News & Articles

This month we’re reading ….

What your donors want … and why

By Tom Ahern

Tom Ahern could walk into any bar in the fundraising world … and someone would buy him a drink.

He’s considered one of the world’s top authorities on how to communicate with donors – to get their attention, inspire them to act and bond them to your organisation.

As Tom has long said, your number one job is to keep your donor/customer happy. And donor-centricity is the only secret to increased giving.

What you donors want … and why is his latest book – and it’s as good as the rest. Within its chapters you’ll learn how to treat donors as customers, how to organise communications around the prime metric of lifetime value and how to answer the big three questions required in a high-performance case for support.

The book bases its advice on the latest research. It debunks common myths such as ‘increased awareness raises more money’. It explores in-depth psychology and the neuroscience behind donor loyalty.

And there are lots of real-world examples within the pages of the book that everyone can learn from. The non-profit world is gracious and giving and people want to share how they do things. It’s so we can all learn how to be better fundraisers.

As Tom writes in his last comment in his book:

“Good luck, my dear Fundraiser. You’re already a hero for trying. Knowledge is your friend. Ignorance is your enemy. And so you have this book in your hand. It’s an armor of sort.”

This month we’re launching …

… The Pareto Fundraising Digital Audit

Conducting a Pareto Fundraising Digital Audit is key for fundraisers who want to build a journey to online program success.

The audit will help you:

  • Take a deeper, data-driven dive into your digital fundraising strategy.
  • Uncover the best digital opportunities for your organisation, audience and existing program.
  • Know which aspects of your digital fundraising to focus on for immediate gain, and
  • Understand how you can build a sustainable digital fundraising strategy that aligns with your mission objectives.

The process is simple: Pareto digital strategy and channel experts will analyse your digital activity and results.

You’ll then get a comprehensive – and immediately useful – report which includes data analysis, insights and recommendations … and is informed by Pareto Fundraising’s fundraising sector benchmarking.

The report can then be presented to your team in a mini work-shop session.

The digital strategists at Pareto understand fundraising. Their comprehensive audit will help you make decisions about which aspects of your charity’s digital program to focus on for income and impact.

Take your digital fundraising to the next level – with support from a Pareto Fundraising Digital Audit. Find out more by contacting canyouhelp@paretofundraising.com

They are not your donors … you are one of their charities

Bluefrog Fundraising’s Mark Phillips presented this slide at the recent AFP international fundraising conference.

The slide was based on the simple but obvious finding apparent in every single research exercise that they undertake – donors tend to have a portfolio of charities they support.

Consider the 2018 Pareto Benchmarking Report. The statistics show that Australian donors support more than one charity too.

Cash donors, on average, support up to four charities. Regular givers support up to two charities. What that means is that you ‘share’ your donors with a lot of other charities.

If you fail to show your donor that your organisation is the best way to meet their aspirations – and you don’t look too different to the next charity – then your donor won’t be particularly committed. And they’ll easily switch their giving.

That’s why fundraisers in high performing charities are making intentional efforts to understand and deliver what their donors want and need. They know that meeting donor service expectations – consistently – can have a significant and positive influence on loyalty.

In return, their donors are donating back to their causes in exponential measures. As famed direct mail fundraiser Stephen Pidgeon noted:

“It is the fundraiser’s job, your only job, to make the supporter feel good about supporting your charity. You have to love your donors. The money will follow.”

What would you do if you knew?

Best-selling marketing author Seth Godin recently wrote in his daily blog:

Excellence

If you knew,

and you could see the world through the eyes of the customer,

and you really cared…

What would you do?

That’s a simple test of creating excellence.

So, if I’m on hold for 56 minutes with Orbitz, does the CEO know? Is that ever a desired outcome?

Does the engineer who shipped a hackable voting machine know that it’s hackable? 

The plumber who finished the job and left the hot/cold controls in reverse position … did he care enough?

Excellence cuts through bureaucracy and status quo and excuses and asks a simple question:

What would you do if you knew?

 

What does this have to do with donors?

