Your Guide to Unleashing the Power of Donor Segmentation

Strategies for Donor Segmentation and Targeted Campaigns

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Dana Guterman

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August 6, 2024

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8 minutes

Nonprofit Trends

Donor Communications

This article is part of a series

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When we think of donor segmentation, we tend to think of sending out emails to different groups of donors. This one's for potential donors, this one's for monthly donors, and this one's for donors who wear berets. (We hope you have a few of those donors; they sound very fashionable and fun.) But donor segmentation is about so much more than that! It's a strategy, a way of life, the key to successful fundraising efforts and a happy donor base.

What is donor segmentation?

Donor segmentation is an approach that nonprofits use to group their donors by category based on various criteria, including preferences, demographics, and history with the organization. Segmenting donors allows nonprofits to tailor their fundraising strategies and communications to individual donors, fostering engagement and building stronger donor relationships.

Pretty straightforward! But, like most things in life, there's a bit more to it.

Why is donor segmentation important for nonprofits?

Donor segmentation is a donor engagement strategy that helps nonprofits aiming to enhance fundraising efforts and build lasting relationships. Segmentation as a strategy involves categorizing donors into distinct groups based on shared characteristics, such as demographics, giving history, interests, and engagement levels and gives fundraisers a way to focus their engagement efforts for deeper relationships.

Picture it: You receive an invitation to an alumni event in Tokyo when you live in New Jersey. "All that money on tuition, and they can't remember where I live?" you fume. "Also, I wish I lived in Tokyo." Or perhaps you get a donation request asking first-time donors to give again, when you've been donating to that very cause every few months for the past two years. How dare they! Situations like these are why any org in the nonprofit sector needs a solid fundraising segmentation strategy.

Specifically, segmentation helps you:

Increase donor engagement
Improve donor retention
Create effective content
Personalize fundraising asks
Cultivate major donors
Tailor fundraising campaigns to your mission

Increase donor engagement

Segmentation makes it easy to send personalized communications to donors. And when people feel seen by your organization, rather than being one number in a vast donor database, they want to stay connected to and involved with your cause.

Segmentation impacts retention

Understanding donor preferences leads to improved relationships with donors, and strong relationships means donors who stick around, in good times and in bad. Plus, segmentation helps you avoid donor fatigue by not asking too much of any one donor (that donor who gives $15 every year on his niece's bday? Don't send an ask for a $100 monthly donation).

Create content that works (and converts)

70% of consumers report receiving irrelevant ads, content, or information at least once a month (Redpoint Global). Nobody has time for that! With segmentation, you can send your donor population relevant content, tailoring your communications strategies to the various donor types.

Deliver tailored fundraising asks

When you segment donors, you can ask for donations based on past giving patterns (i.e., how much they've given, when, and how frequently), ensuring your asks make sense for each individual. Nothing turns off a donor more than asking for gifts that are above their income level!

Cultivate major donors

Once you have your segments, you can easily identify major donors and commit additional resources to cultivating those relationships.

Tailor fundraising campaigns

Different donor segments may respond better to specific fundraising campaigns, which enables nonprofits to create more targeted appeals and boosts campaign effectiveness.

What donor segments should you create?

So, what do meaningful segments look like? When you segment out your donors, you want to consider what type of communication makes sense based on donation history, communication preferences, giving motivations, and demographics. Here are some examples of types of donor segments to consider with tips on how segmentation can lead to more effective fundraising.

1. One-time donors

With donors who have given single donations, the goal is continued engagement and, ideally, another donation. By segmenting this type of donor, you can give them a warm welcome, encourage engagement with your organization, and turn one-time donations into recurring gifts.

2. Major donors

As much as we love diversified revenue streams, major donors usually make up the majority of nonprofit fundraising revenue, so you really want to go above and beyond when it comes to stewarding these relationships. By segmenting out major gift donors, you can make a personal connection and build a communication strategy to match.

3. Recurring donors

Recurring or monthly donors give on a regular basis, making this common type of individual donor vital for stable revenue. When you segment out these key donors, acknowledge their commitment, maintain their loyalty, and potentially encourage them to increase their recurring contributions or engage with peer-to-peer fundraisers.

4. Lapsed donors

You know lapsed donors once loved you, but then ... something changed. Segmenting this type of donor allows you to re-engage them through targeted fundraising appeals, reminding them of the impact of their past support.

5. Volunteers

Volunteers may not give cash, but they're dedicated supporters who invest time and effort. By segmenting volunteers, you can recognize their contributions, involve them in volunteer opportunities, and transition them into donors (if appropriate).

6. Legacy donors

Donors who have included your organization in their estate plans are a special segment. Acknowledge their planned gifts, invite them to special events, and maintain a strong personal relationship, ensuring future sustainability.

