News & Articles

State of the Donation 2016

As presented by Sean Triner at the FIA Conference 2016

How unity helped power a $1.3 million appeal

Benny appeal 1

Caption: St John New Zealand’s 2015 annual appeal netted $1.3 million, telling the story of a real-life young mum Haylee, who was revived after her heart stopped. The pack included a drawing by her children and husband; and warm, natural images like the one above of Haylee with her daughter Olivia and below, of them thanking paramedics.

St John New Zealand’s Northern Region saw net income triple year-on-year for a 2013 tax appeal that focused on a real patient’s story – a toddler, Benny, who’d been saved from drowning. Behind the campaign (covered in the August/September 2014 issue of F&P) was a new data-led, donor-centric and emotive approach developed in partnership with the consultancy, Pareto Fundraising, showing donors the genuine need they were fulfilling.

The Benny campaign marked a significant leap for St John New Zealand, which provides emergency ambulance and community services. And its success has sparked ongoing transformation.

It has been the catalyst for the 130-year-old organisation’s three regions to adopt one unified and nationally led strategy instead of fundraising separately. Just one sign of the effectiveness of this change is that St John New Zealand raised $2.2 million in total from its 2015 annual appeal – a great achievement anywhere in Australasia.

Sharing the Benny campaign

Following the success of the Northern Region’s new direction, St John New Zealand’s other regions were keen to trial the Benny campaign in their areas. So they tested it at Christmas – in 2013 for the Central Region and 2014 for the South Island.

Each region personalised and localised the content, and weighed up the risks. The results of the Northern Region helped allay concerns about how a more conversational and heartfelt tone of voice would impact public and donor perceptions of the St John brand.

Still, stakeholders – including those responsible for executive leadership and governance – needed information and assurance on the risks involved. This was supported through regular communication between fundraising managers, sharing experiences and talking through stakeholder questions.

Developing a nation-wide fundraising plan

Over 2013 and 2014 the regions collaborated on a national fundraising plan, assisted by Pareto Fundraising, placing donors centre-stage.

This started out as three regional plans and a national plan, aligning where possible. Then last year a single national strategy was created, with the four main stakeholders clarifying the roles and responsibilities for a deeper fundraising program.

Regions drove new strategies and activity, capitalising on their local presence to achieve growth, for example by managing bequestor conversion and stewardship. Meanwhile the national office provided support, governance and critical projects: such as developing an integrated database to centralise data management and analytics; and managing the bequest program’s proposition, promotion and prospecting.

The national strategy also outlined the structure and objectives that now inform regional plans, with goals that include celebrating donors as heroes and embracing them through quality relationships.

Donor communications were increased from four a year to nine, giving people extra opportunities to engage with St John. This necessitated a shift in thinking and raised new questions about donor fatigue, brand risk and sustaining the return on investment.

But Pareto Fundraising could show that organisations which participated in its annual benchmarking project and sent more donor communications, also experienced higher retention rates, more gifts per donor and, in general, stronger income growth. And the consultancy’s analysis revealed that 35% of St John donors were shared with other charities and in some instances were giving them 5%-20% more!

Going beyond appeals

Bequests and major gift strategies were also reviewed. A nation-wide strategy for middle donors (those who gave a single gift of $1000-$5000) was implemented, with one bequest strategy (instead of three) incorporating learnings from each region. The successful regular giving product, ‘Team Green’, was introduced. Unlike cash appeals that raise money for equipment, Team Green’s donors support frontline officers, and specialised communications make their relationship about people and bring them ‘into the team’.

First step to truly national fundraising

St John’s annual appeal in 2014 was the first time the organisation’s new direct mail fundraising strategies and tactics were applied in a simultaneous nation-wide campaign integrating direct mail, e-mail, digital advertising, a dedicated website landing page, social media, TV and radio.

The single call to action was to donate now to “help St John continue saving the lives of New Zealanders like baby Israel”, and the urgent proposition was “power St John by helping buy equipment” – i.e. 12 new ambulances. While insights about donor behaviour meant targeting could be improved, this multi-channel approach increased response rates and the average gift (see Table A).

