Direct Mail Continues Driving Planned Giving
January 9, 2018 Mark Hrywna
The national office of the Make-A-Wish Foundation has seen revenue from planned gifts just about triple during the past four years, growing from about $2 million to $6 million. Chief Financial Officer Paul Mehlhorn credits at least part of that success to actively promoting the planned giving program for several years, whether it’s including a mention in direct mail or active online campaigns. Those efforts are now paying off.
“You can do a lot of planned giving advertising but most of your donors come out of your direct mail or online giving platforms. It ends up being a feeder program,” Mehlhorn said. “Generally, you don’t know it’s coming until it shows up but there’s a very high correlation between how they found you and whether they’re in your direct mail or online program,” he said.
“Planned giving is something that if you advertise today, you might see something six or seven years from now. I think we’re in the lifecycle of advertising that we did eight to 10 years ago, starting to end up with results on the planned giving side,” he said. “A lot of the folks now making end-of-life plans are still in that generation that likes getting mail.”
When Mehlhorn started as CFO at the Phoenix, Ariz., headquarters of Make-A-Wish Foundation in 2009, he was told direct mail was a dinosaur that it probably would be gone in five or six years. The national office last year exceeded direct mail revenue by several million dollars over what was raised in 2009. “It looks to me like a program that can stay very strong for the next 10 to 15 years,” he said.
Make-A-Wish had a 3:1 ratio of direct mail to online giving just a few years ago. Direct mail revenue was about $15.3 million last year compared with $13.9 million in 2009. At the same time, online giving has grown from $5.3 million in 2009 to $15 million last year as fundraisers focused their efforts online.
The organization is averaging almost double-digit growth in online giving during the past five years, according to Mehlhorn, and some of that is due to direct mail. They’re aiming for more than $17 million in online giving next year.
While the foundation is investing more online, such as targeted marketing and remarketing, direct mail also is contributing to some extent. Some direct mail recipients will get a mailing and go online to make their gift, he said.
“We continue to increase our investment in online giving. However, we are reconsidering our approach to direct mail and may increase our investment for direct mail in future years,” he said. “As you get past the low-hanging fruit, [online] becomes almost as costly as direct mail. Unless you enlarge your donor pool, you’re going to be spending about the same,” he said.
While organizations are starting to see a shift from direct mail attributed donations to online, it doesn’t mean direct mail is dead, according to Steve MacLaughlin, vice president, data and analytics, at Blackbaud, a Charleston, S.C.-based fundraising technology firm. Online giving is still less than 10 percent of all charitable giving, but it continues to grow each year, he said, just as online retail sales are about 8 percent of all retail sales.
“The reality is that we live in a multichannel world. Donors are multichannel and they will continue to engage with nonprofits online and offline,” MacLaughlin said. “I would argue that online and offline are some artificial distinction that we should stop using,” he said.
Nonprofits should not confuse the channel of engagement with the channel of transaction, he argued. In the “old days,” a direct mail piece was sent and a gift came back in the mail. “The channel of engagement and the channel of transaction were the same,” MacLaughlin said. Today, a donor might get a direct mail piece and then go online to give, or they might get an email, see something on a mobile device, and give offline. “The important thing for nonprofits is to understand and fine-tune their channel mix,” he said.
Make-A-Wish and its 62 chapters nationwide have grown steadily during the past half-decade, reporting $343 million in revenue last year, up from $302 million and $292 million the previous two years, respectively, and nearly a $100 million more than the $256 million in 2013.
Investment income has fluctuated with the markets, as much as $22 million in 2014, but a little less than half of that in 2016. Much of the steady growth has come in public support, rising each year since 2012 when Make-A-Wish reported $202 million, up to $328 million in the most recent fiscal year.
The organization granted more than 15,000 wishes last year and its goal is to grant 17,000 wishes annually by 2020. Its target population is about 27,000 wishes that would qualify, if they could all be funded, and if Make-A-Wish had the resources to provide them all, Mehlhorn said. “The goal is to continue to grow revenue and get to the mission statement and fund every wish. The first step is to get to 17,000 wishes. To do that, we will have to continue to grow,” he said.
Granting more wishes means raising more money but also spending more money. The cost associated with coordinating a wish varies depending on the type but as of 2016, the average cost was $10,130.
Mehlhorn estimated that the organization has grown nationally by about 20 percent during the past eight years. Volunteers do much of the work related to wish granting but the back-office duties and outreach are the responsibility of employees. Make-A-Wish has about 1,100 employees across the United States, including about 180 staff in Phoenix.
Program expenses jumped from $156 million in 2011 to $254 million in 2016, in addition to administration expenses steadily increasing from $21 million to $31 million. Five years ago, fundraising expenses were about $34 million, compared with $60 million in 2016.
Not everything has worked for Make-A-Wish. The organization tried its hand at Direct Response Television (DRTV) several years ago but Mehlhorn said it wasn’t for them. Successful charity DRTV campaigns tend to be, well, downers. “It didn’t work for us. You have to present yourself in a certain way,” he said. “It didn’t fit our messaging.”
Some of its 62 chapters are successful putting on a number of event fundraisers throughout the year while others have not, to the point that they’ve scaled back the number of events. Mehlhorn estimated that chapters put on more than 600 events annually, with about 10 per chapter being pretty typical.
Affiliates with many events tend to have a lot of territory, according to Mehlhorn. “We found that if you have a very defined territory where most of the population is concentrated and you’re doing more events, you’re really cannibalizing other events,” he said. As an example, Iowa has a lot of small towns across the state but not a huge population center. “They do a lot more events than other chapters but it works for the type of state they live in,” he said. “We always tell chapters to follow best practices but maintain their own personality.”