Category Archives: Donor Attrition

Predictive Analytics: a nice overview infographic

How nonprofits use analytics for fundraising.  An infographic on Twitpic
Thanks to the fine folks at Bentz Whaley Flessner (@BFW_Social) for this great infographic. Yay Donorcast!

Really. Donors DO care about impact. If we tell them the impact is theirs to make.

“So what’s to be done? The good news is that I think ultimately increasing donors is a shitty reason to care about impact metrics.  To the extent that there can be a culture shift to focus on impact among foundations and “professionalized” change makers, great. But I think the real culture shift is to get nonprofit leaders to recognize the intense responsibility they have for constantly improving impact.”  So says Nathaniel Whittemore in a post on change.org.  He’s responding to study results that show that donors don’t necessarily do due diligence when deciding to give, that “[m]ost people give because they feel a longing to be a part of something bigger than themselves.”

I gotta say, the author’s use ‘donors’ to represent current, past and prospective donors made this post a tough read.  This distinction is not a pedantic one, and it changes the effectiveness of his message. The story a nonprofit would tell to any of them will vary constantly, and it should vary as long as segmenting is possible.  Because the issue here is NOT if donors care — the issue is if donors care enough to give again.

In a normal fundraising year, the story told to past and current donors deserves more time, money, resources, love than the story one would tell to prospective donors.  The donors’ message would lead them to believe that THEY themselves made the service impact, that the organization was just the tool used. These donors are more likely to allow for some use gifts for non-service functions like salaries and office space if they know the people who run their charity.  Nonprofits do a pretty crap job of making the case for operational expenses in general, and measurement groups who apply arbitrary percentages to define a respectable maximum allowable operational expense for all orgs don’t help, but a lot of donors are pretty pragmatic about these expenses.  Sustaining this pragmatism by demonstrating the success of impact is a path to giving success.  And a retained donor and a retained dollar is a critical projection method for future gift revenue streams.  In a 2009 study across all 26 segments of the US nonprofit organization types as determined by a consortium of trade groups (AFP, CASE, Urban Institute, and others …), researchers found that, for every $6 an organization raised in 2009, more than $6 was lost due to donor attrition. Ack!

So, acquiring donors by means of friendships and relationships is in no way new — I ask the same folks to donate to my son’s charity walk every year, and they do because my passion demonstrates that I understand the impact of giving.  I retain these donors.  None of these donors ask if the charity meets its mission because they think I believe it does.  I wouldn’t even mind if one would be a cynical pragmatist and ask why give to this organization, right now, because I have a passionate case to make in response.  Network for Good and sixdegree.org’s research in this phenomenon describes me as a “superactivist,” a trustworthy case-maker.

Does this the superactivist system work in a cataclysmic charity environment like post-Haiti or the Michael Vick cruelty story?  The typical superactivist model does not seem to be as important, and giving because of a network matters, but not to the same degree. And in this model, acquisition is easier and often faster — but often the technological limitations (and possibly corporate net neutrality villainousness) of giving mechanisms reduces retention options.  It’s hard for a charity to collect donor data from a text gift due to lack of shared data, for example.  To text ‘Haiti’ was perceived by the public to be a gift to a critical need via a trusted delivery method portrayed in the media as well as by friends.  Did the majority of those who sent that text trust that it would all be used for Haiti, and by a reputable organization? Did they know that their phone provider could charge a fee, that the phone company would not likely share their address info with that organization, or that they wouldn’t get a ping-back thanks or even a message other than the charge total on their bill?  I found it hard to discern the answers to these questions in the weeks that followed the hurricane.  In an informal poll in the week following the hurricane, 100% of the 45 people I asked who did text ‘Haiti’ were not sure if they would text ‘Haiti’ again in a month.  Most were not sure who got their gift!

Donor retention in religious organizations is a fascinating story.  Why do Catholics give to the Church when the Church’s use of funds has been so widely portrayed as questionable? A family member told me that she continues to give because, although there has been abuse and error, the overriding sense that the Church is performing a greater good overall is a strong case for support. And she gets that message every week, without fail.  The Church is a conduit to actually achieving the work, in some ways in spite of itself.  In this way, donors do care about the impact, enough to overlook conflicts in mission and performance.