The 2015 annual appeal built on these gains, as donors had been taken on a planned journey over the previous year. Experiences, timing and topics across the range of services requiring funding were pre-selected for different donor types.

Donors were connected with various beneficiaries, integrating personalisation relevant to their region, donor type (using a segmentation hierarchy that varied by campaign type, e.g. cash/regular giving/donor survey) and relationship history – based on how recently they’d given, how many times and how much.

The power of one

The organisation’s structure, internal engagement, planning and budgets are still being refined. But a single fundraising strategy now delivered both regionally and nationally is encouraging donors to give longer and give more (see Table B). This unity is one key to St John’s ongoing success. Another is continuing to improve how donors are celebrated, embraced and honoured as generous heroes who help resource life-saving work.

Table A: Annual appeal results – warm direct mail

 

  2013 2014 2015
Net income $927,205 $1,182,944 $1,328,172
Response rate 10.2% 11.6% 19.2%
Average gift $46.53 $47.59 $56.53

 

 

Table B: St John New Zealand’s individual giving income

Year 2012/2013 2014/2015
Income from cash and regular giving $7 million $10 million
Second gift rate – cash donor within 12 months 25% 32%
Cash donor annual retention rate 45% 60%

 

Fiona McPhee and Glen Hill

Fiona McPhee is Strategy Director for Pareto Fundraising, helping charities in Australia and New Zealand like St John to develop their individual giving programs. Glen Hill is St John’s new national Head of Fundraising having previously held this role at St John Northern Region.

This article was written by Liz Henderson, Editor at Fundraising and Philanthropy Magazine. First published in the February/ March edition of F&P Magazine.

Announcement from the CEO of Pareto Phone, Bruce Cotton

This announcement is made following an update sent by Rob Edwards, CEO of the FIA. The update was addressing the protection of vulnerable Australians and the role that all telemarketers have to play in this. If you have not received this letter you can view a copy of the CEO Update from FIA here on the Pareto website.

 

Dear Fundraiser

I want to let you know that Pareto Phone have been working closely with the FIA over recent weeks in providing information on our current telemarketing practices as well as our market data on the importance of the channel in helping Australian charities to fundraise in order to fulfil your mission. This is obviously an extremely important issue for all of us and we believe that our current processes, but, perhaps more importantly, Pareto Phone’s management culture is fully aligned to the protection of vulnerable donors and the delivery of high quality donor care.

In our opinion, the start point for avoiding risks in this area is to ensure that smart data suppressions are being applied to all Campaigns, and, at Pareto Phone, this includes our own “do not call” list which we have built-up over previous Campaigns when talking to your supporters and your prospects. As importantly, we focus considerable specialist resource on training and quality monitoring our telefundraisers which includes the recording of all calls. We also recognise that occasionally a call that we make isn’t up to the standards that we set and, so, we assess, record and feedback on the very small number of complaints that we receive so that we can learn from our mistakes and identify any trends or specifics that require action. We believe that these processes are essential to ensuring that we can deliver the best possible standards of donor care for your supporters.

The protection of vulnerable donors goes to the heart of what Pareto Phone believes in and we will continue to engage in this consultative process putting the case forward for the self-regulation of the industry within the existing legal frameworks. We do agree with Rohan Buettel that further legislation and, specifically, the reversal of the DNCR exemption would, indeed, be a sledgehammer to crack a nut.

If Rob’s update or my e-mail raises any questions please don’t hesitate to contact me.

Regards Bruce Cotton CEO, Pareto Phone

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Are Millennials Really Worth Targeting for Fundraising?

We all want younger donors. But is it worth the investment?

Certainly it is for donors around the 40 year old mark – face to face (direct dialogue) has done really well there getting millions of people around that age to give. But what about younger?

The idea that by getting donors in early, we will make them more likely to support us later is not entirely flawed, but just stepping back and thinking about that logically, it breaks down.

Surely it would be easier to get the more valuable donors in NOW, and only go for the long term get ‘em in young when you have got all of the older ones in?

