Monday, November 11, 2013

How to Write a Thank You Letter

How to write a thank you letter....

First question: should you even bother? The anecdotal evidence for thank you letters is huge – many donors say they like them. Lots of opinion research shows that donors are more likely to give if ‘they know what their money was spent on’. 

However, there is little data that we have access to that demonstrates that general thank you letters actually increase net life time value.  Few charities have tested sending thank you letters to half their donors versus no thank yous for others - especially since it needs to be followed through for a minimum of 18 months, but preferably longer.

Without solid data, most charities make the decision based on policy or gut instinct.  We know that gut instinct is often wrong though. For example, gut instinct (and donor feedback) contradicts the fact that generally, longer letters beat shorter and more mailings = better life time value.

We know that bequest income for many charities can raise more than direct mail donations, and a big influence on bequests is the relationship with the donor.  So maybe being nice, despite a lack of evidence, is not a bad thing.  Even though we can't prove that our lovely thank you letters helped secure some of those bequests.

On balance, despite working at a data-led organisation, and despite the evidence, I reckon writing thank you letters is a good thing to do. 

So let’s be nice to donors. 

Hang on!  Don't rush and write thank you letters yet...

What I am not convinced about is whether there should never be an ask in a thank you letter. Lots of fundraising book authors say there should be no ask - but the evidence they present is what donors say they want, and not what actually has been proven to increase life time value.

I think, in an emergency, there definitely should be another ask for example, following a fire, flood, earthquake disaster).  

But other than that I am not sure. 

Despite all these warnings... if you are going to write a thank you letter - write a good one!

So, assuming we are writing a thank you letter that just thanks and does not ask, then these are the key ingredients for such a letter. 


  • The letter should be correct. Get the name and details right. For higher value donors, if there is any doubt, call and check the details.
  • The letter should be personal – mailmerged, and extra personal touches where possible. Never Dear Friend. Apply the Pareto principle, more personalised for higher value donors.
  • Personalised data should be:
    • Amount donated (“Thank you for your donation of $50 in response…”) 
    • Acknowledgement of recent gifts (“I note that have supported before this year – your ongoing commitment is really appreciated…” 
    • Acknowledge other types of support (not necessarily them all, but certainly most recent). “This donation, along with you telling me that you have mentioned in your will tells me that you have a special place in your heart for .” 
    • Other information, even if used before. “Thanks also for completing the survey earlier this year – I remember that you ticked that you first supported because of . I just wanted to make sure you knew that your donation will go straight to our work in that area…” 
    • Anything else personal that you know for top donors. “I look forward to seeing you at the - I have just been told that you are attending.”
  • The letter should actually say “Thank you for donating…”
  • Unless in response to unsolicited donations, the letter should be tailored to the campaign the person responded to. “Thank you for your donation in response to my letter about Jane, who is recovering after a horrific car accident on Christmas Day”.
  • The letter should be interesting (!) Update on the story that was in the campaign, have a quote from the case study or give some feedback on what others have said or done. “You will be pleased to know that, thanks to the support of you and loving and caring Australians, Jane has now made an amazing recovery. In October she walked to her local café for the first time since the accident…”
  • Should be personal (as well as personalised). The above line would be improved with more personality: “Since I sent my letter to you in September, I caught up with Jane again, along with her physiotherapist, Philip, who is funded by your donations. I was brought to tears when the pair of them were telling me how, in early October, she managed to walk to her local café. She wanted me to share her thanks with you…”

Of course, writing this much will likely take you to more than one page.  Ho hum, if you are going to do it - do it properly.

And of course, nothing wrong with testing the rules above against no thank you letter against thank you letters with asks in them... For at least 18 months!

Sean

Thursday, October 17, 2013

Have you a 100 year plan

Many charities choose to cut back in legacy/bequest programs because they won't see the money in a short time frame. 

I am at IFC listening to a big vision from Japan aimed at having profound impact on the future of Africa. 

"When you grow rice you need one year
When you grow trees you need ten years
When you change society you need 100 years"

Ashinaga, an orphan charity in Japan has a 100 year vision led by a 79 year old man. 

That is forward thinking. 

Yukichi Okazaki presenting at IFC got a few of us thinking about our charities futures. 

