Raising Money Outside The US

June 15, 2009       Michele Donohue      

St. Joseph’s Indian School provides education and residential care to approximately 200 Lakota Native American children in Chamberlain, S.D., America’s heartland. When the organization completed a long-term planning session to brainstorm new fundraising strategies, the decision was made to expand St. Joseph’s direct mail program – into Germany.

Yes, that Germany, the one that used to have a wall.

“Overall, we have done fairly well,” Kory Christianson, executive director of development for the school, said of the international direct mail effort started a few years ago.

The decision to mail there wasn’t made by spinning a globe and starting a program in whatever country it stopped on. Germany stood out for several reasons during the planning and brainstorming, according to Christianson. After Americans, Germans are the most frequent visitors to Akta Lakota, St. Joseph’s on-campus Native American museum. And, German priests and brothers founded the school 82 years ago.

St. Joseph’s active German house file now has nearly 100,000 donors since the organization was fully incorporated as a Germany nonprofit, St. Josefs Indianer Hilfswerk e.V., in December 2002. Christianson explained that the mailing program in Germany has experienced highs and lows, depending on the economy and world events. While response rates are high, lists and postage costs are also more expensive in Germany than in the United States.

Public broadcaster WNED reaches 3.1 million households in Western New York and the Southern Ontario region of Canada – and fundraises in both countries. And while Buffalo-based WNED’s broadcast signal is picked up in neighboring Canada, Vice President of Development Sylvia Bennett explained that there are still differences between American and Canadian donors.

“We want them to understand that we know who they are and respect who they are, just like the American marketplace, so we try to make sure we are adhering to their particular norms, like language,” she said. For example, if you want a Canadian donor to write a check, it might help to get a donation if you are spelling it as ‘cheque’ in the direct mail piece.

Bennett said WNED has broadcasted in the Southern Ontario region for more than 50 years, so Canadian television viewers have grown up with the station. It didn’t start actively marketing to the region until nearly 12 years ago. WNED even markets itself as “WNED Buffalo/Toronto” to emphasize the bi-national presence. Bennett said now nearly half of donors are Canadian.

The breakdown of American to Canadian donors depends on the campaign. Some pledge campaigns have had nearly 70 percent of the responses arrive from Southern Ontario, she said. Now, as the organization is trying to grow its membership donor base from nearly 40,000 to 50,000 during the year, Bennett said the organization is thinking about sending more direct mail across the border.

“Even though there are two countries, we really embrace Southern Ontario as part of our marketplace. We don’t at all ignore Western New York – that’s where we live,” said Bennett. “We think of it as one big community at WNED.”

Nonprofits seeking to strategically expand fundraising programs might find worthwhile opportunities outside the United States, according to Geoffrey W. Peters, president and CEO of CDR Fundraising Group in Bowie, Md. Peters explained that in some overseas markets there is less competition for charitable donations than in the United States. And individuals in many societies have simply just never been asked to make a charitable contribution, he said. The firm has worked with numerous international charites.

One element of cross-border fundraising that’s essential is having a message that will resonate with the country’s donor population. “Disease knows no borders,” said Peters. Missions revolving around poverty or the global environment might also speak to donors around the planet.

Compassion International’s mission is based around child sponsorship. The organization’s target donor audience of Christians holds a “common bond that crosses geographic and cultural boundaries,” said Mark Hanlon, senior vice president of Compassion USA, in Colorado Springs, Colo.

Compassion International has offices within 11 partner countries, including the United States. Like St. Joseph’s Indian School, the most recent expansion was into Germany two years ago. Hanlon said that before Compassion International decided to open the German office, the organization performed “a market analysis of our target audience, what’s the population, and who is already there raising money doing something similar to us” as part of the due diligence before expanding.

A market analysis can help an organization prioritize which country might be the best fit by breaking down the “combination of the knowledge of the market plus what are the circumstances for that particular charity,” Peters said. Some questions to answer include:

  • Will donors support your mission because of similar values, culture or religion?
  • Do you already have connections or brand awareness in the country?
  • Does the country already have a strong nonprofit with a similar mission with roots in this country?

