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Understanding the Fundraising Cycle: 5 Ways to Raise More

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Whether you’re a seasoned nonprofit professional or a newcomer to the fundraising world, your team likely follows a similar set of processes to attract, acquire, and retain donors. This framework is called the fundraising cycle, and optimizing your current practices can make a big difference in your campaign results and donor retention rate.

To help you start optimizing your fundraising cycle activities, we’ll review these topics:

Understanding your organization’s approach to the fundraising cycle can greatly enhance your fundraising prowess. As we review the details of the fundraising cycle, consider how your nonprofit currently operates within each stage. Let’s explore how to leverage these tips and secure sustainable support.

Click here to learn more about how matching gifts can improve your fundraising effectiveness.

 

Fundraising Cycle: Important Terms to Know

You’ll likely encounter these terms as you delve deeper into the fundraising cycle. Here are their definitions and an extended example of an animal shelter to contextualize them:

The fundraising cycle refers to the strategic steps nonprofits take to boost fundraising results.

The animal shelter’s fundraising cycle starts by identifying goals, which is followed by planning adoption drives and fundraising events, which is followed by the launch of these campaigns and ends with the nonprofit assessing performance.

The donor cultivation cycle is the process of nurturing connections with donors over time with strategic interactions and communication cadences.

The animal shelter creates a strategy of organizing an open house adoption fair, inviting interested supporters to a small-group shelter tour, and then concluding the cycle by inviting these attendees to the shelter’s annual fundraising event. 

Sustained donor engagement is the ongoing involvement and interest donors display in your nonprofit’s programs, story, mission, community, and beneficiaries.

The animal shelter keeps donors updated and interested in its cause by sending out monthly donor newsletters highlighting new additions to the shelter and pointing out upcoming fundraising events.  

Donor dynamics are the evolving characteristics, behaviors, interests, and preferences of your donor community. 

The animal shelter notices a shift in their donor dynamics when it experiences an influx of young professional donors who prefer to give on mobile devices, so the organization revamps its online giving page to align with their preferences. 

The donor lifecycle represents the stages through which your nonprofit’s average donor progresses throughout their relationship with your organization.

An average donor lifecycle for the animal shelter might be a donor who hears about the shelter from a friend, adopts a pet, donates at least once a year, and eventually upgrades the value and frequency of their gifts. 

Donor cultivation is the practice of building strong relationships with potential donors to secure a gift from them.

The animal shelter’s team invites animal lovers in the community to join them for an adoption open house where the nonprofit can show the impact of its mission in an emotional way and secure support.

Donor stewardship is the practice of managing and deepening existing donor relationships to maintain or upgrade their involvement with your organization. 

After a donor gives for the first time, the animal shelter’s team sends a personalized thank-you letter. Also, the team puts the new donor in an outreach segment that’s designed to suggest new engagement opportunities so they can scale up their support. 

Donor development encompasses all efforts and tactics your nonprofit uses to strengthen its relationship with donors, no matter the stage of its lifecycle.

The animal shelter practices donor development by prioritizing outreach and building relationships with donors and prospects by leveraging the emotional impact of adopting an animal. As donors progress through their lifecycle, tactics get increasingly personalized so that the donor trusts them enough to devote more gifts to them over time. 

Now that you know these essential terms, let’s answer some other questions you might have about the fundraising cycle. 

Fundraising Cycle FAQs

What are the stages of the fundraising cycle?

Fundraising cycles might differ from organization to organization, but the typical fundraising cycle includes these stages. Let’s view them through the lens of the example animal shelter from earlier:

The fundraising cycle (as explained below)

Identification, in which nonprofits pinpoint donor prospects.

The animal shelter uses multiple analytics and strategies to pinpoint potential donors who are more likely to support its cause. The team focuses its efforts on those who have adopted animals from them.

Qualification, in which nonprofits assess the donor’s capacity and likeliness to give.

