Saturday, October 25, 2008
Check out SOFII for more interesting stuff like this, and loads of practical examples from contemporary fundraising.
Friday, October 24, 2008
Wednesday, October 22, 2008
I have known these guys for quite some time, since they were with bluefrog, another London based agency who I worked with when I was 'charity-side'. bluefrog are well renowned for their innovation and great creative approaches, and thinking about them - and the current economic stuff made me think more about good ideas and where they come from.
My friend Ken Burnett emailed me today about the fact that in times like this, ideas are more important than ever.
"Many currently established methods of donor acquisition can be seen to have arisen as innovations when the need was greatest.
See ActionAid’s insert story on SOFII, and Greenpeace’s development of face-to-face. Plus an array of legacy marketing and other initiatives that arose directly out of fundraising uncertainty.
The whole idea of SOFII itself becomes even more appropriate in tough times. Why trouble to think of your own great idea if you can borrow someone else’s? Why take a risk testing the unknown when you can see how well or otherwise similar initiatives fared, when used by others?
To quote (very reluctantly) Donald Rumsfeld, fundraisers suffer from too many ‘unknown unknowns’, particularly in hard times. So I hope you’ll direct your followers to SOFII, where as many of the ‘known knowns’ as we can uncover are being gathered and displayed to help fundraisers to shed light on the best ways of doing things, however hard times get. And all for free, too."
I am going to pick on a couple of good ideas every weekend for a while, and blog them up to remind people to check it out.
Please, take time to sign up for SOFII- it is a charity, it is free and it is bloody useful with tons of ideas there - just for you.
Saturday, October 18, 2008
According to Gwynne Dyer's new book Climate Wars that won't stop us from complete devastation of our civilisation (tip, if you have a child or grand-child under twenty, don't read this book, you will find it difficult to look them in the eye). But he also reckons once we start trying we might make it.
Great, as a donor, to get positive feedback like that. Let us hope there will be more.
Thursday, October 16, 2008
All about fundraising in a recession, it will feature links and information about what is going on. Stay informed and don't commit recession suicide.
Wednesday, October 15, 2008
Well, the most dangerous thing about this time is the decisions made by boards.
Whatever happens, us fundraisers need to help our boards and management making the possibly fatal mistake of cutting fundraising expenditure. I just wrote down a collection of thoughts and information from researching our data sources and what other ‘experts’ are saying about the recession. By the time I finished it was 9,000 words long, with a ton of data and proof but basically it boiled down to one thing:
Don’t commit recession suicide. Whether donations (responses and/or average gifts) go up, down or stay the same the tactical decisions taken by charities will have more influence on the fortunes of the charity than a recession.
If things get worse, you need to spend more to make the same net and net is the key to delivering services. If things get better because of a recession (which is unlikely) it is a great time to spend more money and get great results. If things stay the same, then keep things the same.
Here is my ten point plan for coping with the recession:
The board and management need to understand the data and stop unrealistic expectations
1. Stop using cost of fundraising (COF) as a key measure and concentrate on net income
2. Work like a business, accept reduced short-term growth in service expenditure to gain increased long-term growth. Don’t commit recession suicide.
3. Stop putting off bequest (legacy) marketing every year – it won’t make any difference to your income next year, but the charities who invested in bequest marketing during or after the last recession are in a lot healthier situation than those who didn’t
4. Accept that donors are not cheap
Apply the Pareto principle internally and externally
5. Look at where your money really comes from now, and concentrate efforts on high yield activities like bequests and major donors
6. Look at where growth is coming from for successful charities, and ensure you are getting your slice
Look after your donors
7. Implement proper, well thought out and planned ‘supporter relationship management’ – just think if you had implemented Relationship Fundraising back when the book was written, your donors would be much more likely to stay with you now.
8. Ensure you are using the right tactics for fundraising – number of mailings, personalisation, length of letters, actually asking for money in your appeals, telephoning to upgrade regular givers; any of these things not done right will cost you much, much more than any impact of a recession.
Get more donors
9. Regular givers are still the best bet in most countries right now; they are expensive and it may take you two years to recover costs but, guess what; that is life in fundraising
10. Understand the implied life time value of such donors – plan long term
Oh, if you are a glutton for punishment and want all the 9,000 words, charts and tables which you can nick stuff from to impress your board then just email us and we will get it to you after some poor person has edited it.
But everyone is agreed. And so are all the experts whose blogs / emails / articles I have read. They all say 'Don't panic, don't hurt yourself'.
