Fundraising On America’s Plains

The rural town of Chamberlain, S.D., is on the Missouri River, about two and one-half hours’ drive west across the rolling plains from Sioux Falls. There aren’t many “whale” donors out there, like there are in New York City, Los Angeles or Atlanta. Most people would be hard-pressed to find Chamberlain on a map.

Prominent there is St. Joseph’s Indian School, which serves approximately 200 children from the Lakota Sioux tribe, who are primarily from families facing a variety of domestic challenges on the reservation. The St. Joseph’s fundraising program has seen substantial growth, including through the recent “Great Recession.”

Direct response guru Larry May sat down with Kory Christianson, the school’s executive director for development and recipient of the Max Hart Award for fundraising achievement from the DMA Nonprofit Federation in 2010.

Larry May: Can you give us a brief overview of the history and current profile of St. Joseph’s Indian School?

Kory Christianson: We were founded by the Priests of the Sacred Heart. A congregation of German priests and brothers came to America in the 1920s hoping to raise money for themselves. The congregation was in financial difficulties after the first World War. They ended up here in South Dakota. Seeing the challenges the Native Americans faced, they decided they had found a calling to be of service. The school was founded in 1927.

The congregation also works on three other reservations. And, they support a women’s shelter and other programs. Over the years, they faced adversity — fires, tornados, drought — that affected the school. The school evolved from a dormitory-style living format to the small-group “family” home concept we have today.

May: That’s a common model, a group of 20 or so kids living with an adult couple overseeing the house. Was it more like a traditional orphanage at one time?

Christianson: In many ways, yes. People still refer to it as a boarding school from time-to-time.

May: What’s the history of the direct mail program?

Christianson: It seems to go back to the start of the school. The first lists used were phone books. They would go through, trying to find names that might be possible donors.

May: I remember as a kid having little knick-knacks around our house that had a Native American and Catholic quality – like little Nativity scenes. I have no idea if they came from here or St. Labre or Red Cloud. I think there’s always been some brand confusion. The programs seem to have been pretty extensive at least going back to the ‘50s.

Christianson: Our Charitable Gift Annuity program goes way back. One of our talking points is: “We never missed an annuity payment, including during the Great Depression.” Of course, we probably had few annuitants back then, but it does stretch way back.

May: The population served here is relatively small, a few hundred students in any given year. Yet you have millions of donors, close to 1 million 0-12 month donors right now.

Christianson: We’re right around 900,000 0-12 now, as we enter our big fall acquisition and reactivation period. So hopefully we will be close to one million in the next several months. There’s an ebb and flow to that throughout the year.

Each year we have about 200 to 220 children who come and live at the school. We provide everything for them, in addition to the other programs on the reservations. But it is interesting that we have so many supporters from so far away.

May: The donors are primarily on the coasts?

Christianson: Yes, and the retirement states. The average donor is about 69, which has been trending up. We have pockets around the big cities – New York, Chicago is big for us — and also Florida and Arizona.

May: How important is the Catholic donor community to St. Joseph’s?

Christianson: We’ve tried to identify our Catholic donors, either from the lists they’ve come from, or the package they responded to, or if they ask the priests for prayers for an intention. Using that approach we can only identify 25 percent of the file as Catholic.

But assuming a percentage of the balance is also Catholic, we tend to view ourselves as a Catholic organization supported largely by non-Catholics. Over the years, the percentage we can identify as Catholic has been decreasing.

As part of our strategic planning process, we communicate with donors through an email survey and ask them a number of questions about our mission, how they view us, etc. It’s pretty clear that our donors are spiritual and have a desire to help the kids, which relates to their religious background, but they don’t mention Catholicism specifically. In our brand, the word that jumps out at them most is “Indian,” not “St. Joseph’s.”

May: When you have personal contact with donors, such as through your donor luncheons around the country, you probably get to meet thousands of donors over the course of a few years. What do you think people’s perception of St. Joseph’s is, versus the reality?

Christianson: The residential element sometimes surprises them, even though we talk about it so much. They think of us as a school. They feel that Native Americans have been wronged over the years and they have an obligation to help them.

May: You mail a lot of premiums. You have a monthly renewal package, plus a number of additional appeals. How many mailings would you say a typical active donor will receive?

Christianson: I’d say 24 to 26, something more or less every other week. That includes the newsletters and our annual report information. May: When you got there in 1993, the mailings were less premium-oriented. I think most of the monthly mailings didn’t have a premium. How many 0-12 month donors were there then?

Christianson: In 1993, we had approximately 260,000 0-12 donors. And today, we’re over 900,000.

May: Through more acquisition and more premiums. Although in recent years, your acquisition volumes have come down somewhat, because you’re using some packages with very high response rates – some pretty expensive premium packages.

Christianson: There was a philosophical change. The appeals had been more “emergency” focused, with heavy emotional content. With heavy testing, we moved to a more premium-focused program, with less “urgent” copy. We moved from a package with two or three all-occasion cards, to multiple cards, to note pads with name labels, or a heavy trinket included in the package.

May: Talking about changing the themes of the packages, you’ve moved toward promoting the culture of the Lakota Sioux, with an emphasis on respect and dignity, rather than desperation.

