Are Fundraisers in Hot Water Without Disasters?

November 15, 2016       Martin C. Daks and Mark Hrywna      

When civil war erupted in Syria in 2011, disaster relief organizations such as Doctors Without Borders/Médecins sans Frontières (MSF) (No. 50) were quick to respond, sending trained personnel to the scene to offer medical and other assistance. MSF, an international organization with U.S. headquarters in New York City, has stayed the course despite suffering from multiple airstrikes that obliterated hospitals affiliated with the organization.

But as organizations continue to pour resources into regions that suffer man-made and natural disasters, will donors continue to dig deep into their pockets to help fund lifesaving activities?

MSF’s financial reports provide what seems to be some sobering news: After total revenue jumped by double-digit percentages from 2012 through 2014 ($200.3 million in 2012, $221.1 million in 2013, $344.6 million in 2014), the increase leveled off at about 2 percent in 2015, or $351.3 million. Does this mean that well-publicized disasters — like the West Africa Ebola virus in 2014, when MSF’s revenues swelled by about 55 percent — spur donors to turn out only to quickly burn out and quench their giving in subsequent years?

Not exactly, according to MSF Director of Development Thomas Kurmann.

“We’re not worried about the 2015 numbers, because our growth in 2014 was so massive compared to 2013 that we wouldn’t expect to reach a similar gain in 2015,” he said.

Massive media exposure from issues such as the Ebola virus and MSF’s response to the humanitarian crisis in Syria helped to fuel donations. “We recorded record donations in 2014,” Kurmann said. “While the percentage increase was not sustainable, we’re surprised but pleased that donations continued to go up from that level, and didn’t slip,” he said.

To maintain its revenue base, MSF has been analyzing donor spending and adjusting outreach efforts to stay ahead of the curve.

About five years ago, digital and other direct marketing accounted for 60 percent of revenue while major donors — those who give more than $5,000 a year — accounted for the remaining 40 percent, according to Kurmann. Today, direct marketing efforts account for a maximum of about 53 percent of donations while major donors and planned giving make up the remainder.

The fruits of investments in planned giving almost always come years later, Kurmann said. About six or seven years ago, MSF leaders decided to invest in promoting planned giving. “I do think that now we’re in a phase where we see the results of that investment in that time. Of course, the bigger the donor base the more likelihood that you’re considered in the will of a donor,” he said.

And just as donations have increased, so has MSF’s donor base burgeoned, from about 560,000 in pre-Ebola years to about 700,000 active donors (those who have given within the past 12 months). Ebola “changed our reality. It was a crucial year that brought us on to another level,” Kurmann said.

A crisis situation like Ebola can drive a “balloon” in the number of new donors but most don’t make a second donation, said MSF Marketing Director Molly Elliott. In 2010, when Haiti was struck by a massive earthquake, MSF received $260 million in donations only to see that drop to $180 million the next year.

“We now use every channel available to reach, update and cultivate donors,” she said. “Mail, and, on a limited basis, email — mainly for cultivation and updates, social media, and some digital advertising.”

Donors would be out of luck if they visited MSF’s website to make a restricted gift specifically for a certain disaster. To give restricted gifts, a donor would have to contact MSF’s donor services by phone or email. Only unrestricted gifts are accepted via the web.

Last year, total restricted giving was about $17 million, according to Krumann, with almost $2 million for Nepal and less than $5 million of it for Syria and the refugee crisis. MSF also received $1.5 million restricted for Ebola.

Unrestricted giving can lead to overfunding, as was the case after the Asian tsunami in 2004. This is often the risk for emergency organizations like MSF, which are very specific in scope in time but also expertise, Kurmann said.

MSF has pursued a message to the public that unrestricted gifts help organizations like it most because managers can decide how best to allocate funds as needs change over time, or rapidly. “We try to keep that flexibility,” Kurmann said.

A decade after the tsunami, people know MSF for its unrestricted policies, he said. “Every organization prefers unrestricted, we strategically started to communicate reasons why unrestricted is so important. That’s where we want to be.”

“We expose ourselves immediately to overfunding, if we open the web to unrestricted giving,” Kurmann said. If there’s a risk of overfunding in a particular case, it’s not uncommon to reach out to donors and ask permission to use their gift in an unrestricted manner. “Oftentimes, the donors say yes,” he said, and in some cases even send another check.

