Saturday, July 25, 2009

The survey - the most powerful tool in the world

Since I first starting using surveys at UK mental health charity, Mind, I have loved them as superb sources of information and as a great fundraising tool.

Pareto Fundraising's Creative Director, Dan Geaves loves surveys as much as me.

Here is his very uesful presentation about them - some very useful statistics in there.

An article about using surveys (and more) is going out in our next Pareto Talk e-newsletter. To sign up to receive it, click here.

Wednesday, July 22, 2009

DMAW Bridge Confence

Get major donors next week. The biggest reason that major donor programs fail is that no one asks a rich person for money.

Read what I have to say about it in 'The Hitch-Hikers Guide to Major Donor Fundraising' - and below is the presentation to go with it, presented at DMAW Bridge Conference.

Tuesday, July 21, 2009

Calling all INGOs - invest in Australia

At the IWRM conference Mal Warwick stated that 'Social Media is no good for fundraising'. But he wasn't telling us not to use it - he was suggesting that we use it to build relationships and generate leads.

He also told us that the more fields of information that you capture, the lower your response rate, so to generate maximum response rate just ask for email address. Makes sense - BUT we know that calling people on their mobile phone is much, much more effective in converting them to donors, especially regular (monthly) donors.

But what is the optimum point? Charities and companies worldwide are investing in exploring these ideas, but rarely coordinated even amongst their own sites.

Even when tested, in many of the case studies I saw at IWRM and then at ADMA Forum there was no joined up thinking between the initial test and the final sale.

The initial sign up rate when capturing data is not the point - the number of sales is the point - but testing is long winded and expensive.

Chatting to people from different INGOs (International Non Governmental Organisations eg UNICEF, Plan, Oxfam, Greenpeace, Amnesty) in different countries I see some amazing tests but again, no joined up thinking.

For example, Greenfam USA may be testing one thing, for a cost of $50k and Greenfam UK testing another for the same price, Greenfam Brasil another and so on.

Surely a better approach would be a team effort, pooling resources and testing joined up thinking in a tech savvy country, with a small but rich population, high Internet penetration and in a language used in more countries than any other?

Having a multi-national team enables 24 hour project development, doubling the speed at which progress can be made (I know, in theory it should treble speed but in practice, hand overs etc slow things down). Back end could be done in cheaper countries - any online test can be done anywhere of course.

The lessons learned can then be rolled out and tested. Of course, some practical differences between countries will emerge but as World Vision have shown with their international rollouts of successful products, these differences are cheaper to iron out than everyone just doing their own thing.

We are managing to do this at Pareto - with our international offices working together with areas of speciality in different countries. It is hard work to get it going, but we can see the advantages already.

And the country rope for these tests? Australia. WSPA did it - come on the rest of you!

Oh, and for all those non-INGOs grumbling that this blog is useless for them, make friends with INGO staff and find out their results and I promise to publish whatever I can get permission to publish.

Live from DMAW Bridge Conference

My first attempt at ScribbleLive - I type and this blog entry gets updated. The Conference lasts until end of Thursday, American East coast time...It may even go to my Twitter too, (@seantriner).

So check in anytime until then. After that, I will neaten it up a bit.

Monday, July 20, 2009

Time to spend your reserves!

Charities build reserves for a rainy day - as do companies. If it is raining now, and charities (and companies) are laying off people rather than use their reserves - what were those reserves for!?

Before I set up Pareto Fundraising with Paul Roberts, I was fundraising and marketing director at Mind, a UK mental health charity. While I was there, I introduced face-to-face fundraising, which brought in hundreds of thousands of pounds.

Although it wasn't cheap my argument was simple: the return from face-to-face (F2F) activities was better than the amount the money would earn in the bank. (By face-to-face, I mean the practice of asking people for small monthly regular gifts on the street, at events and door-to-door).

Even over five years, F2F does well to make a return of more than 3:1 and it can take nearly two years to break-even. But it still hammers investment returns in the best bull market.

Other methods of recruiting new regular givers, like direct mail or online, give a superior return on investment over five years but income is harder to earn and can rarely match the volume of F2F.

I recently met with staff at a charity in New Zealand. The rather innovative finance director said that what they needed to do was to sell their property and free capital to invest in F2F. She was serious, and the CEO nodded in agreement. Her argument was the same as mine when I was at Mind - the return from F2F would be better than just leaving the money invested in property.

As well as yielding more, the risk is very low too. Now they will need to have some serious conversations with an F2F supplier and their board.

