Many charities have proven that telling individual stories is more motivating for potential donors than throwing statistics and numbers at them.

Telling people that there are 10,000 people diagnosed with x disease per annum is not as effective as telling a story about one person with that disease, and what you can do to help.

Story telling hammers fact sharing when it comes to soliciting donations.

Assuming that you have already been convinced that this is the case, then the next stage is to write those stories in a really engaging way.

I often get involved in writing copy and a trick that I have found is that stories flow better, and are more engaging if they are personal, involving, directly thank the donor, and are witnessed.

By witnessed, I mean kind of like what preachers do. Don’t just tell someone a story, make it personal. Since good direct mail letters should be written in first person singular, to a donor, the writer should be telling the story from their perspective,

In a story about someone with x disease, the writer should have met that person or their family. It is more compelling to say ‘when I met Bill, I was shocked when he told me that…’ ‘it brought me close to tears…’ than just saying something like ‘let me tell you about Bill. He was diagnosed with ….’

Take a leaf from preachers – witness change.

According to Givewell of those charities that declare their assets, 65 have more than $500,000 in their bank account, with a total of $3,722,530,136 between them.

Why do charities have these assets? $3.75bn is a lot of money. Much of it is tied up in property.

There is no doubt that owning a building outright is going to save money on an annual basis. Basically, no mortgage or rent.

Several reasons are given for why charities have large assets other than property. According to a recent article in the Age, the McGrath Foundation banks all three years salary for each nurse it takes on, ensuring that the service will be provided independent of the charities’ performance.

But often the reason many charities keep large reserves are for a ‘rainy day’. Reserves give a charity security.

What many boards don’t understand is that good fundraising can also offer stability. Of the top 50 charities by fundraised income, 26 have assets less than one year’s worth of fundraising income. These low asset charities are unsurprisingly dominated by INGOs (international non government organisations) – charities like Oxfam and World Vision whose work is carried out predominantly abroad.

Boards are usually populated by great volunteers with diverse backgrounds, but very rarely are they from a strategic fundraising background. Some may have been involved in fundraisers – balls, events or making donations themselves – but they are rarely acquainted with fundraising mathematics.

The bottom line is that the most stable, ongoing growth driver that outstrips property values, rent savings and classic investment strategies is a well managed individual fundraising strategy with classic direct mail and phone donors, regular givers (recruited by face to face and other means – don’t rely just on face to face donors) and bequest management.

Your classic donors, as well as providing income, are more important to you as a pool for bequests, major donations and regular givers. Your regular givers should be recruited using multiple techniques – at least face to face and mail/ phone conversion of classic donors.

Here is an index based on benchmarking data plus estimated returns over the past five years. It is easy for you to adjust the returns to reflect your own investments.

Your job as a fundraiser is not just to fundraise, it is also to give your bosses the tools they need to help your do your job. That main tool is data.

Seven steps to convince your board that releasing assets for fundraising investment – before a rainy day – is usually a good idea

1. Make sure that you know and understand what you want funds for – do you really want to have an income two or three times your current income in five years. What would you spend it on?

2. Think long term. More non-emergency money has been donated to charities in Australia through bequests than regular giving or appeals in the past. But the best bequest prospects come from your giving database.

3. Make a choice. Either fundraise, or don’t. But don’t meddle in the middle it is pointless.

4. Get the data. Look at Pareto benchmarking and research on asset bases and fundraising income from Givewell. Every time they have a query or barrier, answer it with data, not opinion. Demonstrate that solid, stable income growth comes from solid, stable investment in fundraising.

5. Show that during times of stress such as an economic crisis, corporate and events fundraising are very vulnerable, normal donor approaches are stable but regular giving keeps on growing.

6. Model your potential. Build proper models, based on real data and factored by how ‘sexy’ your organisation is; what is it’s appeal to the public?

