Speaking of questions that have come up following our presentations lately, someone recently inquired about pledge attrition after our webinar on effective capital campaigns. The question was: How can nonprofits best plan for unpaid pledges during a campaign?
Because capital campaigns are built around multi-your pledges, a nonprofit can expect to experience some pledge attrition due to unforeseen circumstance such as a bankruptcy, loss of employment, or the death of the donor over the course of the campaign. But, by and large donors fulfill their commitments. Accountants often advise nonprofits to plan conservatively for 8-10% pledge attrition. However, over the course of our firm’s 23-year history working on campaigns, we’ve rarely seen a percentage of unpaid pledges that high—normally see no more than 2-3%. The times when we have witnessed a higher rate of pledge attrition have been in campaigns with many broad-based, smaller donors that may not have a strong relationship to the organization.
Ongoing stewardship is key when considering pledge attrition, especially in a multi-year campaign. A nonprofit cannot assume that just because a donor has made a pledge that they will fulfill it. A verbal pledge is never something you should count. We always advise our clients not to add anyone to the publicly shared contributors list and certainly not to the “books” until a written pledge from the donor is secured. In addition, it’s imperative to stay in touch with the donor, send them frequent pledge payment reminders, and of course, thank them throughout the campaign. If a donor misses a pledge payment, it’s important to follow-up immediately — do not let months go by before addressing it. It’s possible that it just slipped the donor’s mind. Remember too, that often times it’s the satisfied donors who have been stewarded properly over the course of the campaign that you can return to towards the end of a campaign when you’re looking to reinvigorate and close on your goal.
It’s also worth noting that we don’t recommend a campaign pledge period of more than five years; our recommended range is usually 3 to 5 years. Beyond 5 years, your chances of unpaid pledges will likely increase as there are many factors that could arise and affect a donor’s ability to complete their pledge.
I recently heard a great story told at the Giving Institute/Giving USA meeting, where a large organization in California that just concluded a $1 billion capital campaign (with hundreds of thousands of donors) only had a pledge attrition of $500,000. This is an amazing rate — below 1/10 of 1%. The point being that if people believe in your mission, and they are properly stewarded, without any unforeseen circumstance, they will give.