Data Insights

Is Your House In Order?

If you saw the recent “Show Me the Money” story on Channel 7’s Sunday Night or heard influential 2GB radio journalist Ray Hadley a few days later, then you know the spotlight is once again on Australian fundraising – and not in a good way.

Pareto’s Benchmarking Report 2017 clearly shows that two decades of great growth in fundraising income has contracted.  And that the dependency on Face to Face Fundraising needs to be considered with the trends.

Our team have been working with both the FIA and PFRA to supply them with figures that show the value of long term donor relationships and the multiplication effect of the initial investment in fundraising that can be realised if we look beyond the first 12 months.

Lessons learned from Britain’s not-for-profit sector, tells us to prepare for the change and ensure Australian Charities have their house in order.

You may remember that 2015 was called the summer of charity discontent in Britain.

Months of fundraising criticism by the media, politicians and the public, including donors, resulted in a devastating loss of trust and public confidence in Britain’s charities.

Shocked by this national outrage, the UK government demanded an investigation.  Sir Stuart Etherington, chair of the review panel, said ‘… charity fundraising has never been more important … this is why it is particularly crucial that we get fundraising right.’

Part of getting fundraising right was the formation of the Commission on the Donor Experience. Their role? To produce an authoritative report on the fundamental ideas and strategies that will put the donor at the heart of fundraising – not fundraising targets.

Almost two years on, the Commission has released the first of its summaries.

The 6Ps: a blueprint for transforming fundraising for good is the first in a series of planned reports that aims to change forever the donor experience and the way that fundraising is done in Britain.

I urge you to download this report – with thanks to SOFII – and share it with everyone in your organisation.

The CDE’s first findings show you practical ways to help fundraisers everywhere deliver happy, satisfying and effective experiences for donors.

Please do contact me or your Pareto Account Director with any questions you may have.

Dearne Cameron

CEO Pareto Fundraising +61 (0)2 8823 5800

Thank you: Say it often, say it right

Next to your fundraising appeal, your thank-you letter is the most important piece of communication that your donor receives.

Great thank you letters are the hallmark of great fundraising programs. They make a donor feel appreciated and important … that their gift will make a true difference.

When donors are thanked properly for their gift, they are far more likely to give again.

So how do you write a great thank you letter?

  • Thank you letters should be written as part of your fundraising appeal. They are not an afterthought but are a significant, integral component.
  • They should be as beautifully crafted and well thought out as your appeal letter.
  • They should be personal – a real letter that speaks directly to the donor.
  • Your letter should tell a story; ideally, a story in which the donor is the hero (because of their gift.)
  • It should reinforce just how the donor’s gift will be used – and the difference it will make.
  • If you don’t have any immediate results that you can send back in response to a donor’s gift, let your donor know when they will next receive an update on the program being funded. And follow through!
  • There should be no grammatical or spelling errors.
  • Most importantly, the letter should be sent out quickly.

Thanking matters! If you aren’t spending as much thought and energy on thanking donors as you do asking them, you aren’t doing your job.

Need some help? There are some great resources out there to help you get started.

Visit Lisa Sargeant’s ‘Thank you Letter Clinic’ on SOFII.  There are eight examples of thank you letters to help inspire you to write your next one.

There are five thank you letters donors will love at ‘the balance’




New Australian Donor Numbers Fall for First Time in Two Decades

The latest Pareto Benchmarking figures show that the number of new donors acquired by the 82 participating charities in 2016, was less than in 2015.

These charities include a majority of charities raising over $20m in 2016, and a good selection of medium sized fundraising organisations as well.


With more than 65% of all regular givers and appeal donors acquired by face to face or direct mail, whatever happens to these two channels influences the big picture more than anything else.



Direct mail grew solidly until last year despite postage costs increasing dramatically, the Australian dollar falling from 1:1 to 1:0.75 and Australians falling from being ‘the wealthiest people in the world’ to just pretty rich (on average!)

By the end of 2015, intense acquisition strategies from many charities, large budgets and our small population of people aged over 65 (the average age of a direct mail donor is around 73) led to many charities simply running out of new people to ask.

