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 in 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!

Five Easy Steps Toward Understanding Attribution

Chris Hubbard
VP, Account Services

Direct marketing used to be exactly that: “Direct.”

But in today’s multi-channel marketing world, that’s not the case. With donors receiving fundraising messages and brand impressions through a wide variety of sources and channels, we now must answer a more difficult but pressing question: “How did our promotional effort in channel X influence giving in channel Y?”

Most often it’s impossible to prove direct attribution, however understanding the correlation between efforts in one channel and outcomes in another helps inform campaign strategy, investment decisions and our understanding of the donor behavior.

Plus, making decisions about program investments based on face-value performance can be dangerous. Imagine cutting back on acquisition mail program volume only to find that you lost $250,000 in digital revenue as a result, too. In Press Your Luck parlance, that’s a “double whammy!”

For-profit companies are now fairly sophisticated in term of true attribution modeling. Non-profits aren’t there yet and may not be for a while. That’s okay, though. Understanding the correlations can support your decision-making process and begin to define an attribution strategy that works for your organization.

So how do you lift the veil and take a closer look at how programs influence each other? Here are five valuable steps you should make part of your regular monitoring habits:

#1 – Match your “passive” giving sources against your promotion history
Most clients have source categories like whitemail, web giving, and tributes built into their gift source coding methodologies. While these may appear to be “over the transom” gifts, analysis usually says otherwise. Compare these gifts to your promotion efforts and you’ll find that many of the donors making these gifts received a recent promotion.

With one client, we discovered that 23% of these gifts were preceded by a mail promotion within the prior 30 days…and the revenue from these was over $5 million. More so, 55% of that revenue was received within 10 days after the in-home date. While some of that giving may have occurred naturally, who wants to take the risk of finding out how much?

#2 – Conduct match backs against your recent prospect lists
While exercise #1 tells you more about existing donors giving through alternate sources, a similar analysis can be conducted on new donors. You’ll probably need the help of your merge-purge supplier to do some name and address matching of “passive” sourced donors against recent prospect files. Once the matches are identified you can calculate how long after the in-home date the gifts were made. Like above, you’ll start to see a correlation between the delivery date and these gifts.

While not a perfect science, you can determine what percent of those responses you want to attribute to the acquisition mail effort when determining how much to invest in a mail acquisition program.

#3 – Use unique URLs where possible in mail and print offers
We all know that donors and prospects don’t always use the unique URL you provide. And yet, it’s still valuable and does attribution work for you. With a unique URL, you will get more real-time learnings on campaign or test performance, particularly if you are executing a strategy where the objective is to move people online. Keep those backslashes short and relevant.

#4 – Chart media impressions against direct response revenue trends
This is a less granular measurement but starts to build the bridge between your direct response and brand communications efforts. It’s well known that larger media campaigns provide halo coverage for all fundraising efforts — but to what degree? Work with your internal teams to capture impression data as specifically as possible (daily or weekly being optimal) and then compare that information against different giving types on file.

Depending on the type of media (i.e., digital ads vs. TV spots, etc.), you are likely to find different correlations. Year-over-year and pre-flight, in-flight and post-flight trends help illuminate the effect of these advertising impressions.

#5 – Develop a time-based attribution methodology for digital advertising efforts
According to Smart Insights Display Ad CTR Benchmarks published in January 2018, all ad formats and placements averaged a click-through-rate of just 0.05%. While this is a really low CTR, we can attribute web revenue to donors who recently saw a display ad. When reviewing view-through performance from your display partners, make sure you are capturing the time of the viewing and the time of the gift. Then you can use a graduated attribution model that gives more credit to the display effort the closer it compares to the timing of the actual gift.

If you’re like most nonprofits, you will continue to give donors a multitude of options for giving and surround them with omni-channel marketing messages. With such varied donor touchpoints, we all need to become comfortable with the fact that donors will give where they are most comfortable, which doesn’t necessarily align with what is easiest to measure.