When you give your donors an exceptional service experience they donate more, are more loyal and share their experiences with their friends. Great! That’s what every charity strives for.

But bad experiences drive your donors away – faster than you might think. Even if people love your mission, some will walk away after just one bad service experience, even more after several bad experiences.

Maximising lifetime value is about raising money from your most satisfied donors. But as fundraisers we need to know conclusively what makes a donor satisfied.

The two-factor theory of motivation and satisfaction

Frederick Herzberg, an American psychologist, first published the Two Factor Theory back in the 1950s. He found there are two types of factors that influence motivation and satisfaction among people:

  1. Hygiene factors
  2. Motivation factors

If you were to apply his theory to donors, it would look something like this:

Hygiene factors:

  • Easy website navigation
  • Easy to use donation page
  • Quick and successful resolution to a complaint
  • Phone call picked up promptly
  • Correct spelling of a donor’s name … to list just a few.

Hygiene factors are mostly about procedures. Donors don’t need to be dazzled but instead want to be able to easily make their donation, know that their donation went through online, know that their credit card information is secure and so on.

Hygiene factors don’t necessarily attract new donors, but if done poorly, can reduce satisfaction and drive your existing donors away from your charity.

Motivation factors:

  • Thank donors (personal letter, telephone call)
  • Have a solid welcoming process (multi-channel to suit your donor)
  • Show the great things that the donors’ contributions made possible.

Motivation factors are those experiences that surprise and delight your donors. And done well, can set your charity apart from your competitors. This is where the donor magic happens.

How to make sure that you know

Stewardship Tracker is an internationally recognised donor service platform which helps charities find out how their supporters feel about their service experience.

Launched in the UK 10 years ago – and now available from Pareto in Australia – Stewardship Tracker focuses on the aspects of donor service that are the most meaningful. These are the things that your charity needs to get right up front if you are to retain your existing donors and build their lifetime value.

Stewardship Tracker helps your charity track whether it’s delivering on its most basic service promise:

  • We’ll provide solid service delivery
  • We’ll thank you properly
  • We’ll update you on the impact of your gift so you know where your money goes
  • If things go wrong, we’ll fix them.

Donors want to support our causes, but they also want their support to be seamless, so they can get on with their lives. So, our job as relationship builders is to eliminate the obstacles that might prevent them from doing that:

  • When you don’t thank a donor, they wonder if the donation was received.
  • If you don’t feed back on the impact of their gift, they wonder if they made a mistake and that their money isn’t being well spent.
  • If they can’t donate quickly online or over the phone – their irritation levels rise. And their satisfaction with your organisation falls.

Exceptional customer service is about reducing the donor effort across all service points.

That’s why Stewardship Tracker is such a powerful tool. It will help you to identify and meet fundamental donor service expectations consistently. Because when it comes to generating outstanding donor satisfaction and loyalty, nothing special in your donor journey will count unless all of the core fundamentals of your donor journey are running smoothly.

If you would like to discuss our main Stewardship Tracker we’d be delighted to talk to you. Please call us on 02 8823 5800 or email: shopme@paretofundraising.com

Generation X is philanthropy’s ‘next big thing’

Generation X is sandwiched squarely between older Baby Boomers and younger Millennials.

They’re known as ‘X’ because so little is known about the nature of their generation. Instead they’ve always been portrayed as a kind of neglected ‘middle child’ squeezed out of the limelight by two bigger, flashier cohorts – one older (Baby Boomers) and one younger (Millennials).

But their time in the sun is coming because the first of them have quietly reached a milestone: they have turned 50 years old. Which puts them at the beginning of their journey to becoming some of the most valuable donors.

What we do know about them

They are a savvy group – one of the most highly qualified generations in history. Many hold degrees, with others studying part-time for first or further qualifications.

While baby boomers have enjoyed cheap housing, free education and the benefits of a welfare state and abundant jobs … Generation X has survived housing that costs a fortune, a university education that results in a large debt, tightening social security and far more labour force insecurity.

As a result, Gen Xers left home later, pursued further studies, have higher debt and deferred buying a home and starting a family.

