Donor Stewardship: Relationship Building Strategy for Donors

9 min readNov 29, 2022

Donor stewardship involves tracking donations, managing expectations, communicating with donors, and setting up systems to track results.

What is donor stewardship?

Donor stewardship is a system that helps organizations manage and steward donor resources. This includes tracking donations, managing expectations, communicating with donors, and setting up systems to track results.

In simple terms, donor stewardship helps nonprofits understand where their money is going, keep donors happy, and increase the likelihood of future donations. Organizations should implement donor stewardship if they want to maintain high levels of transparency and accountability for their donation processes.

Best strategies for managing and stewarding donor resources include:

Relationship-building and communications that take place after the gift has been received.
Managing gifts as donors intended, updating donors on the progress and impact of their gifts, and easing donors into the cultivation process by keeping them involved with your organization.
Stewarding your donors is about meeting a donor’s gift intentions and expectations within the parameters of your organization to create a long-term, mutually beneficial relationship.
Increasing donor retention by making donors feel appreciated.

How to get started

Start by developing a donor stewardship strategy that outlines your communication policies, recognition strategies, and engagement processes. Your plan should also identify who is responsible for each donor interaction. Your nonprofit needs to understand their donors and their needs. A solid donor stewardship plan will ensure your donors feel seen and appreciated long term.

What are the components of donor stewardship?

Donor stewardship is the practice of managing and monitoring a donor’s giving to ensure that their money is used effectively and efficiently. It includes setting up accounting systems, tracking spending, and communicating with donors. The components include setting up accounting systems, tracking spending, and communicating with donors.

It helps organizations manage their donations so that they’re used effectively and efficiently. It also involves keeping track of how much money has been donated, where it’s been spent, and what kind of communication is taking place with donors. Organizations can use this to improve transparency in their operations as well as build relationships with generous donors.

Some of the roles nonprofits can implement include:

Director of donor relations — responsible for managing and reporting on donor funds.
Stewardship officer — responsible for overseeing the donor stewardship program.
Relationship manager — responsible for building stronger donor relationships.

A stewardship officer plays a vital role in pulling together donor stewardship profiles, ensuring that donors are properly thanked, creating stewardship reports, updating stewardship processes, and maintaining a stewardship schedule. Major gift officers play a key role in your donor stewardship efforts because they build relationships and trust with major donors.

Importance of Donor Recognition

Donor recognition is an important component of donor stewardship.

Recognition programs include:

Donation pages on a nonprofit’s website are an effective way to show donors their appreciation.
Thank donors by their preferred name and in their preferred channel.
Respond personally to donors even if they have not given recently.
Recognize donors for their donation, campaign, and mission contributions.
Focus your engagements around your mission and how your donors play a role in furthering your cause.
Create a relationship with your donors that is beneficial to both parties involved.

How is donor stewardship different from donor relations?

Donor stewardship is proactive, while donor relations is reactive. Donor stewardship involves nurturing and cultivating relationships with donors, something that should be a part of every donor relations strategy. Donor relations is the process of building relationships with donors.

What are the benefits of donor stewardship?

Donor stewardship is a process that helps organizations manage and steward donor data in a responsible way. It’s important to protect donor information, because it can be used to exploit donors or manipulate their behavior.

The benefits include reducing the risk of fraud, protecting donors’ privacy, and managing donation requests more efficiently. Nonprofit organizations need to focus on retaining the donors they already have and fostering donor loyalty.

A strong donor stewardship program lays the groundwork for thanking and acknowledging donors in a large-scale, process-oriented way. Your stewardship efforts will involve training your gifts officers and frontline fundraisers to initiate stewardship with your top donors.

It also allows organizations to track donations more effectively and respond quickly to donors’ needs. Your stewership program should be integrated across your donor relations programs.

Strategy to Improve Donor Relationship Building

Donor retention rate measures how many donors continue to give to your organization over time. The average donor retention rate for the nonprofit sector hovers around 45%. When new donors give only once, you experience a loss on the initial investment to acquire those new supporters.

Donor stewardship improves donor retention by helping organizations manage their relationships with their donors. When donors see how their contributions have impacted your mission, they are more likely to give in the future.

Prioritizing donor retention is the simplest, most cost-effective strategy to ensure the long-term financial health of your organization. Communicating with donors on an ongoing basis can help you learn more about them and understand their preferences, which will enable you to better tailor your good fundraising stewardship to meet their needs.

What are some best practices of donor stewardship?

Donor stewardship is the process of managing and protecting the information donors provide to a charity. This includes ensuring that donors’ contact information is secure, that donations are processed correctly, and that donations are used for their intended purpose.

There are a number of best practices for donor stewardship, including using secure donation processing systems, protecting donor contact information, and using donated funds in an effective way. By following these tips, charities can ensure that their donors feel appreciated and that their contributions go towards important causes.