If you’re not undertaking some of these measurement exercises, it’s important to get these processes in place soon. We’re here to help, so be sure to let us know if you have questions or experiences to share!

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.

What are you talking about?


SOAPBOX

We like to tie ourselves in knots trying to find the right mix of fundraising and cultivation for our audience segments, but have you ever taken a step back and asked yourself, “Do they care?”

It’s always a pleasant surprise to see a large gift or a number of gifts in response to a cultivation piece even though you ‘don’t ask.’ But, you’re a non-profit, you’re fundraisers and the recipient has become conditioned to anticipate an ask, even if there isn’t one. Of course, when you ask, people give, but the response is as much about a reaction to the impression, is it not?

This is a wild over-simplification, of course, and I’m certainly not saying that the right mix isn’t important. Rather, I’m using it as a way to get us all thinking about how your direct response program should be aligned with your organization’s content strategy more broadly.

Ultimately, your direct response program should be structured to make the right ask of the right people at a certain stage in their journey — online or off. That’s why it’s important that your content and messaging is consistent with or expands upon the narratives and key themes that you’re talking about further up in the ‘funnel.’ Not only will your DR creative in mail, email, social, display, etc. feel more cohesive, but it should be deepening the level of interest and engagement with the constituent; less of a blunt force ask.

The rapid feedback loop inherent in your DR program also gives you a channel to test into some narratives to see how your audience responds. Email and paid social are two channels that come to mind as lower-cost opportunities to stress test some of your messaging ideas.

Let’s not forget there is efficiency in this as well. Whether you’re developing content in house or your agency is doing so, atomizing the content in this way helps you derive more value from its production. That compelling infographic shouldn’t be locked away in a report or a blog post. Let’s leverage that in an email header, a compelling social post and more. Have an important statistic or a quote? Find a way to work them into the design or copy of your DM materials and really drive those impactful points home. That’s what your donor and prospects are looking for, right?

Proof.

By the way, when you’re planning your content development, are you paying attention to what your website is telling you? Are you looking to see what pages people are spending the most time on? What pages are driving people deeper? What pages appear most along the path to conversion? Conversely, are you investing in content that people frankly don’t seem to care that much at all about? There is a wealth of information buried in those web analytics, so dig in!

Start by integrating those content planning sessions, taking learnings from all parts of the organization and letting them inform your plans. Develop a comprehensive content calendar inclusive of your DR schedule and leverage all your content to the fullest!

Timely and relevant: Reaching your donors with news that matters

Beth Mello
Beth Mello
Senior Vice President, Account Services

These days, news travels fast…

Whether it’s a hurricane in Texas, a new drug for a multiple sclerosis, tax reform that could affect the economy or a political event that could cause instability, your donors need to know that your organization is ready and able to respond.

Communication is key…
When external events require an immediate response from your organization, it’s critical that you have a plan in place that you can set into motion. With the right planning, you can respond to an event within hours via Twitter, Facebook, or Instagram. Responding and communication via mail may take a little longer, but it can also be done within days if necessary.

And so is a solid communication plan
Thanks to our work with health charities as well as international relief agencies, THD has developed a Rapid Response Platform that allows us to respond immediately when necessary.

The foundation of the plan is partnership: in collaboration with our clients, we put an action plan into place that can be executed within hours of a landmark event. Together, we look at:

  • Audience: Determine the audience for your outreach and have the mechanism in place to extract those names from your database. Identify a plan for prospecting efforts and pre clear any media that you may use.
  • Channel: Know the plan for each of your channels. Your email template should be ready. Gain alignment on what homepage assets will be deployed. And ensure you’ve got print on demand capabilities ready to go.
  • Expectations: Who has responsibility for each piece of the puzzle? How is information communicated between each party?
  • Execution: How quickly can the plan be executed? With proper planning, an email can go out within hours. And an urgent mail piece can reach donors within days.

