If It Ain’t Broke, Don’t Fix It

We have all heard the phrase “If it ain’t broke, don’t fix it.” While this may be effective at times, as fundraisers we need to constantly strive to grow revenues and fund the critical missions we serve.

This can mean countless hours trying to improve the weak links within our program – a strategy which can yield mixed results. And with a finite number of hours in a day, we must concentrate our time and energy on addressing the problem areas, right?

Not always.

I’m certainly not going to suggest that you ignore problem areas in your program. But I also strongly encourage you to carve out time to focus on your highest performing audiences and already successful strategies — all with the goal of generating even stronger results.

With advanced analytics and predictive modeling, you now have the tools to accomplish this.

There are lots of case studies that illustrate this point. Today I am going to focus on just one example – the “SuperDupe” strategy (aka “Lapsed Matches”) used by many organizations to identify names for lapsed reactivation campaigns. In short, SuperDupes are lapsed names that match rental and exchange lists within your acquisition program.

Mailing SuperDupes is a successful strategy for many organizations. And with predictive modeling, you can generate even stronger results.

At THD, we consistently see modeled names outperform SuperDupes by a wide margin:

Most Recent Head-to-Head Test

For the client, these results were exciting…and unexpected. Before this test, the organization believed there was no room for performance improvement within the SuperDupe audience in their lapsed campaign.

This is just one example where we have been able to generate substantial gains in client programs by applying advanced analytics and predictive modeling to audiences and strategies that were already high performing and considered very successful.

So when it comes to your fundraising program, I urge you to ignore that catchphrase “If it ain’t broke, don’t fix it” – and look for opportunities within your program that you may not have known existed.

If It Ain't Broke, Don't Fix It

Personally speaking, I have already thrown out that old hat. Will you join me?

For more information or to get in touch, click here.

Honored to Be Honored

On July 23rd, THD and many of our client partners were recognized for creative excellence at the 37th Annual NEDMA Awards in Boston including Best in Show for the Wounded Warrior Project’s “Tangible Giving” Package, aimed at encouraging donors to upgrade giving

Of the 20 awards received, work for seven different client organizations was recognized with Gold, Silver or Bronze distinctions including Operation Homefront, Wounded Warrior Project, Birthright Israel Foundation, Feeding America, Mercy Corps, Autism Speaks and Make-A-Wish. THD itself also won awards for blog copywriting and for a series of promotional space ads.

Wounded Warrior Project

“This was a record year for THD and our clients,” said Sherri Mayer, Senior Vice President of Creative Services.

“We love that the NEDMAs reward more than creative execution. Judging also takes into account the ability of campaigns to move our clients’ missions forward and more importantly, generate results – and that makes them even more meaningful.”

THD NEDMA Team

While the team at THD is thrilled to be recognized by NEDMA, our greatest sense of pride comes from the company we keep – our clients. To those organizations we say, “Thank You!” While data drives the work we do, our inspiration comes from you and your incredible missions.

The New England Direct Marketing Association is a professional resource center for all forms of direct marketing media and brings together the best and brightest across many different sectors.

For more information or to get in touch, click here.

Google, Facebook, Network for Good and The Unknown Known

Facebook and Network for Good have done a good thing.

Partnering for native, embedded, fee-free donation processing helps nonprofits gain increased visibility, delivers a seamless experience and ensures that 100% of the money collected goes to supporting your organization, which is great for you and exactly what the donor wants.

So, everyone wins, right?

Uh... yahh... about that...

Not so much.

Turns out that all the donor data collected stays with Facebook in accordance with their privacy policy. What exactly will they do with this information is unclear, but odds are the answer isn’t ‘nothing.’

There’s your fee.

They have also partnered with Google and others to embed this giving experience (like on Google’s Knowledge Panel), and in addition to donor data never reaching the nonprofit there are real fees ranging from 3 to over 5%, but that information is not immediately clear to the donor.

Now, let’s be honest, your donors are smart people, many a bit cynical, and they have no idea who Network for Good is…

But, if they thought for a moment that any part of their gift was going to end up in Mountain View or at 1 Hacker Way, or that the act of making a gift would only be adding to the deep reservoir of data that Facebook and Google have amassed, I’m guessing they might be more than little reluctant. The partnership helps mitigate that.

Let’s be honest Part II. Both Facebook and Google need this.