It certainly appears that the Gen Xers are nowhere near as lucky as the previous generation. So it’s no wonder they are behaving slightly differently to the Baby Boomers.

Are you ready for the Generation X donors?

For this generation that is thought of as self-reliant, skeptical, savvy, and more traditional, there’s no ‘one size fits all’ fundraising approach that will work.

They key to successful engagement and retention of not only Generation X, but also all generations, is to operate in multiple channels and provide many options to engage and give.

According to Blackbaud and Edge Research’s report The Next Generation of American Giving, trends and strategies you may want to consider when approaching Generation Xers are listed below.

Of course, these are generalisations and it’s important to get to know the preferences of your individual prospects and donors:

  • Demonstrate impact: 50% of Xers want to see demonstrated impact of their gift, and this has significant bearing on their decision to give. Messaging about your organisation’s impact is critical.
  •  Blend the ways to donate: Gen Xers have a growing preference for making online donations but still respond to mail appeals (albeit, much less so than older generations).
  • Solicit more than once per year: 50% indicate willingness to give more than once per year—which is more than any other generation—so they are more likely to be receptive to multiple solicitations.
  • Engage in multiple ways: Generation X are most likely to fundraise on behalf of a cause, make a pledge, and volunteer their time to an organisation. They are looking for ways they can be involved with time as well as dollars.

While Baby Boomers will continue to represent the largest portion of total giving in Australia for at least the next five years, it’s wise to also get ready for Generation X. They will play an important role in your organisation’s long-term fundraising strategy.

Talkin’ ‘bout our generations

Earlier this year Blackbaud released their third in a series of generational giving studies. The Next Generation of American Giving 2018 sheds light on the inner life of donors across the generations and their actual giving behaviour.

But how similar are American donors to Australian donors? To find out, we’ve used the 2018 Pareto Benchmarking Report and the NAB Charitable Giving Report 2018 as companion pieces to Blackbaud’s research.

The generations

Generation names and age spans are defined somewhat differently depending on country and/or region. Roughly speaking, the following are considered ‘global’ generations:

Millennials                  1981-1996       (22-37 years old)

Generation X              1965-1980       (38-53 years old)

Baby Boomers            1946-1964       (54-72 years old)

Matures                       1928-1945       (73-90 years old)

 

The key findings across both reports

  • Baby Boomers are not even close to relinquishing their position as the top donors. They continue to represent the greatest portion of total giving.
  • It’s Generation X who are close to their prime giving years. Gen X will be the next ‘big thing’ for philanthropy.
  • The number of donors is declining but those who are still giving, are giving more. So understanding and retaining the donors you have is more important than ever.
  • The use of direct mail is also declining, but online giving has not filled the gap left by reduced acquisition direct mail.
  • The Matures still give more than any other generation and are more likely to make a bequest. This will gradually change as the Matures age out.

Fewer donors are giving

Blackbaud Report:  With the exception of Baby Boomers, each generation has seen a decline since 2013 in the percentage of donors who say they give to charity. Research suggests that, even as total dollars donated is growing, the population of givers is contracting.

Pareto Benchmarking Report: Income from retained donors has increased whilst the volume of retained donors decreased. This decline was driven by reduced direct mail acquisition over the past year.

The mature generation is in its sunset years

Blackbaud Report: Donors now in their mid-70s and up remain a significant giving force. They donate more money per capita ($1,235) than any other cohort, and give to more charities. But although they remain mighty in generosity, their star is fading as they age out.

NAB Charitable Giving Report:  Older Australians tend to give more than younger generations with over 55s accounting for almost half of total charity donations (bequests are not captured):

  • Matures donate 26% of all donations
  • Boomers donate 22% of all donations
  • Generation X donate 21% of all donations
  • Millennials donate 11% of all donations.

In the year to February 2018, average total donation for over 65s was $478.

The challenge for fundraisers is that while the Mature generation continues to be generous, we must be mindful that this generation will not be around forever. So a continued focus on the giving and communication preferences of Boomers and the upcoming Generation X is important.

