Using Cost of Fundraising to Turn Lead into Gold

March 19, 2021      Roger Craver

Like anxious parents approaching their kid with the inevitable discussion about sex,  many boards, CEOs and even some fundraisers dread talking to donors about fundraising costs.

Over the years, especially in times of scandal, we’ve written literally dozens of posts on how to talk to donors about fundraising costs. Our bottom-line advice: “Don’t be one bit defensive.  Most fundraising programs are modern alchemy machines turning lead into gold.”

My favorite story on the importance of NOT being defensive comes from Tom Ahern, who reports, “My favorite anecdote on budgeting came from the University of Calgary. One president ago, the head of fundraising went into the budget meeting with the trustees, bounced a Looney [the Canadian 1-dollar coin] off the echoing wood conference table, and declared: ‘For every one of those you give my department, I’ll give you five back.’

In Tom’s wonderful summary of the tactic: “Be brief, be brilliant, be gone.”

I was reminded of Tom’s story when in today’s email I received an appeal from the campaign of Alexandria Ocasio-Cortez

There, in digital black and white was a perfect example of turning  the issue of  cost of fundraising from what many think is a negative concept to be feared as a donor turnoff to an opportunity to be seized

Here’s the Campaign’s message:

________________________________________________________________

 

Roger,

After the 2020 election, Facebook banned political figures from running fundraising advertisements — a move that was incredibly detrimental to campaigns like ours that depend on grassroots donors.

We lost a major fundraising stream for over four months, but now we have some really exciting news. They’re back and we’re trying to make up for the ground we lost.

For every dollar we’re spending, we are raising $1.62 for AOC. Can you chip in $10 today so we can invest these funds and turn your donation into $16.20?

Your donations help us build our movement. They allow us to do deep canvassing around the Green New Deal, they support our Homework Helpers tutoring program, and they help us raise funds for mutual aid and food distribution efforts.

Just this week we put up some brand new ads (you may have even seen one or two!) to see how much we could raise… and the results so far are astonishing:

Spent $98,078.04
Raised $159,176.40
Return on Investment 162%

Contribute $10 now »

We know campaigns ask for money all the time. But, it’s not every day that we can confidently say your $10 donation could turn into $16 for AOC and recruit a new person to join this movement.

That’s a huge opportunity, and the truth is we don’t know how long this Facebook ad surge is going to continue, so we need to strike now.

Please, if you can afford it, chip in $10 to help us raise another $16.20 and recruit more people on to Team AOC. Every dollar right now is getting multiplied 1.62x for the campaign!

Thank you for all you do,

Team AOC

________________________________________________________________

In Kevin’s Subjective or Objective Knowledge? we’re reminded that donors only give and keep giving if they feel competent.  “If I don’t understand your cause or how you fix problems I won’t give.”

In my view the AOC email is a classic example of promoting a donor’s subjective competence.  It doesn’t use a bunch of unnecessary or technical detail or political rhetoric.  Rather, it states the case clearly –and then, right before the donation link illustrates why I, the donor, can be even more confident in my giving decision. (I’m saying to myself, unlike most politicians these folks know how to count something other than votes.)

Roger

P.S.

All of this will hopefully encourage you to remind yourself and your donors (and your board and CEO) that money spent for fundraising yields great returns than virtually any other legal investment a nonprofit can make these days. See Agitator’s The Cheap Money Paradox, then thank them for the wise investment in your organization.

 

 

 

4 responses to “Using Cost of Fundraising to Turn Lead into Gold”

  1. Wow, I can’t understand why the example is only giving an ROI of 1 to 1.6. yikes. Just think that the typical direct mail campaign indeed still gives you a return of investment of 5 to 1 and in the case of many organizations even more than that. But it starts with the example Tom shared. Sadly so many organizations don’t understand it, which will make it even harder to explain to donors.

    • Roger Craver says:

      Hi Erica,

      I have no idea whether this was an acquisitor or house file effort. Either way a 62% return over the 5-7 day period it takes to get the response back is mighty good. Particularly, given what most folks are experiencing with interest on checking and savings accounts. Regardless of the nature of the effort, my point, Tom’s point and your point is that nonprofit managers and boards need to be aware aware of the magnificent returns from fundraising efforts. Most important to your point: they need to be prepared to speak to the subject when challenged/questioned by either Boards or Donors. Roger

  2. Steve Reed says:

    Sometimes, perhaps, the problem is credibility.$5 back for every dollar invested, within a year, can seem to the uninitiated to be too good to be true. I’ve dialed back projections on occasion to avoid to be seen as overselling. Nice side benefit of that strategy is overdelivering at the end of the day.

  3. Positive reinforcement generally strengthens a habit, so you would think that offering your donors rewards would only increase donations.