DIVERSION

Attaching their name to doing good in the face of repeated data scandals and eroding consumer sentiment is just savvy PR. Facebook in particular has been going out of its way to promote the tools to potential fundraisers and nonprofits alike. They are also offering new features like allowing individual fundraisers to be able to set up their own matching gift campaigns and all the tools and resources available for nonprofits through Facebook for Social Good.

No doubt, some of you reading this have seen nice, even significant, returns showing up from Network for Good thanks to people ‘donating’ their birthdays and prominent donate buttons in the Google Knowledge Panel. And while the checks are wonderful, they must come with a nagging sense of frustration that you don’t know who these people are and you certainly can’t do anything to nurture your relationship with them.

We know the online donor is harder to attract, acquire, and even more difficult to retain.

So, what can you do when you don’t know who they are? How can you bridge the data gap?

Take a look at your donor journey and see where you can tighten up.

A couple of quick thoughts:

  1. Optimize email collection on your site. If they find their way to your site to learn more about where their money is going, make sure you are prominently promoting email capture.
  2. Don’t forget mobile. 80% of social media time is spent on mobile devices* and nearly 60% of all Google searches are on mobile devices**, so inquisitive donors are likely to find their way to you on their smartphones. Make sure your site is optimized to convert.
  3. Page Abandonment. Don’t give up without a fight. If people get to your site and sit on key pages (particularly donation forms) for too long, serve up a pop up encouraging them to complete their gift.
  4. Tighten up your remarketing strategy. Odds are, if someone makes a gift to your organization through Facebook or Google they have or will eventually show up on your site. With the knowledge that only 1.2% of nonprofit site visits result in a donation***, what about the other 98.8%? Set up remarketing campaigns through Facebook and Adwords (display, Gmail, similar audience targeting) based on site visitation, donation page bounces and/or views of key pages that appear along the path to donation. Stay in front of them so next time they come to your forms.
  5. Friends of Friends. Take advantage of Facebook’s targeting capability. If someone sets up a fundraiser on your behalf, there’s a pretty good chance they are following you. With a few hundred dollars you can set up campaigns to target friends of your friends with asks to like your page, subscribe to emails, etc.

At THD, we advocate for a diversification of your fundraising approaches and channels. Understanding your donors and their channel preferences should drive your strategy, so we aren’t going to go so far (as others have) as to say stay away from these programs. In fact, how can you? Facebook is encouraging people to donate their birthdays as they come upon them and you certainly see your friends doing the same. It’s good content.

So, continue to invest in your content and your online presence so donors think of you first and implement some or all of the steps above to make sure you’re doing everything you can to capture folks whenever and however they are showing their support.

*Comscore
**Hitwise
***Benchmarks 2017, M+R

Second Gift Strategies that Work!

Sarah Koss
VP, Account Services

We all know that getting the second gift from a new donor is a key objective in the donor journey and crucial to long-term retention. And yet, as many as 70% of all donors leave us after that first gift. How can we enhance & extend the donor journey to reverse the trend?

Here are a few second gift strategies that can make a difference to your program:

Say “thank you” … then say it again

Many times the first communication after the first gift is an acknowledgement, which is meant to provide the donor with a tax receipt for his/her first gift to the organization and solidify the donor’s feelings of goodwill.

Before your newest donor receives yet another request for money, you have an opportunity to begin building goodwill. If you’re using best practices, everyone will receive an acknowledgment with a tax receipt in a timely manner after the first gift. But consider going even further:

  • A real, honest message of thanks. While it’s true that most acknowledgments include a thank you, they also include another ask, which can diminish their impact. Consider a communication that is a pure and unadulterated thank you across all channels. For high dollar donors, consider a phone call. For lower dollar donors, consider cost effective formats such as a postcard or email.
  • Welcome them into the community. It is critical that you educate the donor about your organization and show them their impact in order to solidify their place in your community. You can include all that in a multi part email “Welcome!” series that makes them feel good about their gift and introduces them to many facets of your organization. There doesn’t have to be a lot of content, but showing impact is key.
  • Begin a dialogue. Another important element in the Welcome is to start a dialogue with your donors. Including a brief survey is an excellent way to accomplish this. Let them have a say in how often they would like to hear from you and in what channel.

Pay attention to the age-old best practice: renew as acquired

We’ve seen response rates more than double when the donor’s original acquisition vehicle is sent within the first three months of the renewal cycle!

