Where’s The Breakdown?
I was thinking about the Comments by John Sauve-Rodd and Denisa Casement regarding Roger’s post yesterday, Why Chuck Longfield Is Worried.
Roger was re-stating The Agitator’s determination to intensify our focus on donor retention, and they were commenting on the great success of monthly giving in the UK and Europe, as compared to its pale success in the US.
For US nonprofits struggling to hold on to more than 30% of their first-time donors, the fabulous track record of UK and European charities with monthly giving must seem like some kind of mythical Holy Grail.
It was noted that automatic direct debit giving is far more accepted outside the US, suggesting that banking technique might be the key factor distinguishing the two disparate experiences.
But is that all there is to it?
Two other factors occur to me (other than the most obvious — too many US nonprofits simply don’t seriously try).
One is presentation. Is there something about the way our non-US colleagues frame the need or present the case that yields so many monthly commitments? Perhaps they are more honest with donors about the intractability of the problems they are tackling. Maybe they are better at linking the donations they receive to tangible results that will replicate.
A second factor could be some sort of mind-set blockage with US donors. Have we somehow trained them to think ‘Now!’ and respond only to ’emergencies’ and ‘quick fixes’? Do they have unrealistic expectations about the level and duration of effort required to deal with serious issues. Do they suffer from some kind of culturally-reinforced attention-span deficit? Do they have a problem with ‘commitment’ of the enduring variety?
I don’t know. But my gut tells me the under-performance of monthly giving in the US is more than a matter of banking practices.
Other views?
Tom
17 responses to “Where’s The Breakdown?”
Behavioral Science Q & A
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The question of wether we (non-US) fundraisers present the case differently in order to gain more monthly donations is a little back to front. For 20 years in Europe and 15 here in Australia we’ve known that regular monthly gifts are a much more effective way of retaining donors, so we’ve built propsistions systems and indeed entire industries in order to recruit them. The framing of the donation around long term projects and around shared values has come from what we want the final outcome to be.
I should also probably point out that monthly giving doesn’t necessarily answer the problem of retention. Some NFPs loose up to 50% of their RGs within 12 months.
Here in the UK we are lucky with our regular giving via direct debit. But having met around 18000 donors in focus groups over 18years there is one fascinating thread which seems to weave its way into the minds of donors: with such automatic giving the knowledge of the charities supported is minuscule. I specialise in legacies and the mindset for legacies is “it’s an investment”. If knowledge of the outcomes are minimal and costs of fundraising are unknown then the chance of giving a legacy is small. My brain tells me (and my brain is often wrong!) that auto acted giving produces automated donors who do not really think about other ways of giving such as a legacy.
Tom, a view from the UK. As an ordinary consumer, almost all my expenses are handled through monthly variable direct debits (VDD) from my bank current account. Mortgage, credit card bills, insurances, newspaper subs etc. Why wouldn’t I support my favorite charities in the same way?
Speaking as a businessman, what I do find curious about American fundraising is the reliance on the annual appeal at Christmas time. Every charity is desperately competing for attention in a short time span when most people’s minds are on other things, (travel, presents, parties, family) not not-for-profits. The UK and Europe have learned to spread this appeal out over 12 months rather than just one. My advice would be to drastically reduce annual appeals, which skew not-for-profit cashflows so badly. That’s no way to run a viable sector. It is a self-inflicted handicap.
And not only in Europe. In Latin America as well. There even are organisations that don’t even ask for a single donation and go straight for monthly donations in certain appeals.
Could it be that the US is still very much cheque-driven when it comes to donating?
In the case of Latin America, cheques were never very popular as they required efficient postal services, which isn’t the case in most countries in the Region. This situation pushed donors to prefer using their credit cards. From there to monthly donations there was a relatively small jump. Of course, this doesn’t explain why monthly giving became so popular in Europe where postal services are generally quite good.
