Midlevel-Donor Programs Grow in Popularity — and Sophistication

Kurt Budde/BFAS

The Kennedy Center’s midlevel-giving program was in a rut.

When Katherine Planas took over in late 2014, revenue had been stuck a little south of $3 million for several years. She found that roughly two-thirds of the money was contributed by donors who had come up through the Kennedy Center’s direct-mail, small-dollar program. Yet staff was taking a major-gifts approach to getting renewal gifts, painstakingly printing and mailing highly personalized letters, a tedious task that took a lot of program assistant Joel Iscaro’s time.

Looking for greater efficiency, Planas conducted an experiment, adopting a more direct-marketing-style appeal, with less customization and more underlining. The vendor that does the Kennedy Center’s membership mail handled production, delivery, and analysis.

The results were immediate. Revenue increased 6 percent each of the first two years, and a third of the way through the current budget year, it’s up again. Perhaps most important, the change freed up staff time.

“It is worth every penny for Joel to not be glued to the computer mail-merging, fighting with the printer, fighting with envelopes, folding, stuffing, stamping,” Planas says. “Now he actually has time to steward donors.”

Midlevel fundraising is growing up. Nonprofits are trying new techniques and getting smarter and more deliberate about how they retain these donors and encourage them to give more.

For a long time, midlevel donors fell through the cracks. Groups often pulled them from direct mail when their giving exceeded a certain threshold, but those donors didn’t give enough to warrant the attention of major-gift officers.

Things are slowly changing. Once a niche discipline, programs that target middle donors are becoming important fundraising engines. A private email group on the topic boasts more than 100 midlevel mavens.

Strengthening Ties

Multiple factors are fueling the growth. Chief among them: Retention rates are significantly better for people who make midsize gifts than for small-dollar donors, whose numbers continue to decline.

Midlevel programs also become more attractive — and necessary — as major-gift programs pursue larger and larger contributions, leaving them less time to nurture midsize donors. Though their individual gifts aren’t enormous — $1,000 to as much as $25,000 at many organizations — they add up. And unlike many major gifts, these gifts are often unrestricted.

People who give $1,000 to $10,000 to the SF-Marin Food Bank contribute a quarter of the roughly $10 million the nonprofit raises from individuals. Strengthening ties with these contributors is more important than ever, thanks to the new federal tax law, says Robert Brenneman, the food bank’s chief development officer.

“These are the people who have been itemizing, but going forward they might decide to take the standard deduction,” he says. “They might very well be more thoughtful about where they contribute, and so we want to make sure that we’re top of mind.”

Evolving Playbook

The problem of donors caught between direct marketing and major gifts was dissected in the 2014 report “The Missing Middle,” which examined 27 fundraising efforts targeting midlevel contributors. Programs looked very different from one nonprofit to another, says Mark Rovner, a principal at the fundraising consultancy Sea Change Strategies and co-author of the report.

“There was no playbook,” he says.

Today, he argues, two strategies are emerging. The first is high-end direct-marketing aimed at raising as much money as possible efficiently. The second puts midlevel donors in what you might call a junior major-gift program, with fundraisers actively building relationships and shepherding prospects to the major-gift level.

The Wilderness Society takes the first approach. The conservation group’s midlevel donors give $1,000 to $25,000 annually, money that’s considered membership revenue, says Andrea O’Brien, director of stewardship. She and her colleagues keep an eye out for major-gift prospects but focus more on keeping their supporters happy and encouraging them to continue to give.

Elisabeth Fall/SF-Marin Food Bank

Such programs need to be clear that midlevel donors are their primary objective — and make sure that the rest of the organization understands the goal, O’Brien says. “If people have different expectations of what the group is going to do, that’s going to create problems later.”

Oxfam America illustrates the second strategy. It has taken steps to break down barriers between its midlevel and major-gifts programs. Generally speaking, people who give $1,000 to $10,000 are considered midsize donors. But the organization assigns these donors to a major-gifts officer if their contributions increase and they indicate they want closer ties with the group.

On the flip side, mail is Oxfam’s primary means of communication with some donors who give more than $10,000 but show little interest in the bells and whistles of big-gift courtship.

“We’re moving more toward treating the donor according to how they want to be treated and not according to their gift level,” says Victoria Smith, who runs the international-development group’s midlevel-giving program.

Members of the midlevel and major-gifts teams meet regularly to discuss which donors to assign to a gift officer, and the two departments have shared goals and strategies.

Measuring the impact of phone calls, emails, and other personal touches on those donors is not easy, Smith says. But Oxfam tracks closely the number who go on to make major gifts — data that’s tangible evidence of the program’s effectiveness. “It points back to the role of the midlevel program in identifying those donors and building relationships with them,” she says.

‘You Can Do Both’

Not everyone thinks nonprofits must choose between the direct-marketing and major-gifts approaches. The Kennedy Center’s Planas advocates a hybrid. “I really do think you can do both,” she says. “It’s just a matter of looking at the data you have and choosing where you’re going to focus your time and when.”

When her department shifted its midlevel mailings to an outside vendor, staff used the saved time to conduct research on donors and connect with them.

At the same time, Planas borrowed a major-gifts tactic to deepen ties with the most dedicated midlevel donors. She reinvigorated the Circles Board, an advisory group of midlevel donors that had grown stagnant. Members have no fiduciary or governance responsibilities, but their meetings delve into the inner workings of the Kennedy Center. They also commit to give at least $3,000 and raise or give an additional $6,000, acting as ambassadors for the program.

Last year 25 of the 45 Circles Board members increased their giving by an average of $2,400. With the new donors they recruited, they gave a total of $734,000.

Yassine El Mansouri

Several years ago, a couple on the board significantly boosted their longstanding $6,000 annual gift. Now they give $12,000 each year to support the Kennedy Center’s training programs for young musicians and $25,000 for a major annual fundraising event.

Says Planas: “I truly think it’s because they got to know the institution so deeply through the Circles Board, hearing updates from members of our senior staff, from our president, hearing about programs that don’t always make it in the news.”

Best Friends Animal Society is adopting both the direct-marketing and major-gifts models by splitting its midlevel program into two tiers.

Direct mail has fueled that program — which focuses on supporters who contribute $1,000 to $25,000 — since it started five years ago. Though it features a staff member dedicated to responding to donors’ questions and concerns, the charity this fall added an annual-giving officer, Megan Conn, to build relationships with supporters in the program who give more than $10,000.

Conn typically doesn’t schedule meetings with donors in her portfolio of 300. Instead she sends emails that look personalized but are delivered to multiple people. She also writes personal notes and makes phone calls.

Best Friends created new events to give midlevel and major donors an inside look at the organization’s work. Participants in Friends and Founders gatherings visit the charity’s sanctuary in Kanab, Utah, to learn about the organization’s mission and meet with officials. Among the activities on offer: yoga with bunnies.

“We’re starting to get a lot of people who are really interested in coming to visit the sanctuary,” says Barbara Camick, the group’s director of annual giving. “That gives Megan a great opportunity to engage with them and have a conversation about why they’re passionate about Best Friends.”