Once the animal shelter’s team has pinpointed a group of donor prospects from its group of adopters, it examines the public information available that could signify each prospect’s financial capacity to give. For instance, the team could leverage public records to research the prospect’s past contributions to charitable causes, as well as their participation in animal welfare programs as volunteers.

Cultivation, in which the nonprofit builds a relationship with the donor.

Next, the animal shelter’s team gathers the contact information for each prospect and adds them to its outreach stream. To show prospects how important the shelter’s work is, the team might invite them to a behind-the-scenes tour of the facility or highlight metrics from previous annual reports in outreach materials.

Solicitation, in which the nonprofit asks the donor to give.

Depending on the prospect’s giving potential, it might take the animal shelter’s team some time to build a strong relationship with them. After the team has cultivated a firm connection with the prospect, it’s time to make an ask tailored to the prospect’s interests, preferences, and giving potential. 

Stewardship, in which the nonprofit shows gratitude for the donation and attempts to retain the donor.

Once the prospect has donated, the animal shelter’s team expresses its appreciation. For example, the team might send a handwritten thank you note, publicly recognize the donor online, or add them to a plaque in its office. Even after the donor gives, the team continues strengthening their relationship so the donor renews their support in the future.

Your fundraising circle will eventually follow this pattern with consistent iteration over time: The stages of the donor lifecycle (as explained below).

  • After the nonprofit donor gives for the first time, they’ve been acquired by your nonprofit.
  • Then, the nonprofit either loses the donor’s support and they lapse, or the nonprofit retains them.
  • Over time, if the donor expands their engagement with the nonprofit (either by increasing the value of their contributions or supporting the nonprofit in additional ways), they become upgraded.
  • After this stage, your nonprofit has firmly won the donor’s trust and they’re more likely to remain a long-term advocate for your cause.

Learn more about optimizing your donor lifecycle with our ultimate guide.

Why is the fundraising cycle important?

Using the fundraising cycle as a blueprint for your own strategies can help your nonprofit:

  • Develop standard fundraising processes. Once your nonprofit has found strategies that work for your community and niche, standardizing these processes can help save time spent on outreach and cultivation. 
  • Adapt to a changing donor base. As you optimize your practices to reach new donors, such as integrating technology into your workflow, using your standardized fundraising cycle can help adapt to new donor preferences, too. 
  • Build long-term relationships. As previously mentioned, expanding the fundraising cycle long-term can yield a highly loyal donor community. 

Leveraging the Fundraising Cycle: Top Strategy for Each Stage

As you plan to implement a fundraising cycle for the first time or optimize your existing setup, keep these tips in mind to improve your efforts.

Identification Stage: Use Data Analytics and Key Performance Indicators

In the initial stage of the fundraising cycle, your team needs to start strong by precisely researching and pinpointing donor prospects. By using a data-driven approach, your nonprofit can reduce errors, save time and resources, and quickly funnel prospects to stage two. These tips can help you implement data analytics and key performance indicators (KPIs) into your strategy:

  • Pick your KPIs based on your goals. There are many KPIs your nonprofit can choose to monitor, but you should spend your time on the ones that most accurately align with your objectives. 
  • Leverage predictive modeling. Take your analytics to the next level by adding predictive modeling to your strategy. This technique allows you to use historical data from your CRM and algorithms to predict which individuals are most likely to convert into donors. 

Throughout this stage, ensure that your team is following the correct data hygiene protocols so you can maintain efficiency and effectiveness. NPOInfo’s guide to data hygiene for nonprofits suggests adding these activities to your routine:

  • Standardize your data formatting and collection processes.
  • Regularly back up your data.
  • Invest in data appends to account for any missing information

Qualification Stage: Implement Donor Scoring 

Once you’ve identified donor prospects, you need to prioritize who you plan to reach out to so you can secure gifts faster. Donor scoring provides a standard measurement to help you structure your outreach. You can score donors based on the following criteria:

  • Giving History and Preferences
  • Wealth
  • Connection to Your Cause
  • Referral Source
  • Demographic Factors
  • Community Connections
  • Communication Preferences and Responsiveness

Your nonprofit should pick criteria that align with your objectives. For example, if your nonprofit is deeply involved with a corporate sponsor, you might consider adding a field to account for that sponsor’s employees as they might have unique motivations for supporting your cause. Here’s an example donor scorecard to inspire your nonprofit: 

A donor scorecard with the aforementioned criteria.

