DONOR CULTIVATION

In the ever evolving landscape of nonprofits, decline in revenue and widening funding gap has in recent years become a major challenge for several organizations. Even well-established international nonprofits are grappling with leadership changes, restructuring, and layoffs as they try to adapt to these financial pressures (e.g IRC, Save the Children). This shrinking of resources can be traced back to a variety of factors, including escalating competition for flexible funding, the earmarking of funds, growing impact of wars, climate-induced disasters, prolonged crises, and global inflation. The implementation of Grand Bargain Principles, especially ‘Localization’ is another contestable factor that is leading to the shrinking of the share of funding for the so-called HQ operations.

For nonprofits to navigate this phase and maintain financial stability, diversifying funding sources is paramount. This means strategically combining institutional donor funds (government or public fund sources e.g FCDO, GAC, USAID, EU, etc), unrestricted contributions from corporate and private donors, and securing one-time or subscription-based individual donations from philanthropists (otherwise classified as non-institutional donors). Though global inflation makes this task more challenging, embracing this diversified funding model is essential for ensuring steady growth and long-term sustainability in an increasingly competitive landscape. This is why the topic of Donor Cultivation is crucial as an ongoing business development topic, to not only help secure immediate funding but also foster long-term partnerships that can sustain organizations through the toughest financial times.

This article is for both small, medium and large nonprofit executives and business development experts within the sector, working hard to support the initiatives of their organizations.

Donor Cultivation; Beyond Persuasion to Strategic Partnerships

Donor cultivation is often perceived as the art of persuading potential donors to support your cause. However, it goes much deeper than securing a one-time donation or winning over a benefactor. True donor cultivation is a conscious, strategic, and genuine effort to understand your donors—their priorities, policies, and interests—and honestly assess how your organization aligns with their goals. In essence, it mirrors the principle of “Know Your Customer” (KYC), emphasizing the importance of a thorough and meaningful connection.

For many organizations, the ultimate goal of donor cultivation is to transform potential donors into committed partners, who do not only provide one-off financial support but also invest in the long-term success of the organization. However, this goal is often more complex than it seems. Building a healthy, lasting donor relationship hinges on your ability to remain uniquely valuable to the donor’s immediate objectives, which are subject to change over time. As donor priorities evolve, so does the relevance of your organization’s mission and work to their goals.

Therefore, donor cultivation should be seen as an open, continuous cycle—an ongoing dialogue rather than a one-time transaction. This approach ensures that your organization remains aligned with the donor’s changing needs, fostering sustainable, long-term partnerships.

A popular Donor Cultivation Cycle adopted by many thought leaders including Donorly classifies the Cultivation process to 4 stages as follows:

1. Identification and Research: Effective donor cultivation begins with the crucial step of identification and research, where organizations focus on finding and segmenting potential donors who resonate with their values and mission. For nonprofits, particularly small to medium-sized ones, this process becomes far more efficient when leveraging Prospect Research Tools. These tools are instrumental in pinpointing donors by analyzing two key markers: affinity and capacity. Affinity refers to the “warmth” or interest a potential donor has in your cause, while capacity assesses their financial ability to support your projects. By identifying these markers, nonprofits can target individuals or corporations that are both willing and able to contribute meaningfully. Examples of Prospect Research Tools that aid in this process include donor search, million dollar list, matching gift database etc. These tools streamline the identification process, helping organizations zero in on the most promising prospects. Additionally, the growing availability of AI-powered tools further enhances this capability, offering sophisticated analysis and insights that can significantly improve the effectiveness of donor research and segmentation.

By strategically employing these resources, nonprofits can better align their fundraising efforts with potential donors who not only share their mission but also have the means to make a substantial impact.

2. Cultivation: Cultivation goes beyond merely engaging with donors—it is about building genuine, long-term relationships rooted in trust and mutual understanding. This involves nurturing personal connections, exchanging information and briefs, and ensuring that both parties clearly understand each other’s objectives and values. For nonprofits, fostering these relationships is crucial for long-term success. When working with Institutional Donors, this process requires a more technical and strategic approach. It starts with a deep understanding of the donor institution’s development or humanitarian plans, long-term mission, and the methods they intend to use to achieve their goals. If your organization’s capacities align with those objectives, the next step is to communicate your strengths, track record, and willingness to be a reliable partner. This communication should be ongoing and strategic, using all possible channels to convey your organization’s value and relevance.

Sometimes, the cultivation cycle ends here—when it’s clear that there are no meaningful points of complementarity between your organization and the donor. This underscores why the cultivation process must be reflective and genuine; pursuing partnerships that don’t align with your mission or capabilities only wastes valuable time and resources.