This also helps protect your organization from fraud and abuse while also ensuring that your donors’ data is safe and properly managed. By following these guidelines carefully, you can ensure a successful donation experience for both you and your donors.

Thank donors immediately and without fail.
Use the same channel for the thank you as the donor used for giving.
Use donor-centric language.
Personalize your interactions by segmenting donors based on categories, gift-giving levels, or other demographics.
Recognize donors in some way.
Honor requests from donors who wish to give anonymously.

Setting up classifications of donor funds

In 2018, new reporting requirements went into affect for nonprofits. Accounting Standards Update 2016–14 (ASU 2016–14) reduced the number of net assets nonprofits have to report on to two distinct classes:

Without donor restrictions
With donor restrictions

The latter includes what was formerly separated into the temporarily restricted and permanently restricted net asset categories.

With the new regulations it is imperative that when you receive a donation from a donor, you classify the donation into the appropriate net asset class, and provide documentation to the donor how their funds were used. Along with the proper accounting of the donation, a nonprofit has a responsibility of providing stewardship to the donor.

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Incorporating Donor Stewardship into a Fundraising Strategy

Donor stewardship can be incorporated into a fundraising strategy by understInanding how it works and how it can help your organization manage and track their donors. donor stewardship includes collecting data about donors (such as contact information, donation amount, etc.), managing donations (such as issuing refunds or sending thank you cards), and communicating with donors (such as keeping them updated on the organization’s work).

By incorporating donor stewardship into your fundraising strategy, you’ll have more accurate records of who gave to your cause and what they donated. This information will allow you to better target your messaging to potential supporters, making sure that every penny goes towards the organization’s goals.

Do not underestimate the importance of fundraising stewardship. A donor acknowledgment should be sent to every donor who donates to your organization. But, stewardship goes beyond acknowledging donations. Its building a stronger relationship with your donors by communicating with them using e-mails, newsletters and social media.

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What are some challenges to implementing donor stewardship?

Implementing donor stewardship can be challenging because it requires a change in the way that the organization operates. Implementing donor stewardship can be time-consuming and requires coordination between different departments within the organization. Implementing donor stewardship can require changes to the way that data is collected and analyzed.

Challenges to implementing donor stewardship can include the following:

Understanding the needs of different donors.
Managing a complex system of donor categories.
Creating and tracking records.
Keeping track of donation receipts over time.

Crafting a Donor Stewardship Strategy for Nonprofits

Prepare a written document that outlines the strategy for managing donors. This document should include the following:

Stewardship goals and objectives of the organization.
The mission statement of the organization.
Communication Strategy .
A description of the role of stewardship in fundraising.
The organization’s relationship with donors.
How to cultivate donor relationships and solicit donations from existing donors.
The organization’s plan for using donor data.
The organization’s policies and procedures for managing donors.
A list of the staff members who are responsible for implementing the plan.
The donor database of the organization.
A list of major donors and what they have contributed to the organization in the past.
List of needs that are dependent upon donations

How can donor stewardship be measured?

Donor stewardship can be measured by looking at different factors, such as how well the charity is using its funds, whether donors are getting value for their money, and how efficiently the charity is operating. By keeping a donor database , the charity can track how much money each donor gives, and how often. It is important to note that some donors may not want their information kept in a database. If this is the case, the charity should respect that and not keep the information.

A donor database is also a good way to track which donors are giving money, and how much they give. This can help the charity know which donors are most active, and can help them target those donors for special treatment. For example, by sending a letter to the donor thanking them for their past support and asking if they would like to increase their donation.

Fundraising software organizes all your donor relations, captures the multifaceted relationships you’ve built with donors and stores them for future fundraising activities. For example, FastFund Fund Raising compiles all your donor information and communications in a system so you can create a more personalized communication plan, improving your donor stewardship.

Fund accounting categorizes all revenue as without donor restrictions, or with donor restrictions. If a donation is identified as restricted, the accounting requirements are extremely important.

Accountability is the core concept of nonprofit accounting requirements. If restrictions are imposed by the donor when they make the gift or grant, the income must be recognized when the funds are received in the proper net asset category and then matched with related expenses. This adds a complexity to nonprofit financial reports, which makes accurate and reliable accounting especially important. Using true fund accounting software makes these tasks easier and more efficient.

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Bottom Line

A charity’s donor stewardship strategy should focus on the donors themselves. This is a great way to show that you appreciate their support and value them as individuals. It also shows them how they can get the most out of their donation.

A good donor stewardship strategy is essential for any nonprofit organization, but it’s particularly important if you’re a small charity with limited resources. It’s a lot easier to manage a small number of donors than it is to deal with hundreds or thousands.

Donor stewardship can be measured in several different ways, but the most important thing is that it’s a win-win situation for both the donor and the nonprofit.

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Originally published at https://araize.com/donor-stewardship-nonprofit-strategy/