Data Insights

The new big thing in fundraising – Direct Mail

By Sean Triner

There are so many hip new ways to acquire donors in New Zealand and Australia.  Twitter, Facebook, face to face, phone, mobile, peer to peer, two-step, payroll giving, email, web sites, Google ads,…  but the number one by volume is that new-fangled thing – direct mail.

Seventy charities from the now independent Commonwealth nations of New Zealand and Australia pooled their card file indexes* to study how donors actually behave. They have discovered that direct mail acquired more donors last year than any other form of donor recruitment.

New cash donors

 

 

 

 

 

 

 

 

 

 

 

Direct mail has never had it so good, and 2009-2012 saw a 100% increase in the number of new donors acquired through this new-fangled method. Back in 2009, 155,000 of the 267,000 people who made a donation for the first time to one of the 70 charities did so after receiving a direct mail letter (57%). In 2012 that number had increased to around 350,000 new direct mail donors from a total of 508,000 (69%).

Famously championed by social change entrepreneur Dr Barnardo in London in the late 19th century, direct mail is making a bit of a surge in the Southern hemisphere.

When interviewed, Dr Barnardo was delighted that direct mail had taken off so much.
“I am verily pleased that direct mail is performing well to help waifs and strays in the colonies.” He said.

“With [former] convicts putting their backs into good, honest work to help those even more disadvantaged than themselves, I believe the outposts of New Zealand and Port Arthur [Australia] may well thrive as independent states separate to mother England.”

Looking at individual charities to work out how these donors are acquired, we see most are acquired through ‘premium direct mail’. This describes a method of breaking down the barrier of getting donors to open an unsolicited envelope by offering a gift in return for simply opening and reading the message.

The gifts could be address labels, tote bags, stationery, key rings or pens.

Whilst acquiring donors through these premium packs tends to lead to lower average donations, it also leads to much higher response rates, higher initial net returns and more long term net income.

In the olden days (a couple of years ago) charities were happy with 0.8% to 1.2% response rates from cold mail, but premium packs tend to get at least three times that.

Unfortunately response rates are not covered by benchmarking, but I know that the average response rate from direct mail from Pareto charity clients who follow our recommended strategy is over 4.5%.

Even with lower average donations and lower second gift rates the maths usually work in the favour of the charity willing to spend more per pack on premium direct mail.

Face to face acquisition of regular givers is still huge in Australia and New Zealand, and I recommend still maintaining (or starting) investment in that area, but make sure you have a balanced porfolio – direct mail cash donors will provide a unique income source and will bring you your future bequests and major donors if you follow the right strategies.

*Please note – the charities were collaborating by analysing giving patterns and behaviour. None of them have breached any privacy rules by allowing any other member to identify donors as individuals; ie donors’ personal information was never shared between partners in this exercise.

Maths and Fundraising at WA State Conference

By Sean Triner

I am at the FIA Western Australia State Conference listening to Paul Ramsbottom, a fellow fundraising geek. He is looking at revising the donor pyramid.

This is how the National Park Service in USA illustrates their donor pyramid.

Ken Burnett, who brought the donor pyramid to the attention of many of us in 1992, recently blogged that it was no panacea. Also, the Agitator (The American one, not me) recently blogged about it and how it was not really useful.

Paul agrees. The problem with the pyramid is that it infers people move along it. You bring them in, they make another gift, then another, then become an automatic donor, then a major donor and finally a legator. This doesn’t really happen.

He is getting into some pretty neat maths stuff now – looking at state charts; a mathematical approach in this case looking how people change their state. The key question is what triggered the change in state.

A donor can, at any point, move from one ‘type’ to another. As time moves along, the state of the donor is only ever at one fixed point. He points out that this needs to be managed within charities – he says that Amnesty International in Australia are the only charity he knows of to be working on this topic. If you can’t afford it (but have a database that justifies it) then simply outsource data entry and hire data analysts.

His second maths thing is graph theory. For those who haven’t heard of this, it is simply the theory behind things like how LinkedIn suggests who you should connect with. Also called social network theory.

He shows how Jason Boley managed to use this to spot an incredibly important link between a donor, through the LA Foundation and to another donor – they would never have known without this connection.

The first network map is complex, but Jason drilled down, focusing on LA Foundation and Atlanta Foundation (the red nodes).

Drilling down we see these new connections – that were unknown to the university.

So. We have learned a little about state theory and graph theory, but what does that mean for you?

The key here is that the technology overlay changes the game through four things.  Speed, Scale, Automation and Analytics.

These two theories will help you target better, saving money on marketing to the wrong people and increasing money by getting the right ones. And of course, major donor fundraising will benefit from networks discovered through graph theory.

Paul Ramsbottom

New Donor Diagnostics

By Andy Tidy

Wouldn’t it be nice if when you recruited a new donor, you knew how much they would be worth in the long term? All donors are not equal, and they don’t behave as if they are, so identifying their differences and adjusting the program they receive accordingly, is the key to maximising net income and achieving the best long term return on investment.

