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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.

During his time at Pareto Fundraising, Amnesty International Australia and Austcare (ActionAid International Australia) James has held roles in digital management, strategy, production, campaigns and marketing, content and social media. At Pareto, James has spearheaded successful digital fundraising campaigns for organisations like Lifeline, Soi Dog, Bush Heritage, Baker IDI, Australia for Dolphins and more. During his five years at Amnesty, James led the production of a number of highly successful digital fundraising initiatives including the ‘Radios for Burma’, ‘Dictionaries for asylum seekers’ and ‘Freedom from Fences’ campaigns.

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

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

Forecasting the Future

Accurate budgeting and forecasting is becoming a must do for nonprofits, especially as their individual giving programs grow say Andy Tidy and Clarke Vincent…

 

Some of the most commonly asked budgeting questions in fundraising are, “If I do no acquisition, where will my income and donor base be in one, two or five years?” or “What do I need to invest in order to reach an income or donor volume of ‘x’ amount?”

Alongside these questions, accurate budgeting and forecasting is becoming more important as charities build large individual giving programs. Why? Because if a forecast is out by a relatively small percentage it can have a big impact on service delivery.

The key to accurate predictions is knowing the probability that a donor will or won’t do something. It’s nearly impossible to accurately predict what a single donor will do, but across a large enough group, it is possible to predict with relative accuracy.

 

Regular giving forecasting

For existing regular giving donors this is fairly straightforward. The main thing we need to know is the probability that the donor will not stop their direct debit (either intentionally or by failed payment). There is also a need to predict the propensity to upgrade and by how much, as well as the likelihood of skipping payments, but these have a relatively small influence compared to overall retention.

For regular giving programs with an acquisition strategy, where early donor attrition can often be as high as 50% over the first year of a donor giving, we typically also want to know expected recruitment volumes (including non-starter rates and first payment phasing), along with their subsequent retention, upgrade propensity and decline probability. These variables are essential for us to confidently manage the large budgets invested in regular giving acquisition and donor development.

It is imperative therefore to identify and understand the factors/variables that influence or correlate with retention of both new and existing donors. It is then possible to split the donors into segments defined by those variables and go on to forecast expected income based on the retention characteristics of each segment.

Typically, depending on the size of the file, existing donors will be split into 50 to 100 segments, with acquisition channel (for example, face-to-face, online lead conversion, DRTV etc) and tenure (months of giving) being the most significant. For new donors a smaller number of segments is used, with channel and age being the main drivers.

Each segment’s likely future behaviour can then be calculated by extrapolating the behaviours of previously observed similar segments. Applying an accurate prediction can also rely on an ability (somewhat an art) to forecast changes in the behaviour of a segment caused by anticipated future changes in external influencing factors such as market dynamics, charity fundraising and strategy development.

The segments are then ‘rolled’ back up into a whole group and their overall predicted behaviour can be used for accurate forecasting. For easy visual trend insight, they are often charted too. The two regular giving forecast charts show a no acquisition scenario where a charity is expected to see income shrink and an active acquisition scenario where the charity is recruiting enough donors to grow.

3

Regular giving forecast: five year (No acquisition)

4

Regular giving forecast: five year (Active acquisition)

 

Cash donor forecasting

Forecasting cash donor (single, one-time gift to an appeal) behaviour and fundraised income is inherently more difficult than for regular givers as cash donors have to make the decision to give each time. And depending on the outcome of each of these decisions, the expectation of their future behaviour changes.

It doesn’t mean a cash income forecast can’t be done, it is just that the forecast will not typically be able to be predicted with as much confidence at a granular level. The principles are the same as for regular giving – we need to identify the factors/variables that predict an appeal response and how much they will give – typically these will be based on recency, frequency and value.

Each time a donor makes a donation it potentially changes these characteristics, so the process becomes an iterative one, therefore each year of the forecast is dependent on what we expected the donors to do the previous year.

 

1

Forecast cash direct mail income by year (No acquisition)

 

2

Forecast cash direct mail income by year (Active acquisition)

 

These charts show the difference in forecast income for a direct mail program from doing no acquisition vs acquiring donors consistently over the next five years. It becomes a fairly simple process to manipulate the donor recruitment volumes to achieve steady income or hit growth targets.

An income forecast model can then be enhanced with inputs such as budgets and costings to help model different scenarios for the long-term return of your integrated fundraising program.

Predicting the future can be fun, enlightening and very useful but all forecasts should carry caveats about their limitations and accuracy. The key to improved accuracy is to compare predictions and actuals over time, try to understand the key factors and causes of variations, and make corrections.

Most experienced stakeholders will understand that forecasts should be treated as a useful indication rather than a promise of results. If stakeholders wish to lock-in or guarantee minimum results (for example, to be able to make commitments about future service provision) then it is wise to provide different scenarios that represent different combinations of variables (for example, based on last year’s retention rates, based on retention rates 1% lower than the previous year etc).

 

What about unknown unknowns?

Some fundraising programs become harder to forecast as they mature, or ‘max’ out, as it becomes harder to find and engage new supporters. While it is possible to more accurately predict the income to be received from retained/existing donors, predictions about the long-term future behaviour of donors yet to be acquired is fraught with more variables and risk. There is, however, a considered approach that can be applied to building longer term models of multi-year donor acquisition programs and I will outline an approach to do this successfully in a future article.

