Saturday, March 19, 2011

Fundraising is Beautiful Podcast Data 3 - F2F v non F2F

As I promised on the Fundraising is Beautiful Podcast, here is some more useful information on regular donors. This short presentation compares the implied life time value of average monthly donors recruited across a group of Australian and New Zealand charities (data is two years old now but the trends are the same).
F2 f v non f2f
View more presentations from Pareto Group.


Roewen Wishart said...

This is very interesting data which fits with "ancecdotal observation". Two questions

1. what's the statistical method behind projecting three years worth of data to eight years please?

2. your opening statement about comparison of "average" RD acquisitions. I have no problem with comparing two different monthly rates (after all, that's the point you're making - even at lower rates per month, lower attrition pays off over time). But what's the comparison of cost per acquisition? Were the two monthly donation points chosen becuase the cost per acquisition was the same? After 3 years, let alone after 8, any difference in cost per acquisition becomes less signficant. But of course we are obliged to look at one year ROI, as well as lifetime value.

Look forward to your comments

'Sean is always learning' said...

Good questions:
1) Extrapolation based on last eight years or so of attrition data of both types of data. Upgrades work about the same for both groups so the pattern is the same whether upgrades are included or not.

Please note, non monthly donations are not taken into account. Whilst both types of donors have similar upgrade rates, non F2F donors are 'better' in at least two other ways:

They are much more likely to make additional donations, such as to an appeal.

They are more likely to put the charity in their will, if asked.

And they are older, therefore closer to realising that bequest.

2) The monthly comparisons are not chosen - they are the average monthly amounts across all of the data. Across the data the mean average F2F donation was $25 per month and the average non F2F $15 per month.

Cost per acquisition and therefore ROI is more tricky. For non-F2F donors charities few charities have accurate CPAs available, and when they do they are inconsistent - some include staff salary, some don't. All should include salary, of course. For F2F it is easier, since most pay per donor. But that varies in Australia from around $200 to around $300, a bit less in NZ.

We have seen CPAs for non F2F vary much more. The hundreds of donors picked up through thank you letters and newsletters are nearly free, but for strategic volumes charities must risk more with mailings and phone calls. CPAs there can vary from $100 to $750 - and still be worth rolling out.

Because of the lack of consistent cost data, the data presented here can be better used to determine how much you should be willing to pay for donors. You can set a target CPA.

Put crudely, if you are paying $250 per F2F donor you should be willing to pay $500 per non F2F donor. You will make more money in the long run, plus have a better bequest pool.

Whatever you do, I recommend both. F2F will get you the volumes, non F2F better value. But F2F is lower risk, and less intensive on internal resources if outsourced. Non F2F can take several attempts to get right.

James Read said...

Thanks for posting this information, Sean. The material in the "Fundraising Is Beautiful" podcast is excellent and worthwhile for any fundraiser to listen to.

Disaster Fundraising Guide download it here