Christianson: Definitely, particularly in the last decade. There’s more appreciation of the Lakota heritage. We work to create packages that are effective, which could also be appreciated by the Lakota as a reflection of their culture. That’s an important part of what we do.

May: That content really brands the organization in a strong way.

Christianson: I think so. For example we’ve come to be known by the legend of the Dreamcatcher. You don’t see that in the mail from other organizations. It ties back to Lakota culture as something that’s very important to them. It’s a great example of how we’ve tried to combine successful fundraising with an appreciation for Lakota culture.

May: Your mail schedule and donor segmentation systems are extremely complex, for example, the clubs. You have donor clubs that donors didn’t actually join, but are more or less drafted into. They are monthly donor programs where the donor didn’t actually join, but was more or less assigned to based on RFM.

Christianson: At one time we had three monthly donor clubs. Only one was a traditional club where we asked the donor to join, and only those who said yes were included. It’s called the Tiyospaye Club, which is Lakota for “good friend.” The other two are what we called “involuntary clubs.”

A donor would come on to the file as a new donor, let’s say with a $5 gift. If you soon made another $5 gift, you are immediately moved, involuntarily, into the Widow’s Mite Club, which is a low-dollar club based on the Bible story of the widow’s mite. A second club, the Okola Club, followed the same concept, but for donors of $10 to 14.99. We eventually tested out of the Okola Club, which no longer exists.

May: The Widow’s Mite Club is a great response you’ve created to the challenge of low-dollar donors – what to do with under $10 donors. It’s a very inexpensive package – a letter with a reply slip attached, outer and return envelopes. It goes to the same low-dollar people every month. And because you know they are frequent responders, the program is profitable. And most importantly, it keeps your relationship alive with these low-dollar donors who are a significant source of planned gifts.

Christianson: Exactly. And the package cost in the mail is less than 20 cents and has been for years. This club is overly represented Catholic, so the theme tends to be prayer-based. And, they are a great source of planned gifts.

May: You renew better than 60 percent of each year’s donors in the next year?

Christianson: That’s dropped a bit recently to about 58 percent because we are growing the base and generating more new names.

May: New to file donors are less likely to renew, so the overall renewal rate goes down. You’re getting better than two gifts-per-active-donor-per-year?

Christianson: That’s been hovering right around the two-gifts level for awhile now, for five or six years.

May: That is interesting. That rate is higher than many premium mailers who might get about 1.7 gifts per active donor, but less than Catholic devotional mailers who can get up to 2.5. It’s got something of the flavor of a traditional Catholic program. At least some of the donors seem to be approaching this as a religious appeal.

Christianson: No question. We’ve varied from as low as 1.8 up to 2.2 in some years, and it’s dependent on how heavy our acquisition was in each year. The more new names we added, the lower the gifts-per-donor number will be.

May: We were talking about the inexpensive Widow’s Mite packages, but on the other hand you don’t hesitate to mail some packages that cost $1 per piece in the mail, or even more.

Christianson: We try to mail what works. Back in 1993, we had acquisition results averaging 1.2 percent response, $10-$11 average gift. The packages were pretty inexpensive, but cost recovery was still only about 36 percent.

May: About $2.75 to raise $1

Christianson: Right. Last year, spending about $1.10 per piece in the mail, our cost recovery has come up to the 65 percent range – about $1.50 to raise $1. The acquisition response is around 4.5 percent, average gift is about $18 now. The metrics are much better.

May: You have several acquisition packages, and you match your list selection to the package. Christianson: We have had several controls, but fewer now. We’re basically down to the Dreamcatcher package and a Christmas card package.

May: People often say premium-generated donors have less interest in the organization’s mission. You have a very successful planned giving program, which seems to contradict that idea. What’s the ratio of planned giving income to direct marketing income?

Christianson: We raise from $9.5 to $12 million in planned gifts each year, roughly 65 percent bequests, 34 percent annuities and 1 percent memorial gifts. That’s versus $40 million direct marketing revenue, so about 25 percent. The average bequest is about $10,000. That amount has grown from $6,000 or so about six years ago. Almost 70 percent of our bequests come from the donors we can identify as Catholic. Those Catholic donors tend to make smaller bequests, so our average bequest size might seem smaller than many other organizations.

May: A lot of your annuitants forego the annuity payments, returning them to you as additional gifts.

Christianson: Yes, which is a great benefit. We ask them to forego the payments if they can afford to do so. We have about 4,000 annuitants, who tend to have several annuities with us totaling an average of about $10,000. Our minimum annuity is $1,000 — less than many organizations.

May: You know your market. You promote planned gifts heavily, not just check-off boxes on reply slips or side-bars in newsletters, but also stand-alone mailings promoting planned giving.

Christianson: We do about three independent planned giving mailings each year. We have a planned giving newsletter that gives updates on the school, on our donor lunches, some profiles of individual planned gift donors. We also do the check boxes and other references to planned gifts, especially notes like: “Please remember St. Joseph’s in your will.” We try to hit a lot of touch points. We have eight or so luncheons for donors around the country each year, in addition to phone calls to donors on their birthday, things like that.