Bottom line - what you as a charity do, in reaction to a recession, can be more deadly than what the recession will do on it's own.
If you are reliant upon corporate funding then you are probably most vulnerable. Many of the best corporate donors are (were?) banks. But if you have a sound diverse fundraising strategy, especially if it has lots of regular givers, then you are in the best situation. Don't panic.
Check out what Uncle Mal and Dan Doyle has to say here (US focused, but relevant to us all). Or check out this podcast, again very US but still relevant.
And don't forget if you want my massive rant about the recession, email and ask for it from email@example.com and we will get it to you.
Monday, October 13, 2008
I say a week ‘off’ because, whilst in France, I stayed with a friend, Ken Burnett. You may have heard of Ken from his work and books on fundraising including the essential Relationship Fundraising, which I reckon first came out in about 1893. Over a century later, it is still very relevant and promotes a donor-centred approach to maximising lifetime value; i.e. be nice to your donors and they will give you more money in the long term.
Ken actually has a life beyond fundraising. At his place we spent some time walking around his field. But this time the field is a star of his new book, The Field by the River. This is his first non-fundraising published book—a sort of cross between A Year in Provence and Jed Bartlett’s love for trivia. If you haven’t seen The West Wing don’t worry about that reference. If you did see it, liked Jed and you like nature, you will love ‘The Field’.
During my visit, Ken was obsessed with his ‘score’ or rank on Amazon.co.uk. He was checking it pretty much every hour—as I’m sure you and I would be if we had just had a book published—and it was the main topic of all conversations.
Actually, not all, I exaggerate—just breakfast, morning tea, lunch, dinner, after dinner and a quick check of Amazon before going to bed. To be fair, it was the very first week of sales, I am sure he is not checking every hour this week …
So, what has this got to do with fundraising? And how does it bring in British fundraising stalwarts, Tony Elischer (of Think!) and Tim Hunter (of NSPCC)? Well you didn’t know it was going to bring in Tony and Tim but now you do. They only get tiny cameos though.
At the IoF Convention in the bar (of course) with Tony and Tim talking shop (that’s it for Tim, told you it was a little cameo). Tony brought up the ‘scores’ of my speaking sessions at the Resource Alliance’s shockingly named International Workshop for Resource Mobilisation—IWRM—a couple of months previous, in Malaysia.
I had presented a few sessions in Malaysia that had gone down very well, according to the scores, and Tony ‘ranked’ me—i.e. ‘You came in above blah blah’. Mind you, he did leave himself out of the list—I am sure he did very well too.
And this week I got my ‘scores’ from IoF too. As an egotistical, needy, must-be-loved, ‘please like me’ person this is really important to me, and I hope my mum finds out without me having to tell her. But really, the whole scoring system is seriously flawed.
When Tony first told me about the ‘scores’, I accidentally forgot about my ego and instead got on a soapbox about scoring. (OK, it was still ego—just manifesting itself differently). And here it is.
Conference organisers need an objective way of measuring their speakers’ performances. They really need to be able to get the best speakers back and establish a system of good speakers to build their reputation. Seems obvious.
The problem comes from a conflict between the only real purpose of a fundraising conference—empowering individuals to make more money for their organisations—and the fact that people want to enjoy themselves, be entertained, laugh and learn. If you ask, we will always say learning is our priority. But this is not reflected in the scores.
Basically, most people score emotionally. They will score a speaker higher if they like her or him, they will score higher if they have fun. But worst of all they will score them lower if they disagree with the speaker. The last point presents a huge challenge for any speaker trying to challenge the prevailing paradigm, which of course we need to do if we are to create change.
Now bear in mind a few things:
- Most fundraising conference speakers are not paid and are not professional speakers.
- A large proportion of conference attendees are usually first-timers and people new to fundraising.
- Scores are usually very generous—speakers rarely get the worst possible ranking.
- Session attendance can vary from a dozen to hundreds, so a couple of out-lying scores can have a dramatic impact for some people.
The best learning comes from highly skilled teachers or trainers who really know their stuff, give direct practical information, are willing to adequately prepare before the conference and are engaging and fun. The problem is they are very rare—hence the international conference ‘circuit’ has the same old names cropping up.
So what can we do about it?
Well, we need a paradigm shift about how we ‘score’ at conferences and the decision-making process about how we invite people back.