 

I suggest:

1.Look at your current donor database by age, you will likely see a stark correlation between age and every measure of success. Generally older donors tend to:

1. Higher ave donation 2. Higher second gift rate 3. Higher retention (especially in monthly giving) 4. Higher amounts raised (in events) 5. Higher chance of supporting an event again 6. Higher life time value a. Higher chance of putting you in their will 7. And higher chance of realising that sooner 8. Higher chance of becoming a major donor 9. Higher chance of responding to most of your communications

In regular/monthly giving the upwards trend tends to stop going up over 67/70 years old.

In cash / direct mail it doesn’t seem to ever stop going up.

And when you take that line to people below about 40 you begin to see that the Return on Investment over (say) five years is simply not worth the effort.

In other words – older donors are better.

Why?

One theory is that charities are simply not good at marketing to younger people.

I don’t believe this, because thousands of brilliant charities try all the time and fail, and have done for years with tons of ideas.

Maybe it is true – after all, before face to face charities had repeatedly tried and failed. But it seems the effort of finding the magic has wasted far too much charity time and money already.

My theory is a bit more simple, and shared with pretty much every fundraiser who has ever looked at demographic data as well as fundraising data:

The older you get, the more disposable income you have. Then, when you get REALLY old, some peoples disposable income may go down, but the asset in your legacy is still going up.

Should we write off young people then?

Not at all. They like purchasing cheap quick things, like Ice bucket Challenge (IBC).

But note, probably more than 80% of the revenue raised for IBC would have come from just 20% of the participants. And that 20% will be heavily represented by older participants.

In other words, they got loads of young people involved, but most of the actual $ will have come from people over 40 or 45. We see this in all events.

But having 8,000 young people to an event, effectively funded by 2,000 old people could have other benefits – for campaigning for example.

All fundraisers WANT young people to give. They really believe in it! I really wish it was so too! But wishing something were true doesn’t make it true.

In the table below, age of donors – across about 70 charities, where age is known, you can see there are some younger groups. But even within those younger groups (like face to face regular givers, averaging 43 years old) we see all of the points I made above still hold true.

p5

 

The trend for all the other areas looks like that too.  i.e. older DM donors are better, as are older online donors etc.
 
And even in bequests from regular (sustainer/monthly) givers.
p1
The chart below shows that older people communicated with by direct mail, including appeals are more likely to donate (there are more of them) AND they give more after their initial gift than younger ones.
p2

Put simply, an average 75 year old paying by cheque will give over 7x their initial gift in 5 years, but a 35 year old cheque donor (of which there are not many) gives about 4 times as much.  A MASSIVE difference. And for credit cards, it is 7x and 5x, still a BIG difference when you consider how expensive and tight the costs of donor acquisition are.

In major donor giving… older is better.
p3
On Facebook… Successful (fundraising) charities have profiles like this…
p4

The bottom line:

 
There is no measure that I can find anywhere that tells a fundraiser that younger people are a priority over older donors.  The only time we need to go for younger people is after we have:
* Exhausted sources of older donors AND
* Following best practice with donor-centric and frequent communications with them AND
* We have a great mid value donor program AND
* We have a great legacy/bequest program AND * We have established a face to face sustainer/monthly/regular giving program (or can’t for some reason)
Only when we can tick all those boxes should we start mass marketing on a strategic level to younger people.
OR
* Involving younger people is core to your mission.
Sean

Do you want younger donors!?

Everyone does. But if you are a fundraiser, despite everyone on your board and management wanting young donors, you know the facts.

You know that the younger a donor is they less likely they are to upgrade, cross sell, give a major donation, become a bequestor or stay with you.

Does that mean you should ignore them? Well: No. You also know that online giving is growing. You know that face to face is the number one source of regular givers – and their average is just 43.

How do you know?

You just read it here: But don’t take my word for it. Get the data for yourself for free if you register before the 22nd of January, 2016. Join Pareto Benchmarking.

 

Face to face is dying

Your board hate it, the press pick on it and so many lament the attrition rates.

But you know the truth.

Face to face acquisition numbers were up last year.

You know that nearly 83% of all new regular givers come from face to face and there are more than 27 charities growing their income dramatically.

You know attrition rates vary by charity from 36% in year one to 66%. You even know the five year value of a regular giver acquired by face to face is $730 (2008 recruits).

You know that non face to face donors are harder to get – but you know they are worth a lot more when you get them.

How do you know?