I’m a UK fundraiser who came across the pond to lead Greenpeace USA’s fundraising between 2003-7, and I thought a lot about this in the four years I was an honorary member of the US fundraising family. It has nothing to do with banking systems, to my mind, though it might once have had. (Replies to John and Denisa’s comments about monthly giving and face to face have been added to yesterday’s Why Chuck Longfield is Worried post).
Monthly giving supporter recruitment can and does work in the US. We did it with face to face/direct dialogue. Others have used agencies to do the same, though not as well. ASPCA does it with DRTV. So the question is why not direct mail? This is pertinent to the US, as this is still the dominant recruitment channel, unlike the UK now, where DMail is a tough one to crack. Mail acquisition that is working has reverted to cash asks, some with premiums or sweepstakes (with the inherent issues with those), with quick conversion telemarketing – the model of 20 years ago. Mobile and Text to Give is the new big thing in the UK right now. Lots of innovation there, but not the volume of DRTV and Face to Face.
I was determined to make monthly giving work in supporter recruitment in the US (why wouldn’t it?), an ambition that met with much derision, I might add. Greenpeace was already a pioneer of automatic payment, with a rigour in upgrading cash donors to sustainers (regular donors, to translate for my UK friends). It might not be bank direct, but people are quite familiar paying utility bills through automatic payment on credit cards. Credit cards have their own processing issues to manage, but it’s possible.
So what happened? Well, we spent 18 months testing, and I mean properly testing, monthly giving in cold mail acquisition. We didn’t crack it, but came close. Frankly, Greenpeace was too small to keep at it, and I was amazed bigger organisations with deeper pockets and more to gain weren’t making the running. I’d like to think someone has done it by now. My friends at ASPCA were trying it too.
My conclusions? You get the donors you deserve. Donors have been trained in the US to give in a certain way. And that certain way is CASH NOW. US DM fundraising is a machine. Low cost high volume direct mail. Regular reciprocal mailings (I recall two million-member organisations mailing each other’s donors EVERY MONTH, and wondering why retention and repeat gifts were a challenge). The churn and burn culture breeds a certain disrespect for the supporter (advertising and selling your donor list for extra income – I once provoked uproar described this publicly as pimping – but can you tell me it ain’t so, rather than complain about my choice of words?). Tactical techniques outweigh message, engagement and relationship-building to maximise response. And perhaps controversially, I’d suggest that when so many agencies have so much vested interest in the production of direct mail (whether paid by volume or not), there hasn’t been the strategic pressure from agency or client side to look for a new model.
Back to relationship fundrasing, back to issues of retention. If you just chase money and the bottom line, and don’t think about your supporters as more than a source of money, don’t complain about the monster of a machine you’ve created.
There’s a ton of exciting stuff in US fundraising. But when it comes to getting monthly giving to work, don’t blame externalities like banking systems, or even blame donors for set-in-their-ways mind-sets. Look to yourselves.
Of course that’s not all there is to it. But consumer culture has a big influence on how various methods work. In 2006 a very successful F2F company from the UK began working in the US. They just couldn’t get it to work.
That doesn’t mean monthly won’t work in the US. It means you can’t just cut and paste between different cultures. Every method will need varying degrees of adaptation.
The “churn & burn” DM method was a US “innovation”. We are now suffering from the culture we spent decades building and reinforcing. The UK has spent decades building a culture of monthly giving. It has it’s own challenges. 80-90% retention rates are common among older donors but the younger donors drop off much quicker and acquisition is very expensive. But, there is much the US can learn from the UK model. US donors still give considerably more per capita than UK donors. Will this be true with upcoming generations? I think that depends on how good we are at adapting fundamental principles to new methods & tools.
If the principles of donor retention and LTV are not integral to the development and application of each method of fundraising they will ultimately fail to be sustainable. Digital, mobile, F2F, DM, telephone…all useful tools when applied correctly. But none of them are the end all, be all of fundraising.
We need to pay attention to the culture we are creating and learn from each other. I’m concerned about creating a social media culture that trains a generation to believe they have changed the world by clicking LIKE or leaving a 140 character comment. Are we thinking this one through?