Tuesday, August 13, 2013

As promised: The second best way to reduce your fundraising income

The second best way to reduce your fundraising income

First thing I would like you to do is think of your favourite cause (but not one you work for, or are on the board of).  Write down what do you do to support that charity and why.

Now hold that thought and please read on. 

Looking at the data from the transactions of seventy NZ and Australian charities, I noted recently that a sure fire way to reduce income and cripple an organisation's ability to do good was to switch money from fundraising to brand awareness.

I promised a second technique to use to hammer your long term 'net good'. 

This one is usually championed from above, maybe at board or senior management level. 

Despite such awesome ammunition as common sense and Dan Pallotta's book and TED talk, this second approach to crippling your cause still lurks menacingly - sneaking up and destroying hope of growth and usually increasing fundraising staff turnover. 

This scourge is 'reducing cost of fundraising'.

Seems a sensible and popular idea really, a lay person without access to insider knowledge would struggle to disagree with that goal.  And sometimes for a relatively mature charity with a clear plan it may make sense.  But the reality is that fundraising can be very, very expensive and pretending it isn't doesn't help an organisation grow.

It is possible to 'cheat' cost of fundraising and admin cost ratios - for example, by being able to report that some fundraising expenditure is 'education', or by demonstrating that fundraising costs are met by investment returns or a generous donor or two.  Most charities can't do this. 

But I  believe that it all comes down to unrealistic expectations. 

With only a few exceptions, growth in fundraising income comes from the acquisition  of new, individual donors. After being identified (by the fact that they made a contribution) these lovely new supporters are then communicated with on a regular basis and reminded of the opportunity to feel great again by making another donation.

In the long term, some of these donors may go on to make very large bequests (legacies) and some may make very large donations. Bequests and major donations have a fantastic return on investment (ROI) and effectively bring a charities cost of fundraising down.  But in the short and medium term...

In Australia and New Zealand around 90% of all new regular givers (RG) come through 'face to face'.  By this, I mean strangers signed up to automatic debits in person from door to door, street or event canvassing. 

Around two thirds of ordinary (non-RG) donors are brought in by direct mail.

Just looking at these two mainstream acquisition methods, a reality check tells us that when everything is taken into account, it takes between around twelve and eighteen months for subsequent donations from these donors to cover their costs. In other words, a charity is in the red for a very long time before income from new donors begins to overtake expenditure.

With between 40% and 50% of new face to face and direct  mail donors choosing not to support a charity again after around twelve months you can see that a high rate of success (motivating lots of new supporters) would be reflected by a high cost of fundraising.

This inherent contradiction causes us charities a problem if we rate our success on cost of fundraising - which parts of the media tell us we should.

In the long term face to face donors who do stay should end up donating considerable amounts, well in excess of their original acquisition costs.  We also know that after many years, direct mail donors will return a good profit if the program is managed well.  After a decade, they will have also contributed considerable sums through bequests and regular giving too.

The charity will have been able to much more 'good' because of the investment than it would have otherwise been able to, but probably at a higher cost than what was desired.

Why this desire to keep costs low? Dan Pallotta has his theories about the beginning of charity but mostly nowadays it is a throwback to a golden age when charities were all volunteers and a niche group of people sacrificed lifestyle and everything else to help.

Since then demand and expectations, regulations and laws, outcome measurements and government insouciance have placed a huge burden on charities, requiring them to raise magnitudes of revenue more than before.  And this is expensive.

The public are told by bits of media that cost of fundraising is an important measure for them to consider, and uneducated (about fundraising) legal authorities rule on it as a measure.  Ostensively to protect from fraud, but in reality punishing and restricting growth opportunities from legitimate activities.

In reality, whether you personally want cost of fundraising to remain low is a moot point.  If you want your favourite charity to do the best it can, then surely you want it reaching as many of the people willing to back them as possible?  Surely you want it raising as much net income as possible? And surely you want it to do as much good as possible?

Put bluntly if a charity can raise $10m at a cost of $5m or $1m at a cost of $100,000 and it costs $1,000 to save a life - which is best?

Or look at it another way,

Cost of fundraising ratio 50%, 5000 lives saved.
Cost of fundraising ratio 10%, 900 lives saved.

Of course, we would all probably prefer $10m raised, $100,000 cost, 9900 lives saved - but it just doesn't work like that for most charities, most of the time.  We need a reality check.

