1 MANAGING FUNDRAISING EFFECTIVELY IN AN ERA OF ECONOMIC RECOVERY: A NATIONAL STUDY OF THE RELATIONSHIP BETWEEN STEWARDSHIP PRACTICES AND DONOR RETENTION By HAISHI CUI A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN MASS COMMUNICATION UNIVERSITY OF FLORIDA 2012
2 2012 Haishi Cui
3 To my beloved parents and friends for lighting up my world
4 ACKNOWLEDGMENTS As an old Chinese saying goes: Single conversation with a wise man is worth a s study of books. I feel so blessed to have had such conversations with professors in the College of Journalism and Communications during my two years of st udy at the University of Florida First, I would like to express my sincere gratitude to my advisor and committee chair, Dr. Kathleen Kelly, for inspiring my interest and passion in the nonprofit sector, for offering me insightful suggestions on both acad emic study and professional development, and for reviewing and revising my drafts in detail to make the work richer. I am truly grateful for all her instructions and help from the first class I took with her to the accomplishment of this paper. Her dedicat ion to professionalism and perfection set a role model for my life. I also want to thank my committee members, Dr. Linda Hon and Dr. Moon Lee, for providing valuable advice on my study and for challenging me to improve my work to a higher level. Secondly, Dr. Cathy Williams, who is in charge of the research program at the Association of Fundraising Professionals offered me great help in obtaining the patience and kindness regarding my request. Even though I cannot recognize all of their names here, I would also like to thank the fundraisers who participated in my survey during a busy time of their fundraising programs and provided valuable information and suggestions for m y study. In addition, without the great help from my fr iends, I could not have gotten through this hard time. Thank you to Xuefan Qi, who encouraged me all the way along and
5 helped me whenever I needed during our ten years of friendship. I also want to gi ve special thanks to my dear roommate, Jing Sun, who pushed me to stay focused during my unproductive days. Thanks to my friends Gong Zhang, Chao Ding, and Guangfan Hu. I will always remember the day we folded my survey letters and stamped the envelopes to gether. Finally, it is my beloved parents, Qi Cui and Yongyan Shi, who made all of my dreams come true. They support me with tremendous efforts, forever trust, and endless love. Their life long commitment to support my education makes my achievement possi ble.
6 TABLE OF CONTENTS page ACKNOWLEDGMENTS ................................ ................................ ................................ .. 4 LIST OF TABLES ................................ ................................ ................................ ............ 8 LIST OF FIGURE S ................................ ................................ ................................ .......... 9 ABSTRACT ................................ ................................ ................................ ................... 10 CHAPTER 1 PURPOSE OF THE STUDY ................................ ................................ ................... 12 2 REVIEW OF THE LITERATURE ................................ ................................ ............ 17 Nonprofit Sector and Fundraising in the United States ................................ ........... 17 ROPES ................................ ................................ ................................ ................... 19 Research ................................ ................................ ................................ .......... 20 Objectives ................................ ................................ ................................ ......... 21 Programming ................................ ................................ ................................ .... 22 Evaluation ................................ ................................ ................................ ......... 23 Stewardship ................................ ................................ ................................ ...... 23 Stewardship and Nonprofit Donor Relationships ................................ .................... 27 Donor Retention and Donor Loyalty ................................ ................................ ........ 30 Research Questions and Hypotheses ................................ ................................ ..... 32 3 METHODOLOGY ................................ ................................ ................................ ... 36 Population ................................ ................................ ................................ ............... 36 Survey Design ................................ ................................ ................................ ........ 38 Data Collection ................................ ................................ ................................ ....... 40 Data Analysis ................................ ................................ ................................ .......... 42 4 RESULTS ................................ ................................ ................................ ............... 45 Participants ................................ ................................ ................................ ............. 45 Research Questions and Hypotheses ................................ ................................ ..... 48 Research Question 1 ................................ ................................ ........................ 48 Hypothesis 1 ................................ ................................ ................................ ..... 52 Hypothesis 1a ................................ ................................ ............................ 52 Hypothesis 1b ................................ ................................ ............................ 54 Hypothesis 1c ................................ ................................ ............................ 56 Hypothesis 1d ................................ ................................ ............................ 57 Research Question 2 ................................ ................................ ........................ 59
7 5 CONCLUSION ................................ ................................ ................................ ........ 70 ROPES Model ................................ ................................ ................................ ........ 70 Stewardship and its Elements ................................ ................................ ................. 72 Reciprocity ................................ ................................ ................................ ........ 73 Responsibility ................................ ................................ ................................ ... 74 Reporting ................................ ................................ ................................ .......... 75 Relationship nurturing ................................ ................................ ...................... 76 Donor Retention ................................ ................................ ................................ ...... 78 Stewardship Practices and Donor Retention ................................ .......................... 79 Implications for the Practice ................................ ................................ .................... 81 Impact on Fundraising and Public Relations Theory ................................ ............... 84 Limitations of the Study ................................ ................................ ........................... 85 Sugg estions for Future Research ................................ ................................ ........... 88 APPENDIX A QUESTIONNAIRE ................................ ................................ ................................ .. 91 B INFORMED CONSENT FORM ................................ ................................ ............... 95 C CO VER LETTER ................................ ................................ ................................ .... 96 D POSTCARD REMINDER ................................ ................................ ........................ 97 LIST OF REFERENCES ................................ ................................ ............................... 98 BIOGRAPHICAL SKETCH ................................ ................................ .......................... 104
8 LIST OF TABLES Table page 4 1 Demographics and characteristics of participants and their organizations ......... 63 4 2 Mean percentages of time spent on steps of the ROPES process ..................... 65 4 3 ROPES Model: Findings of three studies ................................ ........................... 66 4 4 Mean scores on stewardship and its elements ................................ ................... 67 4 5 Donor retention rates ................................ ................................ .......................... 69
9 LIST OF FIGURES Figure page 2 1 ROPES process model of public relat ions & fundraising ................................ .... 35
10 Abstract of Thesis Presented to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Masters of Arts in Mass Communication MANAGING FUNDRAISING EFFECTIVELY IN AN ERA OF ECONOMIC RECOVERY: A NATIONAL STUDY OF THE RELATIONSHIP BETWEEN STEWARDSHIP PRACTICES AND DONOR RETENTION By Haishi Cui May 2012 Chair: Kathleen S. Kelly Major: Mass Communication As gifts from individual s, corporations and foundation s inch upward slowly in an economy struggling to recover from the recent recession, charitable nonprofit organizations face great challenges to fulfill their missions with tight budgets and increasing demands for services. Th ere has never been a more urgent time for nonprofits to rethink their fundraising process and relationship management with donors. Recently, donor retention has received a great deal of attention from fundraisers as increasingly more organizations realize it is a cost effective strategy to keep the organization balanced and healthy. The purpose of the study was to examine the practice of stewardship and its relationship with donor retention in the fundraising process among nonprofits with diverse missions i n the United States. Conducting a mail survey of a random sample of 700 fundraising members of the Association of Fundraising Professionals (AFP), this study explored the time spent on each step in the ROPES Model of the fundraising process, namely, resea rch, objectives, programming, evaluation, and stewardship. Even though the study found
11 that time allotment differs from the norm recommendations, it still supports the tested theory that the fundraising process involves strategic management rather than sim ple solicitation. In addition, the study examined and c ompared stewardship practices of the four elements of reciprocity, responsibility, reporting, and relationship nurturing with annual giving donors and major gift donors. Results showed that nonprofits represented in AFP are above the midpoint of the scale in their practice of stewardship with both types of donors, but they practice stewardship significantly more with major gift donors, as perceived by their fundraisers. This study also found that most A FP organizations spend great effort on retaining donors and regard donor retention as one of the highest priorities of fundraising. Finally, the study identified a positive and significant relationship between the practice of stewardship and donor retentio n. Findings provide meaningful and practical implications for fundraising practices and donor retention management. The study also contributed to the body of knowledge on fundraising, increasing understanding of the ROPES Model, stewardship practices, and nonprofit donor relationships.
12 CHAPTER 1 PURPOSE OF THE STUDY During the recent economic recession, giving to charitable organizations in the United States dropped 7% in 2008, which was the largest decline on record since 1956, when Giving USA st arted estimating giving statistics (Chiu, 2011). Gifts from wealthy American donors plummeted by an average of 35% from 2007 to 2009, according to a study by Bank of America Merrill Lynch and the Center on Philanthropy at Indiana University (Blum, 2010). A fter experiencing record declines in giving in 2008 and 2009, charitable nonprofits continue to face fundraising challenges due to the slow recovering economy (Giving USA Foundation, 2011). Contributions from the 50 wealthiest donors on The Chronicle of Ph ilanthropy 2010 (Mento & Preston, 2010). Giving from foundations and corporations also shrank during and after the recession. According to a Chronicle 2010 survey of the180 largest corporations in t he United States, big businesses said their donations in cash would not reach the amount they gave before the recession in the upcoming years (Frazier & Lopez Rivera, 2011). In general, gifts from individuals, foundations, and corporations increased very s lowly in the aftermath of this economic recession Financial difficulties cause large numbers of charitable organizations, particularly the smaller entities (expenditures below $3 million), to struggle for securing funds for survival with tight operating budgets (Nonprofit Fundraising Study, 2011). 65% non profits in the survey reported a plan for increases in demand of funds for operating services in 2012, however, the amount of donations send out an obvious signal of t o increase staffing levels or extending operating hours (Nonprofit Fundraising Study,
13 2011). Hence, within the changing charitable donation environment, many nonprofits need to rethink their management strategies and differentiate their own advantages in f undraising practices (Naskrent & Siebelt, 2011). Merely acquiring new donors at growing costs is not a wise way for increasing gifts ; moreover, a sustainable donor base with a high donor retention rate is becoming more and more important for the healthy de velopment of charitable organizations (Bennett & Gabriel, 2003). In the aftermath of the recession, with worldwide unstable economies, retention of previous donors is more critical than ever as many charitable organizations witness a decrease in valuable p revious donors due to lack of cultivation and wastes of a substantial proportion of fundraising expenditures (Association of Fundraising Professionals, 2008b). Adrian Sargeant, a professor of Fundraising at the Center on Philanthropy at Indiana University conducted a series of studies on fundraising from a marketing relationships perspective. He pointed out that charities should pay more attention to the loyalty of donors due to the significant loss of previous donors and donation (Sargeant & Woodliffe, 2 007). Established by the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute, the Fundraising nonprofit or organizations gained in gift dollars in 2010, approximately $5.54 was lost in donor e effort and budget spent on new donor acquisition did bring a growth rate of 58.6% in gains; however, the losses from downgraded and lapsed donors, who gave less or did not gave in the current year, results in a loss ratio of 56.9% in 2010.
14 Data collected by AFP suggested that the rate of donor retention in the U.S. is very low, with a mean rate of only 26% for initial cash giving (Levis, 2008). These statistics just given suggest that U.S. fundraisers need to align their strategies with economic reality a nd strategically focus resources on donor retention to ensure the well being of their organizations in the years ahead. Due to this practical problem in nonprofit sector, there is an increasing necessity for investigation on variables influencing donor re tention both theoretically and empirically (Kristoffersen & Sigh, 2004). Traditionally, both practitioners and academic researchers have focused on membership or the motivation for giving (Sargeant, 2008). However, the economic recession prompts a new and urgent question for investigation: Why do donors stop giving? It is quite different to answer why donors are motived to give the first time than to understand their motivation to keep up supporting a certain organization over time (Bussel & Forbes, 2006; S argeant, 2008). Some possible answers reported in trade publications include donors not knowing where their money goes, and what the charity is trying to achieve (Hall, 2006). Donors may also dislike the way the charity treats and communicates with them. P enelope Burk (as cited in Hall, 2006), president of Cygnus Applied Research, a Chicago fundraising consulting firm, centered research determined that over 70% of donors say that the value of their first gift is considerably less than they could have made at that time. One conducted by Nathan and Hallam (2009) also found that poor communication strategies and failure to meet expectations pushed dono rs away. Donor reported several issues regarding fundraising practices: (1) inappropriate thanks, (2) over solicitation, (3)
15 receiving inappropriate communications, and (4) not receiving recognition for long term support (Nathan & Hallam, 2009). The key to donor retention goes back to good relationship management practices (Caldwell, 2012). Practitioners commonly agree that identification, cultivation, and maintenance of relationships with donors are key to building donor loyalty and generating gift dollars (Sargeant, 2002). As nonprof it consultants Tom Ahern and solicitation s Instead, nurture relationships. Effective fund development starts and ends charitable organizations build and maintain strong relationships with donors? Increasingly fundraisers realize that effective stewardship is one of the most effective revenue, decrease costs, decrease cost per doll ar raised, and move more donors up by sending thank you letters, communicating effectively on how they use their gifts, and cultivating long term relationships (Mento, 2009). As Katya An dresen (as cited in West, 2010), chief increasingly expect engagement that makes them seen, heard, and involved, both This study adopts the ROPES p rocess model of fundraising (Kelly, 1998, 201 1), with its five steps of research, objectives, programming, evaluation, and stewardship. The fifth step of stewardship practice includes four elements: reciprocity, responsibility (including responsible gift u se), reporting, and relationship nurturing. Stewardship is also a cultivation or maintenance strategy in the public relations theory of relationship
16 management (Hon & Grunig, 1999). Previous studies have proved that effective nonprofit donor relationship s management through stewardship practices plays a positive role on securing major gifts and donor retention in planned giving programs (Wate rs, 2009; Caldwell, 2012). With increasing cultivation on annual giving donors, it also requires an examination on re lationship management and its impact on donor retention for both types of donors (Waters, 2009; Naskrent & Siebelt, 2011) The study examines the amount of time fundraisers invest in the five steps of the fundraising process, with a concentration on maint aining and enhancing relationships with previous donors through the practice of stewardship. It hypothesizes that stewardship practice is highly practiced in nonprofit organizations. In addition, this study explores other influencing factors of charitable organizations on the stewardship strategies and donor retention rates. Therefore, such an analysis requires taking the provide information on donor retention rates. Through analyses of the relationship between stewardship practices and donor retention rates, this study provides useful guidance for fundraisers to effectively manage donor relations and increase donor retention with strategic communication and effective relationships management. One major academic contribution is that findings test the conceptualization of stewardship. Adopted from public relations (Kelly, 2001b), enhancing the ROPES model also adds to the body of knowledge of public relations. Furthermor e, the study, for the first time, relates stewardship practices to donor retention for both annual giving donors and major gift donors with scientific evidences.
