A Conversation With Michelle Hurtado, Head of Google Ad Grants

Michelle Hurtado
Global Head of Google Ad Grants

Jeff Ostiguy, Vice President of Marketing at THD, sat down with the Global Head of Google Ad Grants, to discuss Google’s commitment to the nonprofit sector, Ad Grants program changes and how nonprofits can be successful with Google Ads.

THD: Michelle, thanks for taking a little time to talk with us today! Can you give us a brief history of the Ad Grants program?

Hurtado: Google’s mission is to organize the world’s information and make it universally accessible and useful. Google Search is critical in this. We saw how effective ads on Google Search results pages were and so we started the Ad Grants program so that resource strapped nonprofits could have good access to share information on Google.com. We’ve now been giving free Google Search ads for 16 years, directly in alignment with Google’s mission. We hope that we’re helping nonprofits amplify their vital work and grow with Google: by supporting nonprofits to raise awareness, get people involved, and fundraise.

THD: What does the Ad Grants team look like? We often hear it is a small team of volunteers.

Hurtado: Ad Grants has been a small team historically but we have doubled in the last year! We are a dedicated group of 12 and we have team members who have been with Google for 14, 15 and 16 years, sitting across 6 different offices.
We also have partners we work closely with. For example, we have our Certified Professionals Community of agencies and consultants who are knowledgeable about Ad Grants and dedicated to nonprofits, so we recommend their services. We also partner with universities to offer a program for students learning online marketing to volunteer with Ad Grantees through the Google Ad Grants Online Marketing Challenge.

Last year we served about 51,000 nonprofits so we also rely on volunteers to scale our support efforts. You’ll see many of our volunteers on our educational resources such as videos and livestreams on YouTube and our new Community forums which are great platform for nonprofits to ask questions and get help quickly.

THD: In January of 2018, a number of new performance and structural guidelines were put in place for the program. Have the changes had the impact on performance that your team had hoped? What trends or changes have you seen since you made the changes?

Hurtado: Yes! We reviewed our program policies to add clarity and raise standards of quality for our free advertising grants. We want our Grantees to all be in compliance with these policies and we hope they act as a guide to optimize accounts. For example, we don’t permit single word keywords because they don’t often make a good match with a relevant ad and a user taking action on your site, so that policy prods nonprofits to build out keyword lists.

Performance metrics like conversion goals met show positive results and click through rates have more than doubled. My team is committed to helping nonprofits use their Ad Grant successfully.

THD: Have a large number of Grantees been suspended since the policy changes were implemented in January of 2018? Are more nonprofits opting to use automated options like Smart Campaigns?

Hurtado: Many nonprofits have been impacted by the policy changes but almost all fix the issue and are reactivated. Smart Campaigns is an excellent option for Grantees that can’t invest the time to manage their online ads regularly. This campaign type can be set up in just 15 minutes, and then works to constantly improve an ad around a goal, measure its performance, and show clear, understandable results. More nonprofits are using Smart Campaigns as they see the ease, but it’s still a low proportion of our Grantees.

THD: How do you plan on making compliance more smooth for all parties involved?

Hurtado: We want our Grantees to have a good experience with us and we have provided a lot of educational opportunities to nip compliance issues in the bud. Currently, we are developing an on demand report so Grantees can check compliance proactively that we think will help a lot. We send out a monthly report by email and recommend Grantees confirm their correct email is associated with their Ad Grants account to ensure they don’t miss our notices, and check spam folders just in case.

THD: One of the biggest challenges – and opportunities – nonprofits have is balancing the role of Ad Grants with their paid programs. What is Google’s point of view on how to manage that? How should nonprofits view Ad Grants vs. paid Google Ads and how can they avoid competing with themselves?

Hurtado: Indeed, Ad Grants doesn’t cover all online ad opportunity. We encourage Grantees to get to know online ads through Ad Grants and learn about what’s worth investing more in. Ad Grants is limited to Search ads on Google.com after paying ads, so investing in some paid ads extends your reach significantly and has additional features to market specifically to supporter lists and use image and video ads to drive retention and advocacy. Additionally, when something is in the news or when there is high seasonality, Grantees can capture more of that increased interest by supplementing their Ad Grants account with a paid account.

It’s important to note that Ad Grants accounts do not compete with paid Google Ads accounts. Grantees can literally duplicate their Ad Grants account to a paid one if they wish to ensure they get the top ad position. Investing in paid Google Ads may result in significantly more volume so it’s worth considering.

THD: We have seen many nonprofits be very successful with Google Ad Grants. What are your top tips when managing and evaluating the performance of ad campaigns?