The public, many boards, CEOs, senior staff and some bureaucrats simply have completely unrealistic expectations.  They imagine this beautiful, pleasant, pretty world where people just up and give.  The reality is sophisticated programs of trained professionals buying creative services, data services, print, postage, travel, training, processing, opening mail, computers, software licences and so much more just to get those dollars.

A few charities in Australia got hammered in the press for their high cost of fundraising a little while ago. A quick look at their annual reports or benchmarking data shows that it didn't put donors off giving to them.  

In fact, the big fallout from these stories was self inflicted.  Only charities who decided to cut their cost of fundraising suffered.  Unless you are making some big mistakes with your fundraising, aiming to cut costs will almost certainly cut acquisition which in turn will inevitably hurt your future.

I know, you may be thinking 'it just isn't right.  Donors demand low cost of fundraising.  But just think back to your favourite charity.  

Did you choose them because their cost of fundraising is low?  No of course not.  

Do you even know their cost of fundraising?  

I have done that exercise with thousands of people, and dozens of boards and senior staff teams - and I have only had a handful of people know what the cost of fundraising of their favourite charity is.

We think cost of fundraising is important to donors, when we ask donors they tell us it is important to them, but we look at the data we find out it turns out it is not that important after all.

Check out Dan's video below.

Monday, July 22, 2013

The first of two great ways to destroy your individual fundraising!


The last ten years have been pretty darn good for the charity sectors in New Zealand and Australia. External factors such as domestic disasters, (earthquakes, fires, droughts and floods) economy and government policy have all done their best to break the resolve of the sector but overall we have seen great growth amongst professional fundraising charities.


Much of this growth has come from ‘individual fundraising’.  This would include regular giving (automatic debits), direct mail, and other appeals.

But despite a good decade, some organizations have bucked the trend and have slipped backwards in their fundraising.

I wanted to get to the bottom of this and been looking at the fundraising transactions of individuals who have supported 70 Australian and NZ charities.

Using this data, and what I knew about these charities, the first thing I noted was that it was internalities (decisions made by employees and boards) not externalities (economy, government change etc) that caused their problems.

Those internalities seemed to only come from two decisions that various charities have made which ended up pushing income from individuals backwards.

This blog covers the first.  Another blog is coming about the second.

The first way to destroy your fundraising income seems to be 'Investing in brand'.  Putting money into brand awareness, advertising, events, launches; often, but not exclusively, associated with a re-brand.

‘Brand' is incredibly important for the long term survival of a fundraising charity.  Having a great brand helps keep loyal donors, win corporate donations and means you are more likely to be front of mind when people write their wills. 

But branding is not about big ads, prescriptive fonts and cool logos - it is about how the charity behaves; what it feels like to be helped by them, to help them and to be thanked by them.  

Brand is not about how a charity ‘looks’ it is about how people experience that charity.

The best branded charities tell fantastic stories brilliantly and use fundraising advertising activities (like online, direct mail, phone calls, direct response TV and events) to position themselves.  Good fundraising is good branding.

There is never a need for a charity to spend money on 'awareness' for fundraising purposes.  Awareness definitely helps fundraising, but the cost of achieving increased awareness is simply not worth it compared to investing that money in good fundraising, that in turn, increases awareness.

The other benefit is that good fundraising will increase awareness in the right target audience.

If a charity struggles with fundraising, then brand and brand awareness may well play a part, but spending money on building that awareness is not an effective solution.  There are plenty of case studies of charities with no, or little brand awareness, succeeding in fundraising.

Jeff Brooks, author of Future fundraising now (the best fundraising blog) says that a re-brand is a sure fire way to cripple your charity, and he is mostly right.  But some, such as Cerebral Palsy Association have proven that a re-brand is not what hurts; it is what you do with your money that is key.

CPA have enjoyed great growth since their rebrand from Spastics Centre, but it wasn't their rebrand that did this, it was their considerable and careful investment in planned fundraising that worked.  They invested in donor acquisition and retention from key target audiences.

From benchmarking I can clearly see how some of the charities who stopped growth and went backwards achieved this by switching money from fundraising into ‘branding’.

