Sean Triner Blog

Face to face and direct mail – when will the good times end?

By Sean Triner

I just came back from a visit to the UK where I met up with my wonderful financial mentor, Martin Richardson. He was CFO at Action Research (now Action Medical Research) when I worked there back in ’95-’97. Back then Action Research was a pioneer – they were APPCO’s (then working with Caring Together) first ever charity clients making them face to face pioneers.

Martin is still CFO and it was good to catch up, but it was sad to reflect on what happened over the fifteen years between ’98 and ’13. Basically, the first few years of face to face were fantastic – and then other charities jumped on band wagon and results declined. Attrition went up, costs went up and ROI began to decline. So towards the end of the century they stopped.

Throughout the noughties Action Research invested cautiously in face to face donors – but lots of other UK charities did decided to throw lots of money at it.  It wasn’t that face to face didn’t work anymore, it was just that Action Research were a victim of their own success.  By being first, they got some great results and some great donors.  Face to face and direct mail were still great in 2000-2010, just not as good as 1995-2000.

As Martin says “If you have a fundraising method that has a much better return than traditional investments – do as much of it as possible until you find something better or the returns decay back to traditional investment level”.

Martin carries on “Increased competition, market saturation and increased costs have all eroded the ROI and whilst not as good as it once was it is still our first choice for recruiting new regular givers.  What we are all looking for is that next great method so smaller and medium sized charities can be first to market like Action Research was with payroll and then door to door.”

It would appear that the last few years in Australia have provided a new, better or at least comparable return technology: direct mail.

Benchmarking across 70 odd charities from the two nations confirms just how dominant these channels have been. Face to face can take credit for most regular givers across the sector, and direct mail the ‘one off donors’.

 

New Cash Recruits

 

New RG recruits

 

If a charity has a good regular giving upgrade program, is good at converting some of its direct mail donors to regular giving, and follows up for bequests and major donors then we see the two programs yield comparable returns for the charity.

Like many things, a balance of the two is usually the best solution for mid and large sized charities (and small charities who want to be mid or large sized).

Direct mail – especially using premiums or incentives – is great in the short term (cash flow) and long term (bequests and major donors) whilst face to face is great in the medium term (solid, ongoing income growth with low risks).

As you can see from the charts, the best year for both methods was last year, with direct mail growing exponentially in the past few years and face to face linearly. That exponential growth is pretty much all premium direct mail acquisition. Of course, direct mail doesn’t work every time, or for everyone, but across the sector it has done very well recently.

Over the years, I have attended many conferences to hear ‘face to face has had its day’ or is ‘reaching saturation point’. It is true to say that things are tougher now: face to face is more expensive, has (in general) worse retention rates and only slightly better average donations. But it is still the best way to get large volumes of regular givers.

And after just two – three years, premium direct mail is getting the same feedback – and it is tough out there; with response rates expected to decline and average donations eventually to come down. But it is still the best way to get large volumes of cash donors.

SMS giving, online giving, Facebook acquisition all have their place but none are yet providing the results of those two traditional media – face to face and direct mail.

If you are thinking about starting one of them; I am sorry to tell you it would have been a little bit better a couple of years ago, but pleased to say – well done, because it will probably be much tougher in five years.

If you read this far, you probably work for a charity, which means you do good. Saving lives, saving trees, changing society, protecting animals. I hope that the need to help makes you impatient, because you should be.

Have realistic expectations, and appreciate the concept that net income over the next few years is your most important goal.

Get more donors now, because the next lot will likely cost you more and not be as valuable.

 

 

 

 

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.

Top level information from NZ / Australia Benchmarking

By Sean Triner

In a unique show of camaraderie and mutual support seventy charities across NZ (16) and Australia (54) agreed to pool all their transactional data* and analyse it. This means that they compared actual donor behaviour – including mutual donors. With around 2.8 million donors giving $836 million in 2012 to these charities there is a huge wealth of information and learning.

The charities that pooled their data

Logos Landscape 02052013

 

 

 

 

 

 

 

 

 

 

Over the next few months I will share some fascinating insights, ideas and tips based on the data but in the meantime here are some top line facts:

Largest fundraising charities in Australia

Looking beyond the benchmarked charities we looked at the annual reports of top fundraising charities (Australia only). We found that the largest, World Vision, really dominates the market. World Vision are also a member of the benchmarking program, having an enormous influence over the giving patterns of the average Australian.

TopAusCharities

 

 

 

 

 

 

 

 

 

 

 

 

Just short of all fundraising income to the top 50 charities goes to overseas aid. Australians love helping people less fortunate than themselves in other nations. Good on ya Aussies!