Speak to donors personally

In the first year of the donor relationship, it’s critical to speak to them appropriately. Often, new donors are simply thrown into renewal segmentation and receive renewal messaging that doesn’t resonate with them or acknowledge their new relationship. Think about:

  • Segmenting out new donors for the first year of their relationship, further acknowledging and thanking them. You can also encourage a second gift in a way that shows you recognize their status. For example, instead of asking the donor to “renew their gift” ask them to consider “an additional gift.”
  • Review and evaluate existing control content to ensure the new donor is receiving information that is relevant. Your GA data and social threads are great sources for what your constituents are consuming & responding to. Newsletters represent a great opportunity to present mission information as well as highlight the donor’s impact and enhance the relationship.
  • Introduce your new donors to other ways of getting involved. This can include volunteering or joining an event. Or it can be an opportunity to join a monthly giving program, subscribe to your blog, or participate in your online forums. We know that the more engaged they are with you, the better they will retain.

Remember, if you can get that second gift, you increase a donor’s chances of retaining by anywhere from 35 to 60%. So if you’re not putting second gift strategies into place, we’ll be happy to partner with you to increase those all-important retention rates.

Similarly, be sure to get in touch if there are subjects you’d like to see in future issues of Straight Talk.

Happy reading!

Four “Must-Do’s” to Ensure a Strong Mid-Level Program

Nora Millwood
VP, Account Services

Many nonprofits (yours included?) are looking to enhance their mid-level programs, and for good reason. With flat or declining program investments and fewer new donors, focusing on your mid-level is a critical way to increase revenue without a great deal of added expense.

But how do you ensure you’re developing a strong pipeline of Mid-Level donors who are committed to supporting your mission, upgrading their giving over time and, eventually, giving a Major Gift?

At THD, we believe a two-way conversation is central: Talking to Mid-Level donors so they will listen… and listening to Mid-Level donors so they will talk. You may have caught the recent DMANF DC Conference session with Beth Fitch from Mercy Corps and two of my colleagues, Jess Hutchins and Sherri Mayer, on this topic but it’s so important that I wanted to touch on it again.

Mid-Level donors often increase their value to you naturally because of their higher income levels, affinity to your mission and the good work you do. Because of this, too many organizations dismiss the need for greater attention on this audience. But we have seen through work with our clients that developing a strong and well-defined outreach program can actually lead to significant upgrading and improved retention. Increased loyalty? More revenue? Yes and Yes!

From experience we know Mid-Level donors are unique, and we must be sure to treat them that way. They tend to be highly educated, informed about the organizations that they support and intent on investing their dollars wisely. They have a hunger for information and a desire to make an impact on the world. So how must we treat them in order to maximize their value to your program?

We have found there are four “Must-Do’s” in order to ensure a strong Mid-Level program:

#1 – Encourage a CULTURE OF PHILANTHROPY – Organizations who are most successful in building a strong Mid-Level program understand the importance of this audience and are committed to donor cultivation. They recognize and appreciate the value of a donor, particularly a high value one.

#2 – Create DIALOGUE – Asking a donor questions and really listening to their feedback is critical. You can learn so much from what a donor says, both positive and negative. It will help inform your contact strategy, creative and messaging and drive increased donor value and loyalty. As an example, THD Ambassadors develop relationships with donors through phone, email and handwritten notes. They serve as a representative of your organization to answer questions, provide support for issues and educate donors on the impact their giving has had and will continue to have on the mission.

#3 – Always show IMPACT – Mid-Level donors care about efficiency and impact. They want to know their donation is being put to good use and that they’ve made a sound investment. So it’s critical to focus on these key messaging points in every solicitation and cultivation effort.

#4 – Make a long-term COMMITMENT – A strong Mid-Level program won’t be grown overnight. Your organization has to be committed to investing time and money to develop this pipeline of Mid-Level donors. And over time, the rewards will be great in the form of even more Major Gifts.

If you’d like to go deeper with this important subject or have other experiences to share, just let us know. Similarly, be sure to get in touch if there are subjects you’d like to see in future issues of Straight Talk.

Happy reading!

Tax Changes in 2018 – Are You Ready?


The new tax bill signed into law in 2017 has raised many questions – and concerns – among non-profit leaders. Here is a brief recap of what’s changing for 2018:


Downward Chart

New tax brackets have gone down: Highest rate for married taxpayers filing jointly is now 37% on income of $600,000 and above, with similar changes for single taxpayers.

Upward Chart

Standard deduction was increased to $24,000 from $12,700 for Married taxpayers filing jointly, and personal exemptions were eliminated, with similar changes for single taxpayers.

$10000

State and Local (SALT) deduction limited to $10,000.

House

Mortgage interest deduction was limited for new mortgages taken after December 14, 2017. Home equity loan interest is no longer deductible.