The organisers of the key fundraising conferences should come together to develop effective and standardised conference evaluation policies and procedures. This includes organisations such as the Institute of Fundraising (UK), Resource Alliance, Association of Fundraising Professionals, Fundraising Institute of Australia, CAF and Fundraising and Philanthropy magazine. Leave egos behind and do what’s right for the fundraising community. They should develop:
- A much more thorough and data-driven approach to the conference and speaker evaluations. The attendees are customers and should be analysed like a charity would analyse its donors.
- A way to gather more data on attendees—before the conference—to find out about their years of experience, area of work, etc. and then analyse it to see who goes to which sessions.
- A process whereby conference organisers can log who came to what session to put post conference feedback in context.
- An evaluation system that has more emphasis on learning outcomes. This means scoring sessions on more than just content and presentation.
- A process that measures ‘scores’ in grades of ten rather than four. Marks out of ten (rather than ‘poor, ok, good, excellent’) create more significant gaps on measures and also make it easier to provide feedback to speakers and conference organisers.
- Evaluation forms that collect more useful written feedback and send this to speakers.
- A process that takes into account attendance numbers when looking at average scores.
- A process for following up all attendees using something like Survey Monkey to ask people what they have done with the learning.
Those are some of my ideas—but I know you have lots of experience as a conference attendee or speaker, so I would very much welcome your views and ideas.
Anyway, when I wrote this, The Field by the River is ‘scoring’: ‘Amazon.co.uk Sales Rank: 3,486 in Books’, the highest I have seen. Oh, Year in Provence is 3,883 and #1 at Amazon was‘Chinese Food made easy’.
When it was about 4,000 I asked Ken what that means in book sales. ‘I have no idea, but it was 7,433 yesterday …’
Bloody typical, no one seems to measure the right thing.
Wednesday, October 8, 2008
On a piece of paper, or open up your word-processor or notes program write down:
- Your favourite charity - not the one you work for
- How you support the charity (eg monthly gift, volunteer, occasional donation)
- Why you support them
Here is an example:
- My favourite Charity: The Sumba Foundation
- How you support: Regular gift from credit card & occasional donation
I went to see them at Christmas last year and met loads of the kids. Before the Sumba Foundation started its work, the infant mortality was about half the kids. ie half of them would die before they get to adulthood, mostly from malaria. It is easily prevented - nets and education, and I was really motivated.
Please take the time to do that, it will be worth it.
Now, back to the blog...It’s a curious thing, but most charities, much of the media and an annoying number of public servants appear to think that the percentage of money raised by charities and spent on actual charitable work is the most important measure of worth available.
So much so, that for some states and nations return on investment (ROI) is one of the key measures that charities need to report on.
But our obsession with ROI damages our ability to make the world a better place, and I have the data to prove it.
When I meet with charity staff and boards, ROI is always an important consideration.
Fundraisers are given a brief that they must grow income by X without the annual cost of fundraising (COF – an inversion of ROI) increasing by more than Y.
ROI can be a useful measure – for example, when a fundraiser is considering tactic A vs tactic B to acquire new donors and there is a limited budget. Provided ROI is considered over several years, measured holistically (ie to include additional gifts, upgrades and bequests), and the rollout/repeat potential is considered, then it can be the best measure.
So why does it make me so angry? Principally, because obsession with ROI above all else harms growth. Too many charities choose the path of slow growth – or even reject otherwise successful strategies – because of their fear of a low ROI.
For example, charity A raises $40,000 from its Christmas appeal to warm donors, at a cost of $10,000 - an ROI of 4. It knows that by increasing the amount of time spent on the DM pack, sending out more information and writing longer, more professional copy (in other words, by spending more money) it could probably increase the donation income to $100,000. But the pack would then cost about $50,000, giving an ROI of just 2.
So the boss says no, and the charity continues the old way, maybe improving income a bit by writing longer copy. Net income, however, is still only about $30K, whereas the more expensive method would have netted $50K. Apart from the fact that the charity has $20k less to spend on services (or fundraising growth) in the immediate term, the decision is greatly flawed in the long term.
Meanwhile, Charity B, which decides to go the more expensive route, is set to benefit from a) higher net income, and b) many more donors. This is not just some hypothetical example. The chart below depicts a real life Australian case study. This charity decided to look at the long-term picture, and not worry about ROI.
The consequence for this charity of the shift in mindset was enormous. You can see that after a number of years, ROI is creeping back up again, but more importantly, the overall amount available for services (ie net income) from Tax 04 to Xmas 07 was $2.08 million. (Charities in Australia usually have two peak times for mailing – Christmas and “tax” – which is mailed around April/May). If they had kept to the old strategy, and experienced a bit of growth, they could have expected to net about $600K.
