated. Even an email newsletter is out of touch at this point.
What people really want to see are the headlines and the sound bites. They want to see living case studies of people who have benefited from their donations.
Let me give you an example with social media ads.
It makes sense to run advertisements, either on Facebook, Instagram, LinkedIn, or Twitter. Create content that shares the stories of the people you’re serving as a nonprofit. Tie those ads directly into the investment that was made in order to create the social benefit.
All that requires from your donors is a quick glance at your ad headline as they scroll through Facebook. They see that for every dollar given to your organization, $17 are generated in return. That’s an easy sound bite. That’s a feedback loop. People don’t necessarily have to read an entire article or attend a quarterly meeting. They just need to feel good about the money they spent.
Companies know this. Nonprofits don’t. Companies know that in order to retain their customers they’ve got to market to them. They’ve got to provide a great client experience.
Why does Coca-Cola advertise when it’s the most recognized brand in the world? It’s not because they need more people to drink Coke. It’s to reaffirm that when you drink Coke, you feel good. You keep drinking Coke.
Reinforce and repeat. Social media ads are great for that.
Another way to deliver feedback is by providing an in-depth look with a case study.
You can do this at a gala or meeting by having one person go up on stage and give a testimonial. It doesn’t have to just be the stories of the people that are benefiting, it could also be the volunteers. This is a powerful way to provide validation that your nonprofit is making an impact.
The 2nd Myth: Timing
You say: “I’m in the accumulation phase of life. I’m not ready to give to charity yet.”
I say: “Bullshit.”
“I’ll do it when I have more money.”
“I’ll do it once I’ve exited my business.”
“I’ll do it in the next phase of life.”
People, entrepreneurs especially, avoid giving money to charity. A lot of excuses. One reason.
They look at giving money like it’s an expense. They don’t look at it as an investment, but they need to.
Your donation is an investment to the community and yourself because it provides a tremendous amount of happiness and joy when you get the feedback loop.
Not to mention that it’s scientifically proven: people who give money actually get more money in return.
Research shows that for every $1 in additional income, givers donate $0.14. And for every $1 you donate, your income rises by $3.45. How? It’s because people who approach life in a giving manner become highly valuable in their companies.
Let’s triple your impact! Give $1, get $3.74. Research shows Givers earn more.
If you’re an entrepreneur you approach your network in a giving manner. Your network are those people who are going to go to bat for you. They’re going to help you grow and scale your company. When you give to your network, your network gives to you.
Donating money is a means of scaling our companies. We make more money as a result.
There’s compounding returns on giving as well, just like any type of investment.
Imagine you wait until you sell your business before donating $20 million. The impact of donating that $20 million in 20 years is nowhere near what it would be if you donated $1 million every year for 20 years starting today.
Don’t underestimate the power of compounding impact. Give over time, not later in a lump.
You make a much bigger impact and you create a lot more excitement if you give along the way as opposed to waiting until there’s some major liquidity event.
Entrepreneurs need to stop looking at giving from a scarcity mindset, where everything is an expense. Instead, they need to look at giving strategically.
Giving is strategic because it’s a tool to increase your income, but it requires an investment just like any other.
So if I told you that you could triple or nearly quadruple your income based on giving, would you do it?
Come back next week as I take on 2 more myths about giving.