7 Ideas to Rev Up New Donor Acquisition

Chad Lucier
Chad Lucier
Vice President, Account Services

New donor acquisition ain’t what it used to be.

While it’s a road that continues to be traveled by most nonprofits, it’s filled with more bumps and potholes than ever, as evidenced by the Blackbaud donorCentrics Index:


blackbaud-chart

There is some positive news: nearly ½ of all organizations realized a positive change in 2016 and the median decline was only -1.2%.

Regardless of whether you’re in the 51% on the decline or in the lucky 49%, here are a few ideas that might help rev up your new donor acquisition program:

1.    Invest in paid search

The Chronicle of Philanthropy ran an article several years ago that has always stuck with me.

It stated that four out of every five donors research an organization before donating. I imagine this is even truer for new donors than existing donors. This means that optimizing your Google grants and paid search investments will ensure that your prospective donors not only find you, but that they get the message you want.

More importantly, a good paid search strategy is critical to capitalize on the awareness and intent being created by all of your on-line and off-line efforts.

If you want to read more about digital acquisition, check out Jeff Ostiguy’s blog post.

2.    Consider insert media

Insert media utilizes 3rd party companies and publications to distribute your offer directly to individuals. This can take the form of anything from statement stuffers to catalog bind-ins to newspaper inserts.

Insert media has one distinct advantage over direct mail. Because there is no postage or addressing involved, the cost to produce and distribute insert media is significantly less than direct mail. As a result of those low costs, you can reach a much larger audience and deliver a significant number of impressions.

Although response is significantly lower than direct mail, those cost savings can result in a similar upfront CPDR and by all indications life time value is just as strong. For one client we’ve seen a 20% improvement in the CPDR.

If you’ve maxed out your direct mail acquisition efforts, insert media may provide the incremental gains needed to get back on the path to growth.

3.    Use back-end premiums to boost response

Back-end premiums are growing in popularity; most insert media packages utilize them, many DRTV spots offer one for becoming a monthly donor and Peer-to-Peer campaigns are using water bottles, fleece jackets and the like to promote higher gift levels.

More organizations are using them in the mail to effectively increase response rates, and in some cases average gift size.

In three separate client tests, back-end premiums drove significant improvements. Response rates increased by a minimum of 20% and average gift improved by as much as 25%.

If you haven’t tested a back-end premium in the mail, maybe it’s time. I also recommend testing the price point right out of the gate since it can greatly influence both response and average gift.

4.    Consider front-end premiums, too

Hate them all you want. But there’s a reason a majority of organizations use them: they drive response. In many cases those address labels or note cards will increase the number of donors at both ends of the giving spectrum.

Below is one recent example of where a premium was tested against a non-premium and resulted in more new donors at all gift levels.

Compared to the non-premium, the premium generated:

70% increase in $15+ gifts
49% increase in $25+ gifts
10% increase in $50+ gifts

The average gift was $28 for the non-premium and $21 for the premium, which as you can see, can be very misleading. A gift distribution is critical to understanding the value of your premium based acquisition package.

If you aren’t using front-end premiums, they are worth another look.

5.    Use non-premiums for higher value donors

A non-premium based acquisition package won’t increase the number of new donors at the same rate as premium packages. But package costs are low and lifetime value is high so there are plenty of reasons to incorporate non-premiums into your new donor strategy.

To get the most out of your non-premium strategy, make sure you reinvest those cost savings.

While costs vary widely, many non-premium packages cost $100/M less than a premium-based package.

If you are mailing five million non-premium packages, that is $500,000 that you can reinvest in either increased volume or one of the other strategies noted above. By doing so you may actually reap the benefits of both a larger and more valuable donor universe.

Like a balanced portfolio of stocks and bonds, a combination of premium and non-premium acquired donors will typically yield the best balance between growth and value.

6.    Retarget website visitors

Most organizations are retargeting their website visitors with banner ads … but how many are retargeting those visitors with direct mail appeals?

By all accounts, retailers and other commercial organizations are successfully using direct mail to convert web site visitors to customers. This usually takes the form of a postcard featuring a product that you browsed online. While application and execution may be different for non-profits, it is an exciting opportunity nonetheless.

Although this is fairly new to the non-profit space, the potential exists to convert a number of returning visitors or donation page abandoners into donors. This could be especially meaningful for organizations with significant web traffic.

At the very least, this is a new way to target a warm prospect universe.

Which brings us to…

7.    Don’t neglect warm prospects

The path to growth isn’t always through new donors. Sometimes it is more productive to mine the event names or memorial donors that are on your own database than it is to acquire a new donor.

The trick is in identifying the ones most likely to respond. For some ideas on the matter, I encourage you to read Brian Murphy’s recent post about uncovering the buried treasure in your database.

What did I miss? Please share your thoughts and ideas about how to rev up your acquisition program by clicking here.

Tax Reform and You. What Does It All Mean?

Eric Johnson
Eric Johnson
Vice President, Business Development

With President Trump unveiling his tax reform plan in recent days, we’re left wondering what it all might mean for donors and those that do the noble work of fundraising to help others.