17 CHAPTER 2 REVIEW OF THE LITERATURE This chapter starts with a general overview of fundraisin g in nonprofit sector, followed by discussion on the main concepts of fundraising practice. The chapter also includes a description of ROPES model with a focus on stewardship practices. In addition, the donor retention and donor loyalty concepts are explai ned. Finally, this chapter concludes with research questions and hypotheses that direct the study. Nonprofit Sector and Fundraising in the United States th e United States. Eve n during this economically challenging time, Americans individuals, corporations, and foundations -still donated an amount of $290.89 billion in 2010, which is about 2% of the gross domestic product in the U.S.A (Giving USA Foundation, 2011; Gross dome stic product, 2011). Currently, there are an estimated 1.57 million tax exempt nonprofit organizations registered with the U.S. Internal Revenue Service according to the National Center for Charitable Stati stics (2011). Among them, 61% are charitable orga nizations with the 501 (3) status, w hich are eligible to receive tax deductible gifts. The Urban Institute (2009) divides those diverse charitable nonprofits into the following categories: (1) Arts, culture, and humanities (10.9%) (2) Education (18.3%) (3) Environment and animals (4.4%) (4) Health (12.2%) (5) Human services (33.7%) (6) International and foreign affairs (2.0%) (7) Public and social benefit (12.1%) (8) Religion related (6.5%). Even though religious charitable organizations are small in number they receive the largest proportion (34.6%) of the total charitable donations of $290.89 billion in 2010, compared
18 to charitable organizations with other missions (Giving USA, 2011). Education division takes 14.3% of the rest, followed by gifts to founda tions (11.3%). It is not surprising that education achieves high revenues because of its sophistication on fundraising. Education employs the most full time fundraisers and Council for Advancement and Support of Education (CASE) conducts a large amount of research on educational fundraising (Kelly, 2002). To advance the understanding of overall nonprofit organizations and their fundraising practices, there is a need to conduct research on nonprofits with different missions other than education. As explaine d further in Chapter 3 this study chose members in the AFP as the sample to cover as diverse organizations as possible. Giving back to society has been a long time characteristic of U.S. culture since colonial times. However, there was no formal fundrai sing practiced until the early 1900s scholars and practitioners relate fundraising to phi lanthropy in general. Tempel (2003) based approach to the marketing point of view, Adrian Sargeant process of donor exchange that is based on the long term value that can accrue to both ed that marketing is different from fundraising for three main reasons: First, in market exchanges, the benefits only impact those who are involved, but in philanthropic exchanges some of the benefits spill over into society; Secondly,
19 marketing is concer ned with consumer publics, but donors and consumers are not acknowledged role of the fundraiser is t services by generating gifts (p. 12). donor relationships. Kelly (1998) defined fundraising practice as a specialization of public relation s with a focus on nonprofit donor relationships in a more comprehensive 8). This study adopts the public relations perspective to understand t he process of fundraising. Fundraisers usually classify fundraising programs into two categories. The annual giving program is the fundamental fundraising program in every charitable organization. It raises money to cover daily services and operation expe nses through regular programs every year. Annual giving tries to attract a large number of new donors and retain current donors (Kelly, 1988). Different from annual giving, the major gifts program requires more time and effort to personalize appeals to in dividual donors (Kelly, 1988). There is no universal guideline that indicates what gifts are considered as a major gift because they depend on different organizations. At the basic level, there is no difference in the application of ROPES model for annual giving program and major gift program. However, there are differences between the two in terms of time spent on each step and tactics on the four elements of stewardship (Kelly, 2001). ROPES Even in the aftermath of economic recession, fundraising still needs effective and systematic management more than ever before. Derived from a public relations model
20 by Jerry Hendrix (1995), Kelly (1998) conceptualized a fundraising process called ROPES, w ith five steps: research, objectives, programming, evaluation, and stewardship. The model is both descriptive and normative, describing what the fundraising process is like and how it should be practiced. A national survey conducted in 2001 provided eviden ce that ROPES is a valid description of the fundraising process (Kelly, 2001a). It is applicable to both annual giving and major gifts programs and encompasses gifts from the three donor types: individuals, corporations, and foundations. The final step of stewardship makes the model a circular loop for ongoing relationship management with donors (Kelly, 2001b). Research The first step in the ROPES process, research, is the most important step in the process (Kelly, 1998). In fundraising, a solid research ca n direct where energies and resources should be invested in and minimize risks for decision making ( Tempel, Seiler, & Aldrich, 2010). Research in fundraising provides fundraisers an overview of an and the way to communicate with donors. It requires practitioners to design research, gather data and analyze them. Many charitable organizations now provide sufficient resources to carry out research properly and continuously. Kelly (2001a) suggested tha t fundraisers spend 20% of their time on research, as shown in Figure 2 1. The basic methods for fundraising research include both qualitative and quantitative methods, such as environmental scanning, focus groups, and surveys (Burnett, 2002). Additionally fundraisers usually have many in house databases and records for secondary research (Kelly, 1998). (1998) suggested that research should start on the organization, providing a chance for
21 fundraisers to know their organization thoroughly and establish goals to support the fundraising research. It is essential to research each opportunity during an ec onomic challenging time. Then the final research aims at donor publics by segmenting them into annual giving donors and major gift donors, who should be matched to the organization and the opportunity. The more fundraisers know about donors and prospective donors, the more likely they can build quality relationships and accurately structure fundraising (Burnett, 2002). Objectives With research findings, fundraisers can move to the second step in the process to set objectives that are relevant, attainable, and measurable (Kelly, 1998). Objectives provide direction to programs, give guidance for implementation, and set up the criteria for evaluation (Broom, 2009). Objectives should be consistent with the general mission and goals of the organization (Brody & Goodman, 1988). Therefore, the objectives for Within the context of the organization, fundraisers need to develop specific action plans, which can be combinations of process and o utcome objectives (Lindahl, 2010). As shown in Figure 2 1, this step, which takes about 15% of time, involves with formulating output or impact objectives. Output objectives deal with programing production and efforts (Hendrix, 1995). Usually fundraisers use output objectives for the purpose of cultivation. Impact objectives, on the other hand, focus on the effects of fundraising on donor publics. According to communication theory, effects consist of cognitions (awareness, accuracy, and understanding), att itudes, and behavior. In the fundraising arena, repeat behavior is the most important effect because previous donors
22 are more likely to make another gift than nondonors and it costs much less to raise repeat gifts than new gifts (Kelly, 2001a). Programmin g Taking 30% amount of time, programming is divided into two parts: planning and term relationships with donors that fundraisers take time to develop a coherent fundraising plan with an eye on the big picture (Bray, 2010). Strategic planning results in a written fundraising plan, which includes a list of objectives, an outline of strategies and tactics, a description of activities and tasks, an estimation of budgets for both annual giving an d major gifts, research findings evaluation plans, and plans for stewardships (Kelly, 1998). Next, implementation can be further parted into two sub categories: cultivation and winning this 18 months before a given donor relationship produces any gifts. Ke lly (2001a) reported results of an AFP survey of its members that showed fundraisers spend a great portion of their time on building relationships. Similar to personal relationships building, nonprofit donor relations can be cultivated through informing do nors of programs and way communication (Kelly, 2001a). Solicitation becomes easier with good preparation and cultivation. According to by mail, by telephone, Online fundraising receives increasing attention recent days. Fundraisers need to choose appropriate techniques to communicate with donors in the two primary programs.
23 Evaluation The next step in ROPES theory is evaluation. Dose the programming lead to the accomplishment of all objectives? Too often the evaluation of fundraising is simplified to the amount of dollars received in a given year, and it determines the performance rk (Mesch & Rooney, 2008). Fundraisers may easily ignore the mission of the organization and the long process necessary for raising major gifts (Waters, 2007). In terms of ethics, fundraising should never be evaluated by dollar totals. Taking up 15% of ti me, evaluation should be conducted throughout the whole process of fundraising (Kelly, 1998). Effective evaluation happens at three stages. In the planning stage, preparation evaluation checks the background information used for the program and tests the m essage content (Broom, 2009). During implementation, it is necessary to monitor programming and make sure it stays on track. If anything goes wrong, fundraisers can change programming within the big context. After completing programming, the last evaluatio n stage takes place to measure whether both output and impact objectives are achieved (Kelly, 2001a). By analyzing the success or failure of the Stewardship If cultivation is relationships building before solicitation, stewardship is: The mirror focu ses on nonprofit donor relations, and accounts for 20 % of the amount of time spent
24 Green field (1991) for continued communication that will help to preserve their interest and attention to the orga nization assumes when it pursues and accepts the philanthropy of those who the Council for Advancement and Support of Education (CASE) consider stewardship as a duty of th e organization for its continued existence: To survive and flourish, an institution must engage a large group of enthusiasts who are passionately committed to supporting its mission with their wealth, wisdom, and work. That passion is based on a relationsh ip between the individual and the institution that must be sustained. Relationships built between individuals and the institution are made permanent through a program of recognition, engagement, and communication that encourages regular involvement and giv ing to the highest priorities of the institution (p. 1). How donors are treated after they make gifts builds an essential link between their donors and the recipient organizations, which makes the fundraising process continual and ethical. By conducting all elements of stewardship, fundraisers are not only future donations. That is why it is the second most important step in the process and very necessary for all relat ionship management (Kelly, 2001a). To manage stewardship effectively, Emlen (2007) pointed out that fundraisers should follow eight key behaviors among donors in terms of a good stewardship program: giving regularly, giving to priorities, giving in usable ways, giving to capacity, feeling recognized, agreeing to (2003) book Donor Centered fundraising: A donor based approach to the business of raising money she points out that if the charitable organization satisfies donor
25 requirements for acknowledgment and communication, the result will be an increase in donor retention. However, these two approaches are either organization centered or donor centered. This study takes the pos ition of a mix motive approach. Donating interests, as well as their altruism to the common good through the mission presented by the given charitable organization (Kelly, 1998). Four elements of stewardship: Stewardship co nsists of four elements: (2010) mentions the access to information and the right to receive appropriate acknowledgement, which are key components of stewardship. First, studies show that reciprocity is a universal moral code across all cultures and societies (Gouldner, 1960). It is an expected behavior for organizations to express reciprocity after receiving gifts from donors. Basically, it includes the expression of appreciation from the organization and acknowledgment of its publics (Waters, 2009) The most common act of you note needs to be sincere and timely. Expression of than ks shows mutual respects, maintains social balance and encourages further helping (Kelly, 2001a). When it comes to recognition, the organization should form appropriate benefits or gift levels for donors based on the size of the gift. For annual gifts, per sonalized letters produce higher gift values (Burk, 2003). VIP privileges to exhibits, parking, and events are appropriate for major gifts donors (Kelly, 1998). Some other public recognition can include named gift opportunities and admittance into gift clu bs or societies (Alexander & Carlson, 2005). cultures, it will make donors uncomfortable if the organizations praise donors for their
26 good deed in public. Therefore, private recognition should be used instead (Fredricks, 2009). Grounded in systems theory, the concept of responsibility means that charitable organizations do not exist in isolation; rather, they are part of the society and have a duty to act in a socially respo purpose (Kelly, 2001a). No matter annual giving or major gifts, organizations should use Since annual gifts are u sually unrestricted, they are more frequently misused than major gifts which are commonly restricted in purpose. Few donors would like their gifts to be used for administrative salaries and utility bills. Therefore, this element has both legal and ethical The third element in stewardship is reporting, demanding charita ble organizations integral and effective performance (Kelly, 2001a). Fundraisers need to inform donors of how well program services are implemented after utilizing t heir gifts. Some common conversations via telephone or online social media. Fundraisers should also demonstrate financial accountability by providing IRS 990 tax forms (Waters, 200 9). Donors should be informed with updates on how gifts are used and what benefits their gifts bring. Reporting standards issued by CASE (2009) provide good guidance for educational institutions to be held at significantly higher levels of accountability. The
27 newest edition contains revisions to the reporting standards special for campaigns in order to recognize the importance of all donors, the value of all gifts, and the efforts of all staff fundraisers. For example, planned gifts must be accurately expla ined in the reports and all contributors should be recognized. Relationship nurturing, the fourth element of stewardship, is critical to the run. This is particularly very true when organizations are facing economic challenges. Without building relationships ahead of time, it is hard or even impossible to ask for help when needed. Relationship nurturing creates perceptions among donors of care, appreciation, and respect for their interest and involvement (Worley & Little, 2002). Previous donors are more likely to give again than nondonors and it costs less to cultivate previous donors than to solicit new donors (Kelly, 1998). Kelly (2001a) suggested that the most effecti ve way to nurture relationships is as simple as recognizing the importance of prospective donors and keep them in mind when making any decisions. Rather than contacting with donors only for solicitation, fundraisers nicate with them at other times as well (Kelly, 1998). Communication strategies and tactics used are presented in many practical trade journals. Consultant Laura Fredricks (2009) suggested that fundraisers should keep donors close with newsletters and e ma il messages and record donor information and conversations in databases in order to maintain effective communication and relationships. Stewardship and Nonprofit Donor Relationships stablished
28 conceptualization of organization public relationship dimensions (Ho n & Grunig, 1999). Four commonly used dimensions are control mutuality, trust, satisfaction, and commitment. Control mutuality refers to the power sharing between two parties within a ss to open oneself Satisfaction is the extent to which one party favors the other because they form positive expectations about the relationship. Commitment has been which one party believes and feels that the relationship is worth spending energy to tested the relationship between stewardship practices and rel ationship management in both academic and practical fields. By analyzing the lack of success in the Coaches vs. Cancer campaign, Worley and Little (2001) illustrated the importance of two way communication and the necessity of stewardship in any fundraisin g campaign. This study tested the effectiveness of step public relations model (situation analysis, publics, objectives, strategies, tactics, timetable, budget, and evaluation) in the Coa ches vs. Cancer campaign. The campaign focused mainly on developing new donors. Neither adequate appreciation nor recognition was dedicated to developed a purely promoti onal approach for solicitation with no nurturing of relationships. In general, the Coaches vs. Cancer campaign did not reach its goal due to the lack of stewardship in fundraising.
