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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!)

The cost of attrition

Fiona McPhee says it’s time to question yourself about your approach to supporter loyalty – because attrition is costing us.

This is my favourite time of year! Pareto’s 2017 Industry Trends Benchmarking Report has been released. You and I now have the opportunity to see, at the macro level, what’s happening in individual giving.

We’ve already reviewed the report with our Australian member base and the truth is what’s happening can be summed up in one word: challenging. And I love a challenge. As I know many of you do.

There is no emerging silver bullet on the horizon, there is no dramatic upswing in anything. Overall income has maintained from last year, driven by regular giving, and for some the opportunities are clear. But for those of you with developed programs in a pressured acquisition market that is facing declining retention rates, how do you pursue sustainable fundraising?

“It’s cheaper to retain a supporter than find a new one” is common law in fundraising. And it’s true. Replacing a lost, loyal supporter is even more expensive then acquiring a new supporter as for many the equation will be up around four or more new supporters to simply replace the lost income in one year of a previously retained, loyal supporter.There are two statistics in this round of Pareto Benchmarking that drive this home:
• retained cash supporters contribute, on average, over 60% of total cash income (and if you’ve not done any supporter acquisition recently it will be even higher)
• overall cash supporter retention is at an alltime low (although many charities are 25% to 40% better at retaining their supporters than the average so we know we can do better).

Supporter service is critical

The supporters you already have are your best asset but they are not staying around as long as they used to or could. I can’t go into the details of all the research here (I’m always up for a chat about this though so do please get in touch) but so many things point to how we treat our supporters how satisfied they are with this treatment, and how engaged they are as being critical to supporter loyalty.

Your approach supporter service (or customer care or donor care) is critical to managing supporter loyalty. Our investment in this is low compared to the commercial world. Pareto mystery shops a lot and while things have improved year on year, overall our experiences are not as good as they could be. So how can you ensure you are excelling? Here are two ways to get started:

1 Better understand your audience

Do you ask supporters what interests them? Do you know why they care, what their story is and how engaged they are? Being taken for granted was highlighted by some excellent UK research as a specific reason why supporters chose to discontinue support, including not being thanked appropriately, being asked for money too often, receiving communications they did not want and not being recognised for their commitment.

Do you have an approach to understanding how these issues could be affecting your supporters? Do you ask for and capture the reason supporters cease their support? Do you exit interview selections of supporters?

We are not paying enough attention to our supporters, often driven by the fact that they have no avenues or opportunities to be heard. The rise of mass direct response fundraising has seen process prioritised over service. And while the use of data to segment and target continues to improve it’s what we do with the knowledge from that data that’s lagging. The first steps to take are:
• ensure the information that you have on supporters and how it is captured is audited
• identify the gaps in your knowledge about your supporters – what should you and could you know about your supporters?
• audit the ways you listen to supporters (this can be done as part of an a wider mystery shopping project).

2 Better service your audience

This is the customer service chat many of you need to have. To quote UK fundraising expert Adrian Sargeant: Whether they are consciously aware of it or not, how they are treated by other charities will certainly drive what they expect when they start giving to yours.

Now if you’ve ever manned the phones at your organisation you may well have had a difficult interaction with a supporter who is upset about how much mail they receive or was dismayed to see you ‘out in the street cajoling people into donating’. And the untrained inclination is to get out as fast as possible. I have also seen these situations lead to organisations effectively hiding from supporters – having no clear way to be contacted and no people available to care for supporters with feedback.

These are simple examples of golden opportunities to deliver a great supporter experience. But if you are unprepared and ill equipped, your supporter experience will be poor and their loyalty will be affected.

Do you provide high quality service to your supporters? How do you know? Have you measured it? Do you monitor it all the time? Do you benchmark yourselves? Do you have a complaints procedure? Do you have a customer/supporter service vision? The first steps to take are:
• Get yourself mystery shopped. I recommend outsourcing this and running it over a threemonth minimum, if not a rolling program.
• Benchmark your service levels.
• Develop a service vision and implement KPIs to track and monitor donor responses.
• Audit your team’s roles and skills, and look at ongoing training to upskill them.
• Audit your supporter care communications, both proactive and reactive. Having a fresh set of eyes reviewing for experience, tone consistency, warmth and personalisation will help identify process gaps and execution gaps. An external audit will also help identify how accessible you are to your supporters and how much two-way interaction really exists (research shows us that each time you have a two-way interaction with a supporter it builds their loyalty some more).