In short, we don’t really know quite yet.

We do know that the once-feared reduction in the charitable tax deduction is not part of the President’s proposal. At least for now. And that’s a good thing.

Or is it?

The Trump plan holds the charitable deduction as-is, but looks to double the standard deduction. This change might actually reduce the number of Americans that need to itemize the charitable tax deduction.

If fewer Americans itemize the charitable tax deduction will they actually give less? Tim Delaney, president and CEO of the National Council of Nonprofits seems to think so and was quoted as saying, “Pronouncements of keeping the existing tax deduction for charitable giving create the impression that the status quo would remain, but proposals to double the standard deduction would effectively eliminate the tax incentive for millions of individuals and couples to give to support the work of charitable nonprofits in cities, towns, and rural areas across the country.”

The President’s statement was released on Wednesday, April 26th and has been described as “skeletal” and “a single page filled with bullet points.” In other words, there are plenty of holes and questions outstanding.

As the details of the President’s tax plan become clearer, so will the potential impact on your donors and their financial support. Until then, we recommend these articles for perspective and opinion:

New York Timeshttps://nyti.ms/2plNwHw

The NonProfit Timeshttp://www.thenonprofittimes.com/news-articles/initial-tax-proposal-leaves-charitable-deduction-alone/

Forbeshttps://www.forbes.com/sites/ashleaebeling/2017/04/26/trump-tax-reform-save-for-charities-is-illusory/#7094dfda7888

Beyond the obvious of keeping close tabs on potential changes, nonprofits must strive to be highly-relevant to their constituencies. This will help ensure that contributions won’t decline, even if the tax plan impacts the charitable deduction directly or indirectly.

While THD doesn’t have a crystal ball, we know using data, being nimble and responding swiftly ensures organizations continue to deliver on their missions when donors are faced with issues like tax reform.

To weigh in on this important topic click here.

Is there buried treasure in your database?

Brian Murphy

An interview with Brian Murphy, Senior Vice President, Marketing Analytics & Technology

Q: Brian, acquisition is getting more expensive by the day. And as many as 70% or more of new donors won’t ever give a second gift. But what are the alternatives?

A: Well, a number of nonprofits own an asset that isn’t being utilized to its fullest: their database. There can be hidden treasure in a database – names that have been acquired and paid for but for all intents and purposes are buried.

treasure

Q: What kinds of treasure are we talking about?

A: Untapped revenue sources.

One of the largest sources may be donors who have been lapsed for a decade or more. But they could also include event participants and donors, advocates, and people who were engaged in other types of peer-to-peer programs.

We’ve found that if we approach these audiences a little more creatively, they can be cost-effective alternatives to acquisition in many cases.

Q: You say that you’ve been able to reactivate donors who’ve been lapsed for 10 years or more? How?

A: It’s hard to reactivate long lapsed donors when you’re using RFM, which treats everyone within a segment the same way. But a number of nonprofits have experienced great results through modeling at the individual level.

Q: How about modeling for lower dollar donor records? Those that have given before, but gave a small gift.

A: I’m glad you asked about that and you’re right. While the “M” in RFM – monetary – is really important, a well-built model looks well beyond the amount of a previous gift and identifies donors with both the ability to give again and give at a higher level.

Q: What can modeling do that RFM can’t?

A: To give you an example, THD’s lapsed reactivation model leverages thousands of data points – psychographic, behavioral, transactional, engagement, motivations, preferences and far too many more to name – to pinpoint with surgical precision the lapsed donors most likely to renew their support.

To continue the buried treasure analogy, it’s the difference between sweeping the ocean floor with a net or using the most sophisticated radar technology available. With the technology, you have the equipment you need to find exactly what you’re looking for.

Q: Beyond long lapsed and low dollar donors, where else have you seen success?

A: Over the last few years, we’ve also seen a dramatic fall off in nonprofit peer-to-peer programs like Family and Friends Drives and Neighbor-to-Neighbor Campaigns. This is another area where modeling can make a huge difference. We can model participants as well as donors.

Q: The same basic principle applies to event names as well, correct?

A: That’s right. And for nonprofits who do a great deal of advocacy, those names could be another source of untapped revenue.

Q: Isn’t modeling costly?

A: I think there is a real misconception about the cost of modeling. Many modeling vendors, including THD, will build a model and execute a test to measure model performance at little expense to the client. Test costs are typically much lower than other alternatives – for example developing and testing a new creative package. And the risk is very low because you only need a test panel with enough volume to get a statistically valid read.

But the exciting element of modeling for me is the immense VALUE it is driving for our clients’ programs. The return on investment (ROI) is usually very high.

Q: So you consider modeling a low risk and high value method of mining your database for “buried treasure.”

A: I couldn’t have said it better myself.

To continue this conversation with the team at THD, click here.

Show Your Donors the Love

henry-youngman-quote
Hey!

You spent a lot of money acquiring those donors! And they’ve already shown you that they care.

So this Valentine’s Day, make a commitment to spend more time telling your donors, advocates, and all your constituents how much you love and adore them.