This enlightened attitude to reserves is unusual - for many companies as well as charities.

I heard of one charity cutting services and laying off people despite having very substantial reserves ‘for a rainy day' - enough to keep services going for years. It made me wonder: ‘What are reserves for anyway?'

Chatting to a few charities, I uncovered several reasons for maintaining reserves. The first two below seemed the most frequent:

1) Endowment / income generation

2) Safety net (rainy day)

3) Saving for defined future plans

4) Saving for undefined future plans

5) Protecting their independence (e.g. if government slashes funds they can carry on)

6) Meeting long-term commitments (endowed chairs at unis, specific projects, legal requirements)

7) Covering an amount sufficient to remain legally solvent and pay out all commitments upon wind-up

8) Tiding them over between events

I then asked the lovely researchers at Givewell how much charities had in reserve. (In a moment of fundraising excellence, they pointed out that if I upgraded my subscription they could send me their compiled investment report. Genius - they got my upgrade.)

The Givewell analysis of hundreds of 2008 annual reports shows that 202 non-hospital charities have investments of more than $500,000. Nearly $5 billon is invested, with another $1.5 billion held in cash.

Some of these reserves are big - the largest are held by St Vincent de Paul Society in NSW and the two Australian Salvation Armies. Between them, they reported just over $700 million in non-cash investments with three-quarters of that tied up in their properties.

Let's look at the endowment / income generation motive for keeping reserves. Many charities - especially schools, universities and hospitals - will run a capital campaign to build up a reserve fund to use as an endowment.

According to Wikipedia, "A financial endowment is a transfer of money or property donated to an institution, usually with the stipulation that it be invested, and the principal remain intact in perpetuity or for a defined time period. This allows for the donation to have a much greater impact over a longer period of time than if it were spent all at once."

Put simply, I donate $1 million and the charity invests it wisely and spends the investment returns, but leaves $1 million in the bank. Over 20 years, it draws an average return of say 10% per annum. In other words, my donation provides $2 million for services. So it has a greater impact.

This is all very sound. And as a policy, it prevents charities from falling into the trap of doing as much work as they possibly can now, at the expense of their ability to provide more services in the future. The problem from my point of view is the interpretation of how it can be invested.

I would argue that the last few decades have shown that shrewd investment in fundraising - especially direct marketing, bequests and regular giving - is still following the spirit of the endowment. If that charity had invested my $1 million in regular givers just 10 years ago, they'd have raised nearly $10 million for services - a much better return than the market cash rate.

One argument against this avenue is that fundraising is not as safe as the market. But that depends. Money invested in cash would have perhaps yielded an average of 2.5% per annum very safely. But it would take the best part of a century - if it ever happened - for my $1 millon to be worth more than if the charity had spent it straight away.

This is due to low returns and inflation. A more aggressive approach may have averaged better returns, but not over the past year, and still not as good as yields from regular giving.

Fundraising could have gained a much higher return. However for success many things would have had to be in place already, such as skilled staff, strategy, good creative, a well-managed database, infrastructure like computers, and so on.

For consistent results, the best option, as always, is a balanced portfolio with some investments in fundraising and some in cash, property, shares etc.

The past year has been pretty bad for investments, with no net growth thanks to the financial crisis. But over the past decade, the market (especially in property) has served charities well.

Then again, traditional ‘safe' investments have performed poorly compared to growth in sustainable income for charities that used reserves to invest in regular giving - and not just in the last year.

Exploring annual reports, we can see that Australia for UNHCR, Seeing Eye Dogs Australia, The Stroke Foundation, CanTeen, Surf Life Saving and Save the Children in NZ have all grown their fundraising income well over 50% in the past two years. The revenue of the first three organisations has more than doubled over those two years.

Although The Stroke Foundation has proved that good old-fashioned mass-cash direct mail can still work, most of the growth came from regular giving - and most of that from F2F.

Interestingly, the biggest factor in growth from regular giving and direct marketing is not the type of charity, brand awareness, age, product or geography - it is how much was spent. There is always a learning curve, but after that the return is based on investment levels. Spend more, get more.

The next time your acquisition budget is slashed or non-existent, push the barrier. Check what reserves your charity has, including property - and reframe your acquisition case as an investment decision. Work with the finance director / treasurer to scenario-plan, check what returns have occurred from investments and also what is planned.

That finance director in New Zealand was spot on. Provided they can line up an F2F supplier, make tests work, recruit a staff member to manage the new donor relationships and get the appropriate systems in place, they should sell their property. There is absolutely no sense in not doing so.