Baby boomers are the most generous generation

Blackbaud Report: The Boomer generation remains the most populous of any generation, with more than 74 million living members. They were responsible for 41% of all donations made during the research period.

The average US cash donor is 64 years old. That puts them dead centre in the Boomer cohort. It’s realistic to predict their dominance to continue for at least another five years.

Pareto Benchmarking Report: The Boomer generation is Australia’s largest adult generation – 4.1 million strong. Boomers over the age of 50 are responsible for around 50% of all donations to charity.

Cash donors:

  • Average age: 67 years old (Baby Boomer cohort)
  • Average giving in 2017: $120
  • Regular givers:
  • Average age 47 years old (Generation X cohort)
  • Average giving in 2017: $388.92

Generation X is on deck

Blackbaud Report:  According to the latest Census information there are roughly 65.6 million Gen-Xers in the U.S., and 67.1 million Millennials. That’s a difference of less than two million or two per cent difference between the generations.

The more meaningful difference is one of life stage. Gen-Xers are approaching what have always been prime giving years.

Australian Census Information: There are 4.8 million Gen-Xers in Australia. The nearest generation by size is Millennials at 4.9 million followed by Baby Boomers at 4.1 million.

That’s a fairly even split, but as the Blackbaud report suggest, the more meaningful difference is of life stage.

The first of the Gen Xers has quietly turned 50 years old. This is the generation for fundraisers to watch as at about age 55 people start to become more reliably charitable because they’ve got some extra money.

There are plenty of younger donors. But …

Roughly, millennials contributed 14% of all money donated over the last year in the US, and in Australia, they represented 11% of giving.

Historically, most giving has come from people in middle age and older. And that relationship makes sense.

Younger people typically have much lower disposable income than older people and face uncertain employment prospects and high levels of student debt.

In contrast, older donors tend to be more financially secure and more likely to recognise the relationship between giving and their overall wellbeing.

There’s no question the day will come when Millennials are a philanthropic force to be reckoned with. (And we are seeing signs of that in Australia through face-to-face giving). But for now, it’s a long-term investment.

 

Overall recommendations

1. Focus on the generations that matter today. Boomers are still at the top of the pyramid and Gen X is not too far behind. Love the donors you’ve got. And try and find new ones just like them.

2. Treat your donors well (because that’s how you’ll raise more money) Understanding the needs and expectations of your donors has never been more important. If you treat them right, they’ll give you many years of loyal support.

Remember Nana Murphy? She’s the most important donor in the world – but you need to know who your Nana is.

3. Get serious about retention The Blackbaud 2017 Charitable Report shows that first year retention continues to be abysmal – between 25 and 31% depending on how the donor chooses to give. For Australian donors, Pareto’s benchmarking shows fir year retention of new donors ranges on average between 28% to 56%, depending on channel.

With a shrinking donor population and growing uncertainty about the stability of primary donation channels like direct mail, this is the time to get serious about keeping the donors you have.

4. Get your house in order Evidence is growing that internal organisational issues –  including unsupportive culture, silos, lack of resources, access to actionable data, and other factors  – are having a significant impact on fundraising effectiveness.

Ignoring internal issues is not a luxury any organisation can afford.

5. Commit to testing You know that thing you tried a few years ago that bombed? Maybe try it again. How donors behave changes all the time. Plus, don’t assume past tactics will continue to work.

6. Listen to your donors Relationship fundraising is a two-way street. And fundraising will increasingly be focused on personal connection. While technology will be used as an aid, the fundamental principles of a strong relationship won’t change.

Why would a donor give to your charity?

People don’t give to the most urgent needs, according to the Centre for Charitable Giving and Philanthropy in the UK.

The ‘How Donors Choose Charities’ survey reveals four key influencing criteria:

  1.        1. A donor’s personal tastes and preferences
  2.        2. The impact of their background
  3.        3. Their view of charities’ competence
  4.        4. Their assessment of how they can achieve the greatest personal impact.

Donors’ personal tastes and preferences

It’s easy to assume that people donate because they’re moved by the needs of others and want to help.