The question that needs to be addressed is ‘what are the metrics that need to be monitored that will allow you to see as early as possible how valuable a donor, or a group of donors, will be and how they should be treated?’ Depending on your recruitment mix, these will vary.

Regular Giving Recruitment

For regular giving recruitment, the key performance indicator that needs to be monitored is attrition. Three month, six month and twelve month attrition will identify any issues there may be in the short and medium term. For a long term view, it needs to be measured over two, three or four or more years. Attrition is usually represented as a percentage of recruited donors but there are other ways of looking at the impact attrition has.

The average number of payments made by donors who stop giving is a useful comparator. For example, if the attrition of your regular giving recruits is heavily skewed to the first few months, then you will get fewer payments per lapsed donor than if the attrition is more evenly spread out over the year. This will have the effect of increasing the amount of “lost income” – defined as the difference between the expected income from a regular giving recruit (12 times the monthly value) and the actual amount received. The lost income amount provides a tangible financial value to the attrition.

Upgrade likelihood is another metric that will contribute to long term value, monitoring the proportion of active donors that have upgraded, and the value of the upgrade allows you to monitor the contribution your upgrade program makes.

The last element you need to consider for RG recruits is their propensity to make additional contributions. This is usually in the form of a response to a cash appeal. The recruitment channel is usually the main determinant of whether a regular giving recruit will also make cash gifts, but there can also be variation by list source, payment type, age and other variables.

Once these metrics have been calculated, the next step is to look into any underlying variables that influence them. These will include channel, age, payment method, agency (if Face to Face), DM list and gender. Monitoring and slicing by these factors will allow you to pick up any sub groups that are over or under performing, and adjust your strategy accordingly.

Cash Recruitment

When we look at a cash recruitment program, the metrics that need to consider are different.

Second gift rate is usually the first that is measured. As per attrition for regular givers, this can be looked at after three, six and twelve months. What needs to be measured, along with the second gift rate, is the value of the second gift as this will be a key factor in the long term value of the new recruits. Donors that upgrade on their second gift are flagging to you that they have the potential to donate more – looking at the asks these donors receive will help maximise their long term value.

Along with second gift rates and value, the number of subsequent gifts per year will be a driver of long term income. Those recruits that respond to multiple appeals in the year following acquisition will go on to be some of you best donors.
The proportion of new cash donors that convert to regular giving will vary depending on your strategy – testing of the best approach is ideal if you have enough recruits.

Ongoing Costs

The final element in any assessment of the long term return from acquisition is costs. The recruitment cost is fixed at the time of acquisition, but the ongoing costs can be controlled. By looking at the performance of the new recruits using some of the metrics outlined above, it is possible to quickly ascertain which donors justify the extra expenditure – such as donor care – and which groups of donors need to be cost managed.

Cost management of donors is particularly important if the recruitment contains large volumes of low value one off recruits. These donors need to be given the opportunity to make additional gifts, but by keeping an eye on their net contribution we can make sure that the program as a whole is not compromised by their poor return.
In the same way, monitoring the return from upgrade, additional cash asks and reactivations to regular givers will ensure the net return is maximised.

Creating reports to look at the performance indicators above, when combined with campaign analysis of the initial acquisition, will allow decisions about acquisition and donor development strategies to be made promptly and therefore profitably.

If you need assistance with recruitment analysis and planning, we’d love to help you out. Give us a bell on 02 8823 5800 or email us at canyouhelp@paretofundraising.com.

Test, test and test again!

By Clarke Vincent
This article was first published by F&P Magazine in April 2011

Any strategy or tactic of your appeal program that causes contention or argument amongst your fundraising team is a great thing to test. “Ok, let’s test it” is the best way to move beyond many a heated debate!

Test results can offer significant insight into the best possible path forward, but to the chagrin of every veteran marketer, testing cannot claim to offer eternal marketing truths. What tests give us are measured snapshots in time that act as an indication of likely future outcomes. Previous test results should be viewed as a helpful guide rather than marketing lore, and be re-tested fairly regularly.

Ground strategy in science

Fundraising strategy is best grounded in the science of what has been observed previously, mutated with a creative flair to challenge assumptions and introduce new ideas. The more test results you have access to, the more confident you can be about the likely outcome of your chosen strategy and tactics, as well as the directions in which you push innovation.
Here are five relatively simple tactical tests for any charity with an appetite for running more tests and building their pool of donor insight.

1. Calculated vs default ask amounts
Should you ask each donor for amounts that are directly calculated from their previous gift(s)? Or should you simply prompt donors with the same default level of suggested gift (probably a low, medium and high gift amount)? Often, though not always, the effort of calculating gift amounts for each donor can help to uplift average gift and overall income significantly. You should test to see if it is worth the effort to you (note – we recommend excluding major donors from this test).