7. Social media followers

Social media followers are all potential donors. With effective donor segmentation, you can tailor online communications to convert their interest into active support, whether that's through financial donations, peer-to-peer fundraising, advocacy, or the occasional birthday fundraiser.

8. Corporate donors

Corporate donors' motivations are quite different from individual donors, so you want to engage them accordingly. Typically, they're donating because they have a social responsibility to do so, so keep this segment apprised of marketing opportunities and special events that will polish their brand image.

What do you do with donor segments?

Once you segment your donors, the next step is to strategically utilize these segments to enhance engagement, tailor communications, and ultimately drive more effective fundraising initiatives. That's a mouthful, but what it means is that you can develop donor personas and journeys, analyze donor behavior and trends, and use lead scoring to prioritize donor outreach.

Analyze donor behavior and trends

This is the same thing you do with your non-segmented donor database. You take a look at how many donors gave when, how, their average donation amount, seasonality, and so on. Do the same thing, just with a smaller donor list.

Develop donor personas and journeys

Personas and buyer journeys are kind of a marketing thing. But they require audience knowledge... and where do you get that audience? That's right, your segments. Use the lists that you pulled to supplement your marketing efforts.

Prioritize donors based on activity score

In sales, lead scoring helps you know whether a lead is worth pursuing or how close they are to making a purchase. With nonprofits, scoring donors helps us prioritize which current donors, supporters, and prospective donors will take on activities like volunteering, fundraising, and donating.

What data is necessary for donor segmentation?

All the nonprofit donor types we've discussed share a common giving history, but there are lots of other data points that should inform your segmentation efforts.

1. Donation amount

First of all, the amount of money a donor gives is a crucial data point. Look at a donor's average donation size and frequency, then segment them based on whether they're a major donor, a mid-level donor, or a small donor.

2. Donation history and activity

Examining a donor's giving history, including the frequency and consistency of their donations, can inform when and how you interact with them moving forward. For example, one donor can give a single large gift every December while another gives a medium gift every month. Both would be segmented as major donors, but your donor communications strategy would be different.

3. Geography

Geographical location can impact a donor's connection to your cause or nonprofit. By taking location into account, you can identify donor prospects who might be interested in your cause and tailor current donor messaging to regional interests and concerns, such as local fundraising events.

4. Preferred communication channel

Meeting your donors where they are starts with understanding how they prefer to receive information (e.g., email, direct mail, social media, phone, or one-on-one conversations). Note their preferences well.

5. Donor demographics

Donor demographics are the segmentation basics! Demographic data, such as age, gender, income, and occupation, provides insights into donor preferences and motivations. For example, older donors might prefer direct mail or face-to-face conversations, while younger donors may engage more through digital channels.

6. Donor journey stage

You can segment donors based on where they are in their donor journey. Are they a prospective donor, new donor, current donor, or lapsed donor? This allows for tailored communication strategies that match their current engagement level.

7. Preferred payment method

Knowing whether donors prefer cash or credit (or, these days, Venmo or crypto) ensures a seamless donation experience, reducing barriers to giving. Use this segmentation information to bring prospective donors into the fold by building the most effective donation form out there!

Best practices for effective donor segmentation

Best practices for donor segmentation start before segmenting and go beyond the donation experience. Keep your data clean, focus on the right data, save lists so you save time, make sure you keep it inclusive, and integrate all your most important tools for donor data that prioritizes the donor experience.

Now, you're well-versed in all things segmentation, from segmenting donors to segmenting oranges. (The trick is to use a sharp knife and cut between the membranes!) But how do you implement donor management best practices to maximize segmentation effectiveness?

Here are our go-to donor segmentation strategies.

How to begin donor segmentation

Successful segmentation starts with investing in great donor management software. It provides the tools you need to collect, organize, and analyze donor data efficiently, all in one place. And when you convert your current donor CRM to Funraise, the first thing you'll do is migrate your existing data.

Take a look at how the data migration process works at Funraise.

Why is clean data imperative?

Donor segments only work if you have accurate, up-to-date data. Clean data ensures that all of your segmentation efforts are based on reliable information, so set aside time to regularly clean up your donor database, deleting duplicate entries, checking for accuracy, and standardizing formatting.

Create donor segments meaningful to your nonprofit's goals

As you can see, there are so, so many ways to segment your donors, and you don't want to go overboard with 1,256 different donor lists. Instead, you want to create segments that align with your nonprofit's specific fundraising and engagement goals.

Filter and save dynamic lists of supporters

All this segmenting can take some time, so we suggest that once you have the lists you need... Save. Them. With a donor management program like Funraise, you can save dynamic lists that will remove and include donors as they qualify. And yep, that will save you bunches of time while keeping the lists consistent.

The role of intersectionality in segmentation

Remember that donor segments aren't one size fits all. Intersectionality recognizes that donors have complex identities, needs, and motivations that may overlap with various segments, so defer to your donors themselves on what matters most.