29 Besides the case study, previous literature also tested the theory of Hon a nd elements. Waters (2007) conducted a survey among staff fundraisers at three Northern California hospitals and found that they rated all dimensions of nonprofit donor relationships and elements of stewardship positively. Both annual giving an d major gift were examined and donors rated commitment as the most favorable relationship dimension, followed by trust, satisfaction, and control mutuality. Fun draisers had higher scores on all four elements of stew ardship than did donors. (2009) study on stewardship among annual giving and major gifts donors in the hospitals revealed that focusing on responsibility can help strengthen trust feeling in th e nonprofit donor relationships. And nurturing relationships over a long period of time can turn out to be an even stronger method of developing trust. Interested in the museum sector, Dell (2009) advanced the study of stewardship by finding that senior fu ndraisers at American Association of Museums (AAM) accredited museums practiced s tewardship above the midpoint on a nine point scale and a significantly positive correlation between the practice of stewardship and the quality of relationships with annual g iving and major gift donors, as perceived b y fundraisers. Similar to Water s (2007) study, AAM accredited museums practiced stewardship more and had higher quality relationships with major gift donors than with annual giving donors. d not find a significant relationship between the practice of stewardship and the amount of gifts raised by the organization. The finding was not surprising, as Kelly (1998) stated that fundraising is not about money but about
30 relationships. In addition, O were not significantly related with the amount of money raised, but high quality of nonprofit donor relationship s were associated with years of support, willingness to continue donating, and liken ess to recommend that others donate. In the practical fundraising field, practitioners also conduct research to explore the nonprofit donor relations. The Cygnus research team developed a donor centered fundraising approach based on large donor databases ( Burk, 2003). According to its findings, Burk believed that practicing stewardship is a way to show respect through relationship with donors, nor is it a momentary thing. It is pervasive. In essence, the urk, 2003). During the economically challenging time, many fundraising practitioners noticed that nonprofits depended on donors more than ever (West, 2010). Charitable organi zations find that they may get generates beneficial relationships and creates a win win zone for nonprofits and donors. As Emlen (2007) pointed out: Intentional stewardship begins with a definition of philanthropy as the synergistic relationship between those with resources and organizations with programs and access to beneficiaries. Stewardship i s no longer an end stage activity in fundraising but a contract between philanthropists and nonprofit organizations to work together for the common good. Stewardship, therefore, is managed as the Donor Retention and Donor Loyalty Most charitable organizations experience relatively large proportional losses of donors between the first and second gift (Sargeant & Jay, 2004). Some surveys show
31 that up to 50% of recruited donors never give a second gift. After that, orga nizations continue to lose 30% of their previous donors every year. The regular attrition rate is near 20% per year. During the economic recession and its aftermath organizations suffered even a higher loss ratio of 55.9% in 2007 and 56.9% in 2010, due to the decrease of individual, corporation, and foundation donors (FEP, 2011). Therefore, donor retention deserves more attention from fundraisers in order to hold the number of donors who stop giving to a minimum and to reduce the cost and effort for the or ganization to continually seek new donors (Sargeant, 2001b). One aspect illustrates the importance of donor retention from a relationship marketing perspective. Relationship marketing focuses on customer retention and development (Berry, 1983). Customer re tention means to build and maintain a lasting relationship with a customer, which happens between market transactions as a non coincidental sequence (Royce, 1971). Adopting this approach into nonprofit sector, e value is at the core of relationship to build long term relationships with donors. If organizations distribute higher budgets for enhancing loyalty, the effect of increasing donor loyalty by 10% would increase the lifetime value of the fundraising database by up to 200% (Sargeant & Jay, 2004). Sargeant (2004) thought that donor retenti on is all about donor loyalty, which describes the relationships between charitable organizations and donors from several drivers: satisfaction, commitment, and trust. Donor loyalty is a key factor for long term successful fundraising. It builds nonprofit donor relationships based on mutual respect,
32 openness of information, and continuous cultivation. It provides an opportunity for donors to get involved and gives them a sense of participation that ensures the success of stewardship. Budget allocation for s tewardship practices, although sometimes difficult to justify in the short term, has a significant long term impact on overall fundraising (Grace, 2005). Worth (2002) said that if stewardship practice were effective, donor loyalty and trust would rise. The Association of Donor Relations Professionals (2010) defines donor relations as follows: Donor relations is the comprehensive effort of any nonprofit that seeks philanthropic support to ensure that donors experience high quality interactions with the orga nization that foster long term engagement and investment (paragraph 1). The efforts to build donor relations consist of four elements: gift acceptance and management, acknowledgment, donor recognition (including events), and reporting, which cover some el of the four elements together supports donor acquisition and retention (Association of Donor Relations Professionals, 2010). A study conducted in New Hampshire institution found out a high correlation between donor retention rate and major gifts. Major gifts donors had a consistent giving history before they made the first gift of $50,000 or more. A strong relationship management strategy on donor loyalty can bring significant increase on r evenue (Caldwell, 2012). Research Questions and Hypotheses Based on the issues and literature reviewed, the following research questions and hypotheses form the basis of the study. The research not only examines the ROPES process, but also the extent to wh ich the four elements of stewardship are practiced.
33 RQ1: To what extent do staff fundraisers practice each step of the ROPES process of fundraising for annual giving programs and major gifts programs? RQ1a: To what extent do staff fundraisers practice res earch for annual giving programs and major gifts programs? RQ1b: To what extent do staff fundraisers practice objectives for annual giving programs and major gifts programs? RQ1c: To what extent do staff fundraisers practice programming for annual giving programs and major gifts programs? RQ1d: To what extent do staff fundraisers practice evaluation for annual giving programs and major gifts programs? RQ1e: To what extent do staff fundraisers practice stewardship for annual giving programs and major gif ts programs? Water s practice stewardship more in relationships with major gift donors than with annual giving donors. The following hypothese s are proposed to compare the practice of stewardship and its four elements with annual giving donors and major gift donors. H1: Compared to stewardship practices with annual giving donors, fundraisers practice stewardship significantly more with major gift donors. H1a: Compared to the practice of reciprocity with annual giving donors, fundraisers practice reciprocity significantly more with major gift donors. H1b: Compared to the practice of responsibility with annual giving donors, fundraisers practice responsibility significantly mor e with major gift donors. H1c: Compared to the practice of reporting with annual giving donors, fundraisers practice reporting significantly more with major gift donors. H1d: Compared to the practice of relationship nurturing with annual giving donors, fundraisers practice relationship nurturing significantly more with major gift donors. Even though few previous studies examine the relationship between stewardship and donor retention, literature indicates that the increase of relationship management
34 on stewardship practices will retain more donors. Therefore, the following research questions are proposed based on fundraising theory and the common notion that previous donors who receive stewards from nonprofit organizations are more likely to give in the future than non donors who are not cultivated by organizations. RQ2: To what extent is there a relationship between the practice of stewardship and donor retention rates?
35 Figure 2 1. ROPES process model of public relations & f undraising ( reprinted by permission from Kelly, Kathleen. 2011. Unpublished class handout, PUR 3801 Public Relations Strategy, University of Florida. )
36 CHAPTER 3 METHODOLOGY This study investigates the extent to which fundraisers practice the ROPES process mod el and its four elements of stewardship. It also examines the relationship between stewardship practices and donor retention. Survey research method is chosen for this study because of the large number of the population and its dispersed distribution. A su In order to cover a wide geographic area at a reasonable cost and to provide a high degree of privacy for participants, a mail surve y was used. Mail surveys are better than other methods when researchers need to study a group of highly specialized participants (Wimmer & Dominick, 2011). Another advantage of the mail survey is that it allows participants to answer questions at their own convenient time with a sense of privacy and provide unbiased answers without any personal contact. Response rate refers to the proportion of surveys that are successfully collected from the sample. For mail surveys, the response rate is usually under 40% (Wimmer & Dominick, 2011). Fox, Crask, and Kim (1989) suggested several tactics to increase mail survey response rates: university sponsorship to increase credibility, a cover letter to explain the purpose of the study and offer contact information, perso nalized mailing for each participant, stamped return postage to provide ease of response, and follow up postcards or letters ten days to two weeks after the survey has been mailed. Population The population defined for this study is members of the Associat ion of Fundraising the professional association of
37 individuals and organizations that generate philanthropic support for a wide variety of donor trust and effective members from 222 chapters in this association, which represent a diverse population of fundraisers in different t ypes of charitable organizations all around the world with missions ranging from arts to education to health to religion Mainly there are five categories of AFP membership type: (1) active members who have at least one year of experience as fundraising pr ofessionals and spend at least a quarter of their time on fundraising related activities; (2) introductory members who are newly employed in the field, full time students, executive directors who spend less than 25% of their time on fundraising, and volunt eers; (3) associate members who are engaged in fields related to fundraising; (4) business memberships for those who work in for profit organizations; Fundraising, Fun draising Institute of Australia, and the Fundraising Institute of New Zealand. This study was interested in only the first AFP membership type: active members. Based on findings of a previous study, consultants needed to be removed from this study as they practice little stewardship due to their multiple clients and the nature of their work (Kelly, 2001a). The focus of this study was on U.S. fundraising so active members with international addresses needed to be deleted. Finally, members who were missing o rganizational affiliation in their contact information needed to be removed from the sample to help ensure that participants currently are employed by a charitable
38 organization. Therefore, only active AFP members who are working in the United States as ful l time staff fundraisers were selected for the study. The researcher contacted the person in charge of research programs at AFP, selection criteria for the sample. AFP agreed to participate. requirements. To achieve 95% confidence level, the researcher requested that a random sample of 800 members be drawn from the qualified population. Using an online table of random numbers, the researcher generated a starting point by computer, 22 nd name and rotate its screened database until the sample consisted of 800 fundr aisers. The final sample list was generated in the beginning of December 2011 to make sure it contained the most updated and recent information. The list was supposed to contain names, titles, organizational affiliations, and mailing addresses of the 800 s elected members. Due to missing information of some cases, only 700 fundraisers from the generated sample were used for the mail survey. Survey Design The questionnaire was designed in five parts with 17 questions adopted and questionnaire can be found in Appendix A. The first part asks several questions about the nonprofit organization where the fundraiser works. If the organization is affiliated with a national/international or ganization, participants were asked to fill in the questionnaire based on information
39 mission according to the categories used by Giving USA (2011), the governance of the or ganization, the number of employees, the number of staff fundraisers, the age of the fundraising program as determined by the number of years the organization has employed at least one full time fundraising professional, the total amount of private gifts r eceived by the organization in its last fiscal year, and the percentage of the and ratio measures were used. In the second part, to determine the extent to which fu ndraisers practice the ROPES process model, participants were asked to fill in a percentage between 0% and 100% for the amount of time fundraising staff spend on each step in the ROPES model for both annual giving programs and major gift programs: research objectives, programming, evaluation, and stewardship. Programming was divided into its two major elements, planning and implementing, and participants were instructed that percentages for the six items should total 100%. Different from previous studies, which did not define time, this study instructed participants to think of time in terms of full time effort and not programming from start to end dates may cover 6 months of a 12 month campaign but represent less than 50% of the full The third part of the questionnaire dealt with donor retention rates for both annual giving programs and major gifts programs. Participants were asked to r ecall the donor previous and to estimate what the rates will be for the current fiscal year. The rate of donor retention was defined as the percentage of donors from the previous fiscal year
40 who gave again the next fiscal year. Instructions gave details on calculating retention rates, an example, and limitations of the definition. The three open ended items were measured on a ratio scale. A fourth item, which was close d ended and measured on both nominal and ordinal scales, asked participants to select one of five responses that In the fourth part, participants were asked to report their stewardship practices with both annual giving donors and major gift donors. Using a nine point Likert scale in which to indicate their agreement with 16 items that measured, with four items each, the four elements of stewardship: reciprocity, reporting, responsibility and relationship nurturing. to avoid response set. Interval measurement was used. The fifth and last part of the questionnaire collected demographic information on participants by asking their gender, age, and race. Additional questions asked about current position, years spent in the current position, and years of fundraising experienc e. Nominal and ratio measures were used. Data Collection After receiving approval from the Institutional Review Board of the University of Florida in January 2012, the researcher conducted a pre test by using a convenience sample. Seven fundraisers were re cruited from one university foundation and one human service organization. Five of the fundraisers are female and the other two are
41 male. Their positions range from member of the fundraising staff to director of fundraising. The seven pre test participants sample, completed the questionnaire and provided suggestions on wording and format via individual phone interviews. The survey packages were compiled in January 2012. The questionnaire and informed consent document wer e printed on two sided 11 17 inches white paper in a booklet format and folded to fit #10 carrier envelopes. The two documents can be found in Appendix A and Appendix B, respectively. To enhance legitimacy and increase the response rate, cover letters we re printed on University of Florida Department of Public Relations letterhead and personalized. The first names of all recipients were checked online through organizational websites to determine gender for appropriate social titles. Using the mail merge fu nction in Microsoft Word, the researcher personalized the social title, name, organizational title, organization, and address for each member in the sample. In addition, the researcher personally signed all letters. A copy of the cover letter can be found in Appendix C. Due to the popularity and ease of online surveys, the researcher included a link to an online version of the questionnaire in each cover letter as an option to the mail survey. The online questionnaire was created with Qualtrics software. It must be noted here that AFP declined to provide e mail addresses of its members in accordance with association policy, which required the researcher to administer the survey by mail. Including the link to the online survey in the mailed cover letter gave sample members a
42 The personalized cover letter, consent document, and questionnaire were inserted participants to return their completed questionnaire. Packets were mailed via United States Postal Service to 700 members of the sample on January 16, 2012. A postcard pri nted on white cardstock was mailed seven days later to remind sample members to Data Analysis The researcher coded all responses by assigning a case number, numeric value, descr iption, and label to each answer to all closed ended items. Open ended responses were entered as the value given. After entering all values into the Statistical Package for the Social Sciences (SPSS ), the researcher cleaned the data by checking missing va lues and correcting all errors. Five reverse items regarding stewardship practice were recoded and rewritten to ensure the positive and consistent direction of all responses. SPSS was employed to analyze the data, test the hypotheses, and answer the resea rch questions. Before describing the results, the following paragraphs explain what data were examined for each research question and hypotheses and describe the statistical procedures used. The first research question required analysis of the amount of ti me in terms of full time effort spent on each step of the ROPES process for both annual giving programs and major gifts programs. Data from part two of the questionnaire was used. To answer research questions 1a, 1b, 1c, 1d, and 1e, mean percentage scores were calculated to determine the average time spent on each step by all participants. For question 1c, it was necessary to combine the time percentages spent on planning and implementing to
43 get the mean score for the programming step. Standard deviations w ere also provided to determine the extent to which the data varied from the mean value. Mean scores were used to compare time percentages of the two programs of annual giving and major gifts. For the first hypothesis and its four subset hypotheses, data fr om part four of the questionnaire was used. Eight indexes were created to determine the extent to which stewardship and its four elements are practiced by charitable organizations, four indexes for annual giving donors and four indexes for major gift donor s. To form the stewardship element indexes, responses to the four items measuring each of the four variables reciprocity, responsibility, reporting, and relationship nurturing were computed into a mean score. Means and standard deviations for individua l items were calculated and presented for basic description. The four stewardship element indexes were combined to form an overall stewardship index, one each for annual giving donors and major gift donors. Reliability of each index was computed to indicat e consistency and property of the scales. Following the 95% rule for determining significance, two tailed, paired sample t tests were used to test the first hypothesis and its sub set hypotheses. Previous studies showed that fundraisers practice all four elements of stewardship significantly more with major gift donors than with annual giving donors. To answer research question two, data from part three of the questionnaire were used. Mean scores of donor retention rates were calculated for both primary p rograms three years previous, and current fiscal year. The six donor retention mean scores were
44 used for description; however, only the annual giving and major gift dono r retention mean scores for the last fiscal year were used for analysis. Multivariate analysis of variance (MANOVA) was employed to examine the possibility that organization characteristics, such as mission, governance, and size, have a significant impact on relationship between the practice of stewardship and donor retention rates for the last year. All four stewardship element indexes and the two overall stewardship in dexes were tested to determine correlations. Data collected from part five were analyzed through MANOVA tests to determine if An independent t test was employed to see whether or not women and men practice there is a relationship between stewardship practices and years of fundraising experience.
