Statisticians use the phrase “separating signal from noise” to illustrate the need to distinguish between important data that should drive decision making and irrelevant or misleading data. The “noise” for nonprofit fundraisers is created by the current transactional, impersonal model that powers direct mail and email fundraising. The data collected in this model might include the time of day a donation request is sent, subject lines, length and language of the appeals, etc. But none of that really matters because the fundraiser is overlooking two critical signals about the failures of transactional approaches to fundraising.
Fewer individuals are giving, and even fewer are making recurring donations
The first signal is that the percentage of U.S. households that give to charity has declined from 60% in 2000 to slightly more than 40% today. The second signal is that only an estimated 20% of donors make a second donation to the same organization; according to the Fundraising Effectiveness Project’s (FEP) 2024 Q3 report, only 13.8% of new donors gave again the next year. In short, fewer people are making donations, and many fewer people are making multiple donations.
The FEP report also found, however, that although overall giving totals have remained stable, the number of people giving has fallen. “The decline in donor numbers is largely driven by low participation from the smallest donor group (under $100).” What’s happening is that multimillion-dollar gifts from billionaires are masking this decline in giving by everyday donors.
Relational fundraising: Treating every donor like a million bucks
There’s an alternative to the traditional approach to everyday fundraising; we at Every.org call it Relational Fundraising at Scale. It’s based on work we’ve done coaching smaller nonprofits and engaging with nonprofits on our platform, and incorporates the smart, strategic use of AI.
“Relational fundraising” is what fundraisers do when they write letters to major donors or take them to lunch. Of course, we want all donors to feel appreciated and involved, they say, but in practice, such relationships cannot apply to everyday donors. This is no longer true; using AI, we can make every donor feel like a million bucks. However, this means more than just layering AI on top of existing practices—it requires a shift in mindset that resets assumptions, which together will lead to new practices.
Mindset shift: In contrast to transactional fundraising, relational fundraising centers the needs and interests of every individual donor, “seeing” them as individuals with their own interests, talents, and social capital and asking them what they think and want.
Reset assumptions: Nonprofits are not used to actually asking donors what they want and feel, but they should. Do they want weekly emails (probably not!), or would they prefer a monthly update? Do they want information they can use to tell their friends about your cause? Do they have skills and expertise that would be of value to your efforts?
Practice: AI can be used to create customized experiences that treat every donor like a major donor. Generative AI tools like Gemini or ChatGPT can help organizations craft more compelling stories. Tools like Loom can customize thank-you messages for individual donors. Software like Boodlebox can flag a donor who hasn’t responded in a while.
AI’s ‘dividend of time’ creates space for relationship building with individual donors
In addition, AI has the potential to create something all organizations desperately need: time. When used carefully and well, it can save organizations enormous amounts of time spent inputting and organizing data, reconciling budgets, drafting communications, and screening resumes. Nonprofits can use this “dividend of time” to supersize the hamster wheel, or they can use it to spend time getting to know their donors better.
But this is also where development staff most often get stuck when considering relational fundraising at scale. The idea of spending more time talking to low-dollar donors is so far from their experience and everything they’ve been told about fundraising that the pivot can seem overwhelming.
To be clear, I am not suggesting taking every $25 donor out to lunch. I am suggesting that nonprofits carefully guard their newly gained time and use it to build relationships by, say, calling 10 donors a week to learn more about why they support the organization. Or identify 10 enthusiastic supporters (regardless of their amount of giving) and ask them to become ambassadors for your cause and recruit 10 donors each.
The future of nonprofit fundraising hinges on embracing a relational fundraising approach, powered by AI, to create a community of supporters who want to give over the long term. By shifting from a transactional mindset to one that prioritizes individual donor engagement, nonprofits can not only reverse the decline in giving by everyday donors but also build a more resilient and sustainable funding model. This requires a willingness to experiment, listen deeply to donors, and leverage AI’s capabilities to foster genuine connections at scale. The choice is clear: continue down the path of diminishing returns with transactional methods, or step boldly into a future where technology empowers us to build stronger, more meaningful relationships with those who fuel our missions.
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