7. Get someone from outside to speak with your board, someone from a charity that has taken the leap and gone for big investment or someone with access to the data – or both. I have spent a serious part of my life this year presenting alongside CEOs, CFOs and fundraising bosses to boards and finance committees. They really need to be informed with the truth.

Keep plugging away. It could take a year or two to convince them.

If you do want me to have a chat with your board, CEO or finance committee then of course I would love to, though it does need arranging well in advance – I am doing a lot of it at the moment.

Sean Triner

Last week the UK Fundraising Group on LinkedIn began a thread about how often to mail people.

So how often should you mail?

At Pareto we look at data and try to work out what the optimum communications program should be to maximize lifetime value from donors. Donors are very expensive to get on board, and it is imperative that you look at your data to maximize return on that initial investment.

The most important factor for whether someone will give to you is whether they gave to you previously. Then, the most important variables are how recently and how many times. The more recent someone gave, the more likely they are to give again.So, mailing, emailing or phoning more often means that you are constantly communicating with donors more recently, and therefore more likely to get gifts from them.

Also, the biggest cause of attrition is not giving for a while (!). Fewer communications mean that the gap between giving is greater. If you don’t communicate very often your attrition goes up, not down. Unless your communications are not very good.When it comes to asking donors for a monthly gift we also note that there is an optimum time. It does vary slightly, depending on cause, channel of solicitation etc but it is always going to be within a couple of months of a gift.

Four to six weeks is the right place to start. We are not alone with this approach, anyone else who measures life time value and optimum ‘conversion’ timings finds the same answer.

And this does not appear to vary between countries. We took that learning from data in the UK and applied it in Australia to find the same. Analysing data across other countries gives us the same result.This approach is not aggressive, and is not subjective or an opinion. It is maths. Across any given data set, increasing communications tends to increase the lifetime value of that data set. Not just short term income, but overall giving.

Managed well it should also increase your number of bequestors.Jeff Brooks of the best fundraising blog, Future Fundraising Now advocates at least thirty asks per annum. That seems a lot, but he says that he has never seen increasing the number of asks decrease the total value given.The limit on the number of communications is likely to be forced on you for internal reasons – your capacity to produce multiple communications.

Also, increasing the number of asks is likely to increase total given, and increase retention but each time it also increases costs and reduces the amount given on that occasion. Consequently an initial increase in ROI as you go from say four to eight communications will reverse and you will probably begin to see a decline as you go from say eight to sixteen.

Even so, net income is the best measure – not ROI – from warm mailings to your own donors. It is better to raise $700k at a cost of $300k than $500k at a cost of $100k. More donors, more security, more room for error, more legacy potentials etc = more money in the end.

Wouldn’t it be nice if when you recruited a new donor, you knew how much they would be worth in the long term? All donors are not equal, and they don’t behave as if they are, so identifying their differences and adjusting the program they receive accordingly, is the key to maximising net income and achieving the best long term return on investment.

The question that needs to be addressed is ‘what are the metrics that need to be monitored that will allow you to see as early as possible how valuable a donor, or a group of donors, will be and how they should be treated?’ Depending on your recruitment mix, these will vary.

Regular Giving Recruitment

For regular giving recruitment, the key performance indicator that needs to be monitored is attrition. Three month, six month and twelve month attrition will identify any issues there may be in the short and medium term. For a long term view, it needs to be measured over two, three or four or more years. Attrition is usually represented as a percentage of recruited donors but there are other ways of looking at the impact attrition has.

The average number of payments made by donors who stop giving is a useful comparator. For example, if the attrition of your regular giving recruits is heavily skewed to the first few months, then you will get fewer payments per lapsed donor than if the attrition is more evenly spread out over the year. This will have the effect of increasing the amount of “lost income” – defined as the difference between the expected income from a regular giving recruit (12 times the monthly value) and the actual amount received. The lost income amount provides a tangible financial value to the attrition.

Upgrade likelihood is another metric that will contribute to long term value, monitoring the proportion of active donors that have upgraded, and the value of the upgrade allows you to monitor the contribution your upgrade program makes.