45 CHAPTER 4 RESULTS This chapter charact It then answers the research questions and tests the hypotheses as pr oposed in C hapter 2. Participants Of the 700 mailed questionnaire packets, 22 were returned due to invalid or changed addresses of sample members. Unable to find the right address for replacemen t reduced the sample size to 678. Among all responses, 107 fundraisers returned the questionnaire back via mail and 88 fundraisers completed the survey online, adding up to a total of 195 responses and a response rate of 28.76%. However, half of the online participants dropped off in the middle of the questionnaire and left many missing values. After data cleaning, 138 completed questionnaires were used for analysis, reducing the response rate to 20.35%. USPS cancellation stamps on return envelopes and r esponses regarding individual demographics and organizational characteristics given by participants indicate that they are representative of the population selected for this study. The sample has similar proportions of gender, race, and geographical distri Charitable organizations of all mission types and sizes are represent ed in the sample. Similarities AFP and their organizational employers.
46 Presented in Table 4 1, among the 138 participants, 71.5% (n = 98) are femal e, close to the proportion of 74% women in AFP. with a mean of 47 years old (M = 47.30, SD = 10.84). The majority of participants are Caucasian with a percentage of 94.1% (n = 128), but 1.5% of the participants identified themselves as African American, 2.2% as Asian American, 0.7% as Native American, and 1.5% as Hispanic. In terms of their current position, 45.7% of the participants were the head of fu ndraising in their organizations; 16.7% were the executive director of the organization; 15.9% were senior fundraising managers; 15.9% were fundraising staff members, and 5.8% said they held other positions, such as vice president or development director. Among all participants, the years they spent in their current position ranged from 4 months to 29 years, with a mode of 1 year and an average of 5.5 years (M = 5.52, SD = 5.68). Years of experience in fundraising ranged from 2 years to 38 years, with an av erage of 14 years of fundraising experience (M = 14.07, SD = 8.50). primary mission of their organization as human services. The second largest group is organizations with the mission of education (25.4%), followed by health (19.6%). The remaining 21.7% of organizations represents the following missions in descending order: arts, culture and humanities (7.2%), public society benefit (4.3%), environmental/animals (3.6%), foundat ions (2.9%), religion (2.2%), and international affairs (1.4%). Comparing this distribution to the proportion of subsectors represented by all AFP members, the sample closely matches the population, although education and health missions are higher in prop ortion in this sample.
47 organizations as independent local organizations, followed by 10.9% chapter or affiliate of a national organization and another 10.9% independent national organizations. Of the remaining participants, 7.2% reported that their organizations are government affiliated, 2.2% worked for a national organization with chapters or affiliates, and 13.0% other governance, such as an international organization, state o rganization, and university affiliated foundation or library. last fiscal year ranged from just $34 to $ 300 million, with a median of $900,000. Analysis showed that pa rticipants represent both small and large organizations with total revenues for the last fiscal year ranging from $3,400 to $5.83 billion, with a median of $5,335,714. The largest proportion of participants (36.5%) were employed at organizations with an an nual revenue from $1 million to $10 million in the last fiscal year, followed by those at organization with revenue of $10 million to $100 million (25.4%) and $100,000 to $1 million (19.8%). About 14.3% participants were employed at large organizations wit h an annual revenue of $100 million or more. Only 2.4% of the participating fundraisers worked at organizations with an annual revenue of $25,000 or less, and 1.6% worked at organizations with between $25,000 and $100,000 in annual revenue. The total numb employees, and 37.7% have 50 to 500 employees. The rest of the organizations (22.5%) employ more than 500 people.
48 Among these organizations, the number of fundraising staff employed ranged from 1 to 300 with a median of 3 and a mean of 11 (SD = 37.09); with 82.8% employing less than 10 people in their fundraising departments. Due to the diversity of the sam ple, the length of time the organization had employed at least one full time fundraiser ranged from less than 1 year to 140 years with a median of 15 years and a mean of 19 (SD = ns that were just starting their internal fundraising function as well as those with a very long history of staff fundraising. However, attesting to the relative newness of fundraising as a staff function, about 70% of the nonprofits represented in this st udy have employed full time staff fundraisers for less than 25 years. Research Questions and Hypotheses Research Question 1 RQ1: To what extent do staff fundraisers practice each step of the ROPES process of fundraising for annual giving programs and major gifts programs? To answer RQ1 and its subset questions, two indexes were created to provide the percentage of time spent on each step of the ROPES process for both annual giving and major gifts programs. Mean percentage scores and standard deviations of r esponses on the five steps for the two indexes are presented in Table 4 2. RQ1 asks t o what extent do staff fundraisers practice research for annual giving pr ograms and major gifts programs. Kelly (2001a) suggested that fundraisers should spend 20% of thei r time conducting research in the ROPES process. Responses from staffs, on average, spend just 9.16% (SD = 7.82) of their time on research for the annual giving program but 16 .20% (SD = 12.83) of their time on research for the major
49 devote only 12.57% (SD = 8.28) of their time to the research step, which is substantially less than the theoretic al norm of 20%. For RQ1b, the responses of time spent on objectives ranged from 0% to 25%. Kelly (2008) asserted that fundraisers should spend 15% of their time on formulating objectives. Fundraisers in this AFP study reported an average of 10.37% (SD = 5. 15) on this item for the combined programs, with almost the same proportions for both annual giving (M = 10.07%, SD = 6.38) and major gifts (M = 10.21%, SD = 5.18). The programming step was divided into planning and implementing for more detailed analysis. The norms Kelly (2001a) established hold that fundraisers should spend 30% of their time on programming, equally divided between planning (15%) and implementing (15%). Results from this study showed that the time participants and other fundraising staff m embers spend on planning range from 0% to 63% and on implementing from 0% to 85%. For the annual giving program, the means of percentage of time spent on planning was 20.09% (SD = 12.39) and 31.10% (SD = 16.77) on implementing, for a total of 50.99% of tim e spent on the programming step slightly more than one half of the entire fundraising process. Participants reported lower mean percentages for the major gifts program: 17.06% (SD = 9.30) of time spent on planning and 25.34% (SD = 15.65) spent on impleme nting. Combining both elements and both programs, fundraisers represented in this study spend, on average, 46.53% (SD = 16.21) of their time on the programming step, which is considerably higher than the theoretical norm of 30%.
50 In answer to RQ1d, the resp onses on time spent on the evaluation step ranged giving programs and 8.36% (SD = 4.90) for major gifts programs. Combined, evaluation commands a mean of 9.03% (SD = 4.51) match the recommended norm. Fundraisers represented in this study spend, on average, 21.50% (SD = 12.25) of their time on stewardship for the combined programs ranged from 0% to 55% and showed that fundraisers spend more time on stewardship practices for major gifts programs (M = 22.87%, SD = 13.41) than they do for annual giving programs (M = 19.52%, SD = 12.76). As discussed in C hapter 2, two previous studies gathered data on time spent on the five steps of the ROPES process model: Kelly (2001a), who conducte d a telephone survey of AFP members with a Ph.D. degree, and Dell (2009), who conducted a mail survey with the senior fundraisers of museums accredited by AAM. As the current study is only the third time that the ROPES model has been tested in quantitative research, it is fitting to create a table to present and compare results from previous stud ies and this study. See Table 4 3. It should be noted that comparing mean scores across populations should be approached with caution. statistics, which were reported in a chapter of a practitioner oriented book (Greenfield, 2001), include only one decimal rather than the two expected in scholarly publications.
51 Starting with the first step, fundraisers in the current study spend 12.85% of their three studies showed that time spent on the research step is less than th e suggested norm of 20%. In addition, this study found that fundraisers spend 10.25% of their time studies. All three percentages are less than the norm of 15%. For the pr ogramming step, three studies, 48.70%. The current study revealed that AFP staff fundraisers spend ult (39.3%) and 16.5% more than the recommended norm (30%). Furthermore, all three studies showed a lower percentage of time spent on evaluation than the norm of 15%. Kelly found that fundraisers with a Ph.D. degree spend about 11.5% of their time on evalu ation, whereas this study got an average percentage of 9.25%, followed by the stewardship step showed a consistent pattern throughout the three studies and had percenta ges that closely matched the theoretical norm of 20%. Addressing the entire research question, RQ1, similar to previous studies, this study revealed that fundraisers spend the largest proportion of their time on programming, followed by stewardship. Wherea s the amount of time spent on stewardship closely aligns with findings of previous studies and the theoretical norm of the ROPES process model of fundraising, the amount of time spent on the programming step is higher than that of one previous study and gr eatly exceeds the
52 recommended norm. Due to the high percentage of time spent on programming, the three steps of research, objectives, and evaluation are lower than prescribed. On the other hand, this study provides evidence that fundraisers spend about 40% of the time they devote to programming on planning programming, as opposed to implementing it. In terms of differences between annual giving and major gifts programs, fundraisers spent more time on research and stewardship for major gifts programs than t hey do for annual giving programs. Even though the time spent on four of the five steps varied from previous studies and the recommended norms, the results of this study support systematic process that entails management of each step in the ROPES model rather than simply the act of solicitation of donors. Hypothesis 1 Hypothesis 1 and its subset hypotheses were tested to determine if fundraisers practice stewardship significantly more with major gift donors than with annual giving donors. Ten indexes were created, four each to present practices of the four stewardship elements of reciprocity, responsibility, reporting, and relationship nurturing with annual giving donors and major gift donors and two indexes of overall stewardship with the two donor publics. Results of analyses are presented in Table 4 4, which shows mean scores and standard deviations of measurement items, stewardship element indexes, and overall stewardship indexe reliability for each index. Hypothesis 1a H1a: Compared to the practice of reciprocity with annual giving donors, fundraisers practice reciprocity significantly more with major gift donors. Starting with
53 the important issue of reliability, as shown in Table 4 reciprocity index is .34 for annual giving donors and .43 for major gift donors. The alpha likely is low due to the fact that all four items measuring the variable were mod ified somewhat from those used by Waters (2007, 2009). About 31% of the items measuring stewardship practices were original to the study, which could also be a reason for the relatively low levels of reliability of six of the eight stewardship element inde xes. 1996) The responsibility indexes achieved this standard, as did the two indexes of overall stewardship with annual giving donors and major gift donors. Analysis showed that deleting any item would not substantially improve the reliability of any of the 10 indexes; therefore, all items were kept for analyses regarding stewardship practices. According to Schmitt (1996), w hen a measure has meaningful content coverage and original items, it may not be a major impediment to use the measure even though it has low reliability. Most participants provided responses for both annual giving and major gifts programs, but because some organizations only have one of the primary programs, some respondents gave only partial answers, which reduced the compared responses from 138 to 122. This reduction in sample also likely contributed to low reliability of most indexes. Returning to the stewardship element of reciprocity, as shown i n Table 4 4, the mean score of the reciprocity index for annual giving donors is 8.21 (SD = 1.24), whereas the mean score of the reciprocity index for major gift donors is 8.50 (SD = .81). A two tailed, paired sample t test found that there is a significan t difference between the
54 two mean scores (t = 3.94, df = 121, p < .001). Analysis revealed that, from the perspective of fundraisers, they and their organizations are above the midpoint of the scale when practicing reciprocity with both annual giving dono rs and major gift donors. Analysis further showed that AFP fundraisers practice reciprocity to a significantly greater extent with major gift donors than with annual giving donors. H1a is supported. Details regarding responses to each item measuring recip rocity provide greater understanding of reciprocity practices. Mean scores for the item on the organization acknowledging gifts in a timely manner are higher for major gift donors (M = 8.50, SD = .81) than for annual giving donors (M = 8.21, SD = 1.24). Th ere is a significant difference between the two mean scores (t = 4.03, df = 121, p < .001). The other three items measuring reciprocity revealed differences between stewardship of the two donor publics, but the differences are not statistically significan t. Mean scores for the item on the organization always sending thank you letters are higher for major gift donors (M = 8.74, SD = .91) than for annual giving donors (M = 8.64, SD = 1.09).. For the item on the organization being sincere when it thanks donor s for their gifts, AFP fundraisers provided a higher mean score for major gift donors (M = 8.67, SD = .92) than for annual giving donors (M = 8.52, SD = 1.10). Finally, responses to the item on the organization recognizing donors as friends because of thei r previous gifts resulted in mean scores of 8.13 (SD = 1.29) for major gift donors and 7.92 (SD = 1.40) for annual giving donors. Hypothesis 1b H1b: Compared to the practice of responsibility with annual giving donors, fundraisers practice responsibility significantly more with major gift donors. As mentioned earlier, the four items measuring the variable of responsibility produced
55 acceptable levels of reliability with alphas of .70 for the annual giving donors index and .71 for the major gift donors index The mean score for the annual giving donors responsibility index is 7.95 (SD = 1.04), lower than the score for the major gift donors index (M = 8.19, SD = .95). A two tailed, paired sample t test showed a significant difference between the two mean scor es (t = 5.18, df = 120, p < .001). Analysis revealed that, from the perspective of fundraisers, they and their organizations are above the midpoint of the scale when practicing responsibility with both annual giving donors and major gift donors. Analysis further showed that AFP fundraisers practice responsibility to a significantly greater extent with major gift donors than with annual giving donors. H1b is supported. Again, details regarding responses to each item provide greater understanding of responsi bility practices. Mean scores for the item on the organization considering donors when deciding how to use their gifts are higher for major gift donors (M = 7.50, SD = 1.97) than for annual giving donors (M = 6.92, SD = 2.22). The difference between the tw o mean scores is statistically significant (t = .4.51, df = 120, p < .001). The other three items measuring responsibility revealed differences between stewardship of the two donor publics, but the differences are not statistically significant. The mean s cores for the item on the organization acting ethically in its dealings with donors are higher for annual giving donors (M = 8.73, SD = .65) than for major gift donors (M = 8. 60, SD = .1.02). in the or ganization using their gifts wisely is 7.79 (SD = 1.34) for annual giving donors and 7.95 (SD = 1.28) for major gift donors. The similar item on the organization valuing
