Tuesday, February 11, 2014

Is face to face fundraising really worth it?

Before I start I should make two confessions:

1) I am biased - my companies analyse data, help donor retention programs, acquisition, legacies and major donors and regular giving conversions by phone, mail and online, mostly in NZ and Australia.  I don't 'do face to face'

2) I am not very good at face to face fundraising. The photo below is of me, as fundraising director at Mind (a mental health charity in the UK) giving it a go in London in the late 90s.  I was not very good.  The guy I am chatting to was French, and we couldn't get foreigners to sign up.  But we had a good chat.

Having said that, I will be as unbiased as I can, just concentrating on the data.

What data? Every year, loads of charities* get together to share information so that they can understand the market and maximise efficiency.  This is an amazing collaboration.  They do not share any data that could compromise individuals privacy, but they are able to look at millions of transactions.  We look at a decade of data - and the volumes are huge.  This is truly how people behave, not how they say they behave.

First thing first - statistically speaking, with the exception of media friendly disasters (tsunamis, floods, fires, earthquakes and other tragic events), people don't give without being asked.  They say they intend to, but they just don't.  If fundraising charities didn't ask, they would save an absolute fortune on salaries, post, creative fees, print, TV ads, phone calls... but would save even more as they blink out of existence.  The good they do wouldn't be done.

One of the greatest fundraising channels in the history of fundraising is 'face to face'.  By this I mean those dudes that knock on your door or chat to you on the street or the shopping mall and ask for a regular gift.

Face to face has achieved something that no other channel has - getting younger people to donate in strategic numbers.  By younger, I mean under 60.  Most donors are over 60 - but face to face has an average age of signups less than 40.  This is remarkable, and the volumes have been huge.

Like any high impact marketing product, face to face is not without controversy.  It is, literally, in your face. Constantly reminding you of the inequities of our society.  Also, there are occasional reports of rude or pushy canvassers - though these are rare now, given that they are pretty much summarily dismissed if they get complaints. Most canvassers passionately believe in the cause, and love the idea that they are able to make a living, fund their travel or whatever - and do good at the same time.  Some canvassers may work for several charities over a period of time, exposing them to different causes.

But it is expensive - travel, salaries, materials, databases, follow up systems, SMSs, email, videos, welcome packs, welcome videos, admin processes and systems, stamps... none of these are free.

A while back we looked at 'in house' v 'outsourced'; on the face of it, it looked like in house would be cheaper and have more passionate canvassers.  The study found that in some cases, that was true but on balance, over five years, there was little in the overall net result for the charity whether it was in house or out of house.  Given the challenges of setting up in house (different pay structures, space, getting and retaining direct sales management expertise etc) most charities actually out source.

Like any marketing, expensive doesn't mean bad - the most important thing for a company is "What is our profit margin?"  Charities don't call it that, but they need 'profit' because this funds their good work.

But does it work?

Firstly - what is 'working'?  For me, it has to make a net return in a reasonable time frame and not cause damage to the  brand of the charity.  These are relatively easy to measure.

Net return is obvious.  But damage to brand is harder - in my view, looking at a charity's impact (the work it does) and its overall income - beyond face to face, and over many years - are the best objective measures.

Also, 'working' would be influenced by how well it 'works' compared to other methodologies, such as digital, mail, phone, outdoor, TV, radio etc.

So, let's start with volume.  Of 230,000 donors acquired in 2012 by the charities in the study a whopping 90% were through face to face. And face to face provided the largest growth too.  Gulp.  In the chart below 'RG' is regular givers - ie people who sign onto an automatic debit, usually monthly.

This is so great, that if you are serious about growing regular giving, you kind of have to do face to face.

But do these donors stay with you?

Looking at 2006 to 2011 recruits of new donors we see that, after one year, more than half are still giving - about 57% of new regular donors to all the charities doing face to face, were still giving 12 months later (the 'attrition' - number of people who stop giving - is about 43%, hence retention is 57%).

Imagine if you worked in a company where you get people to give you a monthly debit in return for, well, nothing (except a good feeling), and over half were still giving a year later.

You can see as volumes increased over these years, attrition has increased the increase is in line with what you would expect from larger volumes.

Remarkably, of the people who lasted a year, only 15-17% would drop out in year two and 5-10% per year afterwards- within the realms of 'natural attrition'

But how does this attrition compare to other methods?  Well, because only a small proportion of the donors acquired in 2011 were from sources other than face to face, it is best to group them together to compare against face to face.