The last element you need to consider for RG recruits is their propensity to make additional contributions. This is usually in the form of a response to a cash appeal. The recruitment channel is usually the main determinant of whether a regular giving recruit will also make cash gifts, but there can also be variation by list source, payment type, age and other variables.

Once these metrics have been calculated, the next step is to look into any underlying variables that influence them. These will include channel, age, payment method, agency (if Face to Face), DM list and gender. Monitoring and slicing by these factors will allow you to pick up any sub groups that are over or under performing, and adjust your strategy accordingly.

Cash Recruitment

When we look at a cash recruitment program, the metrics that need to consider are different.

Second gift rate is usually the first that is measured. As per attrition for regular givers, this can be looked at after three, six and twelve months. What needs to be measured, along with the second gift rate, is the value of the second gift as this will be a key factor in the long term value of the new recruits. Donors that upgrade on their second gift are flagging to you that they have the potential to donate more – looking at the asks these donors receive will help maximise their long term value.

Along with second gift rates and value, the number of subsequent gifts per year will be a driver of long term income. Those recruits that respond to multiple appeals in the year following acquisition will go on to be some of you best donors.
The proportion of new cash donors that convert to regular giving will vary depending on your strategy – testing of the best approach is ideal if you have enough recruits.

Ongoing Costs

The final element in any assessment of the long term return from acquisition is costs. The recruitment cost is fixed at the time of acquisition, but the ongoing costs can be controlled. By looking at the performance of the new recruits using some of the metrics outlined above, it is possible to quickly ascertain which donors justify the extra expenditure – such as donor care – and which groups of donors need to be cost managed.

Cost management of donors is particularly important if the recruitment contains large volumes of low value one off recruits. These donors need to be given the opportunity to make additional gifts, but by keeping an eye on their net contribution we can make sure that the program as a whole is not compromised by their poor return.
In the same way, monitoring the return from upgrade, additional cash asks and reactivations to regular givers will ensure the net return is maximised.

Creating reports to look at the performance indicators above, when combined with campaign analysis of the initial acquisition, will allow decisions about acquisition and donor development strategies to be made promptly and therefore profitably.

If you need assistance with recruitment analysis and planning, we’d love to help you out. Give us a bell on 02 8823 5800 or email us at canyouhelp@paretofundraising.com.

In Australia any charity that conducts cash appeals (and predominantly the data shows us these are run by direct mail) will be conducting an annual tax appeal sometime between April and June this year (ref. 1). This has been the peak period for cash appealing to our current donors for at least the past 10 years. The next peak is at Christmas time.

Whilst the generation of cash income in the industry has flattened over the past three years (ref. 2) we have become more successful during the tax period. This is being driven by income generated from retained donors, as well tax time being the peak period for Australian charities to recruit new cash donors. Chart 1 shows us when Australian charities are recruiting their cash donors – and tax time (May / June) is the peak, followed by Christmas (November / December).

Chart 1

Chart 2 from our recent 2011 Pareto Fundraising Benchmarking program depicts the growth in cash income by quarter from Australian charities.

Chart 2

Tax time continues to generate the most high value ($1,000+) gifts by volume and value. Chart 3 depicts by value and volume when these high value cash gifts are generated in Australia. It’s worth noting that more value and volume is generated outside of tax time throughout the year, yet tax is where the focus is for both donors and charities.

Chart 3

As reported in Pareto Talk, last year many tax appeals struggled with a suppression in response and value, in particular value from high value segments. Chart 2 shows the impact of this with limited growth between 2009 and 2010 (Q2).

Christmas appeals (Q4) show (Chart 2) a similar trend with flat income between 2009 and 2010 (the slight decline presented is the outcome of one charity, and when removed shows flat growth).

What does this all mean for the upcoming Australian tax appeal season? Will we see returns stablise?

We conducted a review of 13 Australian charities’ 2010 Christmas cash appeals and saw some ground recovered in response rates with 12 posting higher response rates than 2009. A positive outcome reflecting the current market place.