56 giving donors and 8.71 (SD = .83) for major gift donors. Hypothesis 1c H1c: Compared to the practice of reporting with annual giving donors, fundraisers practice reporting significantly more with major gift donors. The four items measuring the variable of reporting produced reliability with alphas of .59 for the annual giving donors index and .46 for the major gift donors index. As shown in Table 4 4 the mean score of the reporting element index for annual giving donors is 7.34 (SD = 1.30), as compared to 7.63 (SD = 1.12) for major gift donors. A two tailed, paired sample t test revealed that there is statistically significance between the mean scores of the two indexes (t = 5.17, df = 118, p < .001). In other words, according to fundraisers, the practice of reporting is above average in their reporting is practiced significantly more with the latter donor public. Therefore, H1c also is supported. Analysis of responses to i ndividual items provides more detail about the practice of reporting. Mean scores of the item on the organization telling donors how it has used their gifts is higher for major gift donors (M = 7.74, SD = 1.51) than for annual giving donors (M = 7.02, SD = 1.89). Paired sample t tests found that the difference is statistically significant (t = 5.40, df = 121, p < .001). The other three items measuring reporting revealed differences between stewardship of the two donor publics, but the differences are not s tatistically significant. Results showed that AFP fundraisers perceive above average agreement on the item regarding the organization informing donors about its fundraising practices, with a
57 mean score of 6.70 (SD = 1.73) for annual giving donors and 6.97 (SD = 1.75) for major much money was raised in that year are similar for both annual giving donors (M = 7.55, SD = 2.48) and major gift donors (M = 7.58, SD = 2.46). Amo ng four items measuring reporting practice, the item got the highest mean scores dealing with the organization providing access to its IRS Form 990. Nonprofit organizations with an annual revenue of more than $5,000 must report their income, expenses, and other financial information to the IRS on the Form 990 and, by law, make it accessible to interested parties. Mean scores on this item are 8.09 (SD = 1.74) for annual giving donors and 8.25 (SD = 1.59) for major gifts donors. Hypothesis 1d H1d: Compared to the practice of relationship nurturing with annual giving donors, fundraisers practice relationship nurturing significantly more with major gift donors. As .44 for major gift donors index. Mean scores for relationship nurturing with major gift donors (7.55, SD = 1.16) are greater than those for annual giving donors (7.31, SD = 1.21). A paired sample t test revealed that the mean scores significantly differ (t = 3.18, df = 119, p < .001). Though still above average, mean scores of relationship nurturing with both types of donors are lower than means of the other three stewardship elements. Regardless, findings show that AFP fundraisers practice relationship nurturing with m ajor gift donors significantly more than they do with annual giving donors. H1d is supported. Analyses of individual items enrich understanding of relationship nurturing. The item on the organization being more concerned with its relationships with donors than
58 with its fiscal health (originally reversed) generated a higher mean score for major gift donors (M = 7.04, SD = 2.25) than for annual giving donors (M = 6.55, SD = 2.36). The difference between the two mean scores is significant (t = 3.61, df = 120, p < .001). The other three items measuring relationship nurturing revealed differences between stewardship of the two donor publics, but the differences are not statistically significant. The item receiving the lowest levels of agreement from participants was on donors hearing from the organization at times other than when it is soliciting for gifts (originally reversed). Mean scores on the item for annual giving donors is 6.96 (SD = 2.04) and 7.01 (SD = 2.38) for major gift donors. Mean scores for the ite m on organizations regularly communicating with donors is similarly greater for major gift donors (M = 7.65, SD = 1.57) than for annual giving donors (M = 7.52, SD = 1.56). The last item of relationship nurturing assessed the extent to which fundraisers an d their organizations invite donors to participate in special events held by the organization. Again, mean scores showed that major gift donors are more likely to be invited to special events (M =8.52, SD = 1.18) than annual giving donors (M = 8.24, SD = 1 .29). As mentioned earlier, two overall stewardship indexes were created, one each for annual giving donors and major gift donors. Both indexes have relatively high reliability, t donors. The mean score of overall stewardship practices with annual giving donors is 7.73 (SD = .78), and the mean score with major gift donors is 7.98 (SD = .74). A two tailed, paired sample t test showed that there is a significant difference between t he two mean scores (t = 6.01, df = 115, p < .001). Addressing the entire hypothesis, similar to previous
59 studies, this study revealed that fundraisers practice stewardship significantly more with major gift donors than with annual giving donors. The overa ll hypothesis is supported. Independent sample t test showed that there were no differences of stewardship practices between men and women. In addition, the current position of participants and their race did not differentiate them on the practice of stewa rdship. Lastly, years in their relationship with their practice of stewardship. Research Question 2 RQ2: To what extent is there a relationship between the practice of stewardship and donor retention rates? To answer research question 2, donor retention rates for the annual giving program and the major gifts program for three different fiscal years were measured and analyzed. Participants were asked to recollect the donor retention rates three years previous to the last fiscal year. They also were asked to estimate the donor retention rate for both programs for their organi donor retention was defined as the percentage of donors from the previous fiscal year who gave again the next fiscal year. Results of the analyses are presented in Table 4 5. The donor retention rate for the organ 63.77% (SD = 21.23) for the annual giving program and 65.66% (SD = 25.13) for the major gifts program. Responses ranged from 4% to 100%. The donor retention rate for the fiscal year three years previous to the las t is, on average, 58.77% (SD = 21.04) for annual giving and 60.05% (SD = 24.09) for major gifts. The two sets of statistics suggest that donor retention rates increased during the three year period. However, expectations indicate little growth in the immed iate future. Participants estimated that
60 as those for the last fiscal year, both for the annual giving program (M = 64.21%, SD = 22.38) and for the major gifts progr am (M = 64.46%, SD = 27.21). The combined donor retention rat e for the last fiscal year is approximately 64.71%, and the combined rate predicted for the current year is 64.33%. Both rates are lower 2010 f ound by AFP and the Urban Institute (2011) in their survey of 2,377 representatives of U.S. nonprofits. Differences may be the result of differences in sample size, or it may be that charitable organizations represented in this study are not as effective a t retaining donors than other organizations. year three years previous to the last fiscal year was problematic for some participants, and 52 participants did not provide data for that year. Several explained that they could hindsight, the question should have been modified to account for fundraisers who are relatively new to their jobs. Because of this problem with the older year and the fact that figures for the current year are predictions, only retention rates for the last fiscal year were used for further analyses. As described in C hapter 3, one closed ended item was created to measure donors. Participants were instructed to circle the retention is among the highest fu
61 reported that donor retention receives minimal attention in fundraising, and just 5.1% said that seeking new donors takes precedence over retaining past donors the first and second responses, respective ly. The researcher coded the ordered responses from 1 to 5 and computed the mean score for the item. Analysis produced a mean score of 3.54 (SD = 1.02), which places the typical respondent between the fourth response given above and the third response: forts to retain donors have greatly increased in the last four years, since the increased their donor retention efforts to cope with the recent recession and its aftermath an d currently give retention of donors high priority. correlation coefficients showed there is no relationship between the overall donor retention rate of the last fiscal year and the amount of private gifts or the amount of total revenue; nor are the donor retention rates related to the number of fundraisers employed or the age of the fundraising function (i.e., the number of years the organization has employed at least one full time fundraising professional). MANOVA tests revealed that there are no statistical differences in donor retention rates among organizations with different missions, governance, and employee numbers. sts revealed a moderate statistically significant correlation (r = .27, p < .01) between the practice of stewardship with annual giving donors and the donor retention rate for the annual giving program for the last fiscal year. A stronger and significant c orrelation (r = .37, p < .01) was found between the practice of stewardship with major gift donors and the donor
62 retention rate for the major gifts program for the last fiscal year. These results indicate that with the increasing practice of stewardship w ith annual giving donors, donor retention rates for annual giving programs are likely to be higher. It is also true that when organizations practice more stewardship with major gift donors, the donor retention rates for major gifts programs are likely to b e higher. Additional analyses also found that the practice of responsibility with annual giving donors is significantly correlated with the annual giving donor retention rate for the last fiscal year (r = .25, p < .01). This means that the more nonprofits act responsibly toward annual giving donors, including responsible use of their gifts, the more likely the donor retention rate for annual giving will be higher. In addition, reporting practiced with major gift donors is positively correlated with the maj or gifts donor retention rate for the last fiscal year (r = .29, p < .01). Similar to annual giving, the stewardship element that has a correlation with the major gifts donor retention rate for the last fiscal year is the practice of responsibility (r = .3 6, p < .01). Although moderate in degree, these significant and positive correlations indicate that donor retention rates are higher when charitable organizations practice more reciprocity, reporting, and responsibility with major gift donors. The answer t stewardship with annual giving donors and major gift donors is positively related to the donor retention rates of annual giving programs and major gifts programs, respectively.
63 Tabl e 4 1. Demographics and characteristics of participants and their organizations Variable Number Percentage \ Mean \ SD Gender Male 39 28.5% Female 98 71.5% Ethnicity African American 2 1.5% Asian American 3 2.2% Caucasian 128 94.1% Hispanic American 2 1.5% Native American 1 0.7% Age Mean = 47.30 SD = 10.84 Current position Head of fundraising 63 45.7% Executive director of the organization 23 16.7% Senior fundraising manager 22 15.9% Fundraising staff member 22 15.9% Other 8 5.8% Years in current position Mean = 5.52 SD = 5.68 Years of fundraising experience Mean = 14.07 SD = 8.50 Arts, Culture, and Humanities 10 67.2% Education 35 25.4% Environment/Animals 5 3.6% Foundations 4 2.9% Human Services 46 33.3% Health 27 19.6% Public Society Benefit 6 4.3% International Affairs 2 1.4% Religion 3 2.2% Independent local organization 77 55.8% Chapter/affiliate of national organization 15 10.9% Independent national organization 15 10.9% National organization with chapters/affiliates 3 2.2% Government affiliated organization 10 7.2% Other 18 13.0%
64 Table 4 1. Continued Variable Number Percentage \ Mean \ SD Total number of all employees Fewer than 50 employees 55 39.9% 50 350 employees 45 32.6% 351 500 employees 7 5.1% More than 500 employees 31 22.5% Number of fundraisers M = 11 SD = 37.09 Years of employing fundraisers M = 19 SD = 18.55 (n = 138)
65 Table 4 2. Mean percentages of time spent on steps of the ROPES process Step Current study Mean% (SD) Annual Giving Programs Current study Mean% (SD) Major Gifts Programs Theoretical Norm% (Kelly, 2001a) Research 9.16 (7.82) 16.20 (12.83) 20 Objectives 10.07 (6.38) 10.21 (5.18) 15 Programming (51.19 Total) (42.40 Total) (30 Total) Planning 20.09 (12.39) 17.06 (9.30) 15 Implementing 31.10 (16.77) 25.34 (15.65) 15 Evaluation 10.14 (7.27) 8.36 (4.90) 15 Stewardship 19.52 (12.76) 22.87 (13.41) 20
66 Table 4 3 ROPES Model: Findings of three studies Step 2001 AFP (Kelly, 2001a) Mean% (SD) N = 101 2009 AAM (Dell, 2009) Mean% (SD) N = 144 2012 AFP (Current Study) Mean% (SD) N = 138 Norm (Kelly,2001a) Mean% Research 14.5 (9.2) 10.35 (6.20) 12.57 (8.28) 20 Objectives 13.8 (7.6) 11.02 (9.05) 10.37 (5.15) 15 Programming 39.3 (16.2) 48.70 ( -) 46.53 (16.21) 30 Planning -20.31 (10.12) 18.76 (9.62) 15 Implementing -28.39 (14.64) 27.77 (14.46) 15 Evaluation 11.5 (7.0) 8.26 (14.64) 9.03 (4.51) 15 Stewardship 20.9 (13.8) 21.70 (15.18) 21.50 (12.25) 20
67 Table 4 4. Mean scores on stewardship and its elements Item Annual Giving Donors Mean (SD) Major Gift Donors Mean (SD) Reciprocity The organization acknowledges gifts in a timely manner. 8.21 (1.24) 8.50 (.81) The organization always sends thank you letters to donors for their gifts. 8.64 (1.09) 8.74 (.91) The organization is sincere when it thanks donors for their contributions. (Originally reversed) 8.52 (1.10) 8.67 (.92) Because of their previous gifts, the organization recognizes donors as friends. 7.92 (1.40) 8.13 (1.29) Reciprocity indexes 8.32 (.70) 8.51 (.60) .34 .43 Responsibility The organization acts ethically in its dealings with donors. 8.73 (.65) 8.60 (1.02) The organization considers its donors when deciding how to use gifts. 6.92 (2.22) 7.50 (1.97) Donors have confidence that the organization will use their gifts wisely. 7.79 (1.34) 7.95 (1.28) The organization values donor intent when using gifts. (Originally reversed) 8.37 (1.44) 8.71 (.83) Responsibility indexes 7.95 (1.04) 8.19 (.95) .70 .71 Reporting The organization informs donors about its fundraising practices. 6.70 (1.73) 6.97 (1.75) The organization tells donors how it has used their gifts. 7.02 (1.89) 7.74 (1.51) how much money was raised in that year. 7.55 (2.48) 7.58 (2.46) The organization provides donors with access to its IRS Form 990. (Originally reversed) 8.09 (1.74) 8.25 (1.59) Reporting indexes 7.34 (1.30) 7.63 (1.12) .59 .46
68 Table 4 4. Continued Item Annual Giving Donors Mean (SD) Major Gift Donors Mean (SD) Relationship nurturing Donors hear from the organization not only when it is soliciting for gifts. (Originally reversed) 6.96 (2.04) 7.01 (2.38) The organization is more concerned with its relationships with donors than with its fiscal health. (Originally reversed) 6.55 (2.36) 7.04 (2.25) The organization regularly communicates with donors. 7.52 (1.56) 7.65 (1.57) The organization invites donors to participate in special events that it holds. 8.24 (1.29) 8.52 (1.18) Relationship nurturing Indexes 7.31 (1.21) 7.55 (1.16) .56 .44 Overall stewardship indexes 7.73 (.78) 7.98 (.74) .78 .79 (n = 138)
69 Table 4 5. Donor retention rates Years Annual giving programs Donor retention rate Mean% (SD) n Major gifts programs Donor retention rate Mean% (SD) n Last fiscal year Three years previous 63.77 (21.23) n=115 58.77 (21.04) n=105 65.66 (25.13) n=97 60.05 (24.09) n=86 Current fiscal year 64.21 (22.38) n=100 64.46 (27.21) n=88
70 CHAPTER 5 CONCLUSION Using a survey of a random sample of members of AFP, the purpose of this study was to advance the understanding of fundraising practice by analyzing the time spent on each step in the ROPES process model and measuring the practice of stewardship and its four elements. The study compared stewardship practices with annual giving donors and major gift donors. It also examined donor retention rates and their relationship to the practice of stewardship wi th annual giving donors and major gift donors. ROPES Model Responses from AFP fundraisers revealed that the percentage of time spent on the research step in the ROPES model of the fundraising process is more than the percentage of time reported by AAM seni or fundraisers (Dell, 2009), but less than showed that fundraisers spend far less time on conducting research than the recommended norm, especially for annual giving programs. This underutilization of research is likely to result in incomplete and possibly flawed understanding of the organization, situation/opportunity, and publics. It also hampers meaningful segmentation of publics and communication effectiveness. Even though a nnual giving donors contribute a relatively small percentage of the dollars raised by a charitable organization, research and analysis can increase the progra identify donors who are capable of making a major gift in the future. Detail ed and efficient data collection on donors is essential to building a sustainable donor database. Research on the organization can identity strengths and weakness in its fundraising