Unless charities have great mid, major and bequest donor strategies in place, direct mail has slipped from being a great acquisition tool to just an OK one.  Annoyingly we haven’t a ‘replacement’ channel working at scale to bring in the older demographic.


However, direct mail can’t be looked at on its own as its about the donors not the channel in isolation. The long term benefit is really in bequests.  Despite taking many years, the potential of direct mail with a good bequest program in place is extraordinary.

Just 5,000 new direct mail donors could be worth $5m with a good legacy marketing program.*

Unless you are an animal charity or responding to intense media covered disasters, my advice is to only invest in direct mail acquisition if you have plans in place for donor retention, upgrade (of mid value donors) and especially that bequest fundraising plan.

The other dominant channel is face to face, I have been predicting a peak in face to face volumes for about three years. I guess if you predict your football team will win every year, people forget all but the year you got it right!

Unfortunately I hung in there, and this time I was right. Fewer new monthly givers signed up through face to face in 2016 than 2015.

Despite all this, face to face is still miles ahead of any other channel for acquiring large volumes of monthly givers, and beats direct mail without bequest follow up on five year return on investment.



We have had good growth in online lead generation and phone calls, but the volumes are still comparatively small.  TV, radio, press ads and other channels are just a blip on total volumes, but very important to the few charities getting it right.

New monthly givers signed up by non face to face channels usually have better retention, but there simply aren’t that many of them.


So what does this mean for Australian charities?

We have a small population, our costs are higher than most other markets and our average donations much higher.

We have to really look after the donors we get.  I have mentioned mid value, major donors and bequests already – and they are key – but critically we need to increase our focus on donor love (donor care, supporter service, whatever you call it in your organization).

Here are my tips for all charities fundraising through individual gifts:

  • Be on top of your data.  Measuring campaigns is fine but you really need to be on top of tracking key indicator numbers, key performance indicators and running ongoing analysis to identify trends. And this is for your whole program, individual programs, donor segments and even some individual donors. Produce monthly reports, or even better dashboards, and make sure they are understood and the information is acted upon. It is important to make sure the quality of your data is managed effectively. It’s all well and good to make ‘fixes’ with an agency or mailhouse, but make sure you apply any fixes in your systems too, otherwise it may not be ‘fixed’ for the donors next interaction.
  • Acquire more donors.  If you are acquiring donors and modeling a break even within two years – don’t stop! In fact, if there is any more capacity you can use (e.g. lists or face to face go for it. Just make sure you check the compliance credentials of any suppliers).
  • Know your donor.  A true donor communication survey is key for donor care, major donor work, bequests and more.  It can even help with future direct campaign results!  Key to good donor care is to understand your donor and use a survey year after year.
  • Thank properly.  This doesn’t mean just send a receipt with a short thank you letter.  Every time we conduct mystery shopping, charities come up badly.  Donors deserve a beautiful thank you letter, telling them how their gift will help.  Then they should get a follow up telling how it DID help.  Hardly anyone does this, so, it is easy for your charity to have the best donor care around.
  • Ask properly.  Personalise copy.  Not just name and address, but donation amount, reflect their support, personalise paragraphs depending on their survey responses and previous donations. It is important any personalisation included relates to the donor, and isn’t just changing an adjective in the copy depending on their giving level. Take time to think about where the donor is in their giving journey, what they’ve told you and ensure your copy reflects this well.
  • Use the Pareto Principle. Donors who give larger than average gifts will likely give you more larger gifts.  You don’t have resources to spread equally, so prioritise those with the best potential to give more.  About half your donations will come from just five per cent of your donors.  Use the survey and look at previous giving to work out who they are.
  • Meet donors. The best fundraising happens face to face, but any full time major donor fundraiser who spends more time NOT meeting donors is either under supported or in the wrong job.  There are usually around 220 working days for a full time person.  A full time bequest or major donor fundraiser should be spending 180-200 of those visiting donors.  ALL fundraisers would be speaking to donors. Making thank you calls, checking in on how the fundraising you do feels for your donors. Aiming to understand more and more about your donors. If you have not spoken to a single donor in the last month, pick up the phone now
  • Hold staff and suppliers accountable.  Make sure they know what is expected and make sure good KPIs are in place and understood. Ensure suppliers are compliant with regulations.
  • Try some new stuff. Finally, and only if you have made sure you are doing all the above!  Budget for R&D with no income expected. And please – on behalf of the whole sector – let us know how you get on!