Is the Christmas rebound in response rates an indicator we are aiming for improved response rates this tax time? I would expect that outcomes in this area should rebound from last year, though the level of recruitment you have done, how well you have treated your donors and how recently you recruited will have an impact.

Whilst response appears to be rebounding, average gifts did not fare as well for Christmas 2010 appeals, with all but three charities posting decreased or the same average gift as 2009. This is not surprising:

• with average gifts showing some decline through 2010; and
• charities either using ask strategies that rely on asking for a donors last gift, or using value bands that in many cases see a donor asked for below last gift; and
• recruitment usually diluting overall average gifts due to entry price points

The decline in value generated from high value ($1,000+ gifts) donors seen at tax time in 2010 has also continued with fewer high value gifts received at Christmas 2010 than in the previous year (though many of these higher value donors continued to give, just not at previous gift levels).

Can we expect high value donors to continue responding? I believe so. Will the value of their giving rebound? I think factors such as how you ask and what you ask for will be critical, but there is much ground to be made up in this area.

In situations of declining returns, acquisition can play a critical role in stablising current and future income. Whilst around 20% of cash donors who did not give last year (2010) but the year before (2009) can be expected to give again (ref. 3), the value these and other more deeply lapsed donors returns to our appeals is not enough to replace lost value from active (gave last year) donors who do not give again.

Clearly an ongoing tactic has been to recruit new donors at tax time (and Christmas) to help sustain (or grow) our appeal pools. And I expect this approach to continue this year, and this will help tax appeals in terms of gross income. But its worth considering how much you weight your recruitment to tax time.

Benchmarking has shown us that less than 50% (it’s down to 40%) of new cash donors will give again. Of those who do 70% will do so in the first 12 months. If you recruit a donor at tax time when will they get their next ask?

How quickly you make the second ask impacts on your second gift rates – wait 6 months and you are unlikely to convert these donors to a second gift, wait 12 months and they are lost. So if you are recruiting this tax time when will these donors be asked again?

What if you undertook recruitment in February or March? These donors will now be asked, with likely your strongest appeal for the year, at tax time. And they are being asked within 4 to 8 weeks of their recruitment – an optimum time for a second gift ask and a strong strategy for managing cash donor attrition.

Tax is clearly the most competitive time for cash appealing and cash recruitment in Australia. With many appeals about to hit the letter box July will only tell if we are seeing a recovery from what has been a tough 2 years in cash giving programs.

(Ref. 1) – In some cases Phone Cash activity may run to a different cycle making renewal calls every, say, 80 days but even in these instances it is unusual for a call cycle not to be run around tax time.
(Ref. 2) – Pareto Fundraising Benchmarking 2011
(Ref. 3) – Pareto Fundraising Benchmarking 2011

Over the past 18 months we have worked with nine charities on donor acquisition. Across all the campaigns, all but one have hit gold. With ridiculously high response rates some packs and lists with decent rollout potential are achieving around 5% from cold mailings, and ROIs close to 1.0.

Everyone is happy. But how to find the potential monthly donors in these shedloads of new donors?

We are testing thank you letters with monthly asks, thank you letters followed by monthly ask mailings, and following both by phone calls; in a few months we will know a lot more about the right approach. But in the meantime, check out my debate with Lisa Sargent on the great SOFII website.

Excuses don’t help fundraising
It’s been a horrible start to the year for Australia, in particular the state of Queensland. We’ve been hit with some of the worst floods in our history and one of the more brutal cyclones; all while other parts of the country suffer through bushfires and heat waves.

With the impact of the floods likely to be in the billions of dollars, the federal government has introduced a 12 month flood levy, which increases personal income tax by 0.75% for a year. The levy is designed to help rebuild Queensland’s infrastructure ruined by the floods.

In the aftermath of the announcement, a friend asked me what I thought, and whether I expected charitable support to be impacted by the levy? Did I believe that by the government ‘forcing’ people to support would be to the detriment of Aussie charities?

