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A Quick Guide to Donor Segmentation for Nonprofits

Last updated:  September 13, 2023

iWave Blog   

Effective communication with donors is an ongoing process for nonprofit organizations.

Your donors aren’t all the same, yet maintaining personalized communication can be a major challenge, especially as your list of supporters grows. You know that “one size” doesn’t fit all – different supporters will have different reactions to campaigns, and not all will be a good fit.

What can you do? Send personal communication to each and every person on your list? While this may be a strategy in some cases, it’s not sustainable across a large number of supporters. You’d need huge staffing resources to make it happen.

Donor segmentation is a solution to better personalize your communications without having to pen one-on-one letters to each supporter. Here’s our quick guide to how it works, and how to effectively use segmentation in your organization:

What is donor segmentation?

Donor segmentation is a method of splitting your donors into groups based on some sort of similarities. The commonalities form a basis for decisions on how to communicate with each segment, or what sorts of campaigns to share with them. It’s a way for organizations to be more targeted and relevant with their communications without resorting to one-on-one messages.

Consider how you address different audiences, even in your personal life. You don’t communicate the same way with everyone, you naturally adjust your messaging and tone. For example, think about how you talk to a family member versus how you address a new donor whom you’ve just met. This is the principle at work when you segment your donors, too.

There are almost endless ways to segment your audience. In the nonprofit sector, some common segments include; high-value donors, the channel through which the donor was acquired, and engagement level, or participation in certain events.

Why segment your donors?

There are some distinct benefits to segmenting your donors, including:

1. To give donors a better experience of your organization. People want to receive more personalized, relevant communications. Data from the business sector found that 80% of people preferred to do business with brands that personalize their experience, and it’s easy to see how this can be extrapolated into nonprofit organizations.
2. To allow you as an organization to better understand different segments. When you create segments, you can craft profiles of those segments that help serve as a guide for your campaigns and communications.
3. To improve audience engagement. Hubspot noted that marketers who used segmentation saw up to a 760% increase in revenue. People are more likely to open emails or generally respond to campaigns that resonate with them.
4. To make administration and management of communications easier for your organization. It’s easier to craft effective messaging for a key segment rather than trying to make it fit everyone. It’s also much easier to do this than to try to reach out to everyone personally!

Donor segmentation strategies

There are many ways to segment your donors, so let’s look at a few ideas that are typically used by nonprofits:

Segment by affinity for a cause, topic, or event.

Segmenting donors based on their specific interests or passions allows organizations to tailor their messaging and campaigns more effectively. By targeting donors with content that resonates deeply with their values and concerns, nonprofits can foster deeper emotional connections and drive higher levels of engagement and donations.

For example, “people who are interested in saving the wetlands” is a group with a shared affinity.

Such individuals are more likely to respond to campaigns or events specifically highlighting wetland conservation efforts, as opposed to generic environmental causes.

iWave’s software offers multi-lens modeling, which can help identify affinity groups, among other segments.

Segment by demographics.

This covers a range of possible segments, including age, generational designation (e.g. Baby Boomers, Gen X, Millennials, etc.), gender, income level, involvement with your nonprofit (volunteers, staff members, donors…), and location.

Demographic details like age or generational designation can greatly influence how donors connect with nonprofits. For instance, while Baby Boomers might prefer direct mail campaigns or personal phone calls, Millennials might be more responsive to digital outreach like email or social media campaigns. Understanding these nuances ensures that communication is not just received, but also welcomed and engaged with.

Gender can also play a role in the causes one supports or how they engage with philanthropy. For example, research has shown that women are often more likely to give and give more than men, especially when they feel a personal connection to the cause.

Income level provides insights into the giving capacity of donors. Tailoring campaigns to reflect what is feasible or appropriate for different income brackets can help prevent donor fatigue and increase the likelihood of repeat donations.

Segment by actions or behaviors.

Segmenting donors based on their past actions or behaviors provides key insights into their engagement patterns, enabling nonprofits to predict their affinities more effectively. By focusing on a donor’s behavior, you are essentially recognizing and respecting their choices, making your communication with them more meaningful and informed.

For example, understanding how a person was acquired as a donor can highlight their motivations to donate. If they became a donor after attending a fundraising gala, they might be more interested in social or networking events. Alternatively, if they were acquired through a digital campaign, they might be more responsive to online marketing.

Participation in specific events is another leading indicator of donor behavior. If a donor consistently attends workshops related to a particular cause or issue, it indicates a deeper interest in that area, suggesting that more detailed or specialized communications on that topic might resonate with them.

Monitoring engagement with certain campaigns can also be rewarding. Donors who actively share, comment, or promote specific campaigns might be great candidates for becoming ambassadors for the cause. This also suggests they might be willing to play a more active role if approached appropriately.

Segment by size of gift.

Segmenting donors by the size of their gift is another way to segment donors that helps nonprofits nurture relationships efficiently. Segmenting donors based on their giving capacities allows nonprofits to tailor the communications strategy according to the level of commitment and donation potential of donors.

For donors who contribute larger sums, a more personalized approach is not just a courtesy but an expectation. These individuals often seek a deeper connection with the cause and appreciate updates on the tangible impact of their contribution.

By offering them unique experiences, insights, or personalized acknowledgments — such as a personal phone call, an invitation to a special event, or even one-on-one meetings with the leadership — nonprofits can cultivate stronger ties and potentially secure further major gifts.

Additionally, donors who give smaller but regular amounts are also of immense value. They represent consistent support and potential growth. Over time, with the right nurturing, they might be willing to increase their contributions. Targeting them with messages that highlight the collective impact of regular givers can make them feel part of a larger mission. Additionally, showcasing stories of how consistent donations over time leads to measurable impact can inspire them to stay committed or even increase their giving level.