Hurtado: Whether a nonprofit is brand new to online marketing or already feels pretty comfortable, I have a few recommendations: First, define success metrics. What are the few things your organization wants people to do when they come to your website and how do you know when a goal is reached online? Second, make your organization’s website a priority. Structure the website around key goals and ensure each webpage has a clear call to action. Make the user experience easy and mobile friendly – and refresh content often. Next, set up free Google Analytics to understand what happens on your website and link your goals in your Ad Grants account. The first will help you understand who views what content and the latter will help you improve your ad performance. Then, have a dedicated owner who can be proactive with new ads: learn from user experience on your website, test new ads, be ready to respond to current events and seasonality like Giving Tuesday.

THD: The Google Academy for Ads is a tremendous resource, but it can be a little overwhelming. For a nonprofit marketer, who is familiar with Google, but not with all of the tools and programs available where would you suggest they start?

Hurtado: There is a ton of information out there for nonprofits to educate themselves on how to successfully manage their Google Ads accounts. As for the Google Academy for Ads, it is a fantastic resource but we suggest nonprofits using Ad Grants get started with our tailored educational resources that are program specific and use nonprofit examples for easier consumption. We offer a range of educational and support options for our Grantees because successful online marketing takes commitment and we want to help nonprofits achieve their goals online. A few support options to note:

First, our Help Center hosts tips on how to be successful with Ad Grants such as outlining how to create effective ads and automating your bids. Second, we have our Community forums which we actively monitor for questions. Third, we host educational livestreams and videos on a variety of topics on our YouTube Channel, including how to raise ad quality and how to select keywords. We also develop case studies regularly to highlight how our Grantees are using our program and specific product features to reach their goals. These can be found on our website. Lastly, our Grantees can also leverage the Google Ads support line for help and optimization suggestions. The number is 1-866-2GOOGLE.

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Everything you do in market – brand marketing, direct marketing, content, PR – it all contributes to building awareness for your organization. With awareness comes interest, and that interest is an opportunity. A solid search strategy is a critical part of how your organization can rise up and meet that interest.

If you feel like you aren’t getting the most from your Grant account, get in touch with us here at THD – we can help.

The $2.3 BILLION coffee cup

This past week a simple setting and editing mishap resulted in $2.3 billion in free advertising for Starbucks. And the best part, it wasn’t even a Starbucks cup – it was a generic craft services cup.

https://www.cnbc.com/2019/05/07/starbucks-got-2point3-billion-in-free-advertising-from-game-of-thrones-gaffe.html

GoT Coffee Cup Blunder

It certainly speaks to the strength of the Starbucks brand (people just ASSUME it’s Starbucks), but it’s also a lesson in influencer marketing and how nonprofits can be a part of popular culture.

Sure, it’s unlikely that Jon Snow will show up wearing your company’s golf polo. But cultivating those relationships online and making sure your celebrity and athlete advocates have a bunch of your “swag” can better your chances of them tweeting on your behalf, or showing up somewhere (and having their photo taken) in your T-shirt.

Greenpeace opportunistically – and creatively – capitalized on the buzz by inserting themselves into the conversation and making the case for the dangers of single-use plastics.

https://www.foxnews.com/entertainment/game-of-thrones-coffee-cup-snafu-draws-greenpeaces-attention

Food (or coffee) for thought…

Experience Matters

Before you read the rest of this blog, I’d like to ask you a question.

How do you think your donors would rate their experience with you? On a scale of 1 to 10. Not your mission or your purpose, but the experience they have with you?

Be honest.

Do you think they would tell you that they feel truly heard, appreciated, and recognized? That they are getting something out of the value exchange? Do they feel like you know something about them — beyond when their last gift was or how much it was for?

So, with that rattling around in your brain, I’d like you to meet my friend Jane, your donor — everyone’s donor, really.

Jane

Who is Jane?

Well, Jane gets direct mail and email, and sees your social posts and banner ads. She’s largely channel agnostic in how she consumes information, and as she bounces between channels, her peers play an important role in her decision-making process.

She’s busy, impatient, maybe a touch skeptical — and her favorite consumer brands (Amazon, Patagonia, et al.) have raised the bar in terms of what she expects experientially in return for her money.

Finally, maybe most importantly, Jane doesn’t define herself in the way many fundraisers do. She doesn’t see herself as an active, mid-level, major, or lapsed donor.

She probably doesn’t even know what a “sustainer” is.

She’s a person, a person who cared enough to make a contribution to your organization.

Once we have acquired Jane and she’s gone from being unknown to known, what do we want her to do next?

Make another gift, right? So we ask her — probably a lot.

But what does Jane want? What does Jane expect?

Maybe she wants to make another gift, and if she does, great! Or maybe she just wants to learn more about who you are or what you do, what her contribution will help accomplish — maybe she wants to be an advocate or start a fundraiser of her own.

Maybe she doesn’t want to do anything at all.

As fundraisers, we look at retention rates and we get excited (with good reason) about multi-year retention rates of 70% or 75%, but that’s a percentage of a percentage. Truth is, somewhere around three-quarters of your donors make one gift and are never heard from again. Our research shows that the average lifespan of a donor is less than two years.

Of course, this leads to a never-ending (and costly) search for more Janes.