You read it here: But don’t take my word for it. Get the data for yourself for free. Join Pareto Benchmarking.

bm infograph

 

Five Key Insights from Pareto Fundraising Benchmarking 2015

 

1. Direct mail acquisition has been transformed and reached a new level

Annual new cash donor acquisition increased from around 250,000-280,000 in the first half of the last decade but leapt up to over 600,000 by 2013.

This new level of donor involvement has been driven by direct mail (especially through the embracing of swaps and premiums). Also non direct mail donors increased from around 100,000 per annum to 200,000 per annum across the decade.

This is great news for bequest and major donor fundraisers too, since the most significant source of bequests (that we have any control over) and people giving over $1000 is cash recruits.

 

New Cash Recruits by Channel_2015

 

2. Really great insights into emergency donor retention

This chart shows the income in the previous twelve months, every month from 2009 to 2014. So, for example the charities in the study raised about $875m in the 12 months to December 2012.

The income leap from January 2009 to February 2009, and the subsequent year is mostly due to emergency donors (bush fire). The huge drop in February 2010 is the fact that these donors were not retained very well.

Compare it to the slow increase in the dark green (2010) income. This reflects new donors coming on board in that year, and the slow decrease in the amount of money they gave in subsequent years due to their natural attrition. There is no steep drop.

 

Rolling 12 month income

 

3.  … And the same chart gives us insights into the long term value of donors

You can see that donors recruited before 2005 (the bottom layer) were giving about $350m in the 12 months to December 2009. Look to the right and they were still giving over $250m in the 12 months to December 2014. Wonderful loyal donors! Great for presenting to board, demonstrating the long term ongoing value of new donors.

Finally, this chart shows, despite that ongoing income, we need to still acquire new donors. If no charities had recruited any donors after 2011, the top three layers (2012,2013,2014) wouldn’t exist. Charities would have raised just $625m instead of over $1bn.

 

4. Age is really important in all aspects of fundraising

3

 

This shows very starkly that older donors tend to give more* than younger donors. You can also see that whilst credit card payers are more likely to become regular givers too (the middle blue colour), cheque donors give more cash.

*The 5Yr Cash Ratio shows the 5 year value of a donor/ group of donors expressed as a ratio of the first gift (calculated as the total given over a 5yr period divided by the first amount)

Even in young people fundraising (face to face) we can see that older donors are more financially valuable to a charity.

 

5

 

5. Face to face still rules the roost on volumes… but has the worst retention

With 300,000 of about 370,000 new regular givers coming from face to face, the channel still rocks, adding more ongoing income to charities than anything else.

It does have the worst retention, but I would rather have 50% of 300,000 (150,000) donors giving in year two than 75% of 70,000 (52,500). Even factoring in costs, face to face makes more net income. Of course, I’d rather have both!

 

BM16_Homepage_Banner

Superb Customer Care: I am Great!

Well, according to Soi Dog Foundation I am – and so are all their other donors.

I got this email (click to enlarge) thanking me for my support; it has a lovely video and great copy.

 
 
And then when I shared it on Facebook, it switched to an involvement device and asked my friends to ‘Click Here To Find Out How I Helped Save Thunder’s Life’.
 
Yes I did it!  Clicking will take you to the letter I received.  At first I thought it was a shame it doesn’t say ‘your friend did this’ and then ask my friend to support them.  But then I forgot how clever Soi Dog are.  I know they will be tracking that cookie and ensuring my friend gets plenty of opportunities to support Soi Dog.
 
 

Great stuff Soi Dog. And you too can see the full text of the letter.  Just Click Here To Find Out How I Helped Save Thunder’s Life.

Sean Triner

Co- Founder

 

Direct mail acquisition has been transformed and reached a new level…

Annual new cash donor acquisition increased from around 250,000-280,000 in the first half of the last decade but leapt up to over 600,000 by 2013.

This new level of donor involvement has been driven by direct mail (especially through the embracing of swaps and premiums). Also non direct mail donors increased from around 100,000 per annum to 200,000 per annum across the decade.

This is great news for bequest and major donor fundraisers too, since the most significant source of bequests (that we have any control over) and people giving over $1000 is cash recruits.

New Cash Recruits by Channel_2015