Gaining Ground By Cutting Volume
The infographic below is from our sister firm DonorTrends and indicates that for the first time in a number of years the nonprofit sector seems to be more or less standing still — rather than losing ground. A welcome change in direction.
You can download the full 2016 Fundraising Effectiveness Survey Report here.
In a nutshell here’s what 9,992 organizations, representing 8.27 million donors, who gave $8.6 billion in 2015 are reporting:
- Both the number of donors and dollars increased in 2015. A 2% net gain in donors. A 5.3% net gain in dollars. This compares with a net loss of -3% in the number of donors the year before. And represents a reduction in dollar attrition of $4 from the previous year’s loss of $95 for every $100 contributed.
- The overall donor retention rate stayed at 46%; same as 2014.
- The gain in the number of donors came almost entirely from new donor acquisition and reactivation activities.
- 37% of the $4.6 billion gain in dollars came from the upgrading of donors who were retained.
So what does all of this mean? That perhaps things are improving? If so, it’s a very optimistic perhaps at best. (It’s important to note that the larger organizations are gaining in revenue, smaller organizations are continuing to shrink. And the larger groups are probably growing because they have the funds to sink into acquisition and reactivation efforts, flip sides of the same coin, that produces 98% of that donor ‘growth’.)
And so the beat is likely to go on until we succeed in asking and answering key questions.
Some of those questions I asked yesterday in Fighting the Fundraising Excuse Machine. Questions like why donors give? Why do they stick around? What are their needs and preferences?
As Tom and I await your suggestions on what questions you feel are key to figuring out the future, let’s just jump into it.
The Question of ‘Volume’
Let’s start with the issue of ‘volume’. Are we sending too much or too little, at a frequency that on the one hand is so much that donors are frustrated or turned off; on the other hand, at a rate or paucity that doesn’t keep them well enough informed and engaged? (See the comments of Mary Cahalane and Dennis Fishcam to the Excuse Machine post.)
Some folks truly believe that one branch on the path to ‘donor centricity’ nirvana is by dealing with the issue of volume. It’s a logical place to start, they argue, because when it comes to dealing with donor frustration the assumption is that donors hate the crap we send them. And the more we send, the more they hate.
Perhaps they’re correct (although I doubt it), and we’ll be following up on that. But meanwhile, let’s start with what we know for sure about ‘volume’ and leave donor centricity out of it for now.
What we do know is that that you can send far less and make far more. Or, at the very least send a lot less and make the same. The process is simple and cheap and any organization capable locating their file of any size, uploading it and waiting 3 days can do it.
The folks over at our sister company Donor Trends do this for dozens of organizations every week. By applying a predictive model to select the best performing donors (the ones who, given their behavior are the very folks who want to hear from you most often) and cut back on contact with the least productive, least responsive, they dramatically lower volume, all the while protecting or increasing net income.
Best of all, through a process of back testing the models, even before they’re put into the mail or onto the internet, they can show an organization why and how they can improve results and lower volume and by how much.
They’ve posted a case study here that’s short and sweet. In three steps and three days they promise to do the same for you.
Because Caity Craver, a partner in DonorTrends is also part of my Craver Fundraising Circus Family ( think ‘Flying Wallendas’ for causes) I couldn’t resist sharing her video explaining quickly how all this works.
[ A personal aside: Not only does Caity have more than 20 years’ experience in direct response with groups like Habitat, the Heifer International, Amnesty International and many, many other groups, her childhood was no doubt marred by my rants at the dinner table on how all our causes could do better. Some childhood!]
At any rate, here’s the video:
Mail Smarter. Inside the Fundraisers Playbook – How to Mail Less and Make More. from DonorTrends on Vimeo.
One final note on why I’m spotlighting predictive analytics when it comes to volume is mainly because the question of the financial effects of reducing volume isn’t any longer a mystery or even much of a question. Why our trade persists in avoiding hugely time-saving and money saving applications like those reflected in the case study is a mystery, at least to me. Probably not to agencies and spreadsheet jockeys who make lots of money infinitely splitting Excel cells in pursuit of the proper, but mainly inaccurate, RFM DNA.
In our next post on the question of ‘volume’ we’ll explore how, why and if volume is even remotely connected to donor centricity.
What are some of your questions about ‘volume’ and, just as importantly, about the other questions we should explore?
Roger
5 responses to “Gaining Ground By Cutting Volume”
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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When it comes to volume, it’s not a matter of how much or how little. It’s a matter of how good!
If the quality of your communications with your supporters is high, the question of volume disappears.