After a while, the bosses came to their senses and the charities are now heading for growth again after record acquisition years in 2012 and 2013 - despite a very obvious dip in fortunes, these organisations managed to survive.  

For these charities the 'brand suicide' attempt failed - but not without victims.  Some of these case studies also went through massive change of staff, collectively missed out on tens of millions of dollars and lost the confidence in their marketing and fundraising teams by their boards.

Build, protect and nurture your brand fiercely.  Make sure the way you handle complaints reflects your brand.  Make sure your communications all tell the story of your beneficiaries.  And make sure you don’t waste precious money on building brand awareness.

That won’t guarantee success – but getting it wrong is a great way to guarantee failure.

In an upcoming blog I am going to look at the other decision a few organisations have made to try and reduce their fundraising income.

Sean



Tuesday, May 21, 2013

The new big thing in fundraising - Direct Mail

The biggest new thing in fundraising:  direct mail

There are so many hip new ways to acquire donors in New Zealand and Australia.  Twitter, Facebook, face to face, phone, mobile, peer to peer, two-step, payroll giving, email, web sites, Google ads,...  but the number one by volume is that new-fangled thing – direct mail.

Seventy charities from the now independent Commonwealth nations of New Zealand and Australia pooled their card file indexes* to study how donors actually behave. They have discovered that direct mail acquired more donors last year than any other form of donor recruitment.



Direct mail has never had it so good, and 2009-2012 saw a 100% increase in the number of new donors acquired through this new-fangled method.  Back in 2009, 155,000 of the 267,000 people who made a donation for the first time to one of the 70 charities did so after receiving a direct mail letter (57%).  In 2012 that number had increased to around 350,000 new direct mail donors from a total of 508,000 (69%).

Famously championed by social change entrepreneur Dr Barnardo in London in the late 19th century, direct mail is making a bit of a surge in the Southern hemisphere.

When interviewed, Dr Barnardo was delighted that direct mail had taken off so much.
“I am verily pleased that direct mail is performing well to help waifs and strays in the colonies.” He said.

“With [former] convicts putting their backs into good, honest work to help those even more disadvantaged than themselves, I believe the outposts of New Zealand and Port Arthur [Australia] may well thrive as independent states separate to mother England.”

Looking at individual charities to work out how these donors are acquired, we see most are acquired through ‘premium direct mail’.  This describes a method of breaking down the barrier of getting donors to open an unsolicited envelope by offering a gift in return for simply opening and reading the message.

The gifts could be address labels, tote bags, stationery, key rings or pens.   

Whilst acquiring donors through these premium packs tends to lead to lower average donations, it  also leads to much higher response rates, higher initial net returns and more long term net income.  

In the olden days (a couple of years ago) charities were happy with 0.8% to 1.2% response rates from cold mail, but premium packs tend to get at least three times that.

Unfortunately response rates are not covered by benchmarking, but I know that the average response rate from direct mail from Pareto charity clients who follow our recommended strategy is over 4.5%.  

Even with lower average donations and lower second gift rates the maths usually work in the favour of the charity willing to spend more per pack on premium direct mail.

Face to face acquisition of regular givers is still huge in Australia and New Zealand, and I recommend still maintaining (or starting) investment in that area, but make sure you have a balanced porfolio - direct mail cash donors will provide a unique income source and will bring you your future bequests and major donors if you follow the right strategies.

Sean

*Please note – the charities were collaborating by analysing giving patterns and behaviour.  None of them have breached any privacy rules by allowing any other member to identify donors as individuals; ie donors’ personal information was never shared between partners in this exercise.


Friday, May 10, 2013

Plenary in New Zealand - presentation and useful links

I just presented a plenary at the FINZ conference in New Zealand, because Terry Axelrod couldn't make it.

I promised to post my presentation and some useful links...

Here is my presentation, and there are more links below.


To see how charity data is available in New Zealand (and how it should be everywhere - with a few tweaks) check out:
http://www.register.charities.govt.nz/CharitiesRegister/OpenData.aspx

Watch Dan Pallotta's awesome TED talk...


Sign up for Benchmarking for 2014 by emailing Clarke.vincent at paretofundraising dot com.

Check out that great article looking at data that shows that HIGHER admin costs are better for charity outcomes http://giving-evidence.com/,

Even if you didn't make it along, I hope those links are useful.