I really don’t think so. For two reasons:

People tend to give above and beyond what they normally would in emergency situations

Last year we had a Canadian client due to lodge an appeal the day after the Haiti earthquake. My client rang me in a panic wondering whether in fact we should post the appeal, or delay it.

My response was a categorical ‘yes, post it’. The Haiti situation was horrendous, beyond belief. But the kids we were appealing on behalf of needed help. Their situation hadn’t changed one bit. It couldn’t wait.

So the pack went out, net income increased 25% from the previous year’s appeal. It was a strong appeal. No doubt some of those donors also reached into their pockets to support organizations working in Haiti. But they didn’t forget the kids that also needed help locally in Canada.

I believe the same will ring true after the floods. But a word of warning, the next time this happens (and it will happen, disasters are occurring more frequently) don’t offer an excuse as to why donors shouldn’t or don’t need to respond. Good appeals for support are about clarity and need, not easy ‘get outs’. So avoid wording that mentions conditional support, like “I know you’re probably helping in the aftermath of X, but we also need your help”. That provides an excuse to switch off.

We saw a similar situation as part of the economic meltdown a couple of years back. All of the direct response testing I saw showed what we intuitively thought – mentioning the recession suppressed response.

People give when they see that something needs support, not when they’re presented a raft of excuses why they shouldn’t.

This was about infrastructure, not people

The flood levy is about rebuilding a state’s resources. Roads, buildings, technology. Decimated by a natural disaster.

Whilst that indirectly helps individuals, the levy isn’t about handouts to those affected.

Hence why I believe it won’t affect charitable support, assuming of course it’s backed up with damn good fundraising.

My advice to those fundraising post emergencies is to continue doing what you were planning on doing. Good results follow good practice.

And that’s what I told my mate.

Direct response fundraising often doesn’t make sense. It’s often simple and boring. To many, it’s downright counter intuitive.

Recently, I was asked by a colleague to pen the things I wish I had known earlier in my career; the nuggets of information that would help forge my career. So I’ve morphed this list into a kind of ABC of direct response. The key insights that can shape really effective programs.

Knowing what people say and do are different

I wish I’d understood that what people say and do are two very different things. It didn’t take me long to figure this one out, but knowing that “I won’t read/respond to/give to that” doesn’t necessarily correlate to response is a handy lesson to learn.

Ask yourself, how many statements do you make about things that you plan to do that you actually follow through on? Apply the same logic to fundraising. People simply respond to darn good fundraising, not just what they think they will.

Past behaviour the biggest predictor

Understanding what someone has done in the past is the biggest indicator of what they will do in the future. Recognising this and subsequently spending more time on getting this (the data) right ensures you’re halfway there.

Here’s where it can begin to be counter to our intuition. Surely if someone just responded they need some breathing space? Nope. Going back quickly to that individual ensures you’re giving yourself the best chance to identify likely responders.

As long as it needs to be

A well-worn adage, but still every bit as relevant. Letters shouldn’t be 4 pages or emails short because that’s what we’ve been told. They should be as long as they need to be ensuring they tick all of the mandatory boxes. Enough room to share a story, create a need, offer a solution, ask and keep asking.

The length is irrelevant so long as the execution is spot on.

Complaints are a good thing

Complaints indicate emotion and people caring. Caring enough to voice their views. Few or no complaints usually mean we haven’t pushed the envelope, and likely haven’t told it as it is.

Lots of complaints mean we’ve cut through, sharing something that has pulled on the strings. You’ll generally notice a direct link between lots of noise and grievance and income raised.

The key of course is managing them properly.

Discipline, but test

I wish I’d realized how important it is to be disciplined with what you do, avoiding loads of distraction. I’m not suggesting stifling innovation, but I would encourage doing what works, and do it really well. Remember what pays the bills.