Here are a few simple yet effective ways to show them the love:

  • Thank them. The president of one nonprofit that we know takes time every, single day to make phone calls thanking donors for their support. It inspires him to speak to real live donors, and it makes each donor feel special.
  • Thank them FAST. When you order an item online, you want it delivered right away. Amazon Prime members pay $99 a year for that privilege. Responding immediately is a critical way to cement the goodwill that comes from making a gift.
  • Report back. No one wants to see their funds go into a black hole. Report back to your donors on how their money was spent and all the good it did.
  • Don’t always ask for money. Donors are not ATMs. Sometimes, they just need to know that you’re thinking of them as human beings. Send a card congratulating them on their anniversary as a supporter. Give them a poem that one of your clients has written. Show them a picture of someone they’ve helped.
  • Tell them what their donation means. Every donation is a choice – and often, a sacrifice. Let your donors know that you appreciate and value every dollar they send.
  • Remind them how it feels to give. Scientific research supports the fact that people get an endorphin rush from helping others. It can’t hurt to remind donors that giving actually feels good even while it does good.

When you express your appreciation to your donors, you get loyalty in return. So don’t hesitate to tell your donors how much they are valued, Valentine’s Day and every day of the year.

To continue this conversation with the team at THD, click here.

It’s Not Political: How World Events Impact Fundraising

Jay Denison
Jay Denison
Executive Vice President
Founding Partner

It was April, 1980.

I was a young, enthusiastic account manager responsible for a new member acquisition program for a Zoological Society on the eastern seaboard.

We had a solid, proven list plan. A tried and true offer. Flawless execution.

The mailing arrived in home as scheduled on April 24, 1980 – the same day when a bold attempt to rescue 52 American hostages held in Iran ended in disaster. And our membership campaign resulted in less than 10% of our goal.

That was the day I learned that national and international events can hijack even the best laid fundraising plans.

Predicting revenue in an unpredictable world
Despite our methodical approach to budgeting and projections, the world around us simply refuses to be predictable. And that can throw all our finely tuned revenue targets out of whack.

When the Dow slumps over 1,300 points in a month’s time as it did between December, 2015 and January, 2016, fundraisers feel the pain. When the airwaves are held captive by a contentious presidential election, our donors can get distracted.

The best strategy, the best creative and the best execution can be significantly impacted by external events. All too often, many of us as fundraisers forget that we do not operate in a bubble.

The outside world does have an impact – positive and negative – on the great work we all do together.

How can fundraisers protect themselves?
We’ve seen good times and we’ve seen bad times. And while we understand that you can’t control external factors, you can mitigate them. Here are a few suggestions:

  • Keep senior management apprised of the trends, both when they’re in your favor – and when they’re not. Be prepared to deliver a modified message. Take advantage of the digital channel that allows for a more nimble reaction to external conditions.
  • Don’t overreact when times are tough. Many organizations significantly cut back on investment programs during an economic downturn. Those decisions have a long-term impact that can be difficult to reverse. Understand your numbers and the potential impact of investment decisions made today on the future. Those that stayed the course during difficult economic times are reaping the benefits today with a healthy donor file that is delivering increased revenue.
  • Capitalize on opportunities. The most successful groups know that when the wind is at your back it is the best time to be even more aggressive. Results may be up, but that doesn’t mean that this is the time to cut back. Keep pushing, keep growing, continue to innovate and don’t let up.
  • Be agile and prepare to change course. You may not be able to plan for all external factors or events, but you can have an understanding of what levers may need to be pulled or pushed on relatively short notice.

This past year has been filled with surprises – some pleasant, some less pleasant. The outcome of the presidential election and its impact on our efforts to fund important missions is yet to be seen.

It may be a boon, it may not, but the better prepared we are for any eventuality, the better equipped our fundraising programs will be for the year ahead.

To continue this conversation with the team at THD, click here.

Five Phrases That Can Stifle Creativity

Sherri Mayer
Sherri Mayer
Senior Vice President
Creative Services

In case you haven’t noticed, creative people are sensitive souls. (Aren’t we all?)

You’d think we’d be used to having our work critiqued. And yet, we never seem to develop a thick skin. We wear our feelings on our sleeves, pour our hearts into what we do, and go into every creative presentation with high hopes.

creative-circle

And when you comment on what we’ve so painstakingly labored over, we take it personally.

Wonka

Sometimes, it can be frustrating to know just what to say to help your creative team deliver what you need them to deliver. I should know… I’m both a creative type and a manager of an entire department of creative types.

But here’s the thing: you don’t have to walk on eggshells. You can be honest and forthright. At the same time, there are a few phrases that can stifle a writer or designer’s ability to give you their best work. They are:

I’m not wild about it
It’s perfectly fine that you don’t care for what we presented. (Well, actually it hurts our feelings a little bit. So it might be good to start with what you DID like then get to what you didn’t.)

But as you know, we delivered what we thought was our best work. So help us understand exactly what it is that is bothering you. It’s o.k. if you don’t have the language to describe it… we can help there as well.

In order to fix what’s wrong, we need direction from you.