2. Include regular givers in cash appeal targeting
Should you ask your regular givers for an extra cash gift? Probably, for more important appeals (e.g. emergency, tax). If you do, set it up as a test to ensure it is financially viable (increases net income) to include them; but also measure over a longer time period to see if it has an impact on longer term value by measuring retention and upgrading along with additional contributions. Our testing suggests retention is normally unaffected, overall value is increased and additional cash giving from regular givers is also a good indicator of bequest potential.

3. Push online
Should you promote gift payment online in your mail appeals? One day the answer to that question will be an emphatic yes. But right now, for reasons such as habit, perceived safety and ease of online donation process, it is better tested on a regular basis to see if it is the right thing to offer your donors yet.

4. Repeating specific ask amounts through an appeal letter
Should you ask for a specific gift on the first page of a letter and repeat that ask through to your response device? It works well as a tactic more often than not, but be sure to choose the right amount and the right context for making the ask. (A complaint from one donor about a specific ask does not represent the feelings of your whole base; consider the overall impact on donor value.)

5. Provide a separate response device
Should you use a tear-off, or separate response device? We generally recommend a separate response device because we have never seen them perform worse than a tear-off device, making it the safe option. This is based on the donor insight that direct mail donors are generally older and using a separate response device aids the ease with which someone can respond – no tearing of paper is required, and more space means you can use larger font. If your budgets are tight, test it to see if it is financially worthwhile for you.

Test incremental improvements

These tests are designed for warm donor cash appeals. The absolute best place to test direct marketing tactics is in communications that are improved incrementally over time by only a small amount. Most warm donor appeals quite rightly change the focus of their appeal (often case study or need) greatly with each appeal, whereas an acquisition communication can use a ‘banker’ pack that has proven over time to provide the most effective returns.

Testing an acquisition banker pack is a purer science since less elements of the execution change over time – so you can be more confident in relying on the consistency of banker pack tests. But, since most organisations conduct more warm appeals than acquisition communications, any testing is better than none. Testing should be a part of all direct marketing appeals.

Re-test what you believe to be true

Many tests deliver apparently inconclusive results (essentially – the same result). This in itself can be a useful conclusion, because it’s an indication that it doesn’t really matter too much. Your focus can move onto testing more pressing strategic decisions. But do be sure to occasionally repeat tests, to revalidate what you believe to be true – as our Greek scientific forbears observed; the only constant is change.

Second presentation at AFP – do your 5 day job in 3 days!

By Sean Triner

Today I presented a session titled “How to be so good at fundraising you only need to work afternoons 3 days a week”. I was a stand in for Jonathon Grapsas. He came up with the title which is clever way of saying – do your data analysis!

This presentation is much more detailed, with the case studies not hidden so a massive wealth of information for you, even if you didn’t make it along.

Hope it is useful.

Afternoons, 3 days a week
View more presentations from Pareto Group

Leading Canadian charities come together in the spirit of sharing and best practice

Released 4 May 2010

Pareto Fundraising has released the results of their 2010 benchmarking study looking at trends in the Canadian charitable sector.

The latest analysis looks at data through to the end of December 2009 from the participating 14 Canadian charities including: Amnesty International Canada, BC Cancer Foundation, Canadian Diabetes Association, Canadian Red Cross (Western Canada), CARE Canada, The Children’s Wish Foundation Canada, cbm Canada, Canadian Feed The Children, David Suzuki Foundation, Médecins Sans Frontières Canada, The Nature Conservancy of Canada, Ontario Nature, the SickKids Foundation and WWF-Canada.

In the wake of the global financial crisis, the results were mixed as to how charities in Canada have fared. Whilst income overall fell in 2009, there were certainly some positive signs for the sector, again reinforcing that those organizations that have taken a long term view to growth have come through the financial downturn relatively unscathed and in a strong position heading into and beyond 2010.

Specifically, the latest analysis, which looked at historical data from 4.7m donors and more than $2.2b worth of gifts, found that:

  • Income from individuals fell in 2009, down 10% to $158m. The key driver of that was a drop in onetime cash gifts donated, which decreased $17m last year (this is due to a decline in the number of cash gifts – the average cash gift actually rose).
  • As reported in the previous round of analysis, monthly giving continues to provide a tremendous stream of ongoing income for charities. At the height of the recession, monthly giving grew 9% in 2009, now providing $48m annually for the 14 organizations involved in the cooperative. Based on the current growth trajectory, monthly giving looks set to overtake cash giving in the next year as the major source of individual funding for Canadian charities.
  • Income from planned gifts increased last year (8%) despite the average value of realized
    bequests falling from $35k to $32k (though it still remained well above the 2007 level of $27K). This represents a huge area of growth for Canadian organizations. Despite the fact that the number of bequests left each year is on the rise, these levels are still lagging behind other developed fundraising nations.
  • The level of income and number of new cash donors from direct mail fell in 2009 by 15% and 22% respectively. This decrease in income was despite the increase in average gift levels via direct mail overall (a bigger increase than in the previous year). This decline in income was offset partly by the shift in focus for many organizations to recruiting monthly donors. The fall in new donors being recruited is both a reflection of less prospecting activity being undertaken overall, as well as a fall in the number of new
    recruits coming on board.
  • Online giving continues to grow, an increase in income of 17% from 2008. However giving online remains a relatively small chunk of the pie, accounting for just 2% of all individual income versus more traditional means like direct mail which represents closer to 20%.
  • According to Rebecca Davies, Director of Fundraising at Médecins Sans Frontières, participation in the benchmarking study over the past two years has helped Médecins Sans Frontières make responsible choices about which areas to invest in, particularly during turbulent times.

