Earlier this month, Roger flirted with firing the direct response fundraisers for the top 83 charities in America. He cited as ’cause of action’ the poor fundraising performance of these organization as reflected in Target Analytics 2010 Index of National Fundraising Performance.

This evoked a spirited and thoughtful response from Stephen Hitchcock, now at Bread for the World, and formerly for years at fundraising firm Mal Warwick and Associates. You decide … should Stephen keep his job?

Roger,

I read your April 7 posting about the Target Analytics index, and I think you’ve got it wrong.  In fact, I should be the 84^th fundraiser you fire.  Bread for the World’s direct response program is characterized by most of the “grounds for dismissal” in your posting – especially our “cookie cutter, same-old-same-old plans recycled year after year.”

I believe most of the organizations in the Target index are doing worthy work that is very relevant. These organizations are seeing a declining number of donors and falling revenue because:

(1) Real incomes began declining long before the 2008 decision. Except for modest relief in the Clinton years, the middle class has been under assault since the Reagan administration.

(2) People give when they have a sense of security and optimism about the future. With falling home values, cratered 401Ks, and rising health care costs, few Americans have any sense of financial security.

(3) The past five (ten!) years have been filled with natural and man-made disasters. Americans have responded generously. Many younger individuals have made their first philanthropic gifts to disaster groups – rather than old-line charities.

(4) Subscriber lists have gotten smaller and more costly to rent. A minor factor, but worth mentioning in light of your comments about our over-dependence on list exchanges and cooperative databases.

I appreciate that Tom and you want to be provocative. But I hope you’ll now take an even bigger risk and suggest who should replace the 84 of us whom you’ve fired. What skills do you think these new hires should possess?  What key activities should they engage in?  What will be the measures of their success?

Those of us in the trenches have to negotiate with staff and board members who have no idea how direct response fundraising works – and who think the Internet is fast, free, and environmentally pure. As I and the other 83 fundraisers seek to generate the unrestricted cash revenue that sustains our organizations, we face at least three big challenges:

(a) The true costs of the technology and the staff time necessary to bring online fundraising to a meaningful scale are huge. Open rates, click-through rates, and donation completion are so low it takes hundreds of thousands of email addresses to generate any real revenue – and then there are PayPal and credit card fees to pay. Mobile fundraising comes with additional fees – along with smaller gifts.

(b) “Capturing, integrating, and monetizing of new online donors [those donors and revenue are being captured in the Target index] through the multi-channel programs” is even more expensive and time-consuming. That doesn’t mean we shouldn’t do it, but we need to be honest about what a big part of a nonprofit’s budget must be devoted to operating in the new, digital economy.

(c) Whether it’s online – or on the phones and through the mail – acquiring new donors, thanking them profusely, and communicating effectively requires immense discipline and focus. It may be possible to read War and Peace on your Smartphone while also updating your Facebook page. But the close reading of printed texts, writing complete sentences, and rigorous financial analysis are more useful tools when it comes to raising money. Unfortunately, only a 100 or liberal arts colleges – most with limited enrollments – offer a young people the chance to acquire those skills.

When I began this work of fundraising in 1975, my first boss sent me to a two-day NCDC workshop taught by Jerry Huntsinger.  John Groman was trailing along behind. Almost everyone had concluded that the best donors were aging and dying off – and that the new 1.8 cent nonprofit postal rate would make direct mail obsolete.

I was with Mal Warwick & Associates, where I worked for 22 years, most of the time as president. Since 2008, I’ve been an employee of Bread for the World, which had been an MWA client since 1989.  Over the past five years, Bread for the World has been blessed with an 18 percent growth in membership revenue (about 100,000 gifts under $2,500 in 2010) and a contributing membership that grows a couple thousand each year.  Fortunately, the same-old-same old sustains our relevant work.

Thank you for continuing to agitate us.  I hope you’ll take a second look at the Target numbers and offer some substantive suggestions for alternative approaches.  Best wishes in all your endeavors,

Warm regards,
Stephen Hitchcock

Stay tuned for Roger’s response. Meantime, here are two of my reactions …

The only upbeat message from Stephen relates to disaster giving. Personally, I don’t regard ‘gift receiving’ in response to disasters as terribly demanding ‘fundraising’. Yes, I’m happy that Americans continue to show their generosity in response to such events … but — to put perhaps an overly sharp point on it — that would happen if fundraisers did nothing but hold the basket out, wouldn’t it?

Converting those spontaneous gifts into enduring repeat contributions would be fundraising, as I’ve argued at greater length here.

I do resonate with Stephen’s cautionary comments about online fundraising. A growing piece of the pie, but still doesn’t provide the necessary nutrients for most nonprofits. That said, whether online givers are only semi-literate or not, as Stephen sort of suggests, none of us can deny online is the growth channel (at least as the preferred response mechanism) … and may even become, as we’ll explore later this week, the key to future donor acquisition.

Tom