A number of our clients, supported by this Rapid Response Platform were able to provide much-needed support to the victims of Hurricane Irma and Harvey thanks to a timely response and rapid execution.

It’s not all about disasters
You may find that the news you want to communicate is positive – perhaps it’s about a recent discovery, a news article that mentions you, or a bill that you helped pass. It may be more informational. In many cases, it will be something that could have a serious impact on you, your donors, or the world at large.

Whatever it is, your ability to communicate helps your donors know that you are relevant, timely, and thinking about them. That can make a difference in how your organization is perceived – and ultimately, on the health of your fundraising program.

To learn more about THD’s Rapid Response Platform, contact Eric Johnson at ejohnson@thdinc.com.

Are you tuned into the right channel?

Jeff Ostiguy
Jeff Ostiguy
Vice President, Digital Marketing

Multichannel… Omni-channel… Cross channel… Pan channel. So many buzzwords … and I think I just made up that last one on the spot.

But… wait! Don’t go!

I know you don’t want another blog post about why these buzzwords matter, so I’m not going to write one. I’d rather talk about diversification.

For direct response fundraisers, this is the lens we should be looking through. Trying to be everywhere is great, but if we’re being honest, not always realistic from a budget perspective. So instead, how do we develop strategies that are not quite so channel dependent?

Let’s start with email.

If you’re like most NPOs, somewhere between 15 and 30% of your digital revenue is coming from email. If you’re on the higher end or above, it might look good on the bottom line, but it’s something that should concern you a little bit. No, email isn’t dead, but its role in the fundraising ecosystem is changing. Attrition and deliverability are real problems, and while the tools we have available are helping us be more responsive and strategic in our approaches, we know email still requires a great deal of care and feeding to keep it viable and productive.

Email needs help.

In the grand scheme of things, email is really just another targeted ad impression. Other than search, it remains the easiest to directly attribute revenue to but if you’re judging email on that basis alone you’re doing yourself a disservice. Also, when you factor in platform costs and all the care and feeding mentioned above, I think you’d discover that your real email CPM isn’t that different than other paid digital channels.

We have seen our clients’ email programs without exception benefit from support in display and social. Opens, revenue, etc. all improve with investment in other digital channels.

It’s not just about investing in those channels to support email however – it’s about lessening the revenue burden ON email.

Invest in targeted paid digital media.

Aim to build a program that strategically leverages targeted paid digital media – such as paid display, paid search and paid social – in combination with more rewards or incentive-based cost per acquisition donor programs. Once established, you’ll find these can each become their own revenue streams and pillar strategies.

But what about attribution?

I know this opens a bit of a Pandora’s Box… attribution. Don’t freak out.

If you’re newer to some of these channels, start by establishing some simple time-based attribution models, giving more credit to view-through conversions that happen within hours and less to those that happen within days. Learn and set expectations for the number of new donors acquired through different techniques and model the LTV of these donors against the investment.

With first party data targeting you can send less email and protect the integrity of your database knowing that you’re making your impression in other channels – mail included. The objective, ultimately is simple; increase overall digital revenue through increased visibility and discoverability.

Does it require investment? Yes.

Should you expect a net positive return immediately? No.

Can all this lower funnel spending be more efficient with support from the brand? Yes, but that’s for another post.

Far too often, lower funnel direct response tactics are being asked to do both and as such, expectations for revenue are inflated.

But I digress…

Set achievable goals

You can definitely set goals for your various tactics. A 2 to 4% conversion rate for search, 50 to 60% return on ad spend through paid display, etc.

Track the value of the new donors acquired and the incremental value from renewed and reactivated donors and measure your success against the growth in your site activity and overall revenue generated online.

Over time, you will grow your digital revenue stream and lessen your reliance on email to carry so much of the weight.

And now, a shameless plug.

If you’re going to be in Chicago for the DMA conference, and want to hear more about this, come check out our session ‘Making the Most of Your Digital Program’ at 2PM Central Time on August 29th. You can heckle me if I say omni-channel or multichannel.

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.