I want something out of the box

outside-the-box

I’ve been a creative director for more than a decade and a copywriter for 30 years, and I still don’t know what that means.

It can’t be that we’re not supposed to consider budget, the donor, or all the many creative constraints put upon us by format and medium.

There’s always a box. And we can always be creative within it.

Here’s how I want it done
According to an article entitled “How to Kill Creativity” from the Harvard Business Review,

Creativity thrives when managers let people decide
how to climb a mountain; they needn’t, however,
let employees choose which one.

Of course, creative people need structure. We know that there are constraints. But we can’t let those dampen our passion for the job or our ability to be creative.

Telling a creative person exactly HOW to be creative actually diminishes their enthusiasm.

Back in the day when I used to teach business writing to non-writer types, the first thing I would tell my students is simply to write. Just write and keep writing. Don’t edit, don’t hold back, don’t think of all the things you can and cannot say.

Because all those limitations will prevent you from finding inspiration.

So let your creative folk find their own path to a solution. We can always edit it later.

We tried that once

innovate

Perhaps we did. But…

  • Was the timing optimal?
  • Was the creative excellent?
  • Was it executed well?
  • Has the marketplace changed?
  • Has our constituency changed?
  • Has the economy changed?

According to Founders and Funders, James Dyson created 5,126 prototypes of his vacuum cleaner before succeeding. Steven Spielberg was rejected by famed USC Film School three times. Even the founder of Pandora approached investors 300 times before he got funded.

There are so many factors that go into the success of a direct marketing effort that if an idea and strategy are really solid, they’re going to naturally rise to the top. So even if it’s been tried – and failed – it may be worth looking at again.

They won’t go for it
I’ve been surprised again and again what people will say “yes” to if the strategy and the execution are on target.

Sometimes, it’s even good to show something that is, perhaps, a little left of center. It proves that you and your team are not letting roadblocks stand in the way of innovation and creativity.

So what CAN you do to inspire your creative team?

Who's awesome?

  • Ask us why. If your creative team is as good as they say they are, they can tell you why an execution hits the mark. And it should always come down to strategy.
  • Say “thank you.” We all need props from time to time. It feels good to know that our efforts are recognized.
  • Be specific but encouraging in your critique. Help us understand what isn’t working for you. Then engage us in coming up with a solution. That way, we’ll approach the revision process with energy and enthusiasm.
  • The bottom line? We put a lot of love into what we do. It means that we may be a little sensitive. But that’s precisely what makes our creative work stand out… and often, outstanding.

We hope this helps! If you have questions, comments, or other things you’d like us to discuss in Straight Talk, send us a note.

Taking the Guesswork Out of Digital Acquisition

Jeff Ostiguy
VP, Digital Marketing

Let’s play a little fundraising word association.

When I say, predictable, reliable, formulaic, you think?

Digital, right?

Of course you don’t. You think time-tested direct mail.

When I say digital you probably think, costly, unproven.

Well…
erroneous
It’s true that we don’t have the same kind of return models developed for digital just yet but that doesn’t mean that you can’t go into a digital campaign without a set of expectations for your return on investment. The key is setting the right expectations.

More on that to come, but before we get to how… let’s talk a little about why investing in digital is important.

First and foremost, the digital fundraising landscape is shifting – constantly. Email is a mature channel and other platforms are starting to play increasingly important roles.

In M&R’s wonderful 2016 annual report they pointed out that email attributable revenue was up across the board some 25%, but most email engagement metrics (open, clicks CTR, etc.) are in fact, down.

How is this possible?

It’s simple really. There are more organizations competing for share of mind and share of wallet through more channels than ever before. Realistically, you can’t be everywhere of course, but you have to acknowledge that the path to conversion is not linear. Instead, people bounce back and forth between channels, looking for more than a picture and a call to action. They have high expectations for the organizations they support and the opinions of their peers shared and consumed through social platforms has tremendous sway.

Now, we could easily veer off into a conversation about content (I see a future Straight Talk post about content strategy), but for now, let’s put that aside as table stakes and focus more on how to be in the right place at the right time and feel good about your investment.

6x-graphic

Six times.

That’s what the top 25 organizations in M&R’s report spend on digital per dollar raised online – $.12 to $.02.

Is all of that money raised directly from response to a display ad, or paid social post? No, not even close. But, those strategies – as well as your mail program – are having a direct impact on the performance of your email efforts by surrounding the donor as well as driving new donors and prospects into the pipeline for you to cultivate.

Quick aside, are you measuring site
traffic and organic gift trends around the time
a mail piece lands in mail boxes or
when an email deploys?

We are all getting better at our email programs. Segmentation is better, design is better, we’re learning the right cadence and messaging approaches to maximize the return from our best and most responsive donors.

But, those same donors are being bombarded with messages across channels. This bombardment isn’t just coming from other organizations. Your donors are no doubt receiving other communications from you as well and they don’t distinguish a newsletter, from an advocacy request, from an appeal. As this happens, your emails may start to get “tuned out” by an increasingly large percentage of your database. So, while you might be seeing solid returns from email in your current program, there are warning signs you should be paying attention to.