 

Clarke loves talking about data and has made a career out of doing so for more than fifteen years in the direct marketing industry. He has been our Head of Marketing and Business Development since February 2009.  Andy  started his career in the UK in 1993 working as an analyst for two large charities. In 2003 Andy began working for Pareto Fundraising where he has been the driving force behind Pareto Fundraising’s international reputation for data-driven fundraising excellence.

 

This article was first written by Clarke and Andy and was first published in the October/ November edition of F&P Magazine.

 

THE RISE AND RISE OF REGULAR GIVING

Establishing a regular giving program is a big challenge for any charity. F&P asked Fiona McPhee how she recommends getting donors over the line and keeping them on board for the long term.

According to fundraising expert and blogger Jeff Brooks, about a third of individual income to professional fundraising charities in Australia comes from regular giving. Pareto’s Fundraising Benchmarking 2016 report, which studied the data from 48 different charities, supports his argument – confirming how an ongoing commitment from donors is crucial for a charity’s longevity and stability.

In your opinion, what defines a high-performing regular giving program?

This is one that has well managed customer service and attrition. The biggest challenge in regular giving is the fact that donors stop. They sign up to a monthly donation then at some point in that journey their giving stops, with most new donors bowing out within the first year.

So organisations with low attrition tend to have high-performing programs. The average first-year attrition for starters (those who make at least one gift) is 40% across all channels.

How can a charity reduce the loss of donors within the first year?

Declines management is number one for me in terms of managing attrition, and that basically means if I process your monthly donation and you don’t have enough money in your account or the account is closed, the charity gets a decline back.

Declines management is crucial – you can recover a very large percentage of those declines throughout the year if the right administration and customer service processes are in place.

Many organsations have been able to bring their attrition down by 5% or 10%, simply by assessing and addressing these processes, which makes a huge impact on their income and their retention.

Another way is to have a strong donor save program in place. Charities have to put the effort into training, into developing KPIs and into monitoring their donor save programs so they give themselves the best chance of keeping their regular givers on board. Whether it’s offering them the chance to reduce the monthly amount or even put it on hold for a while, having a strategy in place and a trained team ready to address donor savings is critical.

What’s one of the biggest challenges charities are facing with regular giving?

Supplier capacity and retention for faceto- face recruitment – you might have the budget to invest, but engaging and retaining a suitable supplier and getting the recruitment volume you are after is a real challenge in today’s market.

Marketing automation is another challenge for a lot of charities, but some of them are really trying to crack it. The very good ones are targeting a variety of demographics through a combination of email, SMS, phone and printed material – they’re covering all bases. This is a well-planned strategy but, of course, cost comes into it too.

I think the cost of marketing automation versus the benefit of it is a real barrier at the moment too. However, we can certainly see lower attrition rates in that first period for those who put the effort in.

What kinds of strategies should charities have in place for ongoing retention?

One strategy is upgrade programs, which includes contacting donors and asking them to increase the value of their giving. Again, the high-performing charities have a multifaceted program. It’s not just a one-shot, single-phone campaign at one point in the year. They’re looking at what the different channel opportunities are and the different ways that they can offer upgrades.

Channel diversification for upgrade programs is another good idea. This involves moving beyond just calling or mailing donors. Some charities are looking at how they can use SMS and email to supplement – it’s about getting coverage, so actually trying to get through to every single donor and give them the opportunity to increase their giving as opposed to just touching base on the phone once a year.

How can a charity hope to establish a successful regular giving program?

The first thing it needs to look at is its product or its proposition for regular giving. You’ve got to have a reason for someone to commit to you on an ongoing basis.

That could differ from charity to charity. For example, an organisation that collects money in response to emergencies needs to think about why someone who’s used to giving in response to a really tangible, current emergency should commit to an ongoing monthly donation. It’s also critical that the back-end systems are in place, so that the donor’s transaction process and service experience is as smooth as possible.

Having a long-term budget and commitment in place is also critical. Regular giving tends to not break even and the acquisition of new regular givers can take more than 12 months, depending on the channel, yet a lot of charities run on a 12-month budget.

Setting expectations that regular giving has an excellent, long-term return on investment is often the first step towards ensuring the organisation is committed to investing. You’ve got to stick with it in order to reap the rewards. From that perspective, you’re better off establishing a three-to-five-year return on investment view of regular giving.

What advice would you give to a charity looking to establish a regular giving program?

Start with the expectation that you will need to diversify and evolve the program – it’s not a ‘set and forget’ activity. Based on how things have trended in recent years, expecting what’s working today to be working the same in three years’ time is risky.

From a diversification perspective, there are several different channels options, and each requires a different approach and delivers different types of donors. However, in the market right now, face-to-face accounts for more than 75% of the income for regular giving, so that’s a real focus area. But it comes with massive challenges in that there is less supply than there is demand.

For me, the organisations that are doing really well are using that as their base, but testing to diversify channels. They are looking at other opportunities. They are trying to develop other avenues into regular giving that certainly don’t have the same volumes, but are giving them some stability and sort of future proofing in the event that anything changes.

When you look at the Pareto Fundraising Benchmarking program, you certainly see that those charities that are generating the most income have multiple channels feeding their program.

Fiona McPhee is Strategy Director for Pareto Fundraising, helping charities in Australia and New Zealand like St John Ambulance Australia to develop their individual giving programs.

This article was first published in Fundraising and Philanthropy Magazine 2016