May: You’re the only organization I know that actually calculates the future value of bequests, beyond just assuming the current trends will continue.

Christianson: We jokingly call it our “bequest receivable.” About 25 percent of people who remember us in their wills actually tell us they have. They tell us and we recognize them in our Legacy Club. We recognize them in our newsletter and add their name to a plaque here on campus. The number who let us know they intend a bequest has been growing. Right now we have just about 4,000 people who have told us they have remembered us in their wills. So if that’s 25 percent of the actual total, we have about 16,000 bequests out there. With an average bequest size of $10,000, we believe we have about $160 million in bequest revenue we can anticipate. We’ve discussed this with some of the best planned giving folks in the country and they think it’s a pretty reasonable expectation.

This is an important thing to consider when you’re thinking about acquisition. When we look back at acquisition figures over the years, we see that for every 100,000 new donors we acquire, about 40 eventually tell us they have remembered us in their will. That means 160 have actually remembered us. With a value $10,000 per bequest, that’s $1.6 million, or $16 per new donor we gained.

It’s costing us $8 to gain a new donor today, an $8 loss. But if we know we have $16 per donor in future bequest income, the value of newly acquired names changes completely. Considering that eventual planned giving income, the cost to acquire becomes a net positive of $8 in future dollars from bequests. So in a way, we begin the donor renewal cycle already knowing we have this sizable potential bequest revenue. It’s worth considering when looking at the cost and benefit of acquisition.

May: You mail a lot. And although we’re mailing much more now than many years ago, most of us still worry about over-mailing donors, driving them away by asking too often. You’ve done some extensive testing of that.

Christianson: We had the same concerns, so we tested it. We receive complaints sometimes and those complaints receive a lot of attention. We have a Christmas card program that consists of a box of cards, preceeded by an announcement mailing, and followed by a follow-up mailing. We had been stopping our regular monthly appeals to these donors while we were sending the card series to them.

We tested for four years, letting a sample of the donors get the full card series as well as the regular monthly mailings. We started with a sample of 20,000 donors and increased the group each year. Each year the net income from the group getting all the mailings was about 20 percent higher than those who got fewer. This is the true net, after all costs.

May: A skeptic would say, OK you got more income for a few months, but many of those donors are going to be turned off by getting so much mail. Is there any evidence of poorer long-term value because of increased mail?

Christianson: We haven’t seen anything like that in our analysis to this point.

May: My observation has always been that donor response puts more people into a more recent segment, and the size of that segment is the key driver of overall performance. The impact of no response is impossible to measure. On the other hand, effective mail that presents your mission well, and generates more gross and net dollars is always good for current and future income.

Christianson: The main challenge is managing cost to raise $1. We need to balance the need for more net dollars and the cost ratio to raise them, which we do year-after-year.

Christianson: Right now we have 110,000 active donors in Germany, with about 130,000 lapses. As I said, the priests who founded us came from Germany. There’s a strong interest in the American West and Native Americans in Germany, including very popular novelists. We’ve found that Germans are the most frequent visitors to our Lakota museum here after Americans.

We began the incorporation process in Germany in 2002, which took over a year. We had to find our way through a few disappointing test mailings. Eight years later we’re doing quite well.

May: And the donors are primarily in what would have been western versus eastern Germany, and in the Bavarian area; which is more likely to be Catholic?

Christianson: The religious element of these packages turned out to be more important for us than it is in the U.S. Our control in Germany is a cross on a necklace. There are challenges – lists and postage are high, privacy issues make good lists hard to find. We’re now also mailing in France, with about 40,000 active donors. We’re testing in Austria, Slovakia and the Czech Republic. We’re doing great in the Czech Republic. The control is the same cross and chain.

May: You’ve been active on the web for more than 10 years, what’s working there?

Christianson: We launched our site in 1998. We raised a little over $100 in the first month. Last year, we raised about $1.1 million. We’ve put a major effort into acquiring email addresses and we have over 250,000 emails for our donors now. We integrate email with direct mail, so we send a letter with an email follow-up, driving you to our site, which has been optimized to make giving as easy as possible.

May: You’re active in social media.

Christianson: Yes, we make a good effort, although we raise almost nothing there. Our Facebook page is pretty busy. We’re still trying to find the way to monetize it.

May: What do you see as your challenges in the next few years?

Christianson: We have many projects here at the school that need funding, so we’re exploring many new ways to raise funds. Growth is critical — mailing what works, expanding our base. Developing our auto-deduct program, as well as e-marketing.

May: What are you most proud of from your work here at St. Joseph’s?

Christianson: Our long-standing staff, including Neoma Harris and Marina Kunzweiler, who are deeply committed to the success of the school. Our average tenure in development is 13 years. Another thing to be proud of is that we’re able to fund our current programs and provide funding for tomorrow. We’re well positioned for the years ahead.

NPT Editor’s Note: This is part of a continuing series of conversations between Larry May, senior vice president for strategic development at Infogroup in Greenwich, Conn., and leaders in the direct response fundraising industry. His email is larry.may@infogroup.com