“Snail mail” communication is limited to about 10 pieces each year, per person, plus additional emails depending on what they’ve signed up for, Elliott said. “We’ll slip in a gentle request for donations, while giving a lot of information about what we’re doing, like surgery in the field. On the web we’ll also engage in panel discussions and updates on our activities.”

This year, for the first time, MSF also mounted “road shows,” bringing in field volunteers and others to speak about their experiences with potential and existing donors. “It makes a big impact, when someone who’s been out there can speak with you directly about the way that your donations are being used,” Elliott said.

MSF is increasing its use of social media and other digital outreach, but direct mail “is still our bread and butter” when it comes to generating donations, Elliott said. That’s largely due to demographics; the average MSF donor is 68 years old. “They still rely on traditional mail. But that will change in the next decade or so as Generation X (generally defined as people born between the early 1960s to mid-1970s) arise as the next donor base. Some two decades past that, the main donor base will probably be Millennials.”

To reach these new demographics, MSF is experimenting with additional digital formats, including short-form video productions. “Ultimately, we’re sifting through the population and are trying to reach individuals who are interested in our mission,” Elliott said. “We’re not setting up silos by generation.”
Similar trends have been seen at other nonprofits.

In 2015, the Portland, Ore.-based humanitarian relief and development organization Medical Teams International (MTI) saw revenues increase by about 14 percent as existing donors reached deeper into their wallets, according to Jon Beighle, vice president of marketing and development. MTI very nearly cracked the top 100 with $188.4 million, just behind No. 100 WGBH Educational Foundation at $190.5 million.

The increase occurred “as we improve the depth of relationships with mid-level and major donors in particular,” he said. “Contributors are giving more as they are exposed more deeply to Medical Teams’ programs around the world. We have invested in mid- and major-development officers who are focused on strengthening the connection between donors and the work that they fund around the world through MTI.”

Fundraisers have been primarily focusing on the organization’s existing donor base but haven’t neglected outreach programs during the past year-and-a half. “Private income continues to grow by double digits, with individual giving by major and mid-level donors growing at an even higher rate,” Beighle said, adding that new donors are attracted to the organization to make a difference in specific disaster situations. “We are reaching new audiences through our website, and with social media, primarily Facebook, and third-party websites that list Medical Teams International as a recommended agency that is responding to a crisis, such as Charity Navigator,” he said.

The nonprofit is also investing in digital and traditional outreach, shifting focus from direct mail to online activity. “We also have invested in more and better content about the project participants or beneficiaries of our work,” he said. “This is probably the biggest area of innovation and improvement over the past year. We have more individual story content and more video than ever before. All of our content and website is mobile optimized, recognizing that most online activity is now from mobile devices.”

Unique visitors to MTI’s website increased 38 percent year-over-year, according to Beighle. Activity from mobile users has grown 55 percent year-over-year, faster than the 10 percent growth in desktop users. Last year, about 35 percent of traffic came through mobile and tablet, which is already topped 40 percent this year, he said.

The move to mobile is also apparent in Facebook referral activity. “We’ve seen twice as much traffic referred from Facebook mobile compared to the desktop Facebook site,” he said. “We’ve also seen a huge growth in Facebook referral growth to the website in general; a climb of more than 260 percent year over year.

An evangelical Christian disaster relief organization, Boone, N.C.-based Samaritan’s Purse (No.32) has donors who respond generously when there is a major crisis event in the U.S. or abroad, such as Nepal earthquake in 2015, and later in the year, a massive exodus of refugees crossing the Mediterranean to move from Turkey to Greece and other countries. Revenue jumped 17 percent, from $508 million to almost $594 million, with noncash contributions making up more than a third of the total, about $220 million.

Samaritan’s Purse reported $12.4 million in expenses toward Nepal relief and almost $400,000 in grants, helping about 500,000 survivors with shelter, water, food, medical and other emergency assistance. The organization also chartered 10 flights to airlift supplies to the landlocked nation. Almost 20,000 families received materials and tools to building housing to withstand monsoons, according to the organization.

The largest program by Samaritan’s Purse is Operation Christmas Child, which collects and delivers gift-filled shoeboxes to children around the world. Last year, Samaritan’s Purse reported program expenses of almost $252 million, including of $199 million, associated with the program. The bulk of new names to the organization’s mailing list each year comes through Operation Christmas Child, according to a spokesperson.