Seeing your supporter service as a critical component of managing supporter loyalty with objectives to better understand your supporters and better service them will impact your supporter loyalty.

 

Fiona McPhee and the Pareto team work to review, analyse, benchmark and implement insight led approaches to improve donor journeys, care and service. If you are looking for some support to better understand your donors, drive better donor experiences and improve loyalty email fiona.mcphee@paretofundriasing.com.

This article was first published in Fundraising and Philanthropy Magazine 2017

Meeting the needs of middle donors

It is only in the past three years that middle donors have really been targeted in Australasia. Here Fiona McPhee and Ruthann Richardson explore the benefits of, and what’s involved in, building this significant group.

Middle donors should be viewed as a central part of an organisation’s lifetime value efforts. Middle donors will be retained and upgraded far more than smaller donors and far more than major donors. They represent the most significant block of money, commitment and loyalty. US fundraising consultant/ industry commentator Roger Craver.

Over the past few years, there has been an increase in interest in mid-value fundraising. Blogs, conferences and webinars are focusing on it. And rightly so as there is much to be gained from putting a focused strategy in place to increase the engagement, retention and value of this targeted group of donors.

Together, Ruthann Richardson and I have spent the past two years researching, analysing and working on the development and execution of mid-value programs with charities in Australia and New Zealand.

(We argued about how long we have been working on these programs as many of the high-value donor programs we have run or assisted with over the past 10 years bear It is only in the past three years that middle donors have really been targeted in Australasia. Here Fiona McPhee and Ruthann Richardson explore the benefits of, and what’s involved in, building this significant group. some resemblance to the more recently branded mid-value donor programs. However, formal strategies around mid-value donors have only come to the fore in the past three years in Australia and New Zealand.)

The purpose of developing a mid-value donor program? To raise more income by cultivating and nurturing strong ties and deeper relationships. These programs should bridge the gap between our high-touch major donor programs (one-to-one) and our mass fundraising programs (one-to-many). By adjusting strategies and investment priorities to bridge the gap you can create a one-tosome program that drives these stronger relationships and better longer-term value.

The first step in developing a mid-value donor program is in identifying who your mid-value donors are. This will be different for every organisation – both in volume and value. Your chosen strategy, capacity and budget may well dictate the volume of donors you can service via your mid-value program initially, so the criteria you select may need to be tightened, but we hope success would allow you to expand over time.

Targeting

When looking to identify who could fall into this group for you, there are a number of things to consider:

• Look at the largest gifts made; not those cumulative over a time period The behaviours of those who give larger single gifts versus those who give multiple gifts to reach the same value are different and for a mid-value program we recommend focusing first on those with larger single gifts. Once your program is established and working, if capacity allows for research (and here we mean speaking with/listening to your donors and analysing their behaviours) and/ or testing into specifically targeted segments of donors whose cumulative giving is higher than the norm, this can be part of your plan. (Ruthann suggests looking at donors whose cumulative giving in a year is high and talking to them to assess the difference in their behaviours from the beginning.)

• Focus initially on individuals You may selectively include organisations/businesses over time but, realistically, these programs are designed to develop relationships with individuals and are more easily managed, in the first instance, without making a raft of adjustments to meet te different needs of businesses and organisations. (Ruthann recommends exploring organisation records when you know the decisions are being made by individuals who are simply choosing to give through their businesses.)

• What about regular givers who are giving large amounts every month? This is where analysis and judgement needs to come in. Regular givers who also make larger cash donations are worth considering. The needs and behaviours of higher value regular givers are often different to those of a ‘classic’ mid-value donor. Again, research and testing are critical with this audience. Consider developing a mid-value regular giving program that addresses the specific needs and opportunities presented by people who are already regular givers.

• What feels right in terms of value for your organisation? In Australia and New Zealand we tend to start our exploration with donors who give $1,000 or more (in a single gift) up to where an organisation’s major gift program starts (for those without major gift programs a mid-value program is a nice way to get started towards this). If you don’t have any or many donors up at $1,000 then start at $500 or $250.

• Like any other giving program, recency is critical If you have a selection of donors who haven’t given in the last 24 months there would need to be strong case-bycase reasons to include them in your midvalue program. (I think you should go back 36 months but Ruthann recommends 24 months. We disagree because of the differences in programs we have worked on, so critical analysis and judgement will help make this call.)

• Are you going to consider longevity of giving in your criteria for this group? Donors who have been giving to you for longer are likely to be more engaged. Do they have different perceptions of your work? Are you able to use analysis to understand their potential giving motivations better than new donors? Giving longevity will be likely to affect how you segment your mid-value donors.