    Davies says “The involvement in the benchmarking group has not only helped reassure us that the decisions we’ve made to invest heavily in monthly giving and bequests have strategically been the rights ones for us but the participation in discussions with other leading Canadian
    organizations has been invaluable. We really appreciate the candour and sharing of best practices in the group sessions, and getting some context to the data provided.”

    Ends

    For information on how you can be involved in Pareto Fundraisings Benchmarking Study please contact Jonathon Grapsas at 647-347-0157 or by email at jonathon.grapsas@paretofundraising.com.

Avoid common data pitfalls

By Tertia Sanderson and Fiona Paterson. This article was first published in Fundraising and Phianthropy

Love it or hate it, donor data is the fuel that keeps your charity running. Raw data can be mined and transformed to provide insights and make any supporter communication compelling and personally relevant. But many charities stumble into common data pitfalls that make targeting the best people harder.

Pitfall #1: throwing away donors

It’s unlikely you have too many active donors, and yet it’s possible you have ‘thrown away’ a proportion of donors who may have been active if you had better understood and managed your donor data.

  • RTS (Return to Sender) donors are often flagged in a database as ‘Inactive’ or ‘Do Not Mail’. They should be marked as RTS. Source their new address and actively pursue them through other channels such as email and phone.
  • A donor who rings to complain about a communication received should not be marked as “never speak to me again”. If they have taken the time to ring up they are showing they care about your charity. Use the opportunity to get feedback from the donor – find out what has upset them and what action they would like to be taken. Address this through appropriate coding such as: they are to receive only limited communications and appeals without direct asks; they are not to be contacted by telephone; or they are to be contacted through email only. Don’t just cease communication.
  • The regular giver whose gift doesn’t go through is often ‘thrown away’. Not many charities have a formal process for following up dishonoured gifts and re-engaging the donor. These donors have not actively cancelled and are your best regular giving prospects; make an effort to recover them.
  • A large number of discarded donors are those who are automatically flagged as ‘inactive’ or archived because they meet certain criteria, such as ‘has not made a transaction in 24 months’. These may not be your hottest cash appeal targets, but any donor who has a transaction needs to remain in your contactable pool because they are more valuable than a cold prospect.

Ask yourself:
How do we mark a donor whose mail is returned and do we try to recover them?
What do we do when a regular gift is dishonoured?
Are we too quick to mark our donors as non-contactable?

Pitfall #2: limiting basic contact data collection

Don’t assume that one contact channel is enough. Australia post says at least 17% of people move house every year. By limiting your data to a street address, one in six of your records becomes invalid every 12 months.

Broaden your communication channels to more than just direct mail. Ask for and capture mobile numbers and email addresses. Analysis shows a donor who has provided an email address and a mobile phone number is less likely to stop giving and more likely to be responsive to streams of communication other than direct mail.

  • Ask donors to check and update their contact details at every opportunity – when you mail them, when they call to make a donation. Engaged, committed donors will do it; they want to hear from you in the future.
  • Information such as source of gift and date of birth is incredibly valuable, but is seldom actively sought or captured. Date of birth can be used as a form of verification, to assist acquisition profiling and as a life stage indicator useful for prospecting bequests.
  • Knowing what inspired a donor to first give to your cause provides valuable insight and an opportunity to understand the longer-term value of your acquisition activities.

Ask yourself:
Do we actively seek and revalidate contact information from our donors?
Do we use this to inform our understanding of the donor and communications with them?
Do we use the National Change of Address service at least once a year (at least for active donors and return to senders)?

Pitfall#3: Contradictory Codes

One of the most common problems that crops up is the misuse of codes and flags in databases. Codes or flags are often developed as a reaction to something and the context in which this new coding is placed is not considered. How it affects current process, entry protocols and how the code will be used alongside other data can be easily overlooked.

  • You want your donors IN for as many communication opportunities as possible. A ‘Do Not Contact’ flag might be a quick fix, but consider if this can be filtered by channel or timing so that it’s not ‘Do Not Contact’ ever.
  • Ensure your codes don’t contradict each other. For example, a donor should not be marked ‘email only’ in one section and ‘mail four times a year’ in another.
  • Fundraisers fundraise and database managers usually don’t. Help your database manager (and supporter services team) understand what you need and why.