Sean


Thursday, May 9, 2013

Bequest tips from Adrian Sargeant at FINZ

Good session, as always, for the travelling fundraising academic.

Some really interesting tips on legacies from him, all backed up with research of course...

In 2011, 4200 charities in the UK received legacy income
Top ten of them charities accounted for 32% of the legacies
And the top 50 legacy charities (just over 1%) account for 55%

Grand kids are more negatively influential on will writing than all the good indicators such as volunteering donating etc. make sure you acknowledge this. Childlessness is increasing in USA - Adrian asked if it was in New Zealand, and the answer is yes.
http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=10773770

'A gift in your will' is a better phrase than 'legacy' or 'bequest' because it is more inclusive, more acceptable no people who think their estate is going to be too small.

Telling people why they should tell you that they have put your cause in their will - 'so we can plan for the future' is not a motivator. NSPCC spells out that you don't need to tell us, but if you do we would love to thank you.

Probably best approach is that which spells put how you will thank.

He also reckons drop the puns - will to help, where there's a will there's a way etc.

Focus on looking after the future - people (generally) are not expecting to die soon.

A good campaign should not look at the same sort of motivations as a gift now. For example, no need to say what exactly you would use the money for ($20 to make a blind man see) - concrete examples are good for donations now, but for legacies be more value based.

Present-
concrete (examples)
subordinate (the building blocks)
contextual (the work that is going on now, the number of families helped)
unstructured

Future-
abstract (values)
superodinate (I missed what this meant whilst I was typing)
decontextualised (more big picture, social change etc)
Structured (like show what you did in 1960s, 70s, 80s, etc and what you are going to do in 20 years time, 30 years etc) though better to say in 20 years time, not 'in the 2020s'

Check out Human Rights Watch 'a lasting contribution to your beliefs in human dignity'

Emotion is fine to use in legacy solicitation but the time between call to action and actual action is longer than other fundraising so does need more logical stuff because 'emotions discount faster than logic'

In 'immediate' fundraising you use negative consequences of not giving, (give us the money or..x won't happen), which is right. But for legacies, talk more about the positive impacts and benefits. This is because people are more optimistic about the future...

Adrian then presented lots of good (and bad) examples of good legacy packs.

Great stuff, thanks as always Adrian.








Tuesday, May 7, 2013

Irreverent conference session

How does this sound?

"Living The Dream. Your investment strategy for a secure future.

Sticking with the theme of sustainability ...we have enlisted a trained stand up comedian and deadly snake rescuer for the Thursday afternoon plenary. Sean Triner will take a challenging and irreverent look at investment strategies for wealth creation for delegates wishing to retire to the good life. Amongst the ideas we'll look at property, equities, bank robbery, smuggling, marrying 'well' and fundraising.

With real case studies and data, Sean will refer to Dan Palotta's recent brilliant Ted talk on how fundraisers should be able to operate on a level playing field with the rest of the market. He may also give some directly useful and applicable tips for you too.

If you get your CEO, CFO, treasurer and/or chairperson to this session you will be doing yourself a huge favour for the long term."

Fancy coming along? If you are in Wellington, New Zealand - see you there! If not but you are interested get me along to your conference to do a plenary / key note!

Sean

Thursday, May 2, 2013

The importance of Marginal Costs

Tom Ahern and I were chatting about fundraising at his home in Rhode Island (which I found is not really an island) and decided to video one of these conversations whilst drinking (ahem) mocktails.

Three minutes long, but hopefully useful in breaking down a useful mathematical concept for fundraising.


Feedback welcome - more of these?

Sean

Wednesday, May 1, 2013

Are you in Wellington, NZ next week!?

Very excited to be off to New Zealand next week. 

Andrew Watt and I will be presenting a breakfast debate (I am going to be really mean to him with some tough ethical questions - come and join in if you are in Wellington!) 8:00 a.m. – 9:00 a.m. on 10 May At the Amora Hotel Wellington Tickets (includes hot breakfast and barista coffee): $35 Register here:


Sean

Tuesday, April 23, 2013

Top level information from NZ / Australia benchmarking


The very top level information from benchmarking

In a unique show of camaraderie and mutual support seventy charities across NZ (16) and Australia (54) agreed to pool all their transactional data* and analyse it.  This means that they compared actual donor behaviour – including mutual donors.
With around 2.8million donors giving $836 million in 2012 to these charities there is a huge wealth of information and learning.