Integrate your software solutions for a complete, accurate picture

If you're using 10 different software solutions, clean, comprehensive data is going to be hard to come by. Instead, integrate your various technologies within your organization to create a comprehensive donor database with a more holistic view of donors. This, in turn, will lead to more effective segmentation--and stronger relationships.

Katelyn Baughn, CEO of KB Digital and nonprofit email marketing expert and consultant to Trevor Project, UNHCR, and Amnesty International, summarizes it pretty well:

"Automation and segmentation are the two biggest ways that you can use technology and tools to really scale and see that return on your investment."

She sat down with us on the Nonstop Nonprofit podcast to explain that statement and give us a great action item to add to our to-do list.

"Automation is the best way to ... segment your list and personalize those emails based off of who the people are. So, for example, if they're a donor, a one-time donor that no one knows anything about... It's a great practice to have a welcome series in place to tell them about your organization, share some stories, share some stories of impact, and let them know that their dollars have actually been used or are going to be used to do X, Y, and Z."

Ways to keep your donor segmentation equitable

With great segmentation comes great responsibility. We all know that data is often biased, and that means it's imperative that you ensure equity, inclusivity, and fairness when you segment your data. The most important step is consciously understanding that data equity is important, but similarly critical are data privacy and inclusive communications and engagement.

Here are some effective strategies for equitable segmentation.

Data privacy matters

‍Equity starts with transparency, and as the almighty keeper of donor data, your organization needs to prioritize data privacy and security to protect your donors' personal information. What's more, you need to be 100% transparent about data usage, informing your donor population about how you'll use their information.

Avoid stereotyping

‍When segmenting donors and making donor profiles, it's easy to unintentionally make assumptions. Not all major donors are older; not all college students are on social media. Repeat after us: segmenting should be based on data-driven insights rather than preconceived ideas.

Make your communications inclusive

Your communication with donors should be personalized, but that doesn't mean the overall messaging should exclude any donor segment. Craft messaging that resonates with a diverse target audience and offer content in different languages and formats so that it's as accessible as possible.

Engage equitably

‍Offer all donors (and potential donors) the same opportunities to engage with your organization. And if you do have certain events for a certain category of donors, do your best to make it more inclusive. For example, if you're hosting a special event for everyone who gave a major donation and calling it your "leadership circle," also invite long-time volunteers who have given countless hours to your cause.

Again with the intersectionality

‍We said it before, and we'll say it again: people will belong to more than one segment simultaneously, so recognize that the college student from Iowa who's an annual donor and social media influencer has many facets. Analyze your donors' motivations and preferences mindfully.

Seek feedback

When it's all about standing out and keeping up, donor segmentation is your key to success. By taking a data-driven approach to your communications and campaigns, you can better connect with donors and blow past your fundraising goals. So, head on over to Funraise, and start turning those numbers into insights.

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Donor segmentation FAQ from AI

What is the donor segmentation strategy?

Donor segmentation strategy is a systematic approach to donor engagement that categorizes donors into distinct groups based on specific characteristics, behaviors, and motivations. This strategic classification allows organizations to tailor their communication, engagement, and fundraising efforts effectively, ultimately enhancing donor relationships and maximizing contributions.

How do you categorize donors?

The most common categories for segmenting donors have to do with demographics, donation activity, and behavior. For example, demographics would include gender, marital status, age, and location. Donation activity shows how much they give, how often, and what time of year while behavior shows whether they donate on a desktop or mobile device, for example.

What is a donor engagement strategy?

A donor engagement strategy is a comprehensive plan designed to cultivate and enhance relationships between nonprofits or charitable organizations and their donors. The primary goal of this strategy is to foster lasting connections that not only encourage donors to contribute financially but also engage them in the organization's mission and activities over the long term.

How should you leverage donor segments?

Strategies for leveraging donor segments effectively help your nonprofit maximize fundraising efforts and foster long-term relationships with supporters. Strategies to consider when working with donor segments include tailoring your campaign, utilizing multiple channels, cultivating major donors, and creating targeted content, and building a personalized donation experience.

Donor segmentation: Key takeaways

Donor segmentation is a way for nonprofits to group their donor pool by category based on a range of criteria, including preferences, demographics, and giving history.
Segmenting donors is important for nonprofits because it allows them to tailor their strategies and communications to different nonprofit donor types, increasing engagement, improving donor retention rates, and building stronger relationships.
You can segment your donors based on a variety of factors, including types of donations, giving history, demographics, preferences, and motivations.
Clean data is essential to effective donor segmentation, so regularly go through your database to delete duplicate entries and check formatting and accuracy.
Don't forget to emphasize equity in your donor segmentation strategy that's inclusive, intersectional, and secure.