Major Donors

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!)

Who are the rich people on your database?

By Sean Triner

Those lovely people at Fundraising Research & Consulting (FR&C) have decided to give a massive gift to all you fundraisers wondering where the money is in Australia.

For years they have been trawling the web and building a database of the richest people around, who they give to, how much (where known) and anything else in the public domain.

This information helps charities save lots of money on targeting but also FR&C offer a service where they have a look at the people who are already donating to you and match that to this database of big givers. You may well have someone who donated $1m to another charity giving you $100 every Christmas. That doesn’t mean they will suddenly give you a million, but you certainly should be talking to them differently.

You have to pay for this service but there are a load of free resources available too, and this is the gift FR&C are giving to you: A full list of all those resources. Now you could go and find them yourself, but using this free list will save you over a hundred hours of work (and you would probably not have found them all anyway!)

Check out http://www.fundraisingresearch.com.au/oz_resources_16.html

Major Donors

By Sean Triner

The barriers for asking for large gifts from individuals are numerous:

“I need to do more research”

“The timing is not right”

“I don’t know how much to ask for”

“The chairman should ask this one”

and lots more.

Many of these are valid, but ultimately not asking is a failing strategy.  If you want to get $1m from someone then  you almost certainly need to build a relationship with them, and going straight in with an ask will not get you that $1m.  But done well, a smaller ask is unlikely to put them off their bigger one.  In fact, it is part of building a relationship.

If that person was already a donor, then there is some form of relationship already in place.

For example, to lift a donor from $500 – which they donate in response to your annual Christmas appeal – to $5,000 is much easier than following the full seven steps to developing major donors; and it helps bring them along the journey too, if you follow it up properly.

If you have a lot of higher value donors who donate to your appeals, but you don’t really do anything else with them, try ringing them up and having a chat.  Ask them why they support you, if they have friends that do too.  Try and set up a meeting.  Maybe 1 in 3 or 4 will catch up with you.  There you can look to ask them for a more substantial donation.

It isn’t that hard, and I have worked with many organisations to formalise this approach as a process, and with all but one it has led to significant extra income at little cost – and bringing those donors closer to a really big gift.  I call this ‘Major Donors: Next Week” because you need to do it next week, or it doesn’t work.

Lucky Australians can find out more about major donor fundraising from an excellent bunch of practitioners at the Fundraising and Philanthropy “Art and Science of Major Gift Fundraising” event at the end of the month.  A bargain at $600.  Check it out here.

Frankie Airey helped raise around $500m in one campaign.  Gulp.

Charlotte Grimshaw will also be speaking at the event.  She can help identify potential major donors from any list of donors.

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.

What do you say to identify a major donor prospect?

By Sean Triner

I am at the AFP conference in Chicago, listening to Eli Jordfald from the Lineberger Comprehensive Cancer Center at the University of Carolina.

Amazingly, 85% of the major donor portfolio was developed from existing donors – smaller gift donors. The majority of these were ex-patients.

In the US, major donor fundraisers talk about ‘The Discovery Call’. These are calls that connect people with what the organisation does. Physical, or by phone, they are not really cold calls. Yet fundraisers still dread them.

Her first angle is to look at people who are already grateful. Ex-patients are obvious choices, but other ‘alumni’ should be considered. But you have to be quick. People are not grateful forever.

Her list for prioritizing targets is remarkably similar to the Pareto ‘major donors next week’ program. – past donors – first time donors (everyone!) – alumni – board – donors to similar causes – screened grateful patient lists

The screening is wealth screening – similar to the service that Charlotte Grimshaw offers through Fundraising Research.

So you have a list, what do you do next?

Discovery calls. Whatever you do, at some point you have to call the prospect. And listen. These are not sales pitch calls (unless the donor is not a major donor prospect), they are question sessions.

The purpose of the first call is not to get a visit but to asses whether a visit is appropriate. Be prudent – is it worth it? Visits are expensive. And in that first call, be upfront about title. Also, she says not to worry about avoiding discussing diagnosis. Ie ask them about their diagnosis and treatment.

If you do determine that the prospect is not a major gifts prospect, it is fine to ask during the call. Unless they give you a reason not to ask – ie the person says they are broke, just lost their house, gone bankrupt etc.

So, you get to speak to them, what do you say?

– Opening – Assess interest – Validate capacity – Determine next steps

Examples of openers…. Introduce yourself, thank them for previous gifts and ask something like ‘I understand that you were recently at my hospital and I would be interested to hear about your experience there’

Examples of questions assessing interest…. ‘Tell me about your personal experience’, ‘How do you see your involvement?’, ‘Would you be interested in learning more about our research and clinical programs?’, ‘What areas interest you most in the field of cancer?’

Basically, ask why they believe in your cause.

Examples of validating capacity questions…. – ‘Did you work while undergoing treatment?’ – ‘Now that treatment is over, do you plan to travel?’ – ‘Do you have favorite organisations you like to support? …. Tell me about your involvement.’

Examples of questions to determine next steps… – ‘I’m planning a trip to (your town) next week, would it be convenient to meet in person?’ – ‘I would like to invite you to a unique tour of the new cancer hospital’ – ‘Would you like to tour (something else)’

For lower level people – ‘Would you like to be a member of the (donor club)?’

Now and then you will hear people say ‘you are in my will’ – in this case make sure it is documented and they have the wording right.