But as the study discovered, choices are largely driven by the donor’s own inclinations and preferences, a desire to help people they feel some affinity with, and a partiality for certain causes as a result of personal experiences.

In short, much charitable giving is taste-driven, rather than needs-driven:

“I would support deserving dogs but I wouldn’t support cats because I just happen to not like cats. It’s as silly and as simple as that.”

“I donate to the RSPB (Royal Society for the Protection of Birds) because bird-watching is one of my great obsessions. It’s my, kind of, my treat to myself, if you like.”

The impact of donors’ backgrounds

Our present-day choices are also shaped by earlier life experiences, which can be reflected in future giving patterns. For example, one survey respondent said that he supports a butterfly conservation charity because:

“When I was a boy I collected butterflies and I’m trying to give back, if you like, the damage that I did, so to speak. In those days you were encouraged to kill butterflies and collect them, so that’s an important one.”

People also draw on their own life experiences to create what have been called ‘philanthropic autobiographies’. Donors give to causes they feel some connection to, or affinity with, as a result of experience and incidents in their own lives.

“I grew up by the sea so I support the RNLI (Royal National Lifeboat Association).”

“I have a child and very first thing I started off doing was child sponsorship.”

Donors views of charities’ competence

There is general consensus that charity competence, as demonstrated in the efficient use of money, is highly attractive and likely to prompt greater donations:

“Where we’re more confident that the money is genuinely going in full to the right place, we’re more inclined to give more money.”

“If I’m going to be giving away some money, it’s like buying things in a shop, I want to be sure I’m getting good value for it, as it were.”

However, respondents also noted that given the difficulty in obtaining and understanding information on charities general competence, common proxies for assessing competence include the frequency and estimated cost of charity mailings.

Donors’ desire to have a personal impact

A concern for personal impact is a key factor behind making a donation. And donors care about impact for different reasons based on their passions, preferences and personal experiences.

Security:

“I probably have gone for major charities because I feel they have more clout.”

Impact:

“I gave to a very small charity because it means a huge lot to give them even $100.”

Future-proofing:

‘I sail quite a lot. I’ve never had to be rescued but I give the Lifeboats some money every year, being like an insurance policy.’

Gratitude:

“My dad died unexpectedly, and mountain rescue was involved in him being brought down from the mountain, so I’ve given quite often to mountain rescue.’

So, how do you encourage a donor to give to you?

If we truly embrace the fact that:

  • donors will support what they like, what they know and what they care about, and that
  • it’s more important in the donor’s eyes than what a charity does, who it helps and how urgent it is …

… then it could help fundraisers to be more upfront in matching donors’ tastes with causes that need their support.

Click here to read the full report ‘How Donors Choose Charities’.

Understanding Donor Motivation is also the key to creating Donor Journeys that reduce donor attrition. Contact Pareto if you want help in understanding your donor motivations and using emotional insights to map your donor journeys for improved donor retention.

Are you asking “why” enough?

We’d all love to think that there will always be enough fundraising income to go around. But we know the number of donors is finite and they only have so many dollars to spend and so many gifts they can make.

And as Pareto Benchmarking 2018 shows, your donors aren’t just yours anymore – they’re giving to multiple charities:

Cash donors give to, on average, four charities

Regular givers give to, on average, two charities.

Your biggest asset is your database. But because your donors give to other organisations, your database insight is shared by other charities.

If you want to take your fundraising to the next level and gain an advantage over other charities who are also chasing your donor’s dollar, it’s good to ask your donors ‘why?’:

Why do your donors support you and what do they need from you?

By knowing who your donor is and why they are connected to your organisation, you’ll have the unique data insight you need to offer more personalised, relevant and useful communications – giving your donors greater value and a stronger connection to your charity.

Real fundraising gold is in donor-revealed content

Research is an essential part of thoughtful fundraising and good asking. And today it’s no longer just about the traditional RFM modelling (recency, frequency, monetary).

That’s not to say that transactional data is out-of-date. It’s predictive and it’s valuable. There’s no doubt that a donor who has given before is most likely to give again.

But what RFM alone doesn’t tell you is why that donor gave and the different reasons why two other donors gave.