The pitfalls of mindless acquisition are many, especially when the acquisition is made to appease the potential donor’s pet interest without a full understanding of the implicit costs of a service change or re-focus.  I once asked a prospective donor for a 7-figure gift, and he agreed to make it as long as it served to create a new professorship in a field that was not in line with the university’s mission.  It was so tempting to make that gift (7-figures!), to find a professor to do that job!  But program service would have failed in the long run – the professor would have been insufficiently supported in the pedagogical plan of his department, and if he left after a program was built around him, the students were shafted.  I like to think of that donor, and one who would give to create a scholarship for what amounted to an imaginary student with impossible award criteria, as the Consummate Objection Statement Makers.  They will give only if the mission is sure to fail!

High performance in service and in fundraising is critically dependent on donor retention, on those who demonstrated that they have bought in to the operational success only as much as is needed as long as the service goals are reached.  Retained donors will continue to feed the revenue stream long-term so the mission is met.  New donors are only retained if they self-assess or assess a trusted casemaker’s claim that it will, and are assured that they made it happen.

I want my two dollars!*

My friend Jonathan put this question up for discussion: “As a ‘development’ ploy, a charity sends a two dollar check, asking that the recipient not cash it and donate instead. Cash it or not?” 

One friend said, “I cash it and donate double.” 

Another said, “Stupid fundraising method. If I am the charity, I 1099 the people who cash the checks.”  

Yet another wrote, “I think that the fact that a charity is using any of their assets to send out checks to anyone other than the stated benefactor of the charity, calls into question their management practices and their ability to responsibly manage donated funds. Think twice before donating to them; find another charity to donate to & I wouldn’t cash the check.” 

My first answer?   I said cash it, keep the money, and make the gift that the direct mail piece was too silly to ask for outright. Send a note with the gift to comment on the concern he felt about this appeal type and ask that they exclude him from this type of scheme in the future.  All fundraising techniques work for somebody sometime, and my guess is that Jonathan had been micro-segmented based on prior giving or some other variable. (Or maybe they thought he’s a little old lady with church-based guilt issues. If he was a knitter or crochet-er or quilter, maybe the charity bought a stitch craft magazine mailing list, or maybe it’s just a big ol’ zip code drop…). 

The charity’s appeal might work.  The yield for investment might actually be pretty good, and they may end up putting more money into their programming to benefit their mission.  However, I doubt it is a well-thought-out endeavor since Jonathan received and questioned it. My suggestion that Jonathan give is based on a presumption that he cares about the mission of that particular charity, not because the solicitation warranted a response. 

I have never recommended this appeal technique.  My understanding of  the logic behind this type of appeal is that the check amount (or a $1.00 bill — I’ve received that appeal before) is of a size  that the donor will write a bigger check back — $2 barely pays for postage and printing from the charity and the effort of cutting a check and postage from the donor.  Regrettably, this sets the scale of the ask too low too.  But my main problem with this appeal is not that it doesn’t work — it does — or that the gift size is likely to be quite small, but guilt and trick giving is no way to build a relationship with a donor. For every $6 raised in a given year, non-profits typically retain only $5 the following year due to donor attrition.  Why create extra tension for the donor about deciding to give if there is likely already a problem with keeping donors engaged? Why lead the donor to wonder at all about the motive of the solicitation?

Regarding the comment about management practices and the charity’s ability to responsibly manage donated funds,  I am generally critical of the arbitrary measurement of 10-20% of budget maximum as an indicator of successful nonprofit fiscal management. Although it doesn’t happen nearly as often as it should, a critical look at a 990 is a better way to gauge the charity’s fiscal health against one’s own values. Tell a for-profit company that, in any given year, they shouldn’t invest more in sales if it’s warranted, and they’d likely consider the request to be uninformed and insulting. 

* quote from the 1985 movie “Better Off Dead,” one of my least favorite movies of all time and one with seemingly inexplicable cult appeal.

Why didn’t he give this year?

In response to a question posed about best practices for donor reclamation, I did not address appeal methodologies.  Instead, I addressed a common fundraiser response I see all the time. Sometimes fundraisers hesitate to contact a lybunt/sybunt personally to ask for a gift renewal — we wonder if the past donor is no longer interested in our mission, or is not satisfied with something, or doesn’t want to be contacted.  We use appeal methods that do not best match our intention, like direct mail or e-mail, methods that make it harder for donors to engage in an active dialogue about reasons for giving, or for not giving again.