A few last words of caution though.

Pete Thomas, director fundraising and marketing for Amnesty International Australia, pointed out to me that "the predictability of pledge income [regular giving] does mean that the level of reserves does not have to be as great as it may be if we relied on events or mail. But even an organisation with predictable pledge income can be hit by fire, database meltdown, large scandal, government intervention, strike, legal action etc. which can interrupt income flow and thus our ability to do our life-saving work."

In essence, then, every charity should keep some cash reserves.

But stop and think hard if your reason for doing that is ‘keeping money aside for a rainy day'. Charity bosses - it is raining outside right now. Please make sure your paradigm recognises that.

Every month I write something agitating like this for Fundraising and Philanthropy magazine - for their e-briefing 'The Agitator'. Subscribe to their e-briefing here.

Thanks to Margaret Harlow from Givewell for going well past the call of duty to help with the reserves research.

Wednesday, July 15, 2009

Bums on seats

A neat idea from the DMAW Bridge Conference. Ask the speakers to sell your event by emailing their own contacts. I have spoken now at dozens of conferences and this is the first time I recall ever being asked.

So, if you are in America, you can come along - and I can reserve you front row seats at my presentation!

One critism though, and this was disappointing - the email requires me to fill in my details, including my session title, session times and topic. This will supress take up, and could have been easy to deal with since DMAW will have all that information on file - it is easy to personalise emails these days. Hey, maybe I was in a test / control group and the others were personalised?

Either way. good stuff American DM & Fundraising people; thanks.

Here is the email:

Dear Sean Triner,

The attendee list is growing for the 4th Annual Bridge to Integrated Marketing & Fundraising Conference and, fortunately, we have not experienced a significant decline in registrations like other organizations. There is so much value in this conference that even in a down economy, we expect nonprofits and direct marketing agencies will choose to spend precious professional development funds here.

You can help us continue to reach potential attendees and expand your own professional impact at the same time. What better way to reconnect with customers, donors, and colleagues than for YOU to invite them to have a front row seat at your own presentation! Whether they choose to attend or not, they will be impressed by your expertise, recognition, and warmth in inviting them.

Here is the draft of an invitation e-mail that we promised to send to you so that you can edit and then send it out. Please send this to everyone in your address book. Yes, even your Mom should know that you are speaking at this conference! Cultivation of donors, customers, vendors and colleagues can only result in positive reflection on you don’t miss this opportunity to invite others to join you at the Bridge Conference. We all know that the survivors of economic hard times are poised for greatness when the economy improves.

Dear Friends,

I wanted to share an exciting opportunity I have this summer. I was selected as part of a small number of experts to present at the 4th Annual Bridge to Integrated Marketing & Fundraising Conference, an event that brings together fundraising and marketing professionals from all over the world.

I will be presenting on [insert topic] at [insert time] on [insert day of week and date]. This subject is important to all of us right now because [insert reason]. I invite you to join me at this rich educational conference to learn more about this and other issues, helping each of us to do our jobs more effectively.

You can register for the conference by clicking here. If you are unable to attend, you can look at the website to see if there are helpful resources for you there, or I can tell you about my presentation afterward.

Either way, this is a welcome opportunity to connect with you. I look forward to hearing from you soon and hope to see you in person at the conference.

Kristin McCurry and Lisa Boccia
Bridge Conference Co-chairs

P.S. Don’t forget, if you would like to connect to your potential audience we have a variety of social networking tools available exclusively to speakers to connect them with Bridge Conference attendees. Just send a message to Dawn Smith and we will have one of our volunteer social networking and technology wizards reach out to you.

Monday, July 13, 2009

Consumer behaviour during a recession

At the ADMA Forum, I attended a fascinating and useful presentation by Steven Noble, a senior analyst from Forrester Research. His presentation is available here. They want your details in return (which is why I'm not posting it here) which is kind of fair enough - they are research after all.

Steven had us going all the way back to basics, looking at needs and 'providing' comfort. Brilliantly illustrated with real examples, including how Ivory Soap advertising in the USA evolved through the Great Depression.

Bottom line: Marketers need to give consumers more 'comfort'.

He didn't talk about NGOs and charities, but I reckon we may well have the easiest opportunities to do that.

Thursday, July 9, 2009

ADMA Forum again

I have finished at this Forum now even though there is another half day, and I gotta say I am exhausted - not because of late nights or boredom, but because there was so much to take in.

