What If We’re Wrong?
One of the central theses of Agitator | DonorVoice is that the future of fundraising lies in attracting and retaining more and more deeply committed donors. We’ve talked about how the areas of fundraising that are increasing – mid/major giving, planned giving, and recurring donations –are driven by the most committed donors to your organization.
But what if we’re wrong? After all, earlier this week, we talked about starting with a clean slate; it would be hypocritical of us not to question our fundamental assumptions.
Let’s say things like knowing donor identity, increasing commitment, engaging our donors by seeking their feedback, and the like are the equivalent of a Michelin-star restaurant. There could be a place to compete in fundraising as McDonald’s with a focus on convenience, standardization, and low price.
Such an organization would work on:
Being convenient by being everywhere. Research by one of the dollar stores competing in the United States found that their shoppers are not willing to drive more than three miles to get to their stores – hence why these stores are showing up frequently in lower income areas. So too for our hypothetical organization – if there is no focus on relationship, there must be a focus on convenience.
This organization would have an advantage in some circles. We’ve argued against engaging in Facebook fundraising unless and until you have a plan to engage these donors in other ways. But if you are focus on the immediate gift, efforts where you don’t get donor information for further relationship like Facebook fundraisers, Google and Instagram buttons, text-to-give efforts, etc, are perfectly fine and help you be everywhere.
Building passive giving. Along the same lines, venues like cause-related marketing are great for these nonprofits because you get the money without caring about the donor names. Amazon Smile is perfect because the .5% you get from them without the donor name works just fine. (As a side note, try offering Amazon .5% of any donation you get from their reference – their response should tell you how good a deal Smile is.) Those clothing donation bins that rent a nonprofit’s name for ha’pennies on the dollar would be a haven for such organizations. In short, they would be willing to go where those who want to focus on a donor relationship would not.
Being in the moment. We’ve talked about two types of micromoments: moments that all of us experience — hurricanes, tsunamis, policy wins and losses, etc. – and moments that any of us experience: having a child, feeling a lump, adopting a dog, etc. We organizations that are looking to build a relationship can target these latter experience, meeting people at the time they need us most (as well as the former).
But our McDonald’s nonprofit would focus on the former. When disaster strikes, these organizations will focus on being first. And since these donors generally have lower retention rates, they are a perfect audience for these nonprofits focused on the transaction more than the relationship.
Using their lack of relationship building as an advantage. You may be familiar with the offer Smile Train once used (if not, details here) with the promise “Make one gift now and we’ll never ask for another donation again.” Similarly, we’ve talked about how perceived control of communications is the number one way to get people to opt in (a full white paper on this here). People want to be able to control what communications they get from charities to the point that there may be competitive advantage in letting people know that their gift is just that, with no further obligation unless the donor wishes it. It could cause folks to donate who are wary of getting on yet another nonprofit mailing list.
Competing on easy metrics. We all know that judging nonprofits by the percent they spend on overhead is bunk. But if you raise money by passive means and can strip your donor services down to near nothing, what is to stop you from embracing and trumpeting this easy-to-understand, counterproductive metric? In other areas of our life, we are willing to put up with non-existent customer service if we can save money (e.g., air travel, self-assembled furniture); would donors be willing to do likewise if they feel it means their donation is used most efficiently?
To be clear, I’m not arguing this model for nonprofits is inevitable or even likely. Nor am I arguing this model of fundraising is good. Rather, this is a recognition that markets can tend toward luxury goods and quality service on one side and low-cost providers on the other side. We’ve seen evidence of both growing, with more money than ever coming from the largest and most committed donors on one side and the increase of low engagement efforts like Facebook fundraisers or cause-related marketing efforts on the other.
This goes to what type of fundraiser do you want to be. After all, an Iron Chef wouldn’t make a quality fry cook or vice versa. Which vision of the future do you want to be a part of – part of building an ever-deepening relationship with your donors or working to increase volume of moderately satisfied customers?
