Flat Earth Fundraising: Catch & Release Fishing
Too many direct response fundraisers, many of whom should know better, continue to resort to acquisition techniques that only serve to camouflage the erosion and dry rot destroying long-term donor performance and value.
Whether it’s the over-use of premiums or the increasing dependence on cooperative databases (see piece in Direct Marketing News), the amount of money spent on boosting acquisition campaign results strikes me as the height of short-sighted tactics and irresponsible fiscal folly.
What have these ‘trendy’ and misplaced investments produced? According to the most recent Fundraising Effectiveness Report from the Association of Fundraising Professionals (AFP), for every $5.25 raised in 2010, $5.54 was lost — a 1.9% negative growth rate in giving.
Despite year after year of declining results and ROI rates, direct response fundraisers continue to chase the illusive pot of gold at the end of the acquisition rainbow.
When will they understand that Retention is the New Acquisition?
When will they understand that current acquisition practices amount to little more than expensive lead generation efforts?
As the AFP notes in its Fundraising Effectiveness Report, “For most organizations…taking positive steps to reduce gift and donor losses is the least expensive strategy for increasing net fundraising gains.”
This isn’t some new revelation.
- Fundraisers have been warned for at least 25 years, beginning with Ken Burnett’s groundbreaking book Relationship Fundraising: A Donor-based Approach to the Business of Raising Money, that the old-fashioned ‘burn and churn’ approach to fundraising leads to a destructive dead end.
- Academics Adrian Sargeant and Elaine Jay in their classic work, Building Donor Loyalty: The Fundraiser’s Guide to Increasing Lifetime Value, demonstrated the financial value of investing in retention. “Increasing donor loyalty by 10% today, increases lifetime value of the fundraising database by up to 200%.”
- And again this year, in national studies of 130 organizations in both the US and the UK, DonorVoice demonstrated that an average of $200,000 per 1,000 donors could be posted to the bottom line by improving the level of commitment through identifiable actions organizations can take.
The ‘catch and release’ or ‘burn and churn’ school of direct response fundraising is great for data vendors, printers, and premium manufacturers, but it has never had a leg to stand on in the face of logic, experience and everything that donors tell us. To me this shortsightedness is as baffling as it is persistent.
Perhaps it’s because until recently there was little empirical evidence of just how much this snatch-and-grab philosophy of acquisition/lead generation is costing our sector. But given fresh, math-based insights into how to plug the leaky bucket and how to boost donor retention, there’s no longer any excuse.
Roger
P.S. To get a first hand look at the most recent Donor Commitment research and those factors that drive up loyalty and retention, register today for the free Agitator-SOFII-DonorVoice Commitment Webinar, where the results of the recent UK National Commitment Study will be revealed and discussed.
4 responses to “Flat Earth Fundraising: Catch & Release Fishing”
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Roger, as the Agitator knows, I’m a card-carrying “retententionist.” But I worry readers will misinterpret your post as damning acquisition in general, which I know neither you nor Tom would do. In fact I plunk the keys right now thinking of two nonprofits, one of which is today a huge national charity that quite rightly focused a great deal of time and resources about 7 years back on getting retention right. For nigh on four years, though, they did zero acquisition… ultimately (predictably) reaching a point where revenues went flat. When they woke up and restarted acquisition rollouts — combined with the already stellar retention strategies in place — things started to change.
Nonprofit number two has the potential to grow into a regional powerhouse. However they cling to two myths: #1, that retention means a thank-you, a recent copy of their annual report and newsletter, then total silence for six months and #2, that acquisition means mailing a bunch of letters (the ones of which you wrote about in your above post), and everything will turn around by next fiscal year.
You know I’m on board with the great work being done by DonorVoice — and that I make my living by helping organizations do better retention communications. But I wonder: maybe the Agitator and its readers could (should) also begin a new discussion on effective acquisition strategies for today, along with some really good examples of acquisition mailings, so other organizations could learn from it?
Then you’d have magic: solid retention AND acquisition. Are you guys game?The nonprofit world needs you! Thanks, Roger, as ever. 🙂 Lisa
You are, as so often, absolutely correct Lisa. Neither Tom nor I condemn acquisition since it’s an essential ingredient in the food chain. What we’re so down on, given what we’ve seen over the years, is acquisition conducted without any serious focus or a defined plan for retaining newly acquired donors. As you’ve noted, unless both sides of the process are given proper attention–and investment– the same old erosion and churn will continue.
Love your idea of starting a dialogue and sharing info and examples on successful acquisition strategies and examples.
Please start sending ’em on and meanwhile Tom and I will figure out a way to focus on highlighting and building some sort of knowledge base on all this.
Roger
I agree with Lisa! And with your point as well. I think what’s missing in the churn and burn model is the desire for real relationships with donors (in whatever form the donor wants it). We’ve got to look past dollar signs!
And I want to second Lisa’s suggestion: some more information and discussion about successful acquisition strategies would be great!
Mary
Roger, hooray! Churn and burn should be banished to the dustbins of history, for sure, so any kind of a discussion on “the new acquisition” would be hugely beneficial not just to Agitator readers like Mary C. and me, but to the nonprofit sector as a whole. Thanks so much, to both you and Tom.