How Australians and New Zealanders give their gifts

GrossIndGiving

 

 

 

 

 

 

 

 

 

 

 

 

Australians and New Zealanders gave more money to these charities in 2012 than ever before. From around $365m in 2003 to $836m in 2012 ($637m in 2003 dollar equivalent). The chart above clearly demonstrates the strength of child sponsorship as a great fundraising ‘product’ However, other regular giving programs and bequests also contribute huge amounts. Questions

If you have any questions you want to know about Australian and NZ fundraising data – ask away! Attrition, face to face, average donations etc…

I will post lots but your request will move that subject up the priority list.

*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 is never shared between partners in this exercise.

Bequest tips from Adrian Sargeant at FINZ

By Sean Triner

Good session, as always, for the travelling fundraising academic.

Some really interesting tips on legacies from him, all backed up with research of course…

In 2011, 4200 charities in the UK received legacy income Top ten of them charities accounted for 32% of the legacies And the top 50 legacy charities (just over 1%) account for 55%

Grand kids are more negatively influential on will writing than all the good indicators such as volunteering donating etc. make sure you acknowledge this. Childlessness is increasing in USA – Adrian asked if it was in New Zealand, and the answer is yes. http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=10773770

‘A gift in your will’ is a better phrase than ‘legacy’ or ‘bequest’ because it is more inclusive, more acceptable no people who think their estate is going to be too small.

Telling people why they should tell you that they have put your cause in their will – ‘so we can plan for the future’ is not a motivator. NSPCC spells out that you don’t need to tell us, but if you do we would love to thank you.

Probably best approach is that which spells out how you will thank.

He also reckons drop the puns – will to help, where there’s a will there’s a way etc.

Focus on looking after the future – people (generally) are not expecting to die soon.

A good campaign should not look at the same sort of motivations as a gift now. For example, no need to say what exactly you would use the money for ($20 to make a blind man see) – concrete examples are good for donations now, but for legacies be more value based.

Present:

  • concrete (examples)
  • subordinate (the building blocks)
  • contextual (the work that is going on now, the number of families helped)
  • unstructured

Future:

  • abstract (values)
  • superodinate (I missed what this meant whilst I was typing)
  • decontextualised (more big picture, social change etc)
  • Structured (like show what you did in 1960s, 70s, 80s, etc and what you are going to do in 20 years time, 30 years etc) though better to say in 20 years time, not ‘in the 2020s’

Check out Human Rights Watch ‘a lasting contribution to your beliefs in human dignity’

Emotion is fine to use in legacy solicitation but the time between call to action and actual action is longer than other fundraising so does need more logical stuff because ’emotions discount faster than logic’

In ‘immediate’ fundraising you use negative consequences of not giving, (give us the money or..x won’t happen), which is right. But for legacies, talk more about the positive impacts and benefits. This is because people are more optimistic about the future…

Adrian then presented lots of good (and bad) examples of good legacy packs.

Great stuff, thanks as always Adrian.

Regular giving or one off donations: which to go for?

By Sean Triner

Fundraisers need to grow their databases, but should they invest in regular giving (automatic debits) or one-off donations?

In Australia, until around 2002, the answer was simple because regular giving was a tiny part of the fundraising mix.  Some charities tried acquiring new donors straight on to regular giving, to mixed success.  Some just added an extra line to their direct mail acquisition appeals  offering the opportunity to become a regular giver.

Then face-to-face arrived.  Not only did it acquire hundreds of thousands of new regular givers, it actually created an entire new ‘type’ of donor – a younger demographic.

Brilliant fundraising expert and blogger, Jeff Brooks picked up on this in a recent blog where he noted that: “There are younger donors … just not in America.”  He goes on to say that, “In Australia, more than a third of the charity collected each year comes from what’s called Down Under “regular giving,” otherwise known as monthly giving or sustainer giving.”

He is right indeed. About a third of individual income to professional fundraising charities appears to come from regular giving.  World Vision reports $195m of it’s $345m income in 2011 was from regular giving.  The Pareto Benchmarking report, looking at around $330m of other charities’ income, shows that over one third of that came from regular giving.  This report studied 48 different charities’ data.

Even though face-to-face has been the engine behind this growth, there still many regular givers acquired in other ways.  One significant way is by asking current donors to become regular givers, usually through a combination of phone and mail.

This ‘regular giving conversion’ process is so effective that some charities think of their ‘normal’ database as simply the means to generate leads for regular giving conversion. Charities often make a choice as to whether they should focus on regular giving or not, but the latest data from Pareto’s benchmarking shows that this is the wrong approach. You don’t need to choose between one or the other.

One reason is that most regular givers come from face-to-face. These donors are younger and hardly ever do anything except upgrade when they are phoned. In addition, they are also poor major donor prospects, with very rare exceptions. Furthermore, they are not good bequest prospects, because they are too young and not yet interested in supporting charities in this way.