71 efforts. In addition, more research on the situation/opportunity can ident ify trends and changes in the nonprofit sector and philanthropy and give organizations a greater advantage in fundraising effectively in their environments. Percentages of time spent on objectives and evaluation found in this study are also low, which is c onsistent with findings of the two previous studies on ROPES. Without clear objectives, the whole program or campaign likely will lack focus and direction. It will cause troubles during the programming step, due to a lack of guidance. Formulating objective s pulls all parts of fundraising together with a big picture of goal attainment and planned action. Spending insufficient time on formulating objectives could be one reason for the low degree of evaluation, because, to go beyond counting dollar totals, eva luation is dependent on having set objectives to determine at the conclusion of programming whether or not the fundraising department has met its objectives. Evaluation provides valuable assessment of programming as a whole. Through effective evaluation, o rganizations can identify weakness in their fundraising evaluation of gift usage is also necessary to uphold the accountability of the organization. This study found that AFP fundraisers spend the largest proportion of time in the fundraising process on programming, in both annual giving programs and major gifts programs. The percentage was the largest among the three ROPES studies. One possible reason for this high percentage may be that, despite instructions, respondents thought of time in terms of duration of the step, rather than effort. On the other hand, consistently high percentages far greater than the theoretical norm, may me an that the
72 ROPES model underestimates the amount of time fundraisers need to spend on programming. Regardless, findings showed that planning and implementing activities for programming receive the most attention from AFP fundraisers. Unlike the other ste ps, the time fundraisers spend on stewardship adheres closely study. This supports her theory that the ROPES model is both descriptive and normative. Interestingly, this stu dy found that compared to major gift donors, annual giving donors receive almost the same percentage of time of stewardship. AFP fundraisers practice stewardship to maintain quality relationships with both types of donors in the fundraising process. There was no significant variation among different types of charitable organizations (i.e., mission). The stewardship step is the foundation for maintaining relationships, retaining donors, reducing costs, and increasing gifts. Regardless of differences of time allotment on four of the five steps, effective fundraising management requires fundraisers to conduct research on their organizations, the situation/opportunity, and donor publics related to both; set measurable objectives; efficiently plan and implement programming; evaluate the results; and steward donors to maintain relationships. It is an on going process in a continuous loop. Stewardship and its Elements This study measured the practice of stewardship among fundraisers in AFP representing different nonprofit organizations across the United States. Findings show that stewardship practices are valued by AFP fundraisers, although the degree varied. All types of nonprofits accept stewardship as a strategic part of the fundraising process and practice it
73 emphasizes its importance to improving fundraising effectiveness. The four elements of stewardship provide meaningful and practical details to help organizations better understand their re lationships with donors. Results showed that there is significant difference between practices of stewardship with annual giving donors and major gift donors. Major gift donors donate substantially more money per gift to the organization than annual giving donors do. Therefore, fundraisers spend more time and effort to build and cultivate relationships with major gift donors. Organizations should pay more attention to the practice of stewardship with annual giving donors, however, in order to retain previou s donors and explore their prospects. To achieve this balance, it is necessary for organizations to responsibly, report the gift use regularly, and maintain relationships throu gh effective communication. Reciprocity Reciprocity is the most practiced of the four elements of stewardship. Through gifts. Similar to the other elements, reciprocity is practiced significantly more with major gift donors than with annual giving donors. The difference is not only about the amount of effort spent on reciprocity but also the way to reciprocity is practiced. Research and effective communication increase t he effectiveness of acknowledgement practices (Kelly, 1998). Choosing an appropriate time to thank donors is a great matter to future relationship building. Major gifts received from long time cultivated donors certainly deserve timely acknowledgement from nonprofit organizations. However, fundraisers practice less timely reciprocity with annual giving
74 donors. Many donors usually feel negative about acknowledgement long after the contribution. They take it as a hint for a new solicitation (Nathan & Hallam, 2009) Therefore, time management on acknowledgement of gifts is essential in the fundraising process. Secondly, annual giving donors often receive requests through mass mailings. The difficulty to personally communicate with annual giving donors increases their detached feelings toward the organization. Although the difference of nature between annual giving donors and major gift donors is understandable, fundraisers should strive to increase effective communication and management with annual giving donors who could be prospects for future major gifts. Their word of mouth support of the organization can also attract new donors. Responsibility Even in times of tight budgets, high demands for services, and an economically sts. It is ethical fundraising behaviors that hold the accountability of nonprofits as a whole. Results of this study show that nonprofits are above average on the practice of responsibility with both types of donors, but significantly more with major gift donors. The item on whether the organization considers its donors when deciding how to use gifts revealed a significant difference between annual giving donors and major gift donors. Usually the uses of major gifts are restricted in purpose before receip t. To honor their gifts and assure future donors, fundraisers are cautious about the appropriate use being in the long term. However, when using annual giving gifts, fundraisers are more likely to step into ethica l problems, as annual giving gifts usually are unrestricted and flexible in their use. Annual giving dollars are
75 sometimes misused to pay for such expenses as administrative salaries, which is not the interest and intention of donors. This could be the rea son for different practices of responsibility with annual giving donors and major gift donors. For long term expectations. It is important to listen to both types of donors a nd take their concerns into account when making decisions on gift use. Reporting At the basic level of reporting, nonprofit organizations need to keep donors can orga nizations gain trust and commitment from donors (Hall, 2006) Results of this study show that nonprofit organizations represented in AFP are above average in reporting to both annual giving donors and major gift donors. Any nonprofit organization with an i ncome of more than $5,000 must complete and submit the IRS Form 990. It is a legal requirement that helps nonprofits be accountable gifts, it is also necessary to inform don other financial data. Organizations need to confirm that gifts have been used in the way that was promised to donors in previous communications. It is not difficult to compile annual reports of the organiza Practitioners suggest that p to report to donors. Both annual giving donors and major gift donors, according to this study, receive an above average level of reporting about how organizations use their gifts. However, there is a significant difference of reporting gift use between the two types of donors.
76 The necessity to retain current donors keeps fundraisers informing donors to meet their needs. Through effective reporting, organizations demonstrate a continued intention to cultivate major gift donors and maintain relationships with them. A possible rea son for the higher level of reporting is that organizations usually agree to fulfill certain obligations outlined in the written proposal before receiving a major gift. Reporting to major gift donors about the use of gifts can be one of the requirements st ated in the proposal. Regardless of quasi contractual agreements, transparency to annual giving donors is as important as it is to major gift donors. Fundraisers should keep in mind that there are also media reports available to publics besides the organi reports. Donors can feel unsatisfied or detached if they do not hear from the organization. Things become even worse when donors are unimpressed or even offended by media reports that organizations have large financial reserves or spend their money on unnecessary expenses. The best way to prevent such reports from the organization to fulfill its mission through services, can they have favorable attitudes, develop high trust and loyalty, and donate again to the organization. Relationship nurturing Fundraising is not only about how much money is raised, but more about r elationship building and nurturing in the process. Organizations may be tempted to invest sparingly in this element, which seems to have no direct impact on raising gifts. Holding events and communicating with donors at regular intervals require time and m
77 keeps the whole fundraising process consistent for future development. This study reveals that nonprofit organizations represented in AFP are above average in practici ng relationship nurturing with their donors; however, the element is relatively low in comparison to the other three stewardship elements. Relationship nurturing is dependent on continuous communication with donors. Communication with donors only when sol iciting gifts irritates donors and diminishes the relationship. In this study, fundraisers are above average in communicating with donors regularly for reasons other than solicitation. Organizations recognize both types of donors as valuable sources of fun ding. Major gift donors provide the largest proportion of money to organizations; hence, they receive more communication than annual giving donors. However, the difference not only exists in how much communication the two groups receive, but also the metho d of communication. Major gift donors receive more interpersonal communication, whereas annual giving donors are treated more like customers with few personal contacts from fundraisers. Nonprofits should strive to improve their strategic communication with annual giving donors. Relationship nurturing also depends on involvement, which ranges from decision making. Major gift donors often serve as members of committees or b oards. The more positive interaction organizations have with major gift donors, the more likely they will donate again in the future. To involve the much larger number of annual giving donors, nonprofits rely on volunteer opportunities and special events. The popularity of social media also provides new platforms for engaging a large number of annual giving donors. Relationship nurturing with both types of donors plays an important role in the
78 fundraising process. As mentioned in C hapter 1, effective fundra ising starts and ends with nurturing relationships (Joyaux, 2008). If private gifts are the blood that keeps the organization continuing to fulfill its mission through services, then relationship nurturing with donors represents the stem cells that keep th e organization fresh and healthy with reliable and consistent funding. Donor Retention As presented in C hapter 2, the overall donor retention rate in 2009 2010 was a median of 41% and the repeat donor retention rate was 70%, according to AFP and the Urban measured the repeat donor retention rate, or the percentage of donors from the previous fiscal year who gave again in the next fiscal year. The average donor retention rate 64.7%, combining rates for both annual giving programs and major gift programs. This te is lower, as pointed out in C hapter 4. One possible reason for the lower rate is the small sample size of this study. Another reason might be that some participants may have overlooked or misunderstood the instructions for the item measuring this variable. They might have provided the overall donor retention rate instead of the rep eat donor retention rate. This study found that the combined donor retention rate was 59.4% three years previous to the last fiscal year, which indicates an increased effort to improve donor retention since the Great Recession. AFP fundraisers also were c onfident in predicting a combined donor retention rate of 64.3% for the current fiscal year, a rate almost identical to the one for the past fiscal year. Overall, these findings suggest an increase of donor retention during recent years, which corresponds with the greater emphasis
79 placed on its importance by such fundraising associations as AFP and CASE. However, the flat rate predicted for the current fiscal year may indicate that growth will slow in the near future. As the U.S. economy slowly recovers fro m the recent recession, nonprofit organizations will continue to face tight operating budgets and reduced revenue. Under such circumstances, retaining previous donors becomes more cost efficient and effective to help organizations stay balanced. This study found no significant differences between large and small nonprofits in terms of their donor retention rates and current efforts to retain donors. The importance of donor retention is widespread and accepted by all sizes of organizations in the nonprofit s ector (Sargeant, 2008) Results show that almost one half of AFP fundraisers believe that, in their organizations, donor retention is among the highest fundraising priorities. Based on the mean score, AFP fundraisers hold the belief just given and also bel ieve that they and their organizations have greatly increased efforts to retain donors during the last four years, since the economic recession began. Donor retention is a tangible benchmark for formulating fundraising objectives, evaluating fundraising pr ogramming, and assessing fundraising effectiveness. Stewardship Practices and Donor Retention Practitioner literature asserts that building donor loyalty is the basis for retaining donors. Fundraisers commonly accept that the practice of stewardship is an effective study linked communication strategy with donor behavior, specifically repeat giving. Results show that stewardship practice is significantly related to don or retention of both
80 annual giving donors and major gifts donors. The more fundraisers practice the four elements of stewardship, the more likely previous donors will be retained. Sincere and timely acknowledgement and recognition of donors are simple yet effective ways to encourage repeat giving and future gifts. Nonprofits can send personalized thank you notes to donors, acknowledge them in weekly newsletters, either paper or online, and even hold special events to recognize their contributions (Hall, 20 06; Burk, 2003) External communication tactics, such as press releases, are appropriate recognition makes them feel worthy and more supportive of the organization. Therefore, donors are likely to fulfill their own interests by donating again in the near future. For a short period of time, there may be no direct impact on fundraising results; however, in the long term, this strategy pays valuable dividends. Being responsible a nd ethical in the fundraising process is the basic expectation from donors. It is another useful relationship strategy to build trust. When deciding how Understanding the ir motives to give is important for attracting gifts in the first place, but it is also essential to bringing donors back by fulfilling their expectations of the organization as being socially responsible. This is why organizations should adopt a mix motiv are considered in decision making. Ethical fundraising holds the organization accountable to donors and other stakeholders. It gives donors greater confidence in inviting their f riends to engage with and make contributions to the organization.