Cultivating the group

Once you have determined the criteria for your program, the biggest challenge is in understanding how to cultivate this group – those exceptional donors who are giving at the very top end of your mass fundraising channels but who don’t quite make it into your major donor program.

(Often we encounter some crossover between the major donor prospecting criteria and the newly developed mid-value donor criteria. Savvy major donor fundraisers have seen the benefit of the nurturing and cultivation mid-value programs offer but be prepared to engage your major donor colleagues and plan together.)

It is important in your mid-value program to focus on the donor. The more their motivations and needs are used to tailor the experience the more successful the program. Getting the right balance between cultivation and solicitation is key, as is finding the balance between high touch human interaction and mass fundraising.

Anyone hoping you can simply ‘program in’ a mid-value donor program should probably stop reading here. Human interaction is important. Not all mid-value donors will ask for it and many will say they don’t need it, but without it you will simply be applying more tactics to a mass program, which will only get you so far.

Aim to create a sense of exclusivity, access and special status. Mid-value donor content should be richer – even more sophisticated than that developed for the broader base. Letters and emails (if they are an appropriate channel for your audience) should be meaty and substantive – think more cultivation than solicitation. Spend at least as much time stewarding your mid-value donors as you do asking them.

We have seen and helped build a variety of models that work for great mid-value programs, and each has been a unique outcome of the motivations of the midvalue donors, the tangible and specific proposition(s) developed, the organisations’ available human capital and expertise, the elevation of elements of the mass fundraising program, and special cultivation and solicitation activity designed for the mid-value donors.

Tactics for this group are different from a standard donor program – lots can be learned from testing as well as the experiences from other mid-value and major gift programs. There is no one-size-fits-all approach here.

Your objectives will drive your strategy. A slow burn approach might focus on increasing retention and therefore value over time, a more focused push will look to dramatically increase the short-term value of giving with a keen eye on retention. Often capacity and budget dictate which of these two routes are selected.

You will need a budget. It’s the classic ‘spend more to make more’ but it works. You might be spending more on specialist staff or more on your appeal execution or on special cultivation activities for the audience. Can you do this with no additional budget? If you can divert resources and juggle budgets to spend less in other areas then, yes, but plan to be successful and spend more as you expand and develop the program. Plan to stick with it – this is not a one-shot campaign or throwing in a couple of thank you calls.

At the most basic level, look to complement your mailings with phone calls, custom cultivation and solicitation activity, and stretch campaigns. Ensure you keep a consistent narrative across all channels. Pay attention to how donors respond and what they say to you. Good cultivation means paying attention to the donors’ preferred channels, level of interaction and interest areas and, importantly, capturing and using the insights as they are gained. The best programs have a vision, test and refine, and use human beings as a critical resource.

 

Fiona McPhee and Ruthann Richardson work with fundraisers in Australia and New Zealand to explore, develop and implement mid-value donor programs.

This article was first published in Fundraising and Philanthropy Magazine 2017

James Herlihy

James Herlihy

Digital Strategist

James HerlihyJames Herlihy is the Digital Strategist at Pareto Fundraising. He has spent more than a decade campaigning with non-profits and is the brains behind groundbreaking digital campaigns for dogs, dolphins, humans, rights, reefs and more.

 

 

 

P: +61 2 8823 5800
E: james.herlihy@paretofundraising.com

Becky Brown

Becky Brown

Account Director

Becky BrownFive years ago Becky took the jump from mainstream advertising to fundraising, and has never looked back. Combining her passion for Not For Profit with her love of direct mail strategy she has worked with many of Australia’s most successful charities including Cancer Council Queensland, Mission Australia, Assistance Dogs Australia, Plan International Australia, and Oxfam Australia.

One of the things Becky enjoys most about her role is working alongside her clients to help take their fundraising programs to the next level. From developing mid-value strategies to increase the value of existing supporters, building solid acquisition and retention programs, to developing donor journeys and communications to nurture bequest prospects – she has managed and produced campaigns from all sides of direct mail.

P +61 2 8823 5816
M +61 406 367 455
Level 7, 1 Smail Street
Ultimo NSW 2007

Andrew Martin

Andrew Martin

Senior Consultant

Andrew_MartinAndrew’s deep and abiding passion for fundraising began many years ago in the call centre for one of Australia’s largest international NGOs.  Interacting every day with donors was the best fundraising apprenticeship he can imagine and it has instilled a donor-centric mindset that he has carried with him over the intervening years and roles.