You may have noticed I have written face to face in red.  Now I am going to introduce non face to face donors.  When reading, the word 'non' can somehow disappear, so I am going to highlight that phrase blue.  This will help I promise.

What we see is that 79% of the non face to face donors were still giving in year two - much  more than the face to face acquired donors at 57%.  You may notice that subsequent years have little difference between face to face and non face to face.

It seems obvious - non face to face is better than face to face! Yaay!

Before you charity fundraisers drop plans for face to face and come rushing to me for help with non face to face acquisition, let's take a breath first and explore some more.

Firstly, why does face to face have worse attrition?

Any trained direct marketer will tell you that if you increase volumes of customers, you tend to decrease average positive indicators dramatically, so that will account for much of it, but there are also other factors.

I can't produce data about those signing up because they feel guilty, those who simply can't say no face to face, those who fancied the canvasser or those that got in trouble when they got home and their partner kicked their arse.

But I can produce some data which explains some of this difference.

First is volume - higher volume, worse attrition.

Second is age.  I am sorry to tell you this, but generally speaking younger people don't give,  Like I said earlier, face to face has got younger people giving in strategic numbers for the first time ever.  But when they do give, they are not as 'loyal' as older donors.

Breaking down face to face donors by age, we see about 130,000 of the 2011 recruits were under 44, and less than 50,000 over 44.  But those younger people were much more likely to stop giving.You can pretty much ignore the attrition of the 75+ donors, there are only a few hundred of them, so not statistically useful.

You can see half of the 90,000 under 34 year olds stopped giving after 12 months, but the truly remarkable thing is that a huge volume (45,000) Australian young people have entered into an ongoing relationship supporting a charity in 2012, after supporting it in 2011.  This had simply never happened until face to face was introduced around 2000.  How much better is the world going to be when these donors actually get to donor age!?

Ok, you believe me - face to face works in terms of number of sign ups.  But we need money, not just sign ups, and you probably still prefer those lower attrition non face to face donors.

The chart below shows the massive rise in income from 2003 to 2012.  For all you digital types who think digital can save the world - I think you are right, but not yet.  In fact, not for a very long time - look how much it has grown after tons of effort from the charities.  Online does work, but not on a large scale across many charities.  Yet.  (Happy to chat about some of our amazing online fundraising successes - but they are extraordinary, whereas face to face success is the norm).

Clearly, the big income driver is face to face.  And of the 70 charities in the study, not all engaged in face to face.

Another way of looking at the quality of a relationship with a donors is to look at the proportion of people who stick with their payments but actually increase their contributions.

The chart below shows that face to face donors are about as likely to upgrade over the years as any other method.  Phone is better, but if you consider that upgrading is best done on the phone, you can imagine the contact rate of people acquired by the phone is much better too; we know they are phone responsive.  If anything, it is remarkable the direct mail and face to face are so close to phone acquired donors upgrade rates.

Online upgrades look good, but it is just a big handful of donors comparatively speaking.

So face to face gets the volume, has good retention (but not as good as other regular giving acquisition methods), has good upgrade rates and provides lots of gross income.  But what about the net?

We know that the five year value of face to face donors varies by charity but averages around $760.  The average five year value of non face to face donors, mostly due to better retention, is over $900 -  a big difference.  Again, non face to face does better.

Average acquisition costs are estimated to be around $300 for face to face donors, and $350 non face to face, so non face to face seems to win again (yaay!) but the inconvenient truth is simply the volume - no matter how much money you throw at non face to face, you simply can't get volumes to compete with face to face. Yet.

Either are bloody good - that is lots of extra revenue for the charity that would otherwise not exist, and that, after all, is the goal of the fundraiser.

Of course, the accomplished marketer knows they need a balanced portfolio, and this is the correct approach.

But what of brand damage?  Seriously - Greenpeace, Heart Foundation, Amnesty, World Vision, WWF, Red Cross, UNHCR, Oxfam, Cancer Council NSW.... damaged brands? Come on, get real! Most have been doing this for many years with no negative impact on brand, donor relationships or their ability to do good.

Is face to face fundraising worth it for your charity?  Yes, but only if have good, tight automated admin, a need for money, good communication systems and a great monthly proposition.

* Click on this link to see the charities included in this study.


erica waasdorp said...

This is tremendous research!! thank you so much Sean!!

this is great news too for the many (smaller) organizations who have to depend on non face to face to grow their monthly giving programs!
Cheers,Erica Waasdorp (Monthly Giving.The Sleeping Giant),

Unknown said...