81 is a significant and positive correlation between the practice of reporting and donor retention. Reporting involves standards, system management, and inf orming methods for fiscal accountability and transparency. It is imperative that nonprofits inform donors about their fundraising practices, the use of gifts, and other financial data. Besides the IRS Form 990, access to annual reports with financial infor mation helps donors better understand the organization. If reporting meets the expectations and requirements of donors, they are more likely to be satisfied with the organization. Nonprofits have a greater chance to retain donors if donors have high levels Rather than a simple communication strategy, the element of relationship nurturing concerns the overall effectiveness of relationship management. Fundraising is more than just raising money; the functio n is responsible for building and maintaining reliable, high quality relationships with donors. Diversified communication strategies designed for donors at different levels serve as to maintain established relationships with donors. Through relationship nu rturing, organizations combine communication with donor involvement, which increases probability of high donor retention. Implications for the Practice With the slow recovery of the U.S. economy, nonprofit organizations are in a challenging era in which t o raise and secure funding. Facing such fiscal stress, it is more urgent than ever to better understand and effectively manage the fundraising process. The findings of this study show that nonprofit organizations represented in AFP are above average in their practice of stewardship, and their donor retention rates have increased in recent years. Still, this study identified several areas in which nonprofits
82 could improve, namely greater effort spent on research, formulation of objectives, and execution o f evaluation in the fundraising process. Fundraisers spend only about 13% of their time on research, 7% less than Kelly (2001a ) recommended. As discussed in C hapter 2, research is the first and most important step in the fundraising process (Kelly, 1998). or the organization, situation/opportunity, and publics can save time and money throughout the whole process. Also the time spent on the objectives and evaluation steps are less than the normative recommendations. Objectives give guidance and direction in the management of fundraising. Internal and external evaluation provides organizations with val uable data to better shape current and future campaigns and allows fundraising to advancement of its mission. To build a sustainable base of donors requires changes in co mmunication strategy, especially stewardship practices. This study provides evidence that the practice of reciprocity, responsibility, reporting, and relationship nurturing are all positively related to donor retention. The findings are practical and appli cable to nonprofits and their fundraisers who value donor relationships as equally or more important as money raised. A critical factor in donor retention management is the practice of reciprocity. Nonprofits and their fundraisers should demonstrate their gratitude to donors for their gifts in appropriate, timely, and sincere acts of appreciation and recognition. Tactics may include phone calls, e mails, and personal visits. Multiple organizational representatives should be involved in expressing gratitude, such as
83 senior managers, board members, and program services staff. Organizations can recognize donors on donor walls or in newsletters, annual reports, as well as online. Organizations also need to use gifts in a responsible and ethical way by consideri donors of gift use and financial information could also enhance the quality of communication with donors, improve relationships with them, and increase donor retention. In a ddition, taking more efforts to build and maintain mutually beneficial relationships with donors through continuing communication in times other than thoughts and intere sts and offer more choices to make them feel valued. Doing so could retain donors who will be reliable sources of support for the organization in the future. It is understandable that donors decrease their gifts when they have financial challenges. Offerin g non financial support options can keep donors who may lapse within the Another opportunity for nonprofits and their fundraisers is to increase stewardship practices with annual giving donors. The significant difference between stew ardship practices with annual giving and major gift donors presents opportunities for organizations to manage their interactions and improve their relationships with annual giving donors. Though gifts from annual giving donors are smaller than major gifts, these gifts represent consistent and reliable sources of unrestricted support. It is especially important for nonprofits to have a healthy balance in finance during economically challenging times. Less than desirable stewardship for annual giving donors m ay lead to increases in donor attrition. Organizations need to strengthen
84 relationships with annual giving donors with more interpersonal and open communication. Because of the crucial role of stewardship practices, organizations may consider establishing a separate stewardship office within the fundraising department to manage this important step in the fundraising process. Another recommendation is to leverage munications department. Ensuring the consistency of internal and external messages can increase communication tools from public relations also can contribute to effective no nprofit donor relations hips management. Impact on Fundraising and Public Relations Theory comparison between annual giving programs and major gifts programs. The findings validat involves strategic management of relations with donors through the five steps of research, objectives, programming, evaluation, and stewardship. Findings document the current im portance the nonprofit sector places on retaining study also measured stewards hip practices and the concepts of four stewardship elements among diverse organizations from a more general population than previous studies. The new items provide valid indicators to examine the four elements of stewardship in future research. Furthermore the study establishes for the first time a positive and substantial relationship between the practice of stewardship and donor
85 retention. This relationship strengthens the theory by providing practical reasons for application to the practice. Reflecting the assessment from Sargeant (2004), this study relates effective communication strategy to the highly desired and easily measured outcome of of donor retention. Therefore, the study offers practical recommendations without neglecting the theoretical appro ach to managing donor retention. Limitations of the Study By examining different types of nonprofit organizations from a general population, this study advances the body of knowledge about the fundraising process and the practice of stewardship. In additio n, for the first time, it explored the relationship between stewardship practices and donor retention rates. Although the results validate the theories and increase understanding, several limitations need to be pointed out. The first concern is the general study randomly selected fundraisers who are members of AFP and represent nonprofits with different missions and other organizational characteristics, its low response rate and resulting small sample of par ticipants raises concerns about generalizing findings to all 31,000 AFP members. Yet the sample did not differ greatly from the AFP population. Regardless, a higher response rate and larger sample size would have increased confidence in generalizing findin gs. The researcher likely could have increased the response rate by sending a second survey packet and another reminder postcard. However, administering questionnaires by mail, which AFP required, entails high costs for printing and postage. Due to financi al limitations, as well as time constraints, the researcher was unable to add another wave of mailings. In terms of data collection procedures, the length of the questionnaire, four pages, and the complexity of some measurement items may have resulted in another
86 limitation. As reported in C hapter 3, a fairly substantial portion of AFP members who chose to respond to the online survey failed to complete the questionnaire and had to be removed from the responding sample. Certainly, the item measuring donor r etention rates for the fiscal year three years previous to the last fiscal year created problems for som e participants, as reported in C hapter 4. Answering multiple questions about both the annual giving program and the major gifts program may have confuse d participants and prevented other AFP fundraisers from participating. Future studies should consider reducing their scope of inquiry and the number and complexity of measurement items. Regarding donor retention, the study contained only one item to measu re items measuring the variable would have provided richer and more statistically powerful results. Donor retention rates also are the core of donor loyalty, which is part of relationship maintenance with donors. Therefore, measuring donor loyalty would have provided greater understanding of factors influencing donor retention. The reliability of the stewardship indexes created for the study ranged in ha values from 34 to .79, which are relatively low. Although alphas for the responsibility element indexes and the overall stewardship indexes for the annual giving program and the major gifts program were above .70 and acceptable, alphas for the other six stewardship element indexes are below .70 and lower than those in acceptable for indexes that have not been tested extensively; however, values found in this study suggest a need to improve the measurement of the reciprocity, reporting, and relationship nurturing variables. On the other hand, more studies with large samples
87 provide support for curr ent measurement. Another limitation of this study regarding measurement of stewardship is that all their stewardship practices with donors. A coorientation study of perc eptions from both donors and fundraisers may provide a more complete and accurate understanding of the relationships between a nonprofit organization and its donors. This study compares the practice of stewardship between donors to the two primary fundrai sing programs: annual giving and major gifts. However, there are multiple other ways that donors can be segmented. For example, capital campaigns and planned giving are considered additional, separate programs by many fundraising practitioners. The nature of planned gifts (i.e., gifts of assets made through estate plans) may differentiate donors of such gifts and stewardship practice employed for them. Also, a more detailed classification of donor publics within annual giving and major gift programs may rev eal that the practice of stewardship differs for individual, corporate, and foundation donors. Future studies that distinguish between the three primary sources of gifts may provide more comprehensive understanding of stewardship with different types of do nors. Finally, this study is limited in the sophistication of its data analysis. Findings rely primarily on bi variate analysis, although some multi variate analyses were used to determine differences among variables. More sophisticated tools, such as mult iple regression, should be used in future research. The method used for this study, a survey, is appropriate for gathering quantitative data from a large and dispersed population;
88 however, it is not the optimal method for determining causal effects. Future studies should employ experiments to examine the relationship between stewardship practices and donor retention rates. Suggestions for Future Research This final section recaps, expands, and adds to suggestions for future research already given. To bette r understand fundraising practices in nonprofit organizations, larger samples of participants are needed to generalize findings. As mentioned in the provide more accurate a nd comprehensive understanding of stewardship practices. The use of the coorientation measurement model could reveal misinterpretation of the weaknesses in stewardship databases is difficult but would provide valuable insights from both sides of the nonprofit donor relationship. In addition, independent t test can be employed to analyze data more powerfully. N ew and modified measurement items of stewardship practices created for this study resulted in low reliability for six of the ten indexes. The previous study by Waters (2007, 2010) showed that similar measurement items produced more reliable scales. This di screpancy provides opportunities for future researchers to test and refine items to measure the four elements of stewardship. Developing consistently reliable indexes would advance the theory of stewardship in particular and fundraising practice in general Even though thi s study found no relationships between donor retention and organizational characteristics, future studies should continue to explore differences in
89 donor retention among organizations with different characteristics, such as size, the numbe r of staff fundraisers employed, and the age of the fundraising function. To facilitate data collection, this study only required fundraisers to report the repeat donor retention rate (i.e., the percentage of donors from the previous fiscal year who gave again the next fiscal year). The rate is limited to donors who give in two consecutive years and does not account for other situations, such as recovery of lapsed donors who continue to give after more than one year. Future studies should examine additiona l donor retention rates, such as lapsed donor retention and overall donor retention, to obtain a more comprehensive understanding of retention of donors. In addition, donor acquisition rates (i.e., the percentage of new donors who made their first gift to the organization) and average cost per dollar raised also are meaningful measurements of fundraising practices. Longitudinal studies that examine practice of the four stewardship elements and donor retention rates for multiple fiscal years would provide in depth results to better understand the relationships between the variables, although such studies require substantial time and money. As the practice of stewardship is an effe ctive strategy for nonprofit donor relationship management, future research on the quality of relationships with annual giving donors and major gift donors would provide greater understanding of how stewardship practices enhance nonprofit donor relations and donor loyalty. Data collection and analysis of relationship variables, such as satisfaction and trust, and donor retention rates also would enhance effective fundraising management in practice and advance theory building in public relations. Relationship management scholars have long sought to go beyond the impact of relationship
90 Studies dealing with retention of donors could provide the important linkage between relationship quality and enacted behavior of pub lics. As this study, as well as previous studies, provides evidence that there are differences in stewardship practices between annual giving donors and major gift donors, it is possible that significant differences also exist among other donor groups. As stewardship for planned giving donors may differ from that fo r major gift donors in general. Also, the way organizations practice stewardship with individuals may differ from the ways they steward corporation and foundation donors. Studies using other segmentation of donors would provide insightful information on stewardship practices with donors of all types. In conclusion, this study identifies that there are rich opportunities for research in the practice of fundraising an d the management of nonprofit donor relations. More studies are needed and welcomed to describe and explain the import ant function of the nonprofit sector.
91 APPENDIX A QUESTIONNAIRE Fundraising Practices and Donor Retention This questionnaire will take about 10 minutes to complete. It is important that you answer every item. Your confidentiality and that of your organization are guaranteed. Please answer the following questions/items based on the organization where you curr ently work. If your organization is affiliated with a national/larger organization, please focus on your own division. 1. Identify the primary mission of your organization by circling one of the following categories: a. Arts, Culture, and Humanities b. Education c. Environment/Animals d. Foundations e. Human Services f. Health g. Public Society Benefit h. Int ernational Affairs i. Religion j. Other (specify): ___________________ 2. Of the following categories, which one a. Independent local organization b. Chapter/affiliate of national organi zation c. Independent national organization d. National organization with chapters/affiliates e. Government affiliated organization e. Other (specify): _______________________ 3. In your best estimate, what is the total number of all employees in you r organization? a. Fewer than 50 employees b. 50 350 employees c. 351 500 employees d. More than 500 employees 4. How many staff members are employed in the fundraising department in your organization? (Fill in the blank.) _____________ fundraising staff members 5. Approximately how many years has your organization employed at least one full time fundraising professional? _____________ years 6. What was the total amount of private gifts received by your organization in its last fiscal year? $__________________________ 7. Private gifts represented approximately wha last fiscal year? __________________%
92 8. The next series of items deal with steps in the process of raising gifts. Please estimate the percentage of time you or other members of your organiza first for the Annual Giving Program and then for Major Gifts. Please think of time in terms of full time effort, not as duration of the step. For example, implementing programming from start to end dates may cover 6 months of a 12 month campaign but represent less than 50% of the full time effort spent on the entire campaign. Your answers should total 100% for each program. Steps Annual Giving Program Major Gifts Program Research ________% ________% Objectives ________% ________% Programming P lanning ________% ________% Implementing ________% ________% Evaluation ________% ________% Stewardship ________% ________% 100% 100% The following questions deal with donor retention. In this questionnaire, the rate of donor retention refers to the percentage of donors from the previous fiscal year who gave again the next fiscal year. The percent is calculated by dividing the numb er of repeat donors by the total number of the previous the donor retention rate for FY2011 is 66%. The definition is limited to giving in two consecutive years; it does not account for past donors who give after a lapse of more than one year year and its fiscal year three years previous to the last fis cal year? Also, in your best estimation, what will be the donor retention rate for the current fiscal year? Please provide rates for both the Annual Giving and Major Gifts Programs. Donor Retention Rate Donor Retention Rate Annual Giving Program Major Gifts Program a. Last fiscal year ________% ________% b. Three years previous ________% ________% c. Current fiscal year ________% ________% 10. Of the following responses, please circle the one that you believe best describes your orga a. Donor retention receives minimal attention in fundraising. b. Seeking new donors takes precedence over retaining past donors. c. Efforts to retain donors have greatly increased in the last four years, since the recession started. d. Donor retention is among the highest fundraising priorities. e. The entire fundraising strategy is based on high donor retention rates.
93 11. For each of the statements below, please give your view of how your organization deals with its donors both annual giving donors (left side of page) and major gift donors (right side of page). Please circle the number that best represents your response f rom the 9 point scale provided, where 1 equals strongly disagree (SD) and 9 equals strongly agree (SA). Donors include individuals, corporations, and foundations. SD = Strongly Disagree SA = Strongly Agree Fundraising Practices with ANNUAL GIVING D ONORS Fundraising Practices with MAJOR GIFT DONORS SD SA SD SA 1 2 3 4 5 6 7 8 9 The organization acknowledges gifts in a timely manner. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization informs donors about its fundraising practices. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization acts ethically in i ts dealings with donors. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 Donors only hear from the organization when it is soliciting for gifts. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization always sends thank you letters to donors for their gifts. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization tells donors how it has used their gifts. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization considers its donors when deciding how to use their gifts. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization is more concerned with its fiscal health than with its relationships with donors. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization is not sincere when it thanks donors for their contributions. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 much money was raised in that year. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 Donors have confidence that the organization will use their gifts wisely. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization regularly communicates with donors. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 Because of their previous gifts, the organization recognizes donors as friends. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization does not provide donors with access to its IRS Form 990. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization ignores donor intent when using gifts. 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 The organization invites donors to participate in special events that it holds. 1 2 3 4 5 6 7 8 9
94 The final set of questions concern you. For the following items, please circle one answer or fill in the blank based on your individual demographic information. 12. Which one of the following responses best describes your current position? a. Head of fundraising b. Executive director of the organization c. Senior fundraising manager d. Fundraising staff member e. Other (Specify): __________________ 13. How many years have you been in your current position at your organization? ____________ years 14. How many years of experience do you have in fundraising? ____________ years 15. What is your gender? a. Male b. Female 16. What is your age? _______________ 17. What is your race? a. African American b. Asian American c. Caucasian d. Hispanic American e. Native American (i ncludes Native Alaskan, Hawaiian, and other Pacific Islanders) That completes the questionnaire. If you have any comments or additional information about fundraising practices and donor retention, please write them here. Thanks for your participation! Please return your completed questionnaire in the enclosed self addressed, stamped envelope by January 27, 2012, to: Haishi Cui Graduate Division P. O. Box 118400 University of Florida Gainesville, FL 32611 8400
95 APPENDIX B INFORMED CONSENT FORM Protocol Title: Fundraising Practices and Donor Retention. Purpose of this study: To research the fundraising practices of U.S. charitable organizations and donor retention. What you will be asked to do in the study: Upon reading the description about the study and agreeing to participate, you will be asked to complete the enclosed questionnaire. The characteristics, donor retention, fundraising practices and your individual demographics. Time required: 10 minutes Risks and benefits: There are no anticipated physical, psychological, or economic risks involved with this study. There are no direct benefits to you for participating in th is study; however, your participation in the study will increase knowledge about effective fundraising. Compensation: There is no financial compensation for participating in this research. Confidentiality: Neither your name or contact information will be c ollected for the study. Your responses are anonymous, and neither you nor your organization will be linked to your responses. The data will be kept confidential to the extent provided by law. Voluntary participation: Participation in this study is voluntar y. There is no penalty for not participating. You have the right to withdraw from this study at any time without consequence. Whom to contact if you have questions about the study: Haishi Cui, Graduate Student, Department of Public Relations, College of Jo urnalism and Communications, University of Florida, (352) 871 2309, email@example.com Dr. Kathleen S. Kelly, Professor, Department of Public Relations, College of Journalism and Communications, University of Florida, (352) 392 9359, firstname.lastname@example.org Who m to contact about your rights as a research participant in the study: Institutional Review Board Office, University of Florida, Box 112250, Gainesville, FL 32611; (352) 392 0433, email@example.com Agreement: By signing the line below and completing the followi ng questionnaire, I acknowledge that I have read the procedure described above. I voluntarily agree to participate in the procedure. Signature of Participant Date Signature of Researcher Date
96 APPEDIX C COVER LETTER January 12, 2012 (FIRST NAME) (LAST NAME) (TITLE) (ORGANIZATION) (ADDRESS) (CITY), (STATE) (ZIP CODE) Dear Mr./Ms. (Last name): I am writing to ask you to participate in a research study on fundraising that will advance the body of knowledge in the field. I am a graduate student in the College of Journalism and Communications at the University of Florida and currently conduc ting research to complete my thesis. The purpose of the thesis study is to examine the fundraising practices of U.S. charitable organizations and donor retention. If you choose to participate in the study, your answers will be combined with other fundraise You were randomly selected to participate in this study from a list provided by the Association of Fundraising Professionals (AFP), of which you are a member. Your participation is extr emely important and valuable as the sample is small in number but representative of all types of charitable organizations. The survey will take approximately 10 minutes to complete. Your answers will be used for statistical purposes only and will remain c ompletely confidential. If you agree to participate in this study, please read and sign the enclosed informed consent document, which details the purpose of the research. Please return the signed document and the completed questionnaire to me by January 27 2012, using the self addressed, stamped return envelope provided. If you have any questions, please contact me at (352) 871 2309 or firstname.lastname@example.org. You may also contact my thesis advisor, Dr. Kathleen Kelly, by calling (352) 392 9359 or e mailing her at send a business card along with your completed questionnaire. Thank you for your time and help. Sincerely, Haishi Cui P.S. If you prefer to complete the questionnaire online, please e mail me at email@example.com with your e mail address, and I will send you a hyperlink to the survey: http://goo.gl/tMLWr (case sensitive). Enclosures: Consent form, Survey questionnaire, Self addressed return envelope
97 APPENDIX D POSTCARD REMINDER You recently received a questionnaire about the fundraising practices of your organization. If you have not yet completed the questionnaire, please take a few minutes to do so and mail it back to me in the envelope that was provided. If you prefer to do it online, please go to the link : http://goo.gl/tMLWr (case sensitive) Please contact me at (352) 871 2309 or firstname.lastname@example.org if you have any questions. Thank you in advance, Haishi Cui University of Florida
98 LIST OF REFERENCES Ahern, T., & Joyaux, S. (2008). Keep your donors: The guide to better communications and stronger relationships Hoboken, N.J.: John Wiley & Sons. Alexander, G. D., & Carlson, K. J. (2005). Essential principles for fundraising success: An answer manual for the everyday challenges of raising money San Francisco, CA: Jossey Bass. Association of Donor Relations Professionals. (2010). Donor relations and stewardship defined. Retrieved December 27, 2012, from http://www.adrp.net/assets/documents/adrpdefinitionsexpand ed.pdf Association of Fundraising Professionals. (2008a, August 18). Donor retention trumps acquisition, study notes Retrieved April 16, 2011, from http://www.afpnet.org/Audiences/ReportsResearchDetail.cfm?ItemNumber=2549 Association of Fundraising Professionals. (2008b, November 10). Donor retention key to fundraising success Retrieved April 16, 2011, from http://www.afpnet.org/Audiences/ReportsResearchDetail.cfm?ItemNumber=2599 Association of Fundraising Professionals. (n.d.). About AFP Retrieved April 16, 2011, from http://www.afpnet.org/About/content.cfm?itemnumber=619 Association of Fundraising Professionals (AFP) & the Urban Institute (2011). 2011 Fundraising effectiveness survey report Retrieved March 4, 2011, from http://www.afpnet.org/files/ContentDocuments/FEP2011FinalReport.pdf Bennett, R., & Gabriel, H. (2003). Image and reputational characteristics of UK charitable organizations: An empirical s tudy. Corporate Reputation Review, 6 276 289. Berry, L.L. (1983). Relationship marketing In L.L. Berry, G.L. Shostack & G. Upah (Eds.), Emerging perspectives on services marketing (pp. 25 80). Chicago, IL: American Marketing Association. Blum, D. E. (2 010, November 9). Donations by the wealthy dropped sharply in the recession, study finds. The Chronicle of Philanthropy. Retrieved March 25, 2011, from http://philanthropy.com /article/Donations by the Wealthy/125312/ Bray, I. (2010). Effective fundraising for nonprofits: Real world strategies that work (3 rd ed). Berkeley, CA: Nolo. Brody, R., & Goodman, M. (1988). Fund raising events: Strategies and programs for success New York: Human Sciences Press.