It’s a big step to approach a lapsed donor with a clear perspective; it is very easy and natural to apply our own values to others’ actions. Is he not renewing his support because we addressed his envelope incorrectly, didn’t plan to include more racquetball courts in the new athletic facility, doesn’t like the organization’s alignment with a political initiative, etc., etc.? My advice is: Do not presume that the donor lapsed because of something your organization did or didn’t do. When it’s all said and done, very few of us have the psychic abilities needed to guess why he didn’t give.  Many donors lapse for reasons we might never know, like big purchases, lifestyle and work changes, and new priorities in their giving plans.

In my experience, nothing beats an in-person meeting for re-engaging a lapsed donor and further understanding donor motivation. My advice is to revel in the opportunity to ask ‘will you renew? why or why not?’  It is a chance to ask direct questions and get answers you can use to create the case statement that will help the donor, and other lapsed donors by extension, make a renewed commitment. If you can’t meet in person, try personal phone and personal mail — your response should reflect your ability to handle the scale and cost of the recapture program.

HAHD Kick-off … and I’m already filching from other media …

I was asked to post a little bit about myself for a conference website.  It’s fitting, I think, to kick off my ‘hundred article in a hundred days’ with a note about fundraising worldview.  Here tis:

I worked in higher education fundraising and public affairs in some capacity for 16 years.  During that time, I had a bunch of snazzy titles.  I really enjoyed my work, traveled the world, asked for millions of dollars in person, and raised a hella lot of money, always making or beating my goals.  And I burned out.  *sizzle*

So in 2006, I started my own firm so I could take the best of the “old skool” fundraising techniques, add meaningful ROI-proven Web 2.0 (am I a dunderhead because I don’t know what that phrase is meant to represent?) strategies, and increase the number of retained donors and dollars for my clients. The company works with npos in the US and Europe – we’re small but happy, and we drink a lot of overpriced frou frou coffees.

Here’s my deal:  I am a member of the Fundraising Effectiveness Project (FEP) committee, an initiative started by the Urban Institute’s Center on Nonprofits and Philanthropy and the Association for Fundraising Professionals (AFP) …props to Bill Levis and Cathlene Williams…, and co-sponsored by the Council for Advancement and Support of Education (CASE), Council for Resource Development (CRD), Center on Philanthropy at Indiana University, and the National Committee on Planned Giving (NCPG).  My role thusfar has been to lead the creation of education programs to be used by organizations and chapters world-wide.

Here’s the goal:  Change the path of fundraising in a fundamental way.  In its 2008 report across 26 sub-segments of the nonprofit market, the FEP results demonstrate that, essentially, five out of every six dollars raised will be lost the subsequent year due to attrition.  This is Horrible ROI — it costs more to acquire donors than to retain them.

So I like to consider social network constructs for nonprofits with a clear mission — how will these approaches, in concert with more traditional methodologies, help us treat our donors well enough to increase loyalty and lifetime donor value, to think analytically to predict who of our present donors and prospective donors will likely give more and more often, and to change the fundamental appeal and retention strategies we use to keep the donors we add.”

Donor motivation internal dialogue, Colbert-style

I am struggling with a study on donor guilt  — how does it feel to be a consistent annual donor who has to cut back on giving or eliminate npos from his/her giving list?  So in that spirit, here’s “Formidable Opponent,” Stephen Colbert debating Stephen Colbert on charitable giving.

Stephen Colbert:  But, I could take care of my minimal needs and send the rest of the money to the poor.

Stephen Colbert: Okay, think about this: You could buy a $100,000 Mercedes S600, or you could buy a $10,000 pile of crap from Korea and give the left over 110,000 to…

Stephen Colbert: An orphanage?

Stephen Colbert: Whatever lets you sleep. One day, you go to check on your orphans. It’s raining, and you don’t have the benefits of that fine German engineering. You spin out of control. You’re like a loose lawnmower blade. And what’s that ahead? It’s your orphans! They’ve come out into the street to thank you for your selfless gift.

Stephen Colbert: Get out of the street orphans!

Stephen Colbert: Oh, I forgot to mention: They’re deaf.

Stephen Colbert: Noooooo!

Stephen Colbert: Yes. Yeah, tragedy. Tragedy all because you didn’t care enough to make a difference for yourself.

Stephen Colbert: Wow. You’ve really opened my eyes, Stephen. Say, um, does it have to be a car?

Stephen Colbert: No, it could be a really sweet boat.