The charities that pooled their data




Over the next few months I will share some fascinating insights, ideas and tips based on the data but in the meantime here are some top line facts:

Largest fundraising charities in Australia

Looking beyond the benchmarked charities we looked at the annual reports of top fundraising charities (Australia only).  We found that the largest, World Vision, really dominates the market.  World Vision are also a member of the benchmarking program, having an enormous influence over the giving patterns of the average Australian.
Just short of all fundraising income to the top 50 charities goes to overseas aid.  Australians love helping people less fortunate than themselves in other nations.  Good on ya Aussies!

How Australians and New Zealanders give their gifts


Australians and New Zealanders gave more money to these charities in 2012 than ever before.    From around $365m in 2003 to $836m in 2012 ($637m in 2003 dollar equivalent).
The chart above clearly demonstrates the strength of child sponsorship as a great fundraising ‘product’ However, other regular giving programs and bequests also contribute huge amounts.

Questions


If you have any questions you want to know about Australian and NZ fundraising data - ask away!  Attrition, face to face, average donations etc...

I will post lots but your request will move that subject up the priority list.

*Please note – the charities were collaborating by analysing giving patterns and behaviour.  None of them have breached any privacy rules by allowing any other member to identify donors as individuals; ie donors’ personal information is never shared between partners in this exercise.

Sunday, April 21, 2013

My Out of Office - tips for next appeal


Anyone who emailed me whilst I was in the USA at the AFP Conference and a few other meetings would have got this out of office.
I received quite a few follow ups from people who liked it and found it useful so I am posting it in full.  Hopefully it will inspire you to think about how you could use your out of office....
...
*Please read – this is not an ordinary out of office! Though please note I am back 19 April*
(Well, the next three paragraphs are normal-ish, but the ones below that are more interesting).
Thank you for your email.  I am presenting at the AFP (fundraising) conference in USA, then some consulting and training over there and back to Australia to a series of data benchmarking presentations; should be getting to email in earnest again on the 19th April.
If you need a response before that and are a client, please contact Nicola.long@paretofundraising.com
If you would like to be a client, maybe or definitely, or you want me to speak at your event, please contact Clarke.vincent@paretofundraising.com.
If you really need me SMS me on +61 437 015 333 but try not to wake me in the middle of the night.
OK – now the more interesting stuff…
I can’t go without mentioning books.  I hope that by now that you have read my mini-novel, Haruki the Knife Maker – it is only 99c, in aid of Amnesty, and available in all e-book stores, and only takes 20 minutes to read.
But I also write fundraising stuff too – including a chapter in a new book Global Fundraising: How the World is Changing the Rules of Philanthropy edited by Bernard Ross and Penelope Cagney.  You can get that in p-book form on Amazon.
Now, for you fundraisers – some great tips for your next appeal…
·    Personalise.  Dear Sean is good, but go beyond.  Thank me for my specific actions and give me credit for everything you achieved.
·    Tell me a beautiful story, with a beginning, a middle and an end –and don’t leave me feeling it is now fixed.  There must be a need at the end.
·    Don’t worry about how long it takes to tell me that story AND the points below:
·    Make sure there are frequent and very specific asks, like the examples in the presentation.  The specific ask should be the right amount for me, not a generic ask amount.
·    Take personal responsibility.  Write the letter in first person singular.  Don’t we on your copy.   Remove every ‘we’ replace with ‘you’, ‘my colleagues and I’ or whatever makes sense. 
·    Repeat the specific ask
·    Have a deadline.  This is very important.  Find a reason, overcome barriers but get one. 
·    Every. Single. Time.
·    Repeat the specific ask
·    Build urgency
·    Repeat the specific ask
·    Witness the story (ie “I spoke to Bob today and he said…”)
·    Repeat the specific ask
·    Have a target
·    Repeat the specific ask
·    Summarise in a PS
·    Repeat the specific ask
·    SHOW me the need; not all nice fixed stuff – there has to be something that would be bad if I didn’t give.
·    Repeat the specific ask in the PS, and spell it out – fill in the form with your details, put in the envelope and send to me by…
Don’t worry about the length of the letter, as long as it is good, engaging and emotional.  It is hard to get everything in without using at least 3.5 pages of A4 (including shorter first page with all the header stuff) in point 12 serif font.
Sean

Thursday, April 18, 2013

Pareto Benchmarking report released

Seventy charities came together to share information to improve their fundraising. Many attended presentations of the data in Melbourne and Sydney this week and more will attend in Wellington on Monday and Auckland on Tuesday.