The most interesting and factual article I have read recentrly on F2F. Thanks so much. Now going to read Erica Waastdorp book.

Mitch said...

You made it so easy that even (gasp!) Boards of Directors and CEO's can understand it.

Good work, Sean.

Mitch Hinz

Anonymous said...

very good piece Sean - do you remember about 20 years ago how surprised and delighted you were to realise that your understanding of compound interest was helpful in fundraising?

'Sean is always learning' said...

I wish you hadn't stayed anonymous... but yes, I do remember: who would have guessed a good career for a mathematician would be fundraising? They never mentioned that at careers day at the University of York. I wonder if they mention it these days?

Stephen Pidgeon said...

Great report Sean, thanks. When I was at University of York, they didn't know what a Career Day was!

Anonymous said...

I was anonymous because I just could not work out the techy bit of making a comment on this site.
I have never forgotten what you taught me about compound interest and still use it every day, thanks.
Stephanie Smith

Unknown said...

Really useful insights Sean - Thank you!

I am very interested to see how SMS giving works out in Australia over the next few years too!

I think the STORY a F2F Fundraiser tells will also have an impact on the level of ENGAGEMENT the donor FEELS toward the cause, and in return affect their level and length of commitment... And the charity MUST continue the STORY to keep the donor engaged.

I do remember your Great STORYTELLING session at the AFP 2012!

Thanks again for sharing this brilliant analysis!

Rich Mullens

Ken Miller said...


Why do you believe that in the United States there are so few nonprofits that engage in F2F fundraising and especially for monthly donors?

'Sean is always learning' said...

Hi Ken
A very good question. Whilst there are many that do (Greenpeace, MSF, Amnesty and I think ACLU or one like them approached me in Chicago) they tend to be big internationals with a couple of rare exceptions.
I do think the total number of RGs signed up by face to face in the USA is greater than Australia's 250,000 (see my updated figures blog). But with 313 million people v our 23 million, you are 13.6 times bigger, and I doubt you are picking up 3.4 million (13.6 x 250,000) face to face regular givers.
So it is definitely not as popular an acquisition method. Having had a look at some results of an international charity operating face to face in the USA and other countries, there are differences but they are not strategic in magnitude - as far as sign up rates, attrition and costs etc are concerned.
In Australia it was all the big internationals that kicked it off, with Cancer Council NSW being one of the rare domestic early adopters.
Most domestic charities are still reluctant now, and probably 90% of all face to face donors are acquired by just a few charities.
Maybe the internationals were less fearful of something which, lets face it, doesn't make sense - it really ought not to work! Giving credit card numbers to grungy backbackers on the street! It'll never work.
They were less fearful because it seems to work everywhere else.
So, the reason I think it hasn't kicked off in the USA is because too few charities have made the decision to do it.
There could be more reasons - maybe the crazy framework of differing rules, laws and regulations in so many more states makes it less economical? We only have seven states and territories and that makes it hard enough!
Any other theories?
(None of my theories above are really data based - pure opinion!)

Unknown said...

Yeah, this is crazy good. Do you have any news on F2F and continued F2F cultivation in Australia?

Daryl Upsall said...

Well done Sean. As thought provoking as ever, and as Mitch comments, easy to understand and supported by analysis, data and great graphics. Will share the link to this article far and wide. Cheers man and keep learning...so we can too

Unknown said...

I hope this is helpful. Especially the Yield per portfolio box.


Alan Faubel said...

Excellent bog post Sean. Very interesting reading. Just a quick question on one of the final paragraphs are these numbers the right way around:
"Average acquisition costs are estimated to be around $300 for face to face donors, and $350 non face to face,"

'Sean is always learning' said...

Hi, yes Alan - prices were fair estimates then. It is probably closer to $400 cost per acquisition (CPA) on average in Australia now for face to face, with Child Sponsorship above that. However, for non face to face it really varies.
The huge growth in online lead gen followed by phone call seems to be getting donors a little cheaper than face to face with comparable early attrition if the leads are purchased (eg from Cohort et al).
However, when these leads are generated by the charity, eg from online petition / campaigns then it varies enormously. A successful campaign that raises cash then calls the new donors for RG could get the RGs at a profit, or the CPA could be as high as $500. However, these donors seem to have better retention.
Equally, some charities are acquiring RGs from DRTV at close to $1000.

Alan Faubel said...

Thanks very much for the reply. Again very interesting information.

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