Nick
7 responses to “What If We’re Wrong?”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
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I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
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Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
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Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
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There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
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I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
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Nick, does it have to be an either/or? What are your thoughts on a diversified portfolio of high- and low-depth donor relationship strategies?
An excellent point and one that I left hanging in this piece. There are some things you can do that will help one strategy without harming the other, but there are some places where you have to make a choice between one or the other. And it’s not necessarily intuitive which is which. So this leads me to the favorite of the consultant: the 2×2 matrix…
1. No tradeoff is required. You can have an Amazon Smile program without impacting major donors. Emergency fundraising probably helps you get committed donors in the long-term, as long as you work with them to sort them into committed versus transactional. You can run a major gifts program without hurting transaction gifts. A no-hassle donation form benefits everyone. And so on.
2. A tradeoff is required. What are the defaults on your online donation form when you know nothing else about a donor? What goes on the back of your mail reply device: monthly giving, legacy bounceback, Amazon Smile or the Charity Navigator seal? Premiums or no premiums? There’s some real estate, mental or physical, that can’t/shouldn’t do double duty; IMHO an organization would be smart to say “ties go to commitment/transaction” even within a portfolio strategy.
3. Looks like #2; is #1. These are things where you would think there’s a conflict, but there isn’t. It seems like asking a donor for what their priority is for your organization is a clear commitment strategy, at the expense of transactions. There’s at least some evidence it isn’t — that it increases revenue online and offline for all donors (e.g., https://agitator.thedonorvoice.com/research-update-an-online-test-of-donor-preferences/ and http://agitator.thedonorvoice.com/listen-to-donors-preferences-get-more-donors-money/). If you can identify these false choices, your life and portfolio strategy get easier.
4. Looks like #1; is #2. This is one where there isn’t a lot of evidence, so I could be wrong, but I see some perils of brand ubiquity for a commitment strategy. With for-profits, you see luxury brands eschewing mass market retailers because it would cheapen their brand. You see brands pulsing advertising so that brand knowledge doesn’t tip over into annoyance. And you see some intentionally not making lower-priced versions of their products because that could cannibalize their higher-priced offerings.
So too could it be with nonprofits. One of the challenges with matches in the literature is that people lower their average gift – if I can double my impact with the same gift, I can also have the same impact with half the gift (or, on average have 50% more impact for 25% less average gift). Will donation bins and giving to Facebook fundraisers and text donations and the like replace larger, more meaningful giving? I don’t know, but I suspect there is at least some of this going on.
So, like this post, I sure could be wrong, but on balance I think there’s some things that work for everyone and some things that are tradeoffs, whether hidden or overt.
(And now you know why this didn’t make it into the original post: length. It’s you committed Agitator fans who are reading the comments. Kudos to you!)
Hmmmm…. Very interesting. Very thought-provoking.
Imagine the meaningful conversations we could have, exploring this.
I’m just leaving the 2019 Western Canada Fundraising Conference. Where some of us repeatedly talked about conversation as a core business activity.
Thank you WCFC and David and Christal of THE COMMON GOOD FUNDRAISING – who put this together!
I think you’ve insulted Fry Cooks and Iron Chefs in one sentence. Have you cooked professionally?
Just cooked fries at McDonalds over half a lifetime ago. Apologies if there was insult; none intended. My frame of reference is Top Chef and the like, where some of the tougher challenges for high-end chefs is to run a short-order line (there was even a Top Chef Masters where one of the chefs had trouble in a supermarket – they joked he hadn’t shopped for his own food in years).
Thought provoking article. And excellent points!
My concern is that the lion’s share of nonprofits are on the small side, and don’t have a lot of staff or well-oiled machines. So, for them, this is just too much to consider. If one has to consider every single bell and whistle that comes down the pike, it’s distracting.
I’d prefer a GENERAL guideline of eschewing the small transactional stuff in favor of building relationships and pursuing the 80-90% of giving that comes from 10 – 20% of donors. Unless, as you say, you’re one of those nonprofits that does almost all of your fundraising online, all over the world, and small one-time gifts are your bread and butter. And, perhaps this model is increasing in our digitally-revolutionized world.