Is your active digital donor file getting smaller? Better retention and increasing average gifts are great, but they could be masking a bigger issue.

Have you noticed emails going to spam when they weren’t before? Are your open rates declining? These are symptoms of issues related to your sender reputation and if you keep sending to an increasingly disengaged donor, lapsed donor or prospect universe this could become a HUGE problem.

Bottom line, you have to diversify your channel approach and you must keep acquiring.

free-lunch

I love this cartoon. It’s such a great representation of where we are now.

Email isn’t “free”, but it’s a low cost way to reach younger, high value donors, and we are all really good at it, right?

Social is a fantastic “free” platform to tell everyone about the incredible work we’re doing and better still, our followers will tell everyone how amazing we are…FREE.

Right?

sad-trombone

(wah-wah)

Nope.

The best email programs are those that are reinforcing the messaging of a multi-channel strategy and are written and delivered strategically to convert.

“Free” social no longer exists. The audience that sees your organic posts is getting smaller and smaller.

Google is making it harder and harder for an org to get into an inbox at all, let alone the “primary” folder. If you haven’t already, do a little research into the number of people on your file with Gmail accounts and how many of those people are never seeing your message.

They have also sunset Google Grants Pro and we can expect more changes to Grants in the future.

great-expectations

Ok, so we have discussed the whats, the whys, the challenges and the realities.

One absolute reality is that investing in digital is not just a critical part of your future, but a huge opportunity in the present. With so many options, many of them fairly low cost, take advantage of digital’s unique ability to allow you to test and learn – not just tactics and vendors, but messaging and creative.

Everybody loves a good list, so here are the top 8 things to consider as you gear up to invest in digital.

  1. Have An Attribution Model. No one clicks on banner ads, and if they do, it’s probably on a mobile device and it’s probably an accident. Odds are, the vast majority of the response will come from people who saw the ad, not those who clicked on it. There is no standard industry practice for view through conversion attribution. Some apply a blanket 20%, but we don’t find that to be appropriate. It’s more than fair to give significantly more credit to someone who converts within a day of seeing your ad…or an hour. 2, 3, 4 days, that’s where a 20% attribution is more fair, particularly if you account for other things in the market. Once you get outside of a week, you can think about giving that revenue back or attributing a much smaller %.
  2. Be Fair. Do you make money on direct mail acquisition? With the rare exception, we know the answer is no. So don’t expect to do so in digital. If anything, you’ll lose less money in digital and you will have significantly greater ability to adapt and test into what works. Not to mention the fact that we know that the donors you do acquire through digital are more valuable.
  3. Re: Google. Google is not so much a problem as it is a challenge that we have to acknowledge and accept. Like social, Google is increasingly becoming a pay-to-play platform. Google Grants is great, but limited. The $2 bid cap lets you keep the lights on from a discoverability standpoint but severely limits your ability to get aggressive on donor-centric terms or execute strategic conquesting. The same applies to social. To move the needle, you have to target your message and to target your message, you have to invest.
  4. Paid Search Matters… A Lot. See above. Search indicates intent. Get to the top of the consideration set if someone is signaling intent. Grants won’t get you there in competitive environments. Optimize your campaign mix between paid and Grants and a small paid investment can go a long way.
  5. Pay For Performance. If you want predictability, there are plenty of CPA based lead and donor gen opportunities that give you the ability to set your budget and get a return that you are comfortable investing in.
  6. Think Incrementally. Far too often, the answer to “how do we pay for digital acquisition?” is to move budget from another program. We get it, budgets are limited, but push for incremental funding for this work. Don’t rob Peter to pay Paul as they say. The best performing programs let channels support each other, don’t ask one to fund the other.
  7. Be ready. Once you acquire a lead or a donor, remember that the work doesn’t end there. If you bring someone on through a particular tactic or partner, be sure to a) onboard them deliberately and thoughtfully, don’t just drop them into the ongoing stream of appeals and b) have the infrastructure in place to measure their performance over time. This data will be critical in informing future investments.

That’s it. Easy right?

I’ll leave you with one final thought, #8.

Don’t. Stop.

The six most dangerous words in digital?

“We tried that, it didn’t work.”

It’s true, sometimes it won’t work, but you have to keep testing, keep learning and finding the right mix of tactics and partners for your audience.

We hope this helps!  Questions, comments, or other things you’d like us to discuss in Straight Talk, send us a note.

Your Best Planned Gift Pipeline… is Your Database

Jess Hutchins
Director, Donor Advancement

Did you see the recent headline about the $4 million dollar bequest from a janitor? As a former Planned Gift Officer, I see these stories all the time. Where do these donors come from, and how can I find them? Those questions would often pop into my head.

I was delighted to hear just such a story from a client last week. A multi-million dollar bequest they knew nothing about – good for them!