The chart below shows the percentage of donors in various categories who have informed the charity they have mentioned the charity in their will.

In general, face-to-face donors are clearly not interested in putting charities in their will. The other reason you don’t need to make a choice for or against regular giving is that nearly all non-regular donors will not become regular givers, no matter what you do.

The chart below shows second gift rate by charity within 12 months of acquisition.  It shows the proportion of those second gifts that were the beginning of an automatic payment method (blue), or another one off donation (organe).  Each column is a different charity.  The black lines match the right hand axis – this is the number of new donors acquired by each charity, the orange block is the percentage that had made a second gift within twelve months, and the blue shows the percentage whose second gift was the first of their automatic debits.

Put simply, most new non-automatic debit donors don’t become regular givers within 12 months – even for those charities trying hard to get them to do so.

On the other hand, what of people who came straight in as regular givers?  The chart below shows the total contributions of all donors acquired straight onto regular giving by the channel that was used to acquire them.  Face-to-face accounts for well over two thirds of these donors, and only a few per cent are from online. The little crosses go with the right hand axis and show the ‘ratio’ of giving compared to first gift after four years.  The left is the average total given by donors acquired through that channel straight onto regular giving.

For example on average, face-to-face donors will have given around 25 times their first debit – about $650 – after four years whereas a donor acquired straight to regular giving from a direct mail piece will have given around 45 times their first gift – about $900.

The blue is income from regular giving, and the orange is additional income from other donations.  The face-to-face donors across these charities gave insignificant amounts on top of their regular donations and the direct mail donors gave about $50.

So, we see that most of the value from regular donors is from those regular gifts and little from additional donations.

It is hard to get regular givers to give additional gifts and it is hard to get non-regular donors to become regular donors.  But you as a fundraiser really need both types of donor.

Don’t choose between regular giving and one off – do both.

The Life You Can Save

By Sean Triner

As his mobile phone disappeared into his pocket a huge smile crept across Mark’s face. He had to hold himself back from punching the air and whooping with delight. Just nine months ago, things hadn’t looked so rosy.

His business had grown really well until then – especially with one, blue chip client. But ten months ago a new marketing director had turned up in that client and within a month had swept in a new agency.

He knew it had been a mistake to rely on just one client for half his business, but how could he have turned them down? He had struggled over the past nine months – cut his salary to the bone even though Marcia was expecting. Now little Toby had entered their lives, money was very very tight and the board insisted on redundancies – unless he won this new client he’d been wooing.

The call was confirming the contract. Business was back to booming – but a condition from the new client was that he had to personally oversee the account; without him there was no deal.

Whooping aside he noticed people dodging a street fundraiser – one of those earnest young people banging on about saving the world. This one was representing Oxfam. Well, representing Oxfam today Mark thought – tomorrow it will be Amnesty or Greenpeace.

Earnest World Saver caught Mark’s eye. Before Mark could escape he was caught, dazzled into inaction.

“Hello sir, how are you today?!” began Earnest. “I’m good but…” began Mark, looking for an escape route.

“That’s great! I hope you can spare me a few moments on this fair day. I am working for Oxfam to help alleviate poverty and literally save kids lives around the world. You see, in Africa right now, countless kids are suffering from easily curable diseases. A million of them will die this year from diarrhoea alone. For just $35 a month – a little over a dollar a day – you can directly help save lives…”

Earnest clearly believed in what he was saying; he probably passionately believes in human rights and tying himself to nuclear subs as well thought Mark. But Mark had more on his mind right now.

“Thanks, I’m sorry – I don’t have time right now” he said, making a beeline for a pedestrian crossing where a young mother watched, relived at not being Earnest’s victim. Her child, maybe five years old and dressed in a cliche pretty red dress, looked fascinated by something in the road gutter.

The young mum caught his eye and they both knowingly smiled as he quickly sloped off towards the crossing, willing the lights to change.

Earnest was casting about for his next victim when Mark saw something dart out of the gutter – a rat perhaps. It shot across the road, daring the traffic and startled Mark.

Then things slowed down – it was like a movie; he saw the red dress move after the rat, and the red mass of a bus coming in from the nearside. Without thinking he was moving – instinct kicked in and he leapt across the front of the mum, dragging the kid backwards and towards the gutter. The change in direction, the speed – everything was working against him as he saw the terrified face of the child falling into the gutter ahead of him.

He felt the bus – the wind, the noise and he knew it was over. Marcia and Toby – what about them? He heard the screeching – the tyres and the mother and felt an arm grab him, pulling him up. The bus had come to a rest – the shocked faces of passengers staring out.

Young mum embraced Little Red Dress as he realised it was Earnest helping him up. Earnest had tears in his eyes. “Mate, you’re a hero.”