This post raises another question as well: Do the strategies and methods that are so successful for sustaining giving in Europe possibly suppress the environment for major gift fundraising as well? I prefer to think that the reason we do so poorly at donor retention in the US and are still weak in major giving in Europe is because of the choices we make on stewardship here and in strategy and solicitation there. While we often attribute differences in behavior to cultural characteristics in the donor it is more likely a reflection of the interaction between the donor and the organization. The more we do to integrate marketing (regular giving) with personal solicitation (major gifts etc.) the more successful our programs are likely to be on an ongoing and transformational basis.
As a current young alum who works for development at her alma mater, I think it has a lot to do with the culture the university – or any non-profit – presents monthly giving. I know a lot of recent adults who are fine with doing monthly giving after explaining to them that it’s just a few dollars a month (probably some they won’t notice), a small contribution each month can go a long way, and making a visual for them. For example, donate lunch, cup of coffee, etc. Something the donor, for the most part, does not even take into consideration or may even take for granted.
However, at our institution we’ve had trouble with the bank we work with. I’m not sure if it’s due to a contract or limitations they may have, but it is, nonetheless, an issue.
I also believe that monthly giving will become more common in years to come. As mentioned, the culture can make or break a monthly giving campaign. If the non-profit has been targeting people in an emergency based situation, it can limit their efforts to run a successful monthly giving campaign.
Right now, part of my job is to educated and raise awareness on campus about philanthropic support. I approach students with small amounts and show them how even just $10 a month can really add up. Though our student program is still too young to have a significant amount of results to measure and analyze, I believe it will cause a shift in the culture with the next generation of donors.
I don’t know if the proportion of gifts that come in the last few days of the year in the UK and Europe is as high as it is in the US, but I wonder if the ritual around end-of-year giving is a factor at all in diverting people in the US away from monthly giving?
It’s clear that many families and individuals in the US have embraced the period between December 26th and December 31st as a time to focus on giving back. It’s then that so many households sift through their choices and direct gifts to charities. It seems many give the majority of their donations for the year then. In households with more than one person, folks often spend time discussing the options and make the decisions jointly. Then they have the satisfaction of sending off the donations (whether online or by mail) and getting that “donor high” we’ve all read studies about.
I think year-end giving is a lovely ritual and, as a fundraiser, I’ve given up fretting about not getting year-end donations in the door of my nonprofit earlier. The reality is, it makes sense for people to get through the all-consuming holiday craziness and then put real thought into their donations that last quiet week of the year.
Anyhow, just wondering if that inclination to give at year-end in the US is a factor in depressing monthly giving? Perhaps the folks in the UK and in Europe are smart enough to capture that generous end-of-year sentiment and encourage folks in the direction of selecting which charities to give to monthly over the next year rather than sending a donation right then?
Great post. Part of Adrian Sargeant’s research seemed to imply a few years ago that US donors felt like monthly giving was too akin to paying a bill (as it feels less like giving)- but that doesn’t mean we shouldn’t try it – just make sure the impact statements aren’t invoice-like…
Another first hand story. Child sponsor has been successful with monthly donations for decades. But like Tom Duggan says, monthly giving is not synonymous with higher retention rates. The technical aspects of how that monthly giving happens.
When I was at PLAN USA in the 1980s, our monthly donors who paid by check (the bulk of our donor base of about 100,000) had annual attrition rates of about 35%. But if our donors paid by electronic fund transfer or automatic credit card charges, their drop out rates were 8%.
What we believed to be the difference was that every time the donor had to write a check, they had to make the giving decision all over again. For those on autopilot, they didn’t think about it. Retention rates for our EFT program were equal to our European colleagues where their donors were paying by debit. At the time, most Europeans were paying their bills and making purchases with debit cards, which was not the norm in the US>
At the time, we were able to convert 23% of our monthly donors to EFT, but it took an ongoing effort to do that. We found that we had to stress two things at the time to make this happen 1) that we didn’t have access to their bank accounts, meaning that we couldn’t see what was in the account and we could only take out this one contribution each month and 2) that they had total control and could stop the automatic transfer at any time.