Be creative in examining countries that could be a cohesive fit for mission and might not have a competitive charitable presence. Most nonprofits wouldn’t think of Poland to launch a mail program, “but the charities that have done so have done fairly well,” said Peters.

Christianson recommends organizations work with an agency that understands the culture and business practices of the targeted country because of the wide variety of governmental regulations and cultures. For example, it takes an average of 40 days to register a charity application with the Charity Commission for England and Wales, while registering a Swiss Verein might just take a few days.

Peters recommends organizations find reputable lawyers and accountants in the prospect countries. Those native to the country will know how to navigate that nation’s postal system, tax receipting and tax deductions. For example, nonprofits raising money in Singapore would be subject to the “80:20” rule, in which a foreign charity would have to spend at least 80 percent of the funds raised in Singapore.

In 2007, that Singapore 80:20 rule changed to make a distinction between public and private donations. Nonprofits still have to apply the 80:20 rule to public donations but the standard is waived for private donations, such as gifts from high-net-worth individuals and bequests. “If you go into a country and a raise a whole lot of money, and then you can’t do anything worthwhile with it – it’s not a good thing,” said Peters.

The issues for raising money also go for privacy laws. You might be able to scan your donor database for wealth metrics in the U.S., but it’s hard to estimate someone’s true net worth in Europe, said Daryl Upsall, chief executive of Daryl Upsall Consulting International in Madrid, Spain.

“You have to be much more careful about data you are allowed to keep on donors or potential donors. And here has to be lots and lots and lots of opportunity for opt out [for communications],” he said. Upsall said that makes building a sophisticated database on donor wealth “close to impossible” — unless your donor makes a magazine’s “wealthiest” list. In the current economic climate, Upsall said he’s noticed more non-U.S. based international nonprofits starting a presence in other countries compared to U.S.-based nonprofits. He said while some U.S.-based nonprofits are retracting from the global market, other international charities are hiking up their investment in new markets.

“There’s a lot of heavy investment going into Southeast Asia Ð India, Thailand, Philippines, South Korea. And they are getting all the first move advantage. So they are getting returns on investment that just haven’t been seen in mature markets like the U.S., Canada and U.K. for decades,” he said.

“We know through the tests of many charities and through our own work, direct mail in Spain just doesn’t work,” said Upsall. “And yet when we are talking with major or mid-size, highly successful brands coming into Spain, they insist on doing direct mail.” Upsall explained that direct mail still works well in some markets, such as Holland and Germany. But the key to fundraising in some new markets has been face-to-face fundraising, such as soliciting potential donors on the street, door-to-door and in malls, for automatic monthly bank payments.

When Compassion International decided to expand into Germany, the organization took a year to build relationships within the country. The organization selected board members and a chief executive officer from Germany, which Hanlon described as “critical” to understanding the culture. Since those key people were nationals, they already had networks and connections within Germany.

Having a physical presence in the country you are fundraising in might also help. “If the communication appears to come from somewhere local, for example reply address, address on the Web site landing page, it’s better than a Ôforeign’ sounding location,” said Robin Fisk, charity technology expert at Advanced Solutions International, headquartered in Alexandria, Va. “A client of ours established a very credible presence in Ireland whilst having no staff there, but had a mailing address and used a local mailing company so that the campaigns appeared to be home-grown. Results have shown it worked. They now have a small staff there too,” he said.

Christianson from St. Joseph’s explained that having mission-related programs, such as presentations, exhibits and lectures about Native American culture “lends credibility and authenticity to our overall program” in Germany, he said.

Christianson also recommended that organizations have patience once starting a fundraising program outside of the U.S. “Success doesn’t happen overnight so you may have to subsidize the program for awhile before it becomes profitable,” he said. “Therefore, this presumes you’re in a strong financial position prior to expanding overseas.”

Peters agreed that building a fundraising program in another country will usually take some time before it develops. This means if your organization is in the red in the U.S. and thinks the grass will be greener on the other side of the world — forget it. “This is not the kind of investment one makes in desperation. This is an investment that one does as a part of a long-term strategy,” he said. NPT