Here’s what we learned when we dug into the donor’s history:

  • His first gift of $45 was in 2012 in response to a direct mail acquisition package
  • All subsequent gifts were made in response to direct mail appeals
  • Since coming onto the file, this donor made a total of 11 lifetime gifts
  • All his gifts were made in response to direct mailings
  • His largest gift ever was $1,000 (all other gifts between $25 and $54)
  • Last gift was in May, 2014 (we’ll get back to this later)

This gift – and the donor who made it – illustrates why a robust direct response program – and its database – is a critical pipeline for any nonprofit who wants to increase planned giving revenue (and who doesn’t?).

And yet, it’s an opportunity that is being missed, mishandled, and far too often, misunderstood.

“Many of our valued donors who have provided for Mercy Corps in their wills are acquired through donor acquisition direct mail campaigns, including a recent six-figure donation.”

David Rubin
Senior Director of Major Gifts
Mercy Corps

A different mindset
Planned giving professionals often come from different backgrounds than direct response marketers. We know that the organization we work for has a direct mail fundraising program and asks donors for annual gifts – but often we don’t really know who these donors are, how they behave, or that many of them are qualified to be pursued for planned gifts.

What it took me almost ten years to learn is that, in fact, this database is a virtual gold mine for PG prospecting.

Some organizations are going to have millions of records on their database, some will only have thousands. But the process of identifying, communicating, and cultivation remains the same. One of our most successful programs was with a highly respected international humanitarian organization with more than two million active donors.

We’ve included a brief case study of how THD was able to uncover nearly 8,000 PG prospects for cultivation and stewardship in one client’s database… and successfully generate dozens of planned gifts.

But identifying planned giving prospects is just the beginning. Without a clear plan to cultivate, steward, and communicate with them, you’re wasting your time and money.

Where intention and action meet
Most planned gifts are nothing more than good intentions… until the check is in the mail.

Yes there are some cases, such as irrevocable trusts, where you can count on the revenue. But since most gifts are bequests, they can be changed, altered, or withdrawn at any time.

Without continued cultivation and consistent communication, you can lose a percentage of planned gifts BEFORE they are received by your organization.

So reach out to them even if they have already indicated that you’re in their will. Make sure that your organization is top of mind. And continue to keep them active, engaged, and involved.

How to recognize when someone’s ready for a planned gift
There is one excellent marker for a potential planned gift, and it may not be what you expect.

Take another look at the behavior of the donor who left that multi-million dollar gift I mentioned earlier. He gave frequently and he was loyal, both of which matter. But there was one specific behavior that you want to look for.

He had stopped giving more than two years ago.

When loyal donors lapse, it might indicate a lifestyle change (such as moving to a fixed income) that prevents them from making annual gifts. At this point, whatever they give is going to be through their estate.

These are donors who love you and may want to make sizable gifts! But if you’re not watching closely (or having a PG partner do it for you) these prospects will make their gift to someone else.

When it comes to planned giving, matures rule
Beginning this year, the oldest baby boomers will turn 70. Approximately 72 percent of them give to charity – and the majority reside on a database, along with both older and younger donors who are excellent prospects for planned giving.

Show the love to your direct response donors and you will reap planned gifts for years and perhaps even decades to come.

To continue this conversation with our team at THD, click here.

How to Talk So Your Board Will Listen

I know just how challenging it can be to deal with a Board of Directors.

As CEO of THD, a fundraising agency that drives strategy and regularly presents program results, I appreciate that attempting to predict what your Board needs to hear from you can be intimidating and frustrating. The stakes are high, and it’s essential that your program is understood in the best possible light.

At the same time, I bring a unique perspective to this important topic, because I’m also the Chairman of the Board of Boyce Thompson Arboretum, Arizona’s oldest botanical garden. These dual roles provide me with some insights that might be of use in helping you navigate your relationship with your own Board of Directors.

Fundraising is different. Tell your Board why.
Boards are passionate and typically composed of very talented members. But their knowledge of fundraising is often elementary.

A survey by The Agitator (reviewed in an August 10th blog post) revealed that, when asked to “rate your CEO’s understanding of and commitment to effective fundraising,” 23% responded that they were “more of a hindrance than a help.”

But are you helping them?

We already know that many of your Board members (including your CEO) aren’t necessarily fundraisers. One is a high tech entrepreneur, another is an accountant, a third is from a big corporate foundation and so on. They’re all over the map and have little experience in your field.

But one thing they do have is opinions.

It’s logical to assume that they’re going to try to fit their professional experience into fundraising. Unfortunately, the dynamics are often totally different. While they may understand their own customer acquisition numbers, they believe that for nonprofits, people should just magically support the mission. They’re emotionally invested and engaged, and it’s hard for them to understand why their commitment doesn’t necessarily translate to a broad pool of donors who are willing to give.

That’s why you need to proactively educate your Board in order to gain legitimacy.

The only way to do that is to sit down with your Board and explain the data that goes into fundraising. Once they see how the numbers work, it’s no longer a question of opinion, it’s a question of facts.

For example, Board members sometimes put too much stock into the opinions of those outside your organization, like watchdog groups. Sound familiar? Educating the Board should often center on an actual ‘fundraising curriculum;’ a series of lessons on what numbers really matter and which mean a whole lot less.