If you want to be part of Pareto Benchmarking next year please email Jesse Zarb.

* 5,000 direct mail donors, average age 73, average bequest in Australia $59,273.  Benchmarking shows 0.4% of all such donors have become bequestors, with more advanced bequest programs achieving 2%. $1.2m-$5.9m.

Should Australian fundraisers be worried about UK style meltdown?

The UK is reeling from regulations and rules hammering charities’ ability to raise funds. Some are fearing revenue losses of over thirty per cent. The reason, according to long standing donor care expert Ken Burnett, is that charity fundraisers have been complacent about their relationship (or lack of relationship) with donors.

Pareto Benchmarking shows that the two decades of great growth in fundraising income and numbers of new donors has come to an end. So, we asked Ken whether Australian fundraisers should be worried about a UK style meltdown.

Thanks Ken! (And yes, he knows he mixed his Ps and Fs up – watch the video to see what we mean!)

Data Segmentation need not send you to sleep

At the FIA Conference session next week I will run a session with the title – Practical ways to use data to drive up results. In it, I will be unashamedly sharing some ideas from overseas fundraisers with those of our own, for those who dare attend a session with the word data in the title.

I had the privilege of attending the IFC conference in The Netherlands last October.  If you don’t know about this conference or have never been I encourage you to check out the Resource Alliances website to learn more ( ) – it really is a motivating and information rich conference and the opportunity to meet fundraisers from around the world and hear their stories is inspiring to say the least.

I’m not sure if it was by chance, but the majority of the sessions I attended had two underlying themes.

The first being the integral part emotions play in how and why people respond.  If you want to keep ahead of the game I encourage you to take a look at the research in the areas of neuromarketing and neuroeconomics. A great introduction is a free course via the Coursera program (Massive Open Online Courses deliverd by some of the bets Universities around the world) , or check out Roger Dolley’s neuromarketing blog .

The second was the opportunity we now have to take a look beyond our conventional wisdom and explore innovation in our fundraising approaches. In one particular session I listened as a well-known ‘guru’ of the industry stood up and initially broke my heart by saying “RFV segmentation is not the way”. His comment was meant to shock people into listening.

Some in the room have been as intimately involved in the use of RFV as a basis for our fundraising segmentation approach as I, and we almost keeled over. Others eyes glazed over and they prepared to take a nap. But what came next was some very sensible yet inspiring chat about how simply doing as we have before and not looking to innovate and test means we will be missing opportunities – and in this instance the discussion was around how we segment and target our donors for our range of fundraising activity.

One of the key messages was the idea we look at transactions not relationships – we analyse campaigns or mailing without looking at the big picture of the ongoing relationship individual communications are part of.

This got me thinking about how I review the fundraising programs I help design and support and review with my clients.   And its true simpley looking at a single communincation, campaign, appeal (call them what you like) in isolation will give you the numbers you want for your budget, comparing that campaign to last year will give you the props for a job well done or a job not so well done. And many appraoch the development and analysis of these campaigns with the trusty RFV segmentation in hand ready to decide who is in and who is out based on the performance of each segment.

But what I know to be true is making decisions about your program looking at campaigns in isolation is the wrong thing to do. Looking at the donor base as a series of transactions takes away critical inisght that is likely to influence your decision making in other ways. The response to a single campaign does not tell us if your donor base is engaged, listening and motivated to keep on supporting. And no doubt some of thise judgment is subjective but can we take our use of segmentation approaches a step further and look beyond just the transactional only view?

All of this has inspired my upcoming session at the FIA conference. With the word data in its title I know many will be running for the hills (or the coffee bar). But for those of you keen to look at the things we should be using segmentation (and scoring models) for and ideas for how to take them further, to start looking at relationships, not just transactions and how the journey we are leading our donors on could be measured beyond just ‘did that appeal get a better response than last year’, I’ll see you in Brisbane.


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

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