—-

Our job as fundraisers is to make people care enough about children (or equivalent cause) a long away away, as much as they do for someone close. Most of us would hope we reacted like Mark did, but he risked everything – not just his clothes, a meal or a new iPhone – everything – to save the life of a stranger.

We fundraisers bring our causes closer to our donors through stories and personalisation, though relationships and demonstrating consequences of not giving.

Facts and stats don’t make things closer, stories do.

Peter Singer does a similar analogy in his superb book “The Life You Can Save” – I thoroughly recommend it, available on Amazon etc.

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

Australians gave more to charity in 2011 than ever before

By Sean Triner

The latest Pareto Benchmarking figures – derived from looking at actual transactions across 45 charities in Australia and New Zealand – revealed that Australians gave more money to charity in 2011 than ever before. Double checking annual reports of the largest fundraising organisations not in benchmarking confirms it was a good year.

Regular giving (automatic debits) has grown enormously over the past ten years. In fact, for professional fundraising organisations such as Cancer Council NSW and WWF regular giving accounts for more income than ‘one-off’ donations.

 

 

 

 

 

 

 

 

 

 

 

 

As you can see from the chart above, across the group, around a third of individual gifts came from bequests, a third from regular giving and a third from occasional donations such as those sent in response to direct mail.

Direct mail had been pretty flat over the last few years, but has begun a new resurgence in growth as new creative approaches lift response rates from around 1% to over 4% for many charities. This is from sending letters to people who had not previously donated to the charity.

We expect this growth to accelerate as more and more charities have recently succeeded with their early tests. However, it can take a long time for them to accelerate their programs so the growth will most likely be reflected in 2013 data (to be presented in 2014).

Face to face (people on the street, knocking door to door and asking for monthly pledges) goes from strength to strength, with these 45 charities acquiring more donors through face to face last year than any previous. The only thing holding back further growth in this area is capacity from the face to face providers – they are mostly full up.

But it is not all rosy on the face to face front – one charity in the group lost 60% of its new face to face donors within one year. The average is around 45% but the best manages to keep most of its donors, with only 36% attrition.

Australian and New Zealand charities can join Pareto Benchmarking for free – email bm@paretofundraising.com

When will face to face reach saturation point?

By Sean Triner

Face to face, or direct dialogue*, which is used to acquire monthly donors has added millions onto charity disposable income in New Zealand Australia in just one decade. In 2001 it hardly existed in Australia.

Every year my company, Pareto, coordinates a data comparison project on behalf of a few dozen charities. Last year 41 charities compared their data and found that around a third of their income from individuals now came from regular giving (automatic debits from their bank accounts or credit cards)… RG is the light blue on the chart below…

  …and of that 30% or so of their income F2F has been the biggest driver…(F2F is the orange-ish bit).  

You can see that F2F was still driving the growth, and had actually grown by more in 2009-2010 than 2008-2009. But I still keep hearing people worried about ‘saturation’ – sometimes to the extent that it puts them off investing in this area.

Clearly it is not saturated yet across the market. However, some charities have done so well that the number they acquire each year is about the same as the number they lose to attrition so they have no net increase. For them, they need to look at alternatives if they want to continue to grow.

The latest benchmarking round of comparative data is due April/May this year and seeing if F2Fs rate of growth grew again in 2010-2011 will be fascinating. I will let you know.

* By face to face I mean the process of stopping people in the streets, shopping malls, door to door and at events and asking them to sign up for an ongoing debit from the credit card or bank account. It is huge in Europe, having taken off big time in the mid 90s in the UK and accounts for the majority of new donors acquired in emerging fundraising markets like Hong Kong, Jakarta and Kuala Lumpur. Canada is into it too, but the US is a late entrant, with proportionally less F2F activity. Almost certainly the biggest growth potential in the world is in the USA. If you are US fundraiser and don’t know about it – find out more!

A new charity commission

By Sean Triner

The Australian Treasury department is holding consultations looking at the new ‘charity commission’ for Australia. If fundraisers don’t consult it could be very damaging for us.

If you are working for, or on the board of an Australian charity please make sure you, your board and your CEO know what is going on.

Info from the new Commissions site:

Australian Charities and Not-for-Profits Commission (ACNC). The ACNC will be an independent regulator and will:

  • be advised by an Advisory Board chaired by Robert Fitzgerald AM
  • report to Parliament through the Treasurer
  • be staffed by around 90 officers, with potential for growth if additional functions are added
  • be supported by the ATO in the provision of back-office services

Sounds terrifying – charities will be governed by Treasury. That is too late to change, but what the rules are can still be influenced. No time to delay people – they start their job on 1 July 2012.

I know it is boring, it is Government but if we don’t consult and get this right, it won’t be boring I can promise you that.

http://acnctaskforce.treasury.gov.au/content/content.aspx?doc=home.htm