“The insights shared [by THD] help provide our board a more complete understanding of our fundraising work.”
Lori Seader
Director of Development, The Fresh Air Fund

Context is key.
We’re fortunate that fundraising has entered an era when we can easily give our Board the context they need in order to hear you. A number of organizations like Blackbaud provide excellent quarterly benchmarking so that Boards can receive comparative data in terms of how their program is doing. You have to start with the “industry” and then narrow in on the organization on whose Board they serve because that gives them context.

They need to understand that there are really only four ways in which they can raise unrestricted revenue:

  • Acquire more donors
  • Retain more donors
  • Get them to give more often
  • Encourage them to give a larger gift

And because the marketplace has changed dramatically over the past decade, new ways of measuring progress have been developed.

Show them how much the competition has exploded, what it now costs to acquire a new donor, and what the long-term value of a donor can be. Ground them in the metrics of today’s fundraising landscape so that they can understand the challenges and appreciate them.

Provide them with long term impact.
I cannot emphasize this enough: Most Boards think in terms of your fiscal year when it comes to measuring fundraising performance.

They may not be happy with a 2:1 ROI in this fiscal year, but if we could show over a three year time frame or some longer extended period that we’re actually at a 5:1, 6:1, 7:1, they may be more accepting of today’s ROI.

In addition, if you can provide them with concrete examples of how you turned a $10, $12, $30, $50 gift into a five million dollar planned gift, it can elongate and change the perspective that Board member has on the day-to-day or year-to-year work that’s being done.

Even at a very basic level, they have to understand that finding new donors is an expensive proposition which can only be looked at over the long term. Then, when you turn around and start to look at how your existing donors behave, you’re able to really show that the ROI is actually quite good.

Identify a champion.
It’s always valuable to find someone on the Board who appreciates and values fundraising. It really doesn’t matter where they come from as long as they’re open minded and willing to learn. Then they can serve as your advocate in meetings, helping to lay down the foundation of understanding for the development process and the numerics.

If you can find them quickly, they’re going to be a key asset to you when it comes to helping educate their fellow Board members.

Most Boards have committees where the lion’s share of the work gets done. One of the most important is the Development Committee, which is typically tasked with fundraising oversight.

It’s important that its members get exposed to all facets of your organization’s fundraising programs, and that they be kept informed of progress on a regular basis. They are your conduit to the rest of the Board – along with other key committees such as the Executive and Finance Committees.

Friends, supporters, and advocates on these committees are going to be a key asset to you when it comes to helping educate their fellow Board members.

Be prepared, be bold, be authoritative.
Boards meet infrequently and have demanding agendas. What they value most is someone who will state his or her case simply, get to the point quickly, and be declarative.

Always have your facts straight and always be prepared to answer the question that you know is going to be asked. Don’t overwhelm them with data – be concise.

I can’t tell you how many times I’ve been in Board meetings and the data is too detailed, too granular and simply overwhelming. Sometimes, we think that the more data, the better, but often it’s just the opposite. Lots of data can obscure what you’re trying to say.

And finally, ask for help. You can turn to an agency partner, someone like us, for a helping hand. We are all invested in your success, and will be happy to help arm you with the information you need in order to get your Board’s support.

ian-sig
Ian Thompson
President/CEO, THD

To continue this conversation with the team at THD, click here.

Flat Budgets, High Expectations: The Fundraiser’s Dilemma

We can’t increase your budget [again]

For most of us in fundraising, doing more with less has been the mantra for years.

Even if your budget is flat, your expenses are going up. Paper, postage, people – they all cost more today than they did five years ago. So a “flat” budget actually means a smaller budget.

At the same time, most nonprofits are expecting growth. And you are on the front lines of delivering increased revenue.

Raising more money in a risk averse climate

In his famous (or infamous, depending on your opinion) 2013 TED talk, Dan Pallotta stated that the nonprofit industry’s intensive focus on overhead – fueled by industry watchdogs and public expectations of frugality – squelches innovation and makes risk a four-letter word.

“When you prohibit failure,” he says, “you kill innovation. If you kill innovation in fundraising, you can’t raise more revenue; if you can’t raise more revenue, you can’t grow; and if you can’t grow, you can’t possibly solve large social problems.”

And yet, it’s the circumstances that we face each and every day.

We’d all love to swing for the fences, throw caution to the winds, boldly go where no fundraiser has gone before. But in today’s fundraising environment, we are more often called upon to minimize risk while searching for opportunities to drive greater revenue.

How can we accomplish both? Let us offer up a few solutions.

Offer assignment modeling

As often as not, when it comes to direct mail, many organizations mail everything to everyone and hope for the best. One of our colleagues calls it the “spray and pray” method of fundraising.

But doesn’t it make more sense to mail an offer to a donor based on what he or she really wants, rather than what you want to mail?

Offer assignment modeling allows you to identify exactly which donors will be most responsive to each of the specific packages and offers you already have in your arsenal – premium vs. non-premium, for example – making your mailings more donor-centric and more effective.

Here’s how offer assignment modeling works.