When I moved on to a smaller regional organization in the 90s with a giving based of about 4000, it was much more difficult for us to manage the small number of EFT’s we had and were trying to build and costly.
Today, donors can set up their monthly giving simply by putting their gifts on autopay through their online banking. A much easier way for them to make monthly gifts.
So, I do think it is culture, technology and promotion that are the success factors.
WOW! This comment thread has turned into a Masterclass!! Raises for everyone!
I just want to point out that, although year-end giving in North America can be partially motivated by the ‘holiday spirit’ or a time of reflection, the December 31st deadline exists because of tax receipts. The UK (and I think most or all of mainland Europe) do not give tax receipts for gifts, so this mad rush at the end of the calendar year is non-existant. Many charities still do holiday appeals, which are still very successful.
A reminder that the reason North American charities are so reliant on December income is not because they focus too much on the Christmas appeal.
Tom & Roger,
I am hoping you can clarify something for me. My first fundraising job was at a charity that had what we considered to be a strong monthly giving program (~600 members by close 2008, grown to ~1000 monthly givers today giving ~$750K annually to operations (~75%) and endowment (~25%)). I thought this was the norm, until I learned about a year ago that the US lags in monthly giving.
My question is with ~4,000 givers annually, were our numbers good? Or did we just think we were good because it worked for us? Could we have been doing more? As I have moved on to other places and am looking to start a similar monthly giving program, was that first place an anomaly or can it be recreated elsewhere?
Thanks!
Re: monthly giving vs. one-off. I just received this fine analysis via Australia’s Pareto e-newsletter. The point it makes? Regular and one-off giving are not mutually exclusive, i.e., you should be doing both. And they explain why. Worth reading: http://paretofundraising.com/2013/02/regular-giving-or-one-off-donations-which-to-go-for/
Wow, I just love this dialogue. Some of you may know that I just penned a book on Monthly Giving for this exact reason, called Monthly Giving. The Sleeping Giant, now available as e-book as well.
As someone who moved from Europe to the US 20 years ago and has been working with monthly giving for just that same amount of time, I too was stunned about the number of organizations I met over the years who had huge donor programs but no monthly giving whatsoever. Fortunately that has turned around and if we as fundraisers continue to let management know that this long term investment absolutely pays off, from small but regular gifts now to the ultimate gift, the legacy. .
I can honestly tell you that the ‘old’ direct response tools such as Direct Mail, and telemarketing very much work to generate new monthly donors. Not everybody is able to use television or face to face but using email and direct mail alone will go along way to get started. He, even 100 donors on monthly giving retaining at 95% are huge for some!
Someone asked are 4,000 givers good, absolutely!! Even 100 regular givers can be great for some!
I’m fortunate to have some clients who continuously grow their programs using dm and tm and email and they are willing to invest in it. They are as COMMITTED as we expect our donors to be and frankly, that’s where the crux of it all lies.
It takes CONTINUOUS INVESTMENT as does COMMITMENT on behalf of the whole organization. It’s not a fly by night thing. Unfortunately, it’s not sexy, it means working with the many departments in your organization to make it all happen, but boy, does it pay off!
And indeed, just keep in touch with the regular givers and keep asking and you’d be amazed at their additional giving. Guess what, these donors care about your organization! They trust you with their credit card or bank information, that’s not an easy thing for an American!
Organization management is often willing to invest in major gifts but for some reason, this monthly giving thingy does not seem to quite resonate with them… I’ve always been baffled at that…
I trust that this whole conversation (or master class as someone called it), will give us all HOPE that there are a huge number of wonderful committed donors to be uncovered!
Cheers, Erica
(shameless plug for the book)
http://www.amazon.com/s/ref=nb_sb_ss_i_0_14?url=search-alias%3Daps&field-keywords=monthly+giving+the+sleeping+giant&sprefix=monthly+giving%2Caps%2C208