The photo was taken in Sydney with over 120 fundraisers gathered to find out what is happening to giving in Australia and New Zealand.

Most of what we learned was good news. More money from more people than ever before was donated to the 70 charities, and the majority of charities have enjoyed decent growth over the past two years.

Some top level notes from the session:

- online solicited donations still not significant source of donors or income

- swapping is fantastic, with no indicators of donor fatigue etc BUT
let's look at the long term impact

- direct mail acquired donors - the biggest growth area and we know it increased yet again in 2013. Band wagon is being jumped on!

- face to face still rules the roost for new automatics regular donors growing more than 10% from 2011-2012

- the five year value of non-face to face acquired regular givers is much, much more than face to face so charities should be prepared to accept much higher acquisition cost. A direct mail acquired donor will give an average of 51 times their initial monthly donation, where as an average face to face acquired donor would give 29 times their initial monthly donation.

- we knew credit card donors are better prospects for regular giving than cheque donors, but it turns out they are better bequest prospects too!

- nearly all contributions from a person who comes in as a regular giver will be their regular gifts

- nearly all contributions from a cash donor source will be cash, though over five years bequests and regular gifts add a significant portion

- for the first time we are seeing income directly related to the bequest 'pledge rates' - could be enough to start benchmarking that next year. Charities with higher pledge rates of bequests will make more bequest income

- biggest key to success in bequest pledges seems to be being Victorian! Top four were Australian charities based in that state. But really it is having a certain type of program - the 'one page legacy program' which relies on direct mail and phone to drive pledges. Type of charity is not necessarily key.

- second gift rates, payment type, average donations and more are useful - but ratios are really really useful

- older donors are better. Get the best response rates, retention and total giving. Except for face to face, forget younger donors; there are easier ways to help your beneficiaries

- your donors are almost certainly going to be giving to other charities. For example, 60% of all Australian donors who gave a gift in 2012 and were acquired by direct mail, gave to one of the other 53 charities! The figure was about 15% from face to face acquired regular givers.

Charts and more information to come after the New Zealand presentations next week.

Sean

Wednesday, April 17, 2013

OMG Older People are on Social Media - Drop the Direct Mail Program!


Do you really KNOW who is on social media?

A recent blog by guest blogger George Crankovic on Future Fundraising Now (best fundraising blog in the world) brought to my attention a report from Pew Research about who is on social media. 
Titled Do you think you know who's on social media? the blog pointed out that older people who are online are on social media more than you may imagine.

I quote from George’s blog:
“But now for the unexpected findings:
  • 52% of Internet users between 50 to 64 are on social media.
  • 32% of Internet users age 65 and up are on social media."

Check this out (from Pew's excellently constructed and helpful website)


This use of social media by older people may well be unexpected, but what does it mean?

A couple of problems with this kind of research –

1. It is opinion and not transactional.  Looking at the scale of the research, and Pew’s credentials it is almost certainly statistically accurate in reflecting what people SAY but it is still not based on actual usage data; it is just what people said they did.  This is inherently flawed.

2. What is ‘on social media’?

They decided someone was ‘on social media’ if they answered affirmatively to a question like “Do you ever...use a social networking site like Facebook, LinkedIn or Google Plus?”

There were six questions like that.  Answering that you ever use is a reasonable definition of being 'on social media' but it gives no indication of their involvement.  This will vary enormously by age, gender, education, job, real world social network and more.

My friend John Lepp in Canada accounts for perhaps as many updates from friends as all my other friends added together but he and my someone like my mum are both defined as the being ‘on social media’.

Mum may use Facebook for looking at photos of grand kids once a year, and nothing else.

Everyone is different, but you can rest assured that the average older social media user (mum) has a different level of engagement from the average younger user (John).