Cultivation Stage: Segment Donor Audiences

From general community members to major giving prospects, your team has many donor audiences that you should target with your communication strategy. However, to resonate with the most donors possible, you need to create unique messages for them. 

You can conduct personalized donor outreach efficiently by segmenting your donors based on shared characteristics. For example, you might segment them based on their relationship to your mission, demographic factors, or giving capacity. That way you can send out targeted communications without painstakingly writing an original message for everyone. 

As you start to segment your communications, consider adding these tactics to improve results:

  • Refine segmentation criteria. Over time, your target audience will evolve in numerous ways. Keep tabs on your segments and consider ways that you can better reach them. For instance, if you gain a large amount of younger donors, you might want to add SMS messaging into your outreach so you can align with their communication preferences.
  • Test your communications for effectiveness. You can gain important insights into your outreach strategy by testing it against other methods. A/B testing is an effective way to understand how different segments respond to different communications. For instance, you might draft two separate emails for two halves of the same segment. Depending on how each half responds, you can see which tactic is more effective. 
  • Automate segmentation. If you aren’t sure which segmentation tactics would work best for your audience, you can use technology to find the best options. Marketing software with automated segmentation can provide you with custom recommendations based on your goals and the information stored in your CRM. Plus, marketing software can also automatically create contact lists so you can send out communications quickly once you have segments planned.

Solicitation Stage: Promote Matching Gifts

The fourth stage is the most crucial for achieving your end goal of securing a donation. Offering many ways to give helps you target as many prospects as possible and convert them into loyal donors. You likely already offer tried and true ways to give such as individual donations, but you can attract even more people by promoting and leveraging matching gifts. 

Did you know that 84% of donors are more likely to donate if they know their gifts will be matched? Many employers offer matching gift programs, which your nonprofit can leverage to inspire community members to give. Besides promoting matching gifts, you can boost the likelihood of donors matching by using matching gift software. The right solution will connect to a database of companies with matching gift programs and tell your donors about their company’s policy based on their work email. Ultimately, offering matching gifts is a win-win-win—your nonprofit receives crucial funding, your donors can multiply their impact effortlessly, and their employers can give back to a worthy cause.

Want to learn more about matching gift software? This educational video from Double the Donation is a great resource for beginners:

Stewardship Stage: Leverage Donor Feedback Loops

Once you’ve acquired donors, you need to actively maintain your relationship with them to keep them actively engaged long-term. Feedback loops can inform your engagement strategy with insights straight from your donors and help them feel valued by your organization. Here’s how to implement them to improve your fundraising cycle:

  • Provide user-friendly ways to give feedback, such as online surveys.
  • Keep donors informed on your feedback-evaluation process.
  • Respond to each donor personally and inform them why you did or didn’t end up accepting their idea.

By openly communicating with donors during the feedback process, you demonstrate your commitment to improving your practices to serve donors better and that you respect your donors’ opinions. This can help you attract more donors in the future and retain current donors. 

Wrapping Up + Additional Resources

Now that you understand how the fundraising cycle works and why you should leverage it, you can start creating and improving your own. With some planning, standardization, and iteration, your nonprofit can make a solid structure that works for your niche and, ultimately, improve the donor journey and secure lifetime support. 

Supercharge your fundraising cycle by leveraging the easiest way to give: matching gifts. Click here to get a demo of Double the Donation, the top matching gift platform.