Ask yourself:
Do we have a clear data management strategy?
Does our database manager understand the core functionality of the database and what fundraisers are trying to achieve?

About the writers

Tertia Sanderson is a data analyst who joined Pareto Fundraising in 2008 to use her data skills to improve lives, rather than profit. She brings to Pareto her Bachelor degree in data management, a love and passion for all things data plus 15 years experience in database design and manipulation.

Fiona is a Fundraising and Direct Marketing professional with over ten years experience helping to find, keep and grow donors through the expert management of strategic fundraising and database marketing programs. Enthusiastic and passionate about data, Fiona has a solid background delivering successful fundraising programs globally for clients including ChildFund Australia, Children’s Cancer Institute of Australia, MSF Hong Kong, Leprosy Mission New Zealand and WWF-Australia.

To love or not to love

By Fiona Paterson

I love working on appeals, particularly the integrated campaigns we run. These appeals utilise digital and the phone alongside traditional direct mail. It gives me a chance to get absorbed by a great story, to remind myself why the charity we are helping exists. It also helps me connect with beneficiaries and remember that there are hundreds and thousands of wonderful Australians and New Zealanders out there who give their hard earned dollars to help others, even when their own financial situations may not be brilliant.

On the flip side sometimes I don’t love working on appeals. Because fundraisers are held to some pretty unrealistic expectations when it comes to their individual campaign outcomes.

For most the need to grow appeal income year-on-year is standard. But what happens when your audience is being asked to do more than just support your appeals? What happens when there is no acquisition to develop the base? What happens when market forces, like the Global Financial Crisis (GFC), threaten our audience’s capacity to give?

The context of an appeal

Christmas 2009 turned out to be a pretty tough one for lots of charities. At the start of 2010 I was in a ‘not loving appeal objectives’ frame of mind as more and more fundraisers began to ask me how had others Christmas appeals faired and set about trying to get a clear picture of the marketplace.

As a strategy director it’s hard for me to just look at individual appeals in isolation. I always want to know what the context is in which they are executed. Has there been much acquisition in the past year? Has the communications program/donor journey changed this year? Were new activities targeted at the audience preceding the appeal? Is a segmentation model used to target the activity? Has one been newly introduced? Was the messaging part of an ongoing, planned communication with donors? Was it an emergency message? And more…

But living in the real world means, as fundraisers, we mostly have to work to individual campaign targets.

I love, love, love, organisations that have the flexibility to look at their programs as whole – judging performance across the year, looking at combined returns across the gamut of activity being directed at the donor audience, but this is not the common practice.

So what happened with Christmas appeals to warm (previous) donors? I had a good dig around in the results of our clients, and spoke with a range of friends in other Charities.

What I found was that there was no one defining trend. A few organisations saw growth over their 2008 Christmas income; others found it harder and were seeing below or on par returns compared to 2008. On the whole however it appears that more appeals struggled than those that didn’t.

How did we do?

Increasing appeal income is not an unreasonable request. And for 2009 many organisations had this goal. In order to grow your appeal income you need to either increase average gift increase number of responses, increase your conversion of new donors to multi givers, increase your donor pool or a combination of these.

Most organisations maintained or grew their response rates. The contributing factors included:

  • (Better) targeting;
  • Focused efforts on high value/top 20 percent of donors;
  • Channel integration (eg using phone and/or email);
  • Utilising additional ‘waves’ of communication (follow up or chaser communications).

Many organisations saw average gifts plateau, and in some cases drop. The contributing factors here were:

  • Depressed high value giving. Just a few high value donors not giving or reducing their giving amounts can have a big impact;
  • Acquisition (in particular lower value cash recruitment). Recruiting more donors, at a lower value will see more lower value gifts, suppressing overall average gift; and
  • Anecdotally donors indicating they simply could not give at their previous levels.

For those not making specific asks to donors and/or using their individual, prior giving levels as the basis for your ask, depression of average gifts may have been even larger.

Across the year I have had feedback from major donor fundraisers that their usual suspects were indicating they were not able to give in 2009 or only able to give at a lower levels than in previous years. This has extended through to cash appeals with high value donors tending to maintain response (with a couple of exceptions) but give less.

Those organisations that focused their efforts on this group reaped the rewards. Strong business cases presented justifying higher value giving, follow up communications and person-to-person asking (via face-to-face and phone) and personalised touches helped to encourage this valued group of donors to continue their support.

Context is so important.

Did you change your program in 2009? Maybe you felt the GFC required a change in tack? Did you increase your focus on regular giving conversion? Maybe you had learnings and insights from 2008 that saw you adjust you communications mix or the way you asked your donors?

An organisation I work with changed their 2009 donor communication program. Through the introduction of new tactics in their Spring appeal they saw a significant increase in income from increased response and average gifts. They also introduced an additional communication before Christmas, the purpose of which was donor care and information gathering but unexpectedly generated significant income (lovely donors). And they have increased their active asking (via phone and mail) of cash donors to convert to regular giving throughout 2009.

