Fire The Top 83 Direct Response Fundraisers?

April 7, 2011      Admin

Yesterday, Target Analytics published its Index of National Fundraising Performance for the 12 months ending December 31, 2010.

Not a pretty picture. And frankly, if I were the CEO or a Board Member of one of the 83 big organizations included in this Index, I’d probably be looking for some new resumes to replace some of my status quo fundraisers.

For the 5th straight year the majority of the large organizations included in the Index – those where the dominant revenue source is direct response – have experienced another lackluster or downright disturbing year.

  • Real Index revenue has declined by 13.0% over the past five years, and by 6.9% over the past three years when revenue dollar amounts are adjusted for inflation.
  • Over the past five years, new donor numbers have fallen by a cumulative median of 10.3% — that’s an annual decline of 3.6%
  • And…there’s been little success at making up the loss through better retention. Retention of first year donors continued to drop again in 2010 with only 46% of the organizations reporting an improvement (0.02%) in retention rates.

With less water flowing into the bucket and little change in the outflow where’s all this going, other than down? The more important question is why is this happening.

  • It’s easy to blame it on the economy (but this trend was underway before the economy headed south in 2008).
  • And easy to simply shrug and say, “Well, my sector is doing less bad.” (Not true, unless you can take credit for earthquakes, genocide, and war; only the animal welfare folks are truly ‘up.”)
  • Or perhaps use a little sleight of hand and blame it on online – “You see, there’s a lot more money coming in online and this is cannibalizing other programs.” Not enough. According to the Index the number of new donors has risen from a bit more than 5% in 2007 to a bit more than 7% in 2010.  Barely enough to stay even.

In fact, there are no easy explanations for why the big 83 are in a downward spiral; only questions. But questions which need to tackled head on:

  • Are the large, old organizations that make up the majority of the Index losing their relevance and support?
  • Is there a problem in the fact that most of these organizations build a large part of their declining acquisition programs by exchanging names through cooperative data bases and other ‘take in each others’ laundry’ resources?
  • Has the quality and innovation of direct response programs declined to the point where ‘cookie cutter’, same-old-same-old plans are simply recycled year after year, to the point where perfection of predictability (despite the declining bottom line) has become the enemy of growth and sustainability?
  • Could it be that the rising numbers of new online donors reported in the online studies we’ve reported in The Agitator, are simply not being captured, integrated and monetized through the multi-channel programs that everyone gives lip service, but almost no one ever gets around to implementing?

I suspect it’s a combination of all of these technical reasons. But, mostly I suspect the real culprit is the inability or unwillingness of boards and CEOs to expect more, invest more and demand more from those charged with bringing up the bottom line.

What do you think?

Roger

P.S.  As always, the detailed analysis by the veteran team of Helen Flannery, Rob Harris and Carol Rhine at Target Analytics is worth a thorough read with special attention to the reports on individual sectors. You can get their report here. Go ahead.  Share it with your CEO and Board.

4 responses to “Fire The Top 83 Direct Response Fundraisers?”

  1. Jules says:

    Hi I think it is more to do with the fact the most of the larger organisations DO NOT listen to their donors, both newly acquired and existing. They seem to just ask for support for everything and not take into consideration that if you donated for an earthquake then you may not be interested in donating for a goat for a village.
    I also know that if you do not ask you do not get, but, here is a novel idea, how about asking the donors what they would like to support!!
    Wouldn’t this making the mail outs more effective.

  2. Mary Cahalane says:

    Based on a totally unscientific and anecdotal review of my mailbox, I think there’s quite a lot to your 3rd reason. Same packages, same trinkets, mostly the same lazy numbers game. (There are some really stand-out exceptions).

    I imagine this will also spur another round of “direct mail is dead” pronouncements.

  3. Mike says:

    These numbers are alarming for sure. You can apply more pressure to your sales and marketing guys if you want but donors just seem exhausted or non responsive for a lot of npo’s.

  4. Karin Kirchoff says:

    Roger – I agree that the factors you mention contribute to many of the organization’s challenges. But, one that you didn’t mention gets to whether or not our expectations (and therefore the way we communicate with them) should change.

    Baby boomers are not their parents and don’t do much of anything the way their parents did – and donating to charity is no exception. I am not sure most non profits (or their agencies) have a) figured that out or if they have b) figured out how to talk to those donors.

    What I do know is that organizations who were smart enough to invest in high value donors programs (think sustainer and midlevel) have weathered the storm(s) far better than those who didn’t. You point to this with animal welfare groups (sustainer acquisition and conversion have driven revenue into these orgs) and we’ve seen this with clients who’ve given their donors the opportunity to engage with them in more meaningful ways.
    I don’t think this is a silver bullet per se – but, our programs need to evolve just as our donor’s needs do.

    Best,
    Karin Kirchoff
    MINDset direct