Wednesday, January 6, 2016

Are Millennials Really Worth Targeting for Fundraising?

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We all want younger donors.  But is it worth the investment?

Certainly it is for donors around the 40 year old mark - face to face (direct dialogue) has done really well there getting millions of people around that age to give.  But what about younger?

The idea that by getting donors in early, we will make them more likely to support us later is not entirely flawed, but just stepping back and thinking about that logically, it breaks down. 

Surely it would be easier to get the more valuable donors in NOW, and only go for the long term get ‘em in young when you have got all of the older ones in?

I suggest:
  1. Look at your current donor database by age, you will likely see a stark correlation between age and every measure of success.  Generally older donors tend to:
    1. Higher ave donation
    2. Higher second gift rate
    3. Higher retention (especially in monthly giving)
    4. Higher amounts raised (in events)
    5. Higher chance of supporting an event again
    6. Higher life time value
    7. Higher chance of putting you in their will
      1. And higher chance of realising that sooner
    8. Higher chance of becoming a major donor
    9. Higher chance of responding to most of your communications
In regular/monthly giving the upwards trend tends to stop going up over 67/70 years old. 

In cash / direct mail it doesn’t seem to ever stop going up.

And when you take that line to people below about 40 you begin to see that the Return on Investment over (say) five years is simply not worth the effort.

In other words - older donors are better.

Why?

One theory is that charities are simply not good at marketing to younger people.  

I don’t believe this, because thousands of brilliant charities try all the time and fail, and have done for years with tons of ideas.  

Maybe it is true - after all, before face to face charities had repeatedly tried and failed.  But it seems the effort of finding the magic has wasted far too much charity time and money already.

My theory is a bit more simple, and shared with pretty much every fundraiser who has ever looked at demographic data as well as fundraising data: 

The older you get, the more disposable income you have.  Then, when you get REALLY old, some peoples disposable income may go down, but the asset in your legacy is still going up.

Should we write off young people then?

Not at all.  They like purchasing cheap quick things, like Ice bucket Challenge (IBC).  

But note, probably more than 80% of the revenue raised for IBC would have come from just 20% of the participants.  And that 20% will be heavily represented by older participants.

In other words, they got loads of young people involved, but most of the actual $ will have come from people over 40 or 45.  We see this in all events.

But having 8,000 young people to an event, effectively funded by 2,000 old people could have other benefits – for campaigning for example.

All fundraisers WANT young people to give.  They really believe in it! I really wish it was so too! But wishing something were true doesn’t make it true.

In the table below, age of donors – across about 70 charities, where age is known, you can see there are some younger groups.  But even within those younger groups (like face to face regular givers, averaging 43 years old) we see all of the points I made above still hold true.

GiftClassification
Channel
Income
Donors(age known)
Age at recruitment
Regular Gift
Street/Mall
Face to Face
$165,216,714
   620,857
43
Cash
Direct Mail
$78,436,142
   612,500
70
Regular Gift
Phone
$24,150,667
   100,655
54
Regular Gift
Other
$25,153,095
     72,101
54
Child Sponsorship
Street/Mall
Face to Face
$36,042,920
     68,052
44
Regular Gift
Direct Mail
$21,022,016
     64,000
61
Child Sponsorship
TV
$26,524,368
     42,876
47
Child Sponsorship
Other
$27,903,102
     43,071
47
Gift To Child
Direct Mail
$7,091,384
     82,601
52
Regular Gift
Online
$11,190,781
     30,828
44
Regular Gift
Door to Door Face to Face
$4,931,672
     19,558
44
Child Sponsorship
Online
$8,977,320
     15,126
41
Child Sponsorship
Phone
$7,064,422
     12,601
48
Child Sponsorship
Direct Mail
$7,722,054
     11,543
54
Child Sponsorship
Door to Door Face to Face
$5,488,382
       8,830
45



The trend for all the other areas looks like that too.  i.e. older DM donors are better, as are older online donors etc.

And even in bequests from regular (sustainer/monthly) givers.



The chart below shows that older people communicated with by direct mail, including appeals are more likely to donate (there are more of them) AND they give more after their initial gift than younger ones.


Put simply, an average 75 year old paying by cheque will give over 7x their initial gift in 5 years, but a 35 year old cheque donor (of which there are not many) gives about 4 times as much.  A MASSIVE difference. And for credit cards, it is 7x and 5x, still a BIG difference when you consider how expensive and tight the costs of donor acquisition are.


In major donor giving… older is better.




On Facebook… Successful (fundraising) charities have profiles like this…


The bottom line:

There is no measure that I can find anywhere that tells a fundraiser that younger people are a priority over older donors.  The only time we need to go for younger people is after we have:
* Exhausted sources of older donors AND
* Following best practice with donor-centric and frequent communications with them AND
* We have a great mid value donor program AND
* We have a great legacy/bequest program AND
* We have established a face to face sustainer/monthly/regular giving program (or can't for some reason)

Only when we can tick all those boxes should we start mass marketing on a strategic level to younger people.

OR
* Involving younger people is core to your mission.

Sean







1 comment:

Lee said...

Interesting post; thanks, Sean. A good ROI on relationship-building with younger prospective donors may only be seen when they get older, but to ignore them until they have disposable income will negatively affect the eventual ROI.

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