I repeat: the organization could have raised NET $600K, at an average ROI of 7 or NET of $2.08 million at an average ROI of 2.8. Come on, which result is going to help its beneficiaries more?
So how come so many intelligent people are led astray by ROI? The answer is simple – they are frequently told that this is what is important to donors.
The conspiracy theorist could argue that actually perpetuating the myth does help some charities – but only the really big ones. A shift in strategy for a small charity striving for growth is likely to reduce its ROI, but exactly the same strategy change for a larger one could actually improve its ROI. That’s just a mathematical fact.
This means that if the big charities were to be protective of their turf, banging on about ROI is a good way of preventing smaller organizations from being able to compete.
In the above example, a charity raising $500,000 per appeal who followed the same change in strategy would have seen hardly any change in ROI.
But we keep hearing "ROI (or COF) is important to donors." But who says so? Well, the media, common sense – and even the public. The problem is that this is what people (donors and non-donors) really do think. But it’s not how they behave. The charity above clearly had no problem.
And I have lots of other examples.
The charity probably had to explain the strategy to some major donors, and even the authorities, but its economic basis was so solid that those guys were not going to have a problem with it. Normal donors still gave – and none of my examples hid their COF.
As for the public, they may say ROI (or COF) is really important, but that isn’t reflected in their giving behaviour. The reason they give is because they were asked properly and they care about the cause. People who harp on about the amount of money that goes on administration are normally non-donors; COF is just a good excuse for not giving.
I recall being told about an experiment where a group of people were given real money to donate. They were given choices based on photos, stories about beneficiaries, and pie charts of expenditure. Never were the pie charts a significant factor for choosing which charity to support.
I admit I am not as extreme as Professor Myles McGregor-Lowndes of The Australian Centre for Philanthropy and Non-profit Studies at QUT. During a presentation on accounting for charities (which he managed to make interesting) he called on the Fundraising Institute of Australia to bar charities who bang on about how low their COF is.
But no fundraiser should allow his/her organization’s beneficiaries to suffer because they are bamboozled by the unsubstantiated bollocks that passes for fact when it comes to ROI. Of course, you need to be careful with your funds - I am not suggesting charities go out and take ridiculous risks - just plan strategically.
Don't believe me?
Remember the exercise right at the beginning? Did you write something like this?
- My favourite Charity: The Sumba Foundation
- How you support: Regular gift from credit card & occasional donation
- Why? Their cost of fundraising is really low and I am impressed by their effective admin systems...
Of course not. And do you even know their cost of fundraising?
Donors care about what you do, the impact that you have not how you raise it.
Pareto Fundraising help charities in many ways, not least explaining this in more detail to boards and management. If you want us to help, please email firstname.lastname@example.org.
Canadian Fundraiser published much of this information as an article in May 2008.
Tuesday, October 7, 2008
People (fundraisers) are asking me 'What should we do!?'
For evidence, proof and more detail (a lot more) I have just finished a big, thorough article about it, covering all areas - potential effects, what boards should do, what impact it has had on income to date etc. The article is bloody long and will be a little while more because it is with an editor right now, but it will be essential reading because it gives you what you need to go in and fight the most important battle:
Prevent recession suicide. The most dangerous thing about a recession is charities panicking and making bad decisions that will harm them more than any decline in income as a direct consequence of the actual recession. Cutting budget, reducing acquisition volumes, cutting staff - all of these things are killers for you. Much, much more dangerous than the actual recession.
Puling my big article together, I read a ton of articles, from people I know, such as: Gonzalo Ibarra (Chile, article is in Spanish, he reckons it helps you focus on who your real donors are and that in the massive financial crisis in Argentina they got low rates of attrition and brilliant results). Mal Warwick (USA, DM guru and all round brilliant bloke), who is worried about people cutting back on acquisition and donor care.
And also strangers to me, people like Lisa J. Lehr (a US copywriter) who reckons don't cut back, '...If you're a nonprofit, however, don't make the mistake of thinking that this is the time to cut back on your fundraising efforts. What these gloomy indicators mean is that nonprofits need to increase--not decrease--their fundraising efforts...".
Marc A. Pitman agrees and he wrote a book too, so he must be clever.
All these people - and more - are saying don't cut back. Mal's article includes some big picture data references, but most are telling you this as they are experts.
My article goes a bit further. It has tons of data, explains in detail what to tell the board, management and colleagues and comes up with a ten step plan to protect your charity in a recession. Heavy, but essential reading.