99 Broom, G. M. (2009). (10 th ed). Upper Saddle River, NJ: Prentice Hall. Burk, P. (2003). Donor centered fundraising: How to hold on to your donors and raise much more money Chicago: Cygnus Applied Research. Burnett, K. (2002). Relationship fundraising: A donor based approach to the business of raising money (2 nd ed). San Francisco, CA: Jossey Bass. Bussel, H., & Forbes, D. (2006). Developing relationship marketing in the voluntary sector. Journal of Nonprofit and Voluntary Sector Marketing, 15 151 174. Caldwell, R. M. (2012, February). The true measure of loyalty: Donor retention can mean the difference between a healthy and an ailing development program. CASE Currents, pp. 11 12. Chiu, L. (2011, August 10). How a double dip recession could affect giving. The Chronicle of Philanthropy. Retrieved November 8, 2011, from http://philanthropy.com/blogs/prospecting/how a double dip recession could affect giving/30992 Council for Advancement and Support of Education. (2009). CASE campaign standards : Management and reporting standards for educational fund raising campaigns (4 th ed.). Washington, DC: Author. Dell, C. (2009). Stewardship culture and donors: A study of stewardship in the fundraising practices of U.S. accredited museums Unpublished University of Florida Gainesville. Retrieved April 13, 2011, from the University of Florida online dissertations database: http://purl.fcla.edu/fcla/etd/UFE0024524 Donor Bill of Rig hts. (2010). Association of Fundraising Professionals. Retrieved April 13, 2011, from http://www.afpnet.org/Ethics/EnforcementDetail.cfm?ItemNumber=3359 Emlen, J. S. (2007 ). Intentional stewardship: Bringing your donors to their highest level of philanthropy. Washington, DC: CASE Fox, R. J., Crask, M., & Kim, J. (1989). Mail survey response rate: A meta analysis of selected techniques for inducing responses. Public Opinio n Quarterly, 52, 467 491. Frazier, E., & Lopez Rivera, M. (2011, July 24). Corporate giving slow to recover as economy remains shaky. The Chronicle of Philanthropy Retrieved November 8, 2011, from http://philanthropy.com/article/Big Businesses Won t/128327/
1 00 Resource Center at AFP. Retrieved April 10, 2011, from http://www.afpnet.org/ResourceCenter/ArticleDetail.cfm?ItemNumber=3988 Fundraising Effectiveness Project. (2011). 2011 fundraising effectiveness survey report. Association of Fundraising Profession als. Retrieved November 7, 2011 from http://www.afpnet.org/files/ContentDocuments/FEP2011FinalReport.pdf Gaffney, T. (1996). Advanced techniques of donor recognition. Journal of Nonprofit and Voluntary Sector Marketing, 1 (1), 41 49. Giving USA Foundation. (2011). Giving USA 2011: The annual report on philanthropy for the year 2010 Retrieved November 8, 2011, from www.givingus areports.org. Gouldner, A. W. (1960). The norm of reciprocity: A preliminary statement. American Sociological Review, 25 (2), 161 178. Grace, K. S. (2005). Beyond fundraising: New strategies for nonprofit innovation and investment (2 nd ed.). Hoboken, NJ: John Wiley & Sons. Greenfield, J. M. (1991). Fund raising: Evaluating and managing the fund development process New York: John Wiley & Sons. Gross domestic product. (2011, July). World Development Indicators database, World Bank. Retrieved December 22, 2011, from http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf GuideStar. (2009, May). Hard times for charitable organizations. GuideStar Survey Retr ieved March 25, 2011, from http://www2.guidestar.org/rxa/news/articles/2009/guidestar survey hard time for charitable organization s.aspx they stop giving. News. The Chronicle of Philanthropy Retrieved April 6, 2011 from http://philanthropy.com/article/Charities Treatment of Donors/54880/ Hall, H., & Schwinn, E. (2008, April 17). Surviving tough times: New research can point out ways for fundraisers to thrive. News. The Chronicle of Philanthropy Retrieved April 1 3, 2011, from http://philanthropy.com/article/Surviving Tough Times/60772/ Hart, T., Greenfield, J. M., & Haji, S. D. (2007). People to people fundraising: Social networking and web 2.0 for charities Hoboken, NJ: John Wiley & Sons, Inc. Hendrix, J. A. (1995). Public relations cases (3 rd ed.). Belmont, CA: Wadsworth.
101 Hitchcock, S. (2009). Are there easy ways to reduce donor attrition rates? Contribution Magazines 23 (1), pp.1 1 6. Hon, L., & Grunig, J. (1999). Guidelines for measuring relationships in public relations Gainesville, FL: Institute for Public Relations Research. Kelly, K. S. (1998). Effective fund raising management Mahwah, NJ: Lawrence Erlbaum Associates. Kelly, K. S. (2001a). ROPES: A model of the fund raising process. In J. Greenfield (Ed.), The nonprofit handbook, fund raising (pp. 96 116). New York: John Wiley & Sons. Kelly, K. S. (2001b). Stewardship: The fifth step in the public relations process. In R.L. Heath. (Ed.), Handbook of public relations (pp. 279 289). Thousand Oaks, CA: Sage Publications. Kelly, K. S. (2011, August). Unpublished class handout, PUR 3801 Public Relations Strategy, University of Florida. Kristoffersen, L., & Singh, S. (2004) Successful application of a customer relationship management program in a non profit organization. Journal of Business Research, 51 73 86. Levis, W. (2008). Fundraising effectiveness project Washington, DC: Association of Fundraising Professionals. Lieu, D. (2011, May 2). Online fundraising strategies that beat the bad economy. Prospecting. The Chronicle of Philanthropy. Retrieved October 28, 2011, from http://philanthropy.com/blogs/prospecting/online fund raising strategies that beat the bad economy/29944 Lindahl, W. E. (2010). Principles of fundraising: Theory and practice Sudbury, MA: Jones and Bartlett Publishers. Mento, M. D (2009, March 31). Retaining your best donors. Live Discussions. The Chronicle of Philanthropy Retrieved April 12, 2011, from http://philanthropy.com/article/Retaining Your Best Donors/63313/ Mento, M. D., & Preston, C. (2011, February 6). After a frugal year, 2011 may see a The Chronicle of Philanthropy Retrieved March 25, 2011, from http://philanthropy.com/article/America s Biggest Donors Hit/126221/
102 Mesch, D. J., & Rooney, P. M. (2008). Determinants of compensation: A study of pay, performance, and gender differences for fundraising professio nals. Nonprofit Management and Leadership 18 (4), 435 463. Metrick, L. A. (2005). Successful strategies for effective stewardship. New Direction for Philanthropic Fundraising (pp. 29 41). New York: John Wiley & Sons. Naskrent, J., & Siebelt, P. (2011). The influence of commitment, trust, satisfaction, and involvement on donor retention. Voluntas: International Journal of Voluntary and Nonprofit Organizations 22, 757 778. Nathan, A., & Hallam, L. (2009). A qualitative investigation into the donor lapsi ng experience. International Journal of Nonprofit and Voluntary Sector Marketing, 14 317 331. National Center for Charitable Statistics. (2011). Quick facts about nonprofits. Urban Institute Retrieved December 22, 2011, from http://nccs.urban.org/statistics/quickfacts.cfm Nonprofit Fundraising Study. (2011, December). Nonprofit Research Collaborative Urban Institute. Retrieved December 22, 2011 from http://www.urban.org/UploadedPDF/412466 Late Fall 2011 Nonprofit Fundraising Study.pdf Public Relations Revie w, 33 (2), 99 102. Quinn, L., & Emlen, J. (2005). The thick and thin of stewardship. CASE District I Conference. Boston, January 22 25. Rosso, H. A. (1996). Stewardship in giving and receiving. Rosso on Fundraising (pp. 145 154).San Francisco, CA: Jossey Bass Publishing. Royce, J. (1971). The philosophy of loyalty (reprint). New York: Hafner. Sargeant, A. (1999). Marketing management for nonprofit organizations New York: Oxford University Press. Sargeant, A. (2001a). Relationship fundraising: How to keep donors loyal. Nonprofit Management and Leadership 12 (2), 177 192. Sargeant, A. (2001b). Using donor lifetime value to inform fundraising strategy. Nonprofit Management and Leadership 12 (1), 25 38. Sargeant, A. (2002, Summer). Man aging donor defection: Why should donors stop giving? New Directions For Philanthropic Fundraising, 32 59 74.
103 Sargeant, A. (2008). Donor retention: What do we know and what can we do about it? Retrieved December 22, 2011, from http://www.afpnet.org/files/ContentDocuments/Donor_Retention_What_Do_We_K now.pdf Sargeant, A., & Jay, E. (2004). Building donor loyalty San Francisco, CA: Joss ey Bass. Sargeant, A., & Woodliffe, L. (2007). Building donor loyalty: The antecedents and role of commitment in the context of charity giving. International Journal of Nonprofit and Public Sector Marketing, 18 (2), 47 68. Schmitt, N. (1996). Uses and abu ses of coefficient alpha. Psychological Assessment, 8 (4), 350 353. Tempel, E. R. (Ed.). (2003). San Francisco, CA: Jossey Bass. Tempel, E. R., Seiler, T. L., & Aldrich, E.E. (2010). Achieving excellen ce in fundraising (3 rd ed). San Francisco, CA: Jossey Bass. Urban Institute. (2009). Core files, Public Charities. National Center for Charitable Statistics. Retrieved December 22, 2011, from http://www.urban.org/UploadedPDF/412434 NonprofitAlmanacBrief2011.pdf Waters, R. D. (2007). Advancing relationship management theory: Coorientation and the nonprofit donor relationship. Unpublished doctoral dissertation, University of Florida Gainesville. Retrieved April 13, 2011, from the University of Florida online dissertations database, http://etd.fcla.edu.lp.hscl.ufl.edu/UF/UFE0021051/waters_r.pdf Waters, R. D. (2009). Measuring stewardship in public relations: A test exploring impact on the fundraising relationship. Public Relations Review. 35 (1). 113 119. West, M. (2010, April 4). In tough times, gratitude becomes as important as the pitch. The Chronicle of Philanthropy Retrieved March 15, 2011, from http://philanthropy.com/Article/In Tight Times Gratitude/64908 Wimmer, R. D., & Dominick, J. R. (2011). Mass media res earch: An introduction Belmont, CA: Thomson, Wadsworth. Worley, D. A. & Little, J. K. (2002). The critical role of stewardship in fund raising: The Coaches vs. Cancer campaign. Public Relations Review. 28 (1). 99 112. Worth, M. J. (Ed.). (2002). New strategies for educational fund raising Westport, CT: Praeger Publishers.
104 BIOGRAPHICAL SKETCH Haishi Cui received her Master of Arts in Mass Communication from the College of Journalism and Communications a t the University of Florida in the spring of 2012. During graduate study, her research interests included the fundraising process in nonprofit sector, relationship management, and use of social media in public relations. Before attending the University of Florida, she received her Bachelor of Arts in English with a minor of International Trade in Dalian University of Foreign Languages, China.