That’s why, in today’s competitive environment, every aspect of your donor identity should also be considered:

What are your donors’ likes, dislikes, preferences, expectations, passions, motivations, characteristics, demographics and history?

Effective fundraising is about exploring segmentation based on both predictive modelling and donor identity /preference data. It’s a balance between quantitative and qualitative data points.

And just as RFM modelling is an ongoing program, good donor identity research isn’t limited to what you find out in the beginning of the donor relationship.

In life every moment passes … a medical crisis is forgotten, children leave school, retirement happens … and every day newer, more exciting charitable causes come to the fore.

So, as donors and their circumstances change … so research can continue throughout your donor stewardship process.

It’s a research investment

Setting up a donor identity/preference data capture program requires a modest amount of database preparation and an infrastructure to securely capture and transmit the data provided.

While research can be undertaken in many ways, the programs you use and the information you gather will depend on the size and budget of your charity. And your ability to use that information in your donor communications.

The set-up and ongoing maintenance is an investment. But it’s worth it. Knowing who you donors are and why they give to you helps to bind them to their favourite charity – yours – and your investment should pay off time and time again.

Find out how you can use your donor preference data to make your fundraising programs fly. Contact canyouhelp@paretofundraising.com

The numbers behind great storytelling

We all love a good story. We’re wired that way. We think in narratives all day long, whether we’re buying groceries or making a presentation at work.

That’s why it’s so important for your charity to think in stories. At its simplest, non-profit storytelling is about making your donors feel connected to something bigger than themselves.

In the commercial world, modern-day storytelling is often associated with the popular TED conference series and its slogan of ‘Ideas Worth Spreading’.

Analysis of the most popular 500 TED Talk presentations found that stories made up at least 65% of their content. TED Talks have proven to be a powerful delivery mechanism for sharing insights and ideas in a way that is memorable, persuasive, and engaging:

No matter how far technology platforms for delivering content progress in the next few years, people will still be drawn to the same fundamental things. We’re drawn to narratives and stories that make us feel fundamentally human.

And no matter what fundraising or marketing methods that may come and go, thousands of years of recorded history indicate that stories are here to stay.

This month we’re reading

A love letter to Warren Buffet from Melinda Gates

Every year, Bill and Melinda Gates write an annual letter to update everyone involved on the work of The Gates Foundation.

Their 2017 Annual Letter – released on Valentine’s Day – is a love letter to Warren Buffet, who in 2006, donated the bulk of his fortune to their foundation to fight disease and reduce inequity.

The 2017 Annual Gates Foundation Letter contains several important statistics, but it’s the story behind the statistics that makes it a compelling read.

The letter opens with their favourite number – 122 million:

“If we could show you only one number that proves how life has changed for the poorest, it would be 122 million – the number of children’s lives saved since 1990.

“Every September, the UN announces the number of children under five who died the previous year. Every year, this number breaks my heart and gives me hope.

It’s tragic that so many children are dying, but every year more children live.”

The letter ends with the most magical number they know – zero:

“This is the number we’re striving for every day at the foundation.

Zero malaria. Zero TB. Zero HIV. Zero malnutrition. Zero preventable deaths.

Zero difference between the health of a poor kid and every other kid.

“Polio is closest to reaching this number. Polio will soon be history. In our lifetimes, malaria will end. No one will die from AIDS. Few people will get TB.

Children everywhere will be well nourished.

“We can’t put a date on these events, and we don’t’ know the sequence,

but we’re confident of one thing: the future will surprise the pessimists.”

Throughout the letter are the stories of programs and individual people that have been helped – shared via the written story, photos and videos. And the inclusion of Melinda and Bill’s handwritten notes in the margins of the letter give this report a real authenticity.

From the foundation’s mission to vaccinate all children, reduce newborn mortality, end malnutrition and provide family planning, the letter cleverly translates big numbers to the stories of people and places.

This is data storytelling at its absolute finest. It’s from Melinda Gates, who as Bill says, “is a great storyteller” and who truly knows how to bring you the story behind the numbers. Click here to read the letter.