For some donors, engagement might result in a one-time contribution, while for others, it could lead to long-term support or even contract renewals. Institutional Donors often facilitate this process through formal channels such as calls for Expressions of Interest (EOIs), sector-specific stakeholder consultation meetings, deep-dive sessions, and forums where their specific objectives are discussed. These platforms offer invaluable opportunities for nonprofits to present their capabilities, build rapport, and align themselves with the donor’s goals. Fully embracing and utilizing these opportunities is essential for nonprofits seeking to cultivate strong, enduring partnerships that can drive sustained impact.

3. Solicitation: Once a solid relationship has been established and the nonprofit’s capacities and values align with the donor’s objectives, it’s time to move to the solicitation phase. This is where the nonprofit formally requests a donation. When dealing with Institutional Donors, the solicitation process is usually more structured and standardized. Typically, it involves responding to calls for proposals, concept notes, needs assessments, or other formal solicitations that the donor advertises.

Institutional Donors often publish these opportunities through their designated specific portals as follows: FCDO – gov.uk,  USAID – grants.gov, EU- funding and tenders portal, GAC – international.gc.ca etc. These funding opportunities typically include detailed guidelines and templates that must be carefully studied before a submission is prepared. Understanding the donor’s requirements and following their format meticulously can make a significant difference in the competitiveness of your proposal.

Given the increasing competition in the nonprofit sector, it’s important to accept that not every solicitation will result in success. If a donor rejects your proposal, this doesn’t mark the end of the relationship. Instead, it should be viewed as an opportunity to revisit the cultivation phase—strengthening the relationship, refining your understanding of the donor’s needs, and preparing for the next solicitation opportunity. Continuously nurturing the connection ensures that your organization remains top of mind when the next funding window opens.

4. Stewardship: Stewardship is the crucial process of being accountable for the donations received, ensuring transparency and professionalism in how funds are managed and reported. This phase is not just about fulfilling obligations but also about fostering trust and reinforcing the relationship between the donor and the nonprofit, which is essential for long-term support.

For many donors, especially institutional ones, stewardship involves more than just submitting regular reports on how funds are used. Donors often request to visit project locations as part of their due diligence. These visits are incredibly important for sustaining the relationship, as they provide an opportunity for donors to see the impact of their contributions firsthand. A well-executed site visit builds trust and can significantly increase the likelihood of a repeat donation. Therefore, it’s crucial to plan these visits meticulously, ensuring that all logistics are prepared well in advance to provide a seamless experience for the donor.

Donor reporting, whether for institutional or non-institutional donors, can vary in form. It can be passive, direct or indirect, depending on the donor’s preferences. However, no matter the format, reporting is a critical aspect of donor cultivation and must be prioritized. Providing clear, timely updates on the progress and impact of a donation helps reassure the donor that their investment is being used effectively and that the nonprofit is a responsible steward of their resources.

While many donors do not accept material gifts, organizing recognition events can be a powerful way to strengthen the bond between the donor and nonprofit. These events allow the organization to publicly acknowledge the donor’s contributions, showcase impact stories, and demonstrate the real-world outcomes of their support. Recognizing donors in this way not only deepens the relationship but also highlights the nonprofit’s capabilities, positioning it as a trusted partner for future collaborations.

Conclusion: Elevating Donor Cultivation as a Strategic Imperative

Donor cultivation is not just a fundraising task; it is a critical and technical aspect of business development for every nonprofit. It demands a dedicated commitment of time, effort, and strategic planning. By focusing on building meaningful, long-term relationships with donors, nonprofits can secure the financial resources necessary to fulfill their missions while creating a community of supporters deeply invested in their success.

In today’s evolving landscape, nonprofits must stay attuned to emerging trends in the donor ecosystem. Leveraging new technologies for fundraising and building a robust network of partners are essential strategies for meeting and exceeding fundraising goals. Additionally, nonprofit executives should view their donors as true “partners” rather than distant “angels.” This shift in mindset fosters a more balanced and collaborative approach to engagement and solicitation, strengthening both the relationship and the outcomes.

As you reflect on these insights, consider how prioritizing donor engagement can elevate your organization’s strategy. By integrating these principles, you will not only deepen your connection with donors but also amplify the reach and impact of your mission, ensuring your organization thrives in a competitive and ever-changing environment.

I hope this article inspires you to do more. Feel free to share your thoughts and comments in the box below.

Deborah Brown Majekodunmi