A fictional example

Based on the model’s guidance (and fictional numbers) 2,100,000 pieces of mail were assigned to less expensive Package Q rather than costly Package R.

 

Migration Chart 2

 

The impact? Campaign expenses go down while revenue goes up.

 

A real life example

One of our clients now uses a THD offer assignment model on a regular basis. So far, the use of this modeling tool has reduced campaign expenses by $240,000 which is helping to contribute an additional $529,000 in annualized net revenue to their program.

 

Offer Assignment Modeling Overview for AARP

 

Event conversion modeling

As you know, most event participants are one and done.

They may choose to run a charity marathon once … maybe even twice, even if they’re really passionate … but they’re certainly not going to do it over and over again. The fact is, they’re a whole lot more interested in the marathon than your charity, so they’ll be easily captivated by the next big event or opportunity.

And the kind and generous people who sponsor them?

They’re even further removed from your mission. Your cause is barely on their radar, because they’re giving to the people who asked them.

With conversion modeling, you use all the available data – plus plenty of added enhancements – on this large (and growing) pool of “warm” prospects to identify people that could become long term financial supporters. That way, you’re effectively mining for direct responsiveness within a sea of people that would otherwise never return to your organization any other way.

At the same time, you have the opportunity to suppress those event names that aren’t likely to embrace your mission and become direct response gift-givers.

Another real life example

Below are the results of testing a predictive model to select the most productive individuals for a direct mail solicitation – people who had NEVER responded to a direct mail solicitation.

Prospects for the selection came from a variety of events including an annual walk and other community based events. Based on these test results, the model is now in full roll-out for 10 direct mailings a year.

 

selection model

Production efficiencies

Yes, postage and paper costs are increasing. But if your organization can gain some production efficiencies – say, by ganging your appeals with others for greater printing power – you may be able to reduce your per piece costs.

But … and it’s a big but … production savings are finite.

For one client, we did such a great job finding significant, year-over-year production savings that we were able to actually self-fund program growth.

But at some point, even with all the purchasing power in the world, production savings are not sustainable.

One of the best ways to generate short term revenue is also the worst

There are some solutions that we like to call lobster traps – once you walk into them, the door snaps shut behind you and you can never escape.

Take adding appeals, for example.

It’s an extremely attractive option for generating short term revenue. And if you’re given a Sophie’s choice – cut acquisition or add in another appeal – it’s often the best solution.

But once it’s done it can be very difficult to undo. And if revenue expectations increase every year, where does it end? When your renewal file is receiving mail every other week? Every week? It’s a slippery slope that may impact retention rates over the long term.

Investing in the digital channel

Today, snail mail represents more than half of all total fundraising – and nearly 93% of individual donations. It is, despite reports to the contrary, very much alive.

But it’s sure tougher than it used to be. We all know that it costs significantly more to raise a dollar than it did ten years ago. That the nonprofit market place has increased exponentially.

NPOs

And that some of our most reliable supporters (the Matures, born before 1945) aren’t being replaced by younger direct mail responsive donors.

And then there’s digital.

While the digital channel hasn’t replaced direct mail, and probably won’t for many years, there is no doubt that it has changed the landscape of fundraising and donor engagement.

We know that donors who respond in more than one channel have a higher lifetime value. That’s reason enough to invest. Even better, it develops relationships with donors who are engaged, passionate, and most importantly, under the age of 75.

Most organizations continue to seek out ways to effectively monetize digital media beyond email. There have been a few hugely successful viral campaigns (think Ice Bucket) and influencers such as Ashton Kutcher and One Direction have raised tens of thousands through Twitter campaigns.

But those are one-off opportunities that are difficult, if not impossible, to replicate with intent.

What we do know is that digital can be executed quickly, budget can be controlled, and that testing and learning can be done in real time. That it is the fastest growing fundraising channel since, well, direct mail. And that it is the channel of choice for the next generation.

Stake your claim to revenue

stake your claim

There may be revenues that you are indirectly responsible for, and it’s imperative that you stake your claim to them.

One nonprofit organization just rolled out with unique URLs on all DM packages in order to track revenue directly attributable to mail pieces – and quantified more than a million additional dollars in online revenue.

And that doesn’t even begin to capture the long term value of these multi-channel donors, which is far higher than those who give in one channel only.

Looking at organic online revenue is more complex, but it can be done through analytics. For one client we were able to show that 5-8% of their organic new donors received an acquisition mail piece before going online to make their gift.  And that stat was consistent over a 3 year study. Without the mail, those donors may not have been prompted to consider giving to this charity.

You may also want to look at how many people moved from “mass market” to major giving. Or how many of your planned givers came from the mail. It’s all about showing how your revenue has increased even if it hasn’t contributed to your program’s bottom line.

Flat budgets, high expectations – playing to win

the end

To recap, here are just a few ways that you can deliver increased revenue year over year… even when your budget remains flat.

1. Use modeling to target the right people

2. Look for production efficiencies

3. Add appeals or asks – with great caution

4. Invest in digital with your direct mail savings

5. Ensure that you’ve quantified incremental revenue

 

To continue this conversation with THD Click Here