To mitigate this, we tend to ask “how?” How do we retain Jane, how do we get her to deepen her investment?

At THD, we propose it’s time to start asking “why?”

Why did we lose Jane? What about her experience caused her to drift away?

It’s time to shift our focus to understanding Jane the person, not the donor — what motivates her, what excites her, and what will keep her engaged with us longer.

How do we value a donor?

What value exists in a donor who’s empowered and motivated to go deeper? There is real value in advocacy. There is earned media value in that social video share. And we have all seen the explosion and tremendous impact of peer-to-peer fundraising.

Our data makes a compelling case for the value of multiple relationships. On average, donors with two organizational relationships (e.g., donor/advocate or donor/fundraiser) are 49% more valuable in year one and 38% more valuable five years in. With three relationships, the value factor is even greater (e.g., donor/fundraiser/advocate), 97% and 85%, respectively.

Heck, in 2017 alone, 63 million Americans volunteered 8 billion hours of their time to nonprofits. At $24.69 per hour, that accounts for a staggering $197.5 billion in value*. That’s billion, with a B.

Bottom line: the key to increasing donor value is a better experience that gives the donors options, multiple ways, and reasons to remain engaged — which ultimately extends donor lifespan.

The more ways they connect (or don’t), the more we can learn. And the more we know, the better we can make the experience.

We call this the Donor Experience Value Chain.

With so much data available to us, we can develop strategies offering touchpoints that continually inform us about what is important to donors. While every stage might not include giving, the bond between an organization and the donor becomes stronger, the term of the relationship extends, and the opportunities to ask become greater and land with more authenticity and impact.

Initial Engagement

We have identified six key stages in the donor experience. These stages will seem familiar in many ways, but it’s not the definition of the stages that is important. It is understanding the value of donors in these stages. Having a view into how people are migrating can help us refine our approaches and move people into/keep people in the most valuable stages.

Onboarding

So, this might be starting to sound a lot like donor journeys.

Journeys are presented as a set of predicted or preferred paths. While these are helpful, we think that looking at an experience, and the value of a donor at various stages of that experience, is of far greater value to a fundraiser. We aren’t trying to map people along a particular journey because, ultimately, with the amount of channels and engagement points available to a donor, the number of journeys is almost infinite.

This is where things are getting pretty exciting here at THD.

We are working to aggregate the data available to us into views that will help us understand how donors on file are progressing through their lifecycle, the value over the course of their lifetime, and how our work is influencing these moves.

Summary

In addition to the standard KPIs we all live by, we are introducing a new way to understand the health and composition of your file. This will help us augment and improve the way in which we segment and communicate with our donors, extend the length of their relationship with an organization, and, ultimately, improve the lifetime value of a donor.

We will be at the DMA conference this week in D.C. talking all about donor experience. If you see someone wearing a button that looks like this, come say “hello”!


Experience Matters

*Independent Sector https://independentsector.org/news-post/value-of-volunteer-time-release/

You Say You Want a Resolution…

It’s the New Year. Make any resolutions? Broken any yet?

Oh, and please, that friend that says “My resolution this year was to make no resolution.” You know they have a list longer than a CVS receipt.

Big or small, some we talk about, some we keep private — we all make them. And why not? Even a broken resolution provides us with some motivation to be better, right?

It got us thinking here at THD about resolutions that fundraisers and fundraising agencies like ourselves might want to put into place in the year ahead. How can we make better connections with one another — and our donors — in a year that will no doubt present challenges and opportunities, both familiar and new?

Here are a few (nine in fact) we thought of and WE’D LOVE to hear yours.

So leave some in the comments, send us a note, heck, give us a call — whatever works. As a follow-up, we’ll publish some of what you told us. And maybe even create a big list to inspire us all this year.

We resolve to…

  • Focus on developing a comprehensive marketing strategy for those “valuable with so much potential” mid-level donors
  • Collaborate with colleagues (who are also struggling) to design manageable solutions to the ever-elusive revenue attribution challenge
  • Pick up the phone! A two-minute phone call instead of 18 emails can do wonders for a relationship… and carpal tunnel
  • Break down data silos that impede a truly representative view of our donors
  • Stop blaming Trump (this is not an endorsement, but rather a challenge to dig deeper)
  • Continuously remind ourselves that donors, regardless of the labels and names we give them, are people. Their total experience, not just past giving behavior, is what will motivate them to stay engaged
  • Pay attention to what the file is telling me — and take steps to set up my program for long-term prosperity, even if it means short-term pain
  • Take risks with creative and push boundaries
  • Place a buzzword jar in every conference room (all contributions going to charity, of course) to end the use of terms like ‘viral marketing’, ‘content marketing’, and ‘synergy,’ to name a few

So, there you have it. A start, anyway.

Happy New Year from THD. Let us know what you’re resolving to do more of, less of, better than before, or just differently in 2019 — and here’s hoping we see you soon.

Cheers!

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.

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!

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.