Wednesday, June 24, 2009

Debunking some common fundraising myths

The best part about working for a data driven (obsessive) agency is you get to either debunk or prove ‘common’ fundraising myths.

So I thought it would be useful, and a little fun, to debunk a few common ones. Here goes…

1. I need a product, like child sponsorship, to grow a successful monthly giving program

Garbage, rubbish, bollocks (insert whichever vernacular you like). Simply not true. Yes, organization’s that have child sponsorship “products” have an advantage. But only because they have created an emotional connection with someone. And that’s the key, finding your emotional triggers with your donors.

Refer my earlier post about getting the most by getting it monthly which talks about the fundamentals behind a successful program. Some of the most flourishing monthly programs I have seen (many which started from scratch) are built not on fancy product names but on explaining to donors why you need ongoing, monthly support.

Take the National Heart Foundation of Australia as an example. Four years ago they had a little over 1,000 monthly donors, today over 11,000. Mostly driven by solid direct marketing (phone and mail) and explaining to people how critical funding work like cardiovascular research is to saving lives. It can be done.

2. I should stop mailing donors who used to give one time cash gifts and now give monthly

Response rates to direct mail appeals (as an example) from this group I’ve seen range from 16% to 43%. In short they are for most organization’s I’ve worked with the best responders to further solicitations. Again it makes sense. They are your best donors. So treat them well and they will respond.

This works in the long term as well as the short term. This group (cash who ‘converted’ to monthly) on average deliver more value to date than most other groups of donors, including other types of monthly giving recruits.

3. No one reads long letters

If done properly, long will always beat short. Again, refer my previous post on this.

You can’t send a 6 page phone bill and expect to out pull a short letter, but a well crafted letter that tells a story, is backed up by data driven ask amounts repeated throughout the copy, an easy to complete response mechanism, is urgent and has a target amount will always rock. And will beat a shorter letter.

Why does it take 4 pages though? Who knows. Who cares. Actually that’s not true, I do care. But put simply it’s because it takes that long to do all the things you need to do to make it a brilliant letter. Every single test I have seen around this has proven that longer truly is better.

4. If you mail too much, you will fatigue donors and they will stop giving

The organizations with the best retention rates are those that mail/contact the most frequently. And by mail I don’t mean ask, I mean talk to someone which includes feeding back, caring and thanking.

I looked at an organizations data the other day that mails around 12 times a year, which includes up to 10 financial asks. They have a 2nd gift rate of around 50% (better than the 30% I have seen through benchmarking studies here in Canada) and an overall (year to year) renewal rate of around 70% for cash donors. I’d argue they’d be higher than that if their approach was more personal and engaged donors more effectively, but the point is they talk to donors often (and ask lots) and it works.

5. Street recruitment (face to face/direct dialogue) is bad for the brand and therefore harms income

I’m sure there are those that think recruiting on the street has damaged Greenpeace’s brand. I’d argue, as I’m sure Greenpeace would, that around $1b in income globally over the past decade and a half is pretty darn good. And no doubt outweighs any ‘brand damage’.

There are arguments all over the world, at fundraising conferences, between fundraisers and ‘watchdogs’ and in pubs about the value of this type of recruitment.

But let’s face it, it works. It works looking at volumes of people it brings in (saw a report last week that showed 680k donors signed up on the street in the UK last year, up 16%). It works looking at value over time, typically these types of recruits bring in between $500 and $600 (CAD) over 4-5 years.

Bottom line is it works.

The caveat is it has to be done properly, organizations need to understand how to treat these donors (typically who are younger) and there are all sorts of back end things to consider. But the brand argument doesn’t stack up. Unless you monumentally screw it up and have a PR disaster on your hand (I.e. a canvasser abuses someone on the street).

Have you got any common fundraising myths you’d like me to debunk or prove?

Jonathon

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