That doesn’t mean repetition necessarily rules the day, testing plays a critical role. But make sure you understand what you’re trying to test, and whether it’s something that you can rightly learn from and apply moving forward. Something that will have a significant impact on future income, not something really tactical that might seem fun to test, but is a waste of time. Testing blue v black font on the outer envelope isn’t going to change the world.

Ok, I’m starting to feel a little like a kid penning their Christmas wish list. I just wish I’d written this article a few years back.

Being a fundraiser means being a storyteller. We tell stories with an important purpose: motivating another human being to take action on behalf of someone (or something) they care about.

For more than 20 years I’ve been trying to work out what makes a fundraising appeal connect with the donor and deliver the best response on behalf of my beneficiaries. Today, I’m sharing with you the seven steps I believe the best fundraising approaches (whether direct marketing or face to face) include. Does your next appeal have them all?

1. Express the need

I know this sounds really obvious, doesn’t it? But unfortunately I’ve lost count of the number of direct marketing approaches I’ve received that neglect to tell me exactly what my gift will make happen for the beneficiary group I care about. The need you must express to your donor isn’t about the stuff your organisation needs (more research, tents, homes.) It’s about what impact getting those things will have on the people, places or things the donor cares about. If your appeal doesn’t express this clearly; go back to the drawing board.

2. Tell compelling stories

If fundraisers are storytellers then it’s our job to find powerful stories to tell. Talking simply about someone you met on your most recent trip to the field will connect with the donor far more powerfully than impersonal statistics and facts. Give the donor a person, place or thing to connect with. Draw them a picture with words of who, what or where they are helping. Using personal stories will help you create a genuine connection between donors who care and those you are there to help.

3. Have a clear call to action

What exactly do you want the donor to do? Don’t assume they know. It’s your job to tell them exactly how they can help. Do it in the body of your appeal. Repeat it on the donation form. What is the single most important thing the donor can do to meet the needs of the beneficiary group you’re telling them about? Be clear, be upfront and be consistent.

4. Create a personal link

Step two is about telling real people’s stories with dignity and passion. Here I’m talking about the other important person in the equation. The donor. Does your appeal copy make your donor feel valued and respected? How much do you know about each donor? When did they begin to support your work? Have they supported similar projects in the past? Have they told you though conversations or surveys, just why they think your organisation’s work is so important? All this information, and more, should be on your records. If it isn’t, start finding it out. If it is, then use it cleverly to create personal conversations that acknowledge who the donor is and why you’ve chosen to ask them for their help again at this time.

5. Urgency

If you can’t tell the donor exactly why you’re telling them this story now and what you want to happen as result (and by when), then you’re probably wasting their time. I’m not talking about creating false urgency or raising the alarm unnecessarily. Urgency is about respecting the donor by only asking for help when there is a clear need that they can help us meet. Now. Not next week. Or next month.

6. Talk to the right audience

Data analysis shows me that the best people to ask for help are those who just helped you. Sounds counter-intuitive? But let’s think about it. Someone who has recently responded to a request from you (and has been promptly, warmly and informatively thanked) should be in a supportive frame of mind the next time you contact them. RFV – recency, frequency and value – is your friend here. Put simply, recency and frequency of past giving you allow you to find those most likely to respond next time you ask. Value of past giving simply allows you to work out how much you should ask for this time.

7. Make it easy for people to respond

Oh… the times I’ve been moved to action by an appeal, only to be flummoxed by a dense or confusing response form. Keep it simple. You know what you asked for in the letter or email. Make sure the donation form mirrors that. Give me boxes to tick. Give me enough space to fill in my details – particularly my email address, which is very long. Keep reminding me what impact my gift will have on the beneficiaries I care about (see step one). Importantly, try to fill in the form yourself before it’s published and if your pen hovers over the page or your fingers pause on the keyboard as you have to think about what you’re being asked for – redesign your form.

Next time you have a fundraising story to tell your donors, I sincerely hope my seven step checklist will help you create an appeal that delivers a positive outcome for both you and your donors.