When it came to their Christmas appeal, major growth in comparison to their appeal in 2008 the previous year was not generated. On the face of it their 2009 Christmas appeal was deemed unsuccessful. Viewed in isolation this is a reasonable conclusion. However on closer inspection we can see over the course of 2009 many of their donors had:

  • already given more than their previous annual value through increased average gifts and response rates in other appeals;
  • converted to regular giving cash gifts but the value and/or frequency of these gift can reduce)

Also to note was the volume and value of high value gifts had not matched those received in 2008.

Just taking a direct comparison between 2008 and 2009, their Christmas appeal doesn’t look impressive. Looking at 2008 versus 2009 as a whole we can see that growth has been impressive (even without expectations that the GFC had the potential to suppress growth).

In fact, just in the last quarter, nearly twice as many people gave as compared to 2008.

To summarise, what we did observe with the Christmas appeals 2009 were:

1. Response rates were maintained or increased;
2. Average gifts decreased or were static;
3. Fewer people gave over $1,000

Emerging Trends

There are some other emerging trends to watch out for; most are reflective of or are driving, changing donor giving behaviours.

  • More donors who used to only give through the post are now using our websites as a response channel
  • The increasing use of email to support direct mail appeals is helping to improving response
  • Below are three approaches showing encouraging returns:
    – Integrating email, supporting direct mail approaches & driving online to give
    – Using email drivers to reactivate lapsed donors
    – Using email drivers to convert tepid* supporters to cash donors
  • More opportunities/ways to give are being offered to our donors. Many organisations are increasing their approaches for regular giving conversion and upgrades, virtual gift campaigns are on the rise, and advocacy and campaigning approaches are increasing
  • Charities are asking more often

On this last point I often get asked “How many times should I ask my donors for a donation each year?” To quote Jeff Brooks “this is the wrong question – the question should be; How can we be relevant in the lives of our donors?” There is no magic formula. It critical to understand that for many donors it takes more than one ask to solicit a gift but they do not want to be treated like ATMs.

The importance of relevance.

If your Christmas campaign, or any campaign for that matter, did not at least match your 2008 returns (and you haven’t lost a whole pile of your active donor base in some freak database accident) then I recommend you consider the relevance of the communication you sent to your donors.

And consider the stage in the relationship journey each donor is with you. There are many questions you should be asking yourself including key ones such as:

  • Is this donor relatively new and do they know little about the topic?
  • Has this donor heard it all before?
  • How did they respond?
  • Would they be expecting you to communicate with them at this time, about this issues with this ask?

To paraphrase Jeff Brooks in his Future Fundraising blog: ‘You can’t just raise funds for anything you want. If you go to your donors with a need, topic or ask they don’t associate you with, they just might ignore you in droves. No matter how great your work is.’

Tips for keeping your appeals on track

  • Make sure your communications consider your audience and are relevant to them
  • Ensure you are presenting a clear need and solution
  • Connect donors to beneficiaries (not you, your brand or organisations)
  • Tell a story your audience can connect with
  • Plan your second gift conversion journey
  • Focus your efforts on the top 20 percent (its where your income is coming form)
  • Review your online donation real estate (Is it easy to find? Is it easy to fill in? Can it be adapted to reflect your appeal ask?)
  • Explore channel integration (Email, Phone) – if you have low email or phone number penetration make 2010 your year to actively collect these. (Analysis shows us that even the presence of an email address or phone number on a donor record increases their retention likelihood)
  • Segment and target – don’t mass mail

______________________________________________________________________________________________

* Tepid Supporter – non-financial supporters such as activists, campaigners, e-news sign ups and non-cash donors such as event participants, lottery players and merchandise buyers

Jeff Brooks writes the best blog in fundraising, and we look forward to seeing him at the F&P Australasian Fundraising conference later this year click here and subscribe to his excellent, short updates

About Fiona Paterson

Fiona is a Fundraising and Direct Marketing professional with over ten years experience helping to find, keep and grow donors through the expert management of strategic fundraising and database marketing programs. Enthusiastic and passionate about data, Fiona has a solid background delivering successful fundraising programs globally for clients including ChildFund Australia, Children’s Cancer Institute of Australia, MSF Hong Kong, Leprosy Mission New Zealand and WWF-Australia.

Digging deep to get a true sense of whose really providing the most value

By Jonathan Grapsas
This article was first published in Canadian Fundraiser Magazine

It simply isn’t acceptable as a fundraiser to not truly understand where your money really comes from.

I often hear conversations like this.

Freddy Fundraiser – “Hey, we’ve just did a prospect mailing which did really well. We got a two per cent response overall and one of the lists got a five per cent response! One of the lists we trialed however bombed and only got a one per cent response so we’re canning that one”

Fiona Fundraiser – “That’s great. Sounds like a success. Can you tell me which list got the five per cent response as I might just use the same one for my next prospect mailing?”