Supporters welcome communications that make them feel good! That means the communications need to do one of the following:
– Offer them a chance to feel like a hero in their own life story
– Offer them a chance to be remembered by others
– Offer them a chance to get information the deeply desire
– Offer them a chance to laugh, cry or feel an emotion they want to feel (usually thanks to a well told story)
– Offer them a chance to better themselves in some way
– Offer them a chance to improve someone else’s life
– Offer them a chance to make new friends or feel like part of their community
– Offer them a chance to right a wrong
I might be forgetting one or two others but the point is it ain’t about volume. It’s about quality.
Improve the quality of your communications… provide people with value… MAKE THEM FEEL GOOD… and you can pretty much communicate with them as much as you want. And they’ll thank you for doing so.
Greg,
The “relevant” line is dangerous one to walk.
I realize you are drawing a distinction between appeals and no-ask comms designed to inspire, engage, etc… but the distinction is often lost on donors and the ‘relevant’ determination is typically an internal one lacking any check and balance with reality – i.e. do donors agree with the internal sense of ‘relevant’? Often, no.
One large, prominent charity claims to epitomize donor-centricity and so much so that it increased the number of annual mail solicitations from 24 to 27.
How to justify sending more in the name of being donor-centric? Enter the relevance red-herring; a built-in excuse to keep doing what one is doing and if possible, increase it. Nobody is arguing for sending out irrelevant so why in the world does everybody feel the need to make the obvious point that it be relevant?
More importantly who makes that judgement? It is always an internal one with justification being we sent 3 more appeals and each netted money and we used the correct pronouns and storytelling and made the donor the hero and talked about the impact of their past donation and made a compelling, simple case for additional need with a very clear ask, repeated 6.3 times.
There was a seminal study done analyzing the language and style and structure of fundraising copy relative to other bodies of work (e.g. academic) and it was an indictment nobody read –fundraising copy reads more like an academic abstract than personal, emotional narrative.
Everyone thinks their copy is ‘relevant’ and we all apparently live at Lake Woebegon.
Most of it is crap – per this study – and even if it weren’t, nobody at this aforementioned charity is likely arguing for sending out 54 appeals. Why not? They are all, by their accounting, relevant? What line in the sand exists that says 27 is ok but 54 is crazy talk?
Let me stipulate for the record, sending 27 DM appeals in a year is a massive waste of money and yes, we know appeal 25, 26 and 27 all netted money.
Sending more raises more, with sharply decreasing ROI each time and it cannibalizes from future donations. If you send 6 appeals and get 1.5 gifts a year and think you can send 12 and get 3 the next year you will be profoundly disappointed. You will also be profoundly disappointed to see just how stubborn the 1.5 average gift per 12-month period is (for current, multi-year donors in particular) against the wave of asks you throw at “it”.
And by “it” we mean “them” – the donors you are frustrating the hell out of by running a volume business.
Hmmmm…. “Relevance.”
Here’s my (donor’s) story.
With every donation I send, I enclose a note (on paper or in the electronic form) that says something like, “We enjoy hearing about the work of your organization during the year, but please do not send additional solicitations or sell or exchange our names with other organizations.”
The good news, we get almost none of the sort of mail described above (27 mailings!!!?!). The bad news, we almost never hear from the organizations we have supported.
I wish I understood this result more clearly. The best I can figure is that the development staffs are overgeneralizing. These donors have said “do not solicit” so that must mean we don’t want us to bother them. Or, worse, that their software does it for them because it doesn’t offer an “inform but do not pester” choice in the database.
I’d be glad to learn (from any of the organizations we support or anyone who’s knowledgeable about the question) if there’s a better way of communicating that distinction. It seems quite clear to me. We indeed want to hear about the work our — and many others’ — donations support. But we don’t need to be asked again (and again!?!) to give. We’ll do it – as long as the organization continues to do its work and warrants our trust. Since we’ve been making annual donations to these organizations for sometimes as many as 20 years, it shouldn’t take much to identify us as reliable….or whatever the right label is.
Putnam Barber
Seattle
PS: This problem is even worse with automated monthly donations. The recipients don’t have to ask. So we basically never hear from them again at all. If monthly donating (sustaining giving) is going to live up to its golden prospects, the receiving organizations are going to need to develop new protocols about how to communicate value to their donors without annoying them. It ought to be obvious (is it?) that for a donor the receipt of a solicitation from an organization that is already being supported indefinitely with an automatic debit seems, well, dumb. –PB
Say what you want, but spell the name right! Fischman, not “Fishcam,” please.
We are a direct mail company serving Washington DC area. Mail less and get better results seems counter intuitive to a lot of our clients – though we suggest this to them every time. The standard excuse we get is that even though they agree with us they would not like to rock the boat. Also, a lot of them have not done acquisition for a while and have almost 30% to 40% records on their house list who have not donated in the past 3 to 4 years – yet they are reluctant to let them go.