If the Pareto principle holds true, then 80% of social media activity will involve just 20% of people ‘on social media’.  In fact, I would bet that >64% of activity is conducted by perhaps <4 areto="" font="" of="" squared="" users.="">

Even if the numbers are not an exact 80/20 split, there is no doubt that the majority of activity will be conducted by a minority of registered users.  After all, 50% of my activity seems to be just one friend, John, and I doubt that is unique to me!

Generally speaking, charities have failed to achieve expectations from fundraising on social media.  

I think that there are four reasons for this:

1.     Charity expectations are huge because big stats like these released by Pew are exciting and overwhelming
2.     I believe younger people are much more involved in social media that older people (OK, belief is worse research method than even opinion surveys but come on, what do you think?)
3.     In all metrics on giving, older people in any 'type' of fundraising are better givers - better average donations and retention rates etc.
4.     Charities think it is free or cheap to fundraise on social media, when in fact it needs a program in place like any other advertising media

If you ever see mind blowing data like this, be really careful with how you interpret it. Ask the questions – ‘what does that actually mean?’ ‘How was this research conducted?’ and ‘What about my donors?’.

You are not going to be revolutionising your fundraising by using social media with your older donors for another ten years or so.  Don't get distracted by amazing 'data' about social media... yet.  Stick to what you know works, and look out for case studies of how people have made social media make more money for their cause.

Sean 

Monday, April 8, 2013

Donor Fatigue Fatigue


Please let me tell you a story.

One day, the fundraiser (I will call him Bill) of a small state based charity asked a consultant (Ulrika) to help his charity with their tax time  direct mail appeal to mailed in May.

“Of course” said Ulrika.  After all, she had helped them before and it had worked well.  She had written an appeal that raised more than any appeal before from the 3,000 or so previous donors.  However, they had not done another appeal with her for a couple of years after that because the fundraiser changed and they embarked on another strategy.

Bill explained that the other strategy (focused on building awareness) hadn’t really done much, and their money was low.  However, they had sent a Christmas appeal in November and it had done well.

“Great” said Ulrika – “that means that there are enough donors still with us, so we should be able to do well with the tax appeal.”

“Oh no!” said Bill.  “The May appeal will be mailed to new people; we are worried that we have bothered our current donors a bit too much and there is donor fatigue.  After all, the Christmas appeal didn’t do quite as well as the Christmas before – even though we only mailed them once in between.”

Ulrika was quiet for a bit.  Oh dear, she was thinking, where do I start?

Can you spot the flaws in Bill’s approach?

Right now I am in San Diego a the AFP conference, with maybe 5,000 predominately American, fundraisers.  Chatting to people made me realise that Bill is not alone in misunderstanding a very basic and fundamental, unbreakable 'truth' of direct marketing.  The truth is the recency, frequency, value rule (also known as RFV or RFM where the M stands for Monetary value).

RFV is a mathematical rule that gives you three clues about the likelihood of a positive response from a donor who is mailed.

Recency - the more recent a donor donated, the more likely they are to donate again.  

The chart below shows this in action on a warm appeal - this is real data.  {By warm appeal, I mean an appeal sent to people who had donated before).  Although it is broken into years, the rule holds true over months too.



Frequency - the more times a person has donated, the more likely they are to donate again. The chart below is from the same data as the one above, and just looking at those who have donated just once, and those that have donated more than once. 



Recency and frequency work hand in hand with the fact that charities that mail more frequently - if they are mailing good stuff - have better 'life time value rates'.

Value - the value of a previous gift gives you the best clue as to the potential value of the next gift.  But even high value donors still follow the recency and frequency rules.



The process of acquiring a donor (getting them to give for the first time) is expensive, so charity must maximise the life time value of a donor.  

Bill is falling for ‘common sense’ over ‘reality’.  He thinks that most donors don’t like to be bothered too much asking them for money.  They probably tell him that too.  But the reality kicks in with a little direct marketing concept that works across all products, not just charities.

Look at the data, don't make assumptions based on feelings.  Generally speaking, mailing more frequently than once a year will INCREASE donor loyalty, not decrease.  A charity like Bill's with 3,000 donors should be mailing perhaps at least four and probably six times a year.

Donor fatigue fatigue is when you get tired of people thinking that they have donor fatigue when it simply isn't the case.

Sean
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