Last time I went to ADMA Forum, I was not impressed and have not sent any Pareto people or been along since. This time they gave me a free ticket since I was presenting. The presentation went well (at least I enjoyed it, and got a few laughs - hope that the audience learned something too!) but within the presentation I asked who was from a charity.

About 600 people were attending the conference, and my presso was the only thing on so most were there - but only about a dozen hands went up. But I wasn't surprised because of the lack of enthusiasm the Australian fundraisers I know had for ADMA Forum.

It is a shame. Because there was tons to learn - more for charity direct marketeers than any other conference I have attended in Australia for years.

I was so impressed that I have asked if I can help ADMA to get more charities along to the next one. I am starting now - charity direct marketeers (including events & face to face fundraisers) - start thinking of a way to blag some money in your budget to get along next year.

Specific tips and learnings that I picked up from the Forum this time around to come.

Sean Triner

Wednesday, July 8, 2009

ADMA Forum

Unusually for me I am presenting to a non-charity Audience at the ADMA Forum in Sydney. ADMA is the Australian Direct Marketing Association, so the audience will be mostly for profit organisations. Hopefully I will pick up lots of tips from these experts to apply to the charity sector.

I told them about The Lost Dogs' Home and how they used a really pure, back to basics approach to direct marketing to connect with their key customers and increase their fundraising income by nearly ten times in five years.

Presentation below.


Tuesday, July 7, 2009

Islam and fundraising from bequests (legacies)

At the IWRM conference in India recently, I pointed out that fundraisers who resist bequest marketing often use 'culture' as an excuse for not asking supporters to mention them in their wills.

The reason often given is something like 'Indians don't like talking about death...' This is easily countered by the fact that nor to Brits, Americans and Australians where bequest 'marketing' is more established.

But a fundraiser from Indonesia challenged me with a much more practical problem. She asked whether bequest marketing could actually work in Muslim countries since 'Muslims were required to give their money to their family.'

That would bring bequest marketing to a halt. So I went and found out what I could.

I checked with the President of Dee Why Mosque in Sydney. He told me that "Muslims must leave two-thirds of their estate to their family...the last third should go to good causes." On further pressing, he said that the good cause money would be better spent on "Human charities, good causes" and perfectly reasonably for a man in his position preferred Muslim causes.

I also checked with a lawyer, Haisam Farache, after his website, "Islamic Wills" was brought to my attention by bequest expert Christiana Stergiou.

Haisam confirmed that Muslims are indeed required to leave two-thirds to family and the other third can go to any good cause, human, Muslim or other.

Of course, this is looking at local law - it is possible that legal authorities in different countries may apply restrictions differently, but this would be a state/national legal issue and not a religious or cultural requirement.

If there are any other religions or cultures that make bequest fundraising impossible, please let me know!


Sunday, July 5, 2009

Pareto Squared in Action I

Following on from my blog explaining Pareto Squared, here is another example of applying the principle.

An organisation has 20,000 donors. It has a limited budget, but a tough target. Provided it is not mailing it's donors too often (which many think would be over 30 times a year, so this is not likely) then it would make more money mailing the top 20% of donors (4,000) at least twice, and then just mailing as many of the next 16,000 that budget allows.

In other words:
Mail 20,000 donors at a cost of, say, $20,000. ($1 per pack)

Or Mail
Top 4,000 with a better pack costing $6,000 ($1.50 per pack)
Mail those 4,000 again with a reminder pack costing $6,000 again
Use remaining $8,000 to mail the 'best' of the remaining 16,000 donors with a cheaper - say just 8,000 at $1 per pack.

In the end, only 12,000 of the 20,000 donors are mailed BUT you will make more money.


Thursday, July 2, 2009

Fantastic Donor Care

An interesting letter from AMEX combined with Ken Burnett commissioning me to debate the worthiness of charity newsletters, with newsletter master Tom Ahern prompted me to post this old donor care letter (or 'news' letter). Pareto worked with Lisa Cheng, the then fundraising boss at Children's Cancer Institute Australia (CCIA).

Everything red is personalised information, and there are several variables not used for this donor that could have thanked him for his pledged legacy, extra gifts, specific letters to CCIA and more.
I have also posted the Amex letter - quite cute; handwritten font envelope, stamped and 'from the desk of Pierre Beckert'. I have no idea who Pierre is, and nor does Google, but much more effective in making me feel special* than their regular glossy newsletter / magazine.

And here is the Amex one...

By the way, I know AMEX Platinum is expensive, but with the free travel insurance and free return flight it works out good value... OK, OK, I'm a pretentious mug.

Disaster Fundraising Guide download it here