What’s wrong with this conversation? On face value a five per cent response from a prospect list is darn good, right? Surely that list is better than the 1 per cent one?

Not necessarily.

The problem is response rate is just one in a number of measures we should be looking at. Time after time when I talk to people about this sort of stuff they typically look at three metrics: response rate, average gift level and the cost to acquire.

Which are useful, but they don’t provide the full picture.

You see the problem with what Freddie Fundraiser is doing is looking purely at how someone has behaved in the first instance. What Freddy hasn’t factored in is the subsequent behavior of that group of five per cent of donors who responded.

How many of them go on to make subsequent gifts and what level?

How many of them upgrade their giving and/or donate in other ways (I.e. if they initially gave a onetime cash gift, how many went on to become monthly donors)?

Not to mention was there any rollout potential in this list? If the list has 1,000 records in total then frankly there are bigger fish to fry than going back to the same, tiny pool again.

But the key here is the net value that a group delivers for you. I’d argue that Freddy should look over a period of time, factoring in all costs (recruitment and ongoing), what net value this group delivers.

If only 20 per cent of donors recruited from the so called ‘better’ performing (five per cent) list ever give again and their average gift is just $10 will they actually deliver any net return at all?

And if the ‘poor performing’ one per cent response list delivers a 50 per cent second gift rate (of which half become monthly donors), an average gift of $50 and an average life span of 10 years, surely when you do the math their net value will be higher? Of course it will.

The point is, look at value, not just cost to acquire and the number of people you get through the door. These measures alone will give you a false picture of how you’re doing.

I’ve focused here on an example specific to direct mail, but looking at real value over time works across all channels. And I am working with clients now to dig really deep to get a clear picture of what’s working for them in terms of acquisition.

Right now it’s about smarter, not less, acquisition.

Contact Pareto Fundraising if you would like to commision a data analysis, it will help you prioritise, so that you can make the most of your budget.

About the writer

Jonathon Grapsas heads up Pareto Fundraising’s North American division and is a data geek of sorts. As a leading fundraising practitioner, Jonathon’s particular area of strength is helping charities develop ways to get their donors to take some form of action. His track record in delivering real growth in his clients fundraising programs is outstanding, as is his ability to motivate and inspire fundraisers to make real change.

You can contact Jonathon at jonathon.grapsas@paretofundraising.com or on +1 416 915 4114.

Have donors reduced their giving?

Fiona Paterson, Fundraising Strategy & Data Consultant from Pareto Fundraising takes a look at results from tax time appeals run in Australia looking for trends that can inform our understanding of the current marketplace.

Tax time is the biggest time for cash gift giving in Australia. It’s usually a time to celebrate our biggest appeal of the year. It is also the time of year I am most often asked ‘How are other charity’s appeals doing?’

This year, as a result of low consumer confidence and concern over the impact of the GFC on our donor’s decision making, many fundraisers felt increased anxiety as the end of June and the end of financial year approached.

With Tax appeals often contributing a large proportion of an organisations annual cash income and recent insights from the Pareto Fundraising Benchmarking cooperative showing us high value gifts (those in excess of $1,000) are given predominantly during May and June, we were keen to see what trends could be observed this Tax time.

This year at Pareto Fundraising we worked on, or supported, over 20 tax appeals. Strategies employed, channels utilised and lodge dates varied across charities. This week I have taken a look at preliminary results across our partners hoping to answer the question ‘How are we faring as a sector’?

So what did I see?

  • Around half of charities chose to set targets at or below 2008 actuals. The other half set their targets above 2008 actuals, aiming for growth.
  • Across the charities we collaborated with, income per thousand donors mailed has increased over 2008 levels for one third of the appeals and two thirds have decreased. Increases were between 6 per cent and 69 per cent and decreases were not as extreme, between -4 per cent and -24 percent^. This is reflected in the results of the Pareto Fundraising Benchmarking members, where 14 charities have participated in a comparison of appeal results and one third saw an increase (13 per cent to 233 per cent) in income per thousand over 2008 and two thirds were down (-1per cent to -38 per cent).
  • Response rates have varied widely. The impact of a change in targeting strategy (usually decreasing mailing volumes), a change in ask strategy (usually from soft to specific) and the maturity of the data file (in particular files where the cash giving base is not being refreshed with new donors) has seen many go up and some go down but no discernable trends, or difference from 2008.

Average gifts presented no clear trends either, from a -28 per cent decrease to an impressive top increase of 77 per cent. The majority of increases can be arbitrarily attributed to a change in ask strategy and many of the larger decreases are the result of a decline in the number of high value gifts (with a handful of lower value gifts or non-responses from this group of donors having a big impact on overall average gift compared to 2008. Overall, there were two distinct groups of donor bases with two distinctly different outcomes.

The two groups

Group One – predominantly cash donor bases, first tax appeal working in collaboration with Pareto Fundraising.