After a several years in senior fundraising roles at a number of high profile international NGOs, Andrew is now focussed on working with charities to build ambitious fundraising programs that drive sustained growth for their cause.  He is an emphatic advocate of collaboration and shared learning within the fundraising sector, believing it is critical to our individual and collective success.

M +61 422 221 910
Building 8, 658 Church Street
Richmond VIC 3121

Jo Durant

Jo Durant

Head of Digital Operations

Jo Durant Originally from the UK, but now a Sydney native for 15 years, Jo has spent the last 10+ years in various integrated advertising agencies producing digital projects for a wide range of clients – from major software companies to supermarkets to airlines. At Pareto Jo’s role is key to ensuring the smooth operation of the digital team and offering the best digital service to our current and future clients.

 

 

Ph: +61 415 381 101
Level 7, Smail Street
Ultimo NSW 2007

Damien Mandla

Damien Mandla

General Manager

Damien MandlaPareto Fundraising

 

 

 

 

P +61 2 8823 5800
M +61 432 944 526
Level 7, 1 Smail Street
Ultimo NSW 2007

Dearne Cameron Appointed Chief Executive Officer of Pareto Fundraising

Media Release

9 February 2017

Pareto Fundraising, a division of ASX listed IVE Group Ltd, has today announced the appointment of Dearne Cameron to the role of Chief Executive Officer.

Dearne will succeed one of Pareto’s co-founders, Paul Roberts, who will transition to the role of Senior Consultant, continuing to play a key role within the Pareto team as a mentor in the areas of data insights and fundraising strategy. Dearne will join us on 20th February.

Dearne brings with her 18 years’ experience from the not-for-profit sector complemented with extensive experience in the commercial sector where she also held a variety of Director and Advisory Board positions. Most recently Dearne joins us from CompliSpace Pty Ltd, where she was the Chief Operating Officer. Her not-for-profit experience includes General Manager and Director of Anglicare and Anglican Aid, a board member of House-With-No-Steps since 2011 and a Non-Executive Director for Make-A-Wish Australia for six years.

Warwick Hay, Managing Director IVE Group, said “Dearne’s diverse range of experience across both the not-for-profit sector and the commercial sector will be an asset to the Pareto Fundraising business. Her passion for building strong relationships and helping charities achieve their fundraising goals will be invaluable to supporting our customers and helping them thrive.” Dearne commented, “I remember when Pareto started, I was amongst their first clients. During the last 15 years, Pareto has continued to deliver a growing and unprecedented expertise to the sector. I feel privileged to be part of the Pareto team, and I am looking forward to working with their many clients who are making an important difference through the services they provide.” Dearne studied at Macquarie University, Curtin University and Swinburne University and achieved an MBA, Master of Management, PGC Human Rights, BA Anthropology and Studies in Behavioral Studies and Psychology. She is a Fellow of the Australian Institute of Company Directors, a Fellow of the Australian Institute of Management, a Fellow and Certified Practicing Marketer of the Australian Marketing Institute and a member of the Australian Anthropological Society.

For any enquiries please contact:
Paul Roberts
CEO and co-founder
Pareto Fundraising
E: paul.roberts@paretofundraising.com
M: +61 408 277 642.

About Pareto Group The Pareto Group of Companies is Australia and New Zealand’s largest fundraising strategy and data driven solutions company serving the not-for-profit sector. It has proven market-leading capability across analytics, direct mail, telemarketing and online channels. It is also internationally recognised and well-respected for its Benchmarking program, which provides whole of sector analytics, strategic consultancy and industry thought leadership. www.paretofundraising.com
www.paretophone.com

About IVE Group Ltd IVE Group Ltd is an ASX listed vertically integrated marketing and print communications provider. IVE enables its customers to communicate more effectively with their customers by creating, managing, producing and distributing content across multiple channels. IVE has an unparalleled product and service offering in Australia and holds leading positions across multiple sectors. IVE approaches the market with a solution-focused strategy and consists of four operating divisions – Kalido (creative and marketing services), Blue Star Group, Pareto Group (fundraising specialists-NFP sector) and IVEO (managed solutions). IVE employs 1,300 talented and committed people across its operations in Sydney, Melbourne, Brisbane, China, Singapore and New Zealand. The Group services all major industry sectors including financial services, publishing, retail, healthcare, communications, property, clubs and associations, not-for- profit, utilities, manufacturing, education and government.

www.ivegroup.com.au

End of release