The question for most nonprofits is: Because the standard deduction was increased, and the SALT deduction was limited, how many donors who itemized their charitable deductions in the past may no longer benefit from itemizing? Will donors decide to reduce their giving? If so, what impact will this have on revenue in the coming year and beyond?

As you can see in the chart below, donations from individuals and bequests have been on an upward trend for the past 30 years, with an average increase of 1.9 percent per year. The exception was a notable decline in 2008-2009 during the Great Recession. The only other obvious decline occurred during the 2000 dot-com bubble.

Data Giving Chart

There have been several tax law changes in that period, though none as directly related to the charitable deduction as the 2018 change to the standard deduction. From a historical perspective (see Major Tax Law Changes above), there doesn’t appear to be a direct correlation between tax law changes and charitable giving. Individual donors make their giving decisions due to a variety of factors. Our nation’s economic outlook plays a significant role, so the current low unemployment and high stock market valuations should indicate a positive outlook for fundraising revenue in 2018.

And we know that the single most significant factor in a donor’s giving to any individual non-profit is the donor’s connection and commitment to the mission.

Nevertheless, the tax law changes may have some impact on specific segments of the population. Anticipating those potential impacts will allow us to implement the best strategies to optimize revenue, particularly at the end of the calendar year, when tax concerns are most likely to be in the minds of donors.


Potential Impact by Donor Segment

Share of Tax

Donors with Adjusted Gross Income (AGI) of $100,000 or less:

Minimal impact. These donors, who likely make up the bulk of the direct response file for many organizations, itemize deductions less often. However, these donors will see a small increase in their paycheck withholding if they are W-2 employees, starting in February.


Donors with AGI in the range of $100,000 to $400,000:

Depending on circumstances, these donors, who are likely midlevel donors giving $500-$10,000 per year for most organizations, may experience noticeable changes in their tax returns. Most donors at this income range likely itemized returns in the recent past (see chart above, 77% of filers with AGI $100;-$200k, 93% of filers with AGI $200k-$500k), and are accustomed to the benefit of the charitable deduction. It stands to reason that these donors may consider lowering their giving amount by roughly the cost of loss of the deduction (equal to the amount of their 2017 marginal tax bracket of 28%-33%).

However, these donors are likely to also experience a significant reduction in their overall federal income tax bill, due to the changes in tax rates. In particular, the shift of tax rates at the income range of $165,001-$315,000 of 28-33%, down to 24%, should provide a sizeable increase in disposable income. Ignoring for a moment the complexities of the deduction changes and the Alternative Minimum Tax (AMT), this means a donor with an Adjusted Gross Income (AGI) of $315,000 will owe $14,987 less in federal taxes in 2018 than 2017.

Every donor in this AGI range will experience slightly different results, depending on their own personal circumstances. We expect that long term these changes should offset one another for this population, but that some of these donors will reduce their giving in 2018 due to the loss of the value of the charitable deduction.


Donors with an AGI greater than $400,000:

These donors likely make up the majority of non-profit Major Gift portfolios. Most of these donors will have deductions exceeding the value of the standard deduction, such that it will be worthwhile to itemize their charitable deductions. These donors will continue to benefit from that deduction, so we do not anticipate changes in tax law to have a significant impact on their giving behavior.


Other Considerations:

Donors on fixed income, specifically donors age 65+, are of particular concern due to their prevalence in many organization’s direct response files. As discussed, donors at lower income ranges are unlikely to experience a significant change. However, the value of the IRA Charitable Rollover provision as a giving tool has increased for donors age 70½ and older now that the charitable deduction is less available.

One trend we do expect to continue, or even accelerate, due to these changes, is the rise in the prevalence of the Donor Advised Fund (DAF). Because these funds allow donors to group their charitable deduction into tax years when it is most advantageous, we expect that more donors will use this tool in the future. The challenge non-profits will face will be in identifying the true donors behind the DAFs, and appropriately cultivating and stewarding those donors to cement their connection to the organizations’ mission.


Thinking Ahead: Insights for Your Year End Fundraising


THD BENCHMARKS

To stay ahead of potential revenue shortfalls, THD will proactively track and analyze year over year performance of total giving for all of our clients in the first and second quarter of 2018 analyzing key demographic indicators, including income ranges and age bands, to assess the potential impact of the new tax law changes.


If you’re interested in hearing how THD’s Tax Impact Benchmark can help you get a jumpstart on protecting your year-end revenue, please contact Eric Johnson.

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.

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.