The experience with these appeals shows us that despite the GFC there is room in many donor bases to grow. Across the board these appeals have exceeded results from 2008, increasing income substantially, by an average of 104 per cent, over 2008 income (i.e. they doubled their tax income in 2009!).

This outcome was reflected across the benchmarking group as well where all predominantly cash based charities saw increases in their income over 2008.

Why?

The implementation of a combination of the following strategies has allowed these charities to maximise response rates, increase average gifts and minimise contact volumes.

  • Applying a segmentation model based on previous giving behaviours
  • Using this segmentation model to identify those most likely to respond to a cash ask at Tax time
  • Using individual, previous gift levels to make personalised ask s (as opposed to a one size fits all strategy)
  • Repeatedly asking donors directly for a cash gift (and nothing else)
  • Using a strong case study to represent the need and telling a clear story presenting the solution and how the donor can be part of this
  • Presenting an income target required to implement the presented solution and using a deadline to encourage prompt response
  • Employing a follow up approach to non-responders, asking again against the target
  • Focusing effort on the top 20 per cent of donors (with a variety of high touch, personalised approaches)

The next challenge for these organisations will be to ensure continued commitment from their cash donors – with regular giving conversion being explored by most as a reliable strategy for identifying more committed donors. Our experience has seen that strong cash response provides the best prospecting ground for regular giving conversion (i.e. active cash donors are your best regular giving prospects).

Group Two – programs focused on regular giving, donor base a mix of regular givers and (declining) cash donor volumes.

Many of our charity partners, and the benchmarking group, have focused their fundraising strategy on the recruitment and conversion of regular givers (as this is the number one growth funding stream in the marketplace today and is delivering substantially higher income than the majority of cash only giving programs).

The result of this strategy is a diverging base of committed regular givers and left over cash donors (people who have chosen not to convert to regular giving). The majority of regular giving recruitment strategies see limited new cash donor recruitment and the outcome of regular giving conversion strategies sees the most committed cash donors convert to a regular gift.

The outcome is that the most engaged cash donors convert to regular giving, more regular givers are recruited in addition and the cash only donor pool starts to dwindle through natural attrition and donor resistance to commit.

A good proportion of cash donors who convert to regular giving will continue making cash gifts when asked and regular givers recruited through direct mail, phone and online can be approached for cash gifts successfully^^.

The outcome this tax time has been stability, and in many cases, growth in the cash giving from these donors (regular givers with previous cash giving behaviours).

It is the cash only donors that present a concern. Response rates and/or average gifts are not hitting targets for many charities. Lower response or average gifts from middle and low value donors coupled with lower response or decreased gift value from high value donors has seen income from some charities dip below 2008 levels and for others simply maintain, due to improved performance from cash gifts given by their committed regular givers.

In all cases the strategies described above for Group One have been employed by these causes for several years, indicating the opportunities described for the first group have already been taken advantage of.

For charities in this group, those that saw growth over 2008 were able to maintain their cash pool giving (usually through the behaviour of new cash recruits) whilst maximising income from regular givers who also give cash.

If you aren’t acquiring new cash donors and are therefore reliant on a shrinking pool of cash donors you may well be feeling the effects of less committed giving from these donors this tax time. If you have increased the giving opportunities for donors this year it would be worth looking to see if your donor’s normal giving has simply been transferred to another method of giving. For example, have some given online at tax time when they normally give via direct mail because you sent email reminders or promoted online as a response channel?

Understanding the impact that regular giving conversion has on the makeup of your donor base is key to predicting future behaviour of your left over cash donors. If you have a regular giving program and aren’t asking your regular givers for cash, then^^^ considering this approach is an opportunity for growth.

Armed with these insights, my focus now is on ensuring future appeal targeting takes these observations into account, that strategies and income expectations for cash donor pools within regular giving focused strategies are refined, that strategies are reflective of the need for high value donors being given the most effort, and lastly helping those charities yet to venture in to regular giving, to get their programs going.

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^ I have used income per thousand donors mailed as a way to address the variation between volumes mailed between charities and I have compared against 2008 levels because each charity employs a different approach for setting targets.

^^I have seen limited success in asking face-to-face recruited regular givers for cash through the mail (though using a considered test approach can help you uncover those face-to-face recruits who may be responsive through the mail) but don’t discount the opportunity to test using other channels to approach for additional cash gifts. Proposition is key as is appropriateness of how, when and what you ask for.

^^^Asking regular givers for additional cash gifts will not impact on your attrition if handled appropriately. Using a long-term approach to developing a relationship with your regular givers, and respecting their regular gift as the most important way they support you is essential.

About Fiona Paterson

Fiona is a Fundraising and Direct Marketing professional with over ten years experience helping to find, keep and grow donors through the expert management of strategic fundraising and database marketing programs. Enthusiastic and passionate about data, Fiona has a solid background delivering successful fundraising programs globally for clients including ChildFund Australia, Children’s Cancer Institute of Australia, MSF Hong Kong, Leprosy Mission New Zealand and WWF-Australia.