This approach to communication based on the size of the gift also ensures resource allocation. While it’s crucial to maintain contact with all donor segments, it’s equally essential to ensure that multi-touch communication strategies are used for the highest impact donors.

Segment by donation frequency.

Segmenting donors by the frequency of their donations allows nonprofits to identify and address the distinct patterns and motivations behind each group’s giving habits. Understanding these differences and tailoring communication accordingly can improve donor relationships and result in increased loyalty and engagement.

• Annual Donors: These donors typically contribute once a year, often during specific campaigns or end-of-year donations. Recognizing them for their yearly commitment is essential. Sending timely reminders or anniversary acknowledgments can be effective in ensuring their continued support. For them, yearly impact reports or a summary of how their donation made a difference can be particularly motivating.
• Monthly Donors: Monthly donors demonstrate a strong, continuous commitment to the cause. They often appreciate regular updates on the ongoing projects or efforts their contributions support. By providing them with monthly or quarterly impact reports, you can reinforce the value of their sustained donations. Also, consider offering them exclusive insider updates or events to deepen their connection with your nonprofit.
• First-time Donors: Capturing the interest and loyalty of first-time donors is critical. A warm, personalized thank you can make a strong impression, making them more likely to donate again. Offering them a deeper insight into the cause they’ve supported, or sharing stories of impact, can further improve their connection to your nonprofit.
• Returning Donors: These donors have chosen to support the cause more than once but may not have a regular giving pattern. Acknowledging their continued belief in the organization’s work can be really rewarding. Tailoring communications to remind them of past impacts and current needs can motivate them further. Also, exploring opportunities to transition them into more frequent donors, like monthly donors, can be beneficial.

Segment by interests.

Donors may express different interests related to what you do as an organization. For example; people who’d like to volunteer, people who are interested in education about what you do, people interested in particular aspects of your mission…

1. Interested in Volunteering: Donors who express an interest in volunteering show a willingness to engage beyond financial contributions. These individuals can become valuable ambassadors for your cause. You can tailor your communication strategy to include opportunities for hands-on involvement, and perhaps exclusive volunteer events where they can witness the impact first-hand.
2. Interested in Education: This group values in-depth knowledge about the work your nonprofit is doing. They may appreciate webinars, detailed reports, or educational content that informs them about the issues your nonprofit is tackling. Engaging them with rich, informative material can deepen their commitment and potentially lead them to become advocates who share your content and mission with a broader audience.
3. Focused on Specific Aspects of Your Mission: Some donors are particularly passionate about certain elements of your organization’s work. Segmenting these donors allows you to send targeted updates on the specific projects, campaigns, or issues they care most about. By aligning your communications directly with their interests, you significantly increase the likelihood of ongoing engagement and support.
4. Multi-Interest Donors: These are supporters who show interest in multiple aspects of your organization. They might be interested in volunteering, attending events, and staying updated on various nonprofit initiatives. For this versatile group, varied and consistent communications can help maintain their diverse interests.

Segment by communication preferences.

This is a basic way to segment your donors and can be achieved simply by asking them. Do they prefer email, direct mail, phone, text, online chat, or in-person communication? This allows nonprofits to add another level of personalization and connection to their communication strategy.

How to effectively use donor segments

How can your organization use donor segmentation to get effective results? Here are some ideas:

Ensure your segments are meaningful

There are so many potential ways to segment donors, so it’s worth spending some time deciding which segments will be truly meaningful for your organization first. The idea is that segmentation should make your task easier and generate better engagement.

A meaningful segment tends to be one that is large enough to get results, but not so broad that you miss the chance to engage directly with individuals. Different nonprofits will have different segments that make more sense to them, including making easy, searchable categories.

Target your “ask” appropriately

Effective use of segments means targeting your “ask” so that it is most likely to be possible or valid for the person receiving it. For example, if you’re looking for large year-end donations, young college students probably aren’t an appropriate target group. However, those students may be willing to give a small amount of money on a monthly basis.

At the same time, you can use your segments to plan out your major gift requests. You can identify who among your donors may be in a position to make a major donation, then hone your campaign to appeal to them.

Improve your donor stewardship

You could choose to target donor groups that show increased loyalty and retention with recognition for their impact. For example, you might acknowledge them publicly, or send out thank you letters. You could also keep them updated on topics they’ve shown a particular interest in, such as progress on an aspect of your mission.

Analyze engagement by donor segment

Segmentation is an opportunity for nonprofit organizations to conduct a deeper analysis of their donors and make adjustments to their approach in the future. For example, you might have an initial idea of what your most meaningful segments will be, but will those ideas work out?

Analysis by donor segment allows you to gather data such as engagement information. You might find that a certain segment has little engagement, whereas others are highly engaged. This information allows you to hone your efforts in the future and focus on segments that are more active.

Targeted email automations

Automated email sequences are an efficient way for nonprofits to reach people without having to “reinvent the wheel” each time. In order for those emails to gain traction, they need to be well-targeted to the audience.

You can take the personas and interests of each segment and use those to craft messaging that is more likely to resonate with the target audience. Email automation software can help you to track and target appropriate segments, while fundraising intelligence software can help you to create those segments in the first place.

Conclusion

Donor segmentation is a strategy for splitting your donors into logical groups, helping you to communicate more effectively, in a way that resonates with each group. It’s an important piece to the fundraising challenge as it can help nonprofits to more easily reach people at scale.

Fundraising intelligence software can play an important role in helping nonprofits to discover logical donor segments. iWave is here to help, with features such as multi-lens modeling and in-depth analytics – get your free demo here today.