If you want the full article, then please email email@example.com who will send it when it is ready to go!
If you are new to this blog, and are wondering what Pareto Fundraising is, please click here for more information.
Thursday, October 2, 2008
Listening to them on my iPod on the way to a major donor strategy and training session (as one does) I was intrigued to be reminded of the B Ark. It reminded me of major donor fundraisers. Now, if you are a major donor fundraisers then please don’t take offence – I mean the other major donor fundraisers, not you.
The B Ark. If you are familiar with the Douglas Adams’ masterpiece then skip the next three paragraphs.
Basically, the B-Ark was a huge space ship sent from the planet Golgafrincham. It contained about a third of the population of the planet. The story (that people on the B-Ark were told) was that the planet was about to be destroyed. Three arks would be built.
The A-Ark, would have all the great minds, leaders, ideas people and the C-Ark would have the really useful people; carpenters, farmers, plumbers, electricians and the like. The B-Ark, would have hairdressers, TV producers, insurance salesmen, personnel officers, security guards, management consultants, telephone sanitizers and the like.
The other two thirds of the population, of course, did not follow and "led full, rich and happy lives until they were all suddenly wiped out by a virulent disease contracted from a dirty telephone".
Now, major donors. I have met precisely 42 major donor fundraisers. And I must say, many I have met would earn a place on the B Ark. (Not you of course, dear major donor reader). Many major donor fundraisers circulate in this mystery zone of decent salaries and little fundraised income. They get a new job, spend 18 months prospecting for donors, researching and profiling donors, developing a case for support, complaining the board won’t ask (and – gosh – haven’t actually given themselves!) before moving on to repeat the process, on a slightly higher salary, in a new charity.
As a consultant (yes, I would have been on the B Ark too but…) I see many charities and help with their major donor fundraising. And I note the key success factor is not whether they have prospected enough, researched enough, profiled enough – not even whether they have a major donor fundraiser. It is always the same thing:
Whether they asked a rich person for a lot of money.
Assuming you really need the money, then to run a successful major donor program, you don’t need tons of research, profiles, years of relationships. All of these will help and will have a bearing on the success or the amount you raise, but ultimately the most important thing is that someone asks someone rich for a major gift.
Easy to say, but not that easy to do. In the past months my colleagues and I have conducted about half a dozen training sessions with Australian charities. Those that booked appointments and made asks within days of the training have succeeded. Those that didn’t, are ‘between fundraising successes’.
Now, I am not saying that all the great books and plans and processes by people like Neil Sloggie, Kay Sprinkel-Grace, Karen Osborne and Terry Axelrod et al are wrong.
If you followed them exactly, I am sure you would have success. They have different tactics, some take a long time and all rely on consistent staff, consistent strategy, consistent leadership and consistent follow through. These factors rarely all come together.
Ultimately, they all rely on someone asking someone rich for a lot of money.
I also recognise that for $1m donations, capital appeals etc take time, building relationships take time. But asking is the key. It won’t hurt your chances of getting $1m from rich guys Arthur or Zaphod next year if you get $50k now.
Please, just get on with asking.
Oh, by the way. I am a major donor fundraiser and proud of it.
Pareto Fundraising helps charities with getting over the initial fear of asking - with great degrees of success. See a success story here. Contact firstname.lastname@example.org to see if we can help your charity crack on with major donors.
I originally wrote this about a year ago for the Resource Alliance's Global Connections newsletter.
Wednesday, October 1, 2008
My time is up. I was officially a guru for September, on the Resource Alliance's Ask a Guru section of their website, and I am going to expand on a couple of the questions on my blog into the future.
The questions and answers will remain there, but now it time to pass the baton to Richard Radcliffe, a real guru rather than a fake like me.
So, the next three gurus in Resource Alliance's popular series are:
Richard Radcliffe, October 2008. Recognised as one of the world's leading legacy experts, and a lovely bloke with a strange, very English sense of humour.
Jennie Thompson, November 2008. A leading light in donor communications, a big advocate of a donor-focused approach to fundraising who still bangs on about Relationship Fundraising, which was written by Ken Burnett in the early 90s, and she is still right. Tireless woman, somehow cheats time as she must have 28 hour days and 8 day weeks to achieve everything she does.
Marcelo Iniarra, December 2008. Energy, ideas and pure genius. I think he sold his soul since he started working beyond charities, but he denies it. And he is still trying to drag charities into the 21st Century. Anything to do with technologically driven communications, he is your man. Oh, and he is a rare dude in that he actually made money for charity from online fundraising.