Sweeps Week

October 15, 2009       Michele Donohue      

There seems to be a certain stigma against sweepstakes and raffles in the nonprofit fundraising sector, according to George Whelan, development manager at Consumer Reports Foundation (CRF) based in Yonkers, N.Y.

“It’s not mission oriented. It’s more transaction based, and based on the donor wanting to win something,” said Whelan.

But CRF was the one winning big in its raffle mailing this past November, with revenue lift of more than $200,000, including lapsed and active donors. The winning number was really 285,000. That’s the number of fewer mail pieces sent to get that result, by separating the raffle donors from the mission donors.

CRF introduced raffle mailings during the mid-1980s as an additional revenue stream outside of subscriptions. And now raffles make up 40 percent of the revenue that the fundraising department takes in, with 90,000 subscribers who are considered “raffle-only” donors.

“They are players. They are subscribers to the organization. They believe in the mission, I’m sure, but they would not contribute to a mission message. But if you give them a chance to win a prize, they are going to contribute,” he said.

For the November 2008 mailing, CRF decided to segment donors into five groups based on giving history for the previous three years, instead of sending all donors the same mail stream. The five groups were divided by people who opted out of raffle mailings, those who respond to raffle only, those who respond to mission only, and two groups that respond to both raffles and mission but in different degrees, either majority mission or majority raffle.

The proportion of mission-driven or raffle mailings corresponded to the donor’s designated group. For example, a donor in the raffle-only group might receive nine raffle and two mission-based mailings in a year, while a mission-based donor would receive two raffles and nine mission mail pieces.

“You waste your money by mailing them packages they are never going to give to. They have their niche,” said Whelan. Last year, the raffle raised $7 million, with $3.5 million net.

The Direct Marketing Association’s Guidelines for Ethical Business Practice defines sweepstakes as “promotional devices by which items of value (prizes) are awarded to participants by chance without the promoter’s requiring the participants to render something of value (consideration) to be eligible to participate,” which applies equally to nonprofit and commercial sweepstakes.

Sweepstakes campaigns must state that no purchase is necessary to win the prize. That means recipients of nonprofit sweepstakes campaigns are not required to send a donation to participate. The mailing must also clearly state that a contribution of any size doesn’t affect a recipient’s chance of winning — the person who didn’t send a donation has the same chance as the person who sent $100.

The Deceptive Mail Prevention and Enforcement Act, effective April 12, 2000, was created to cut down on misleading sweepstakes mailings. The act was a crackdown on mailings that mimicked government agency mailings or deceived recipients into thinking they had already won a substantial prize.

The mailings must also have clear, easy to find instructions about entry requirements, including odds of winning, prizes, eligibility requirements, publicity rights and any pertinent dates, such as mailing deadlines and approximate winner notification.

The increased scrutiny and mounting rules, with individual states having their own regulations, led some organizations to drop raffle or sweepstakes mailings completely since the legislation, according to Whelan.

“A lot of organizations did away with it and figured, ‘Oh, we have 25,000 or 30,000 people who give to [raffles], but we’ll get them converted.’ And the answer is no you don’t – you’ve lost them,” said Whelan. “It’s a revenue stream. And if you focus it on just those individuals, you’re not going to upset the rest of your file with mailings they don’t like. But you are going to continue to generate a pretty good profit.”

Marla Altberg, president of New York City-based Ventura Associates, Inc., explained that after seeing an initial decrease in sweepstakes interest a few years after the Deceptive Mail Prevention and Enforcement Act legislation, sweepstakes are increasing, especially when consumer sweepstakes are on the rise.

“Sweepstakes and raffles can not only attract new donors, but increase donations among house file names and raise average gift,” said Altberg. “Such a promotion also gives you another reason to mail during a frequency schedule. That is, for example, for a mailing series with a label package, calendar package, etcetera, the sweepstakes can add something to the mix.”

Brooke Coneys, vice president and general manager of White Plains-based Carl Bloom Associates, agreed that sweepstakes mailings are a fun way to contact your list, especially for organizations that have a full fundraising schedule. “I would recommend it for any nonprofit that has the ability to really pull together the prizes,” she said.

“It’s a way to just wake up interest in the file and to tap in to people who may not be giving to the traditional ask,” said Coneys.

For example, Coneys said San Franscisco-based public broadcaster KQED sends raffle mailings to lapsed and active donors. The raffle mailings provide 30 percent of the organization’s combined special appeal and lapsed net revenue.

But she explained that nonprofits shouldn’t shy away from sweepstakes or raffle acquisition if it’s cost effective for the organization. “I wouldn’t be concerned that the people responding might not be too mission-oriented because they are still supporting the organization,” said Coneys. “Whatever they want to give, that’s okay, as long as it’s cost effective for the mailer and as long as the raffle is tasteful and reflects well on the organization.”

Altberg said response to mail sweepstakes offers can vary dramatically, but organizations should hope to see a 25- percent to 100-percent increase to the control mailing. She said one campaign with a prize of an expensive name-brand luxury car saw a 7.1-percent response rate, and 5.1 percent of respondents also made a donation.

Whelan said that raffle mailings tend to get a greater response rate with a lower average gift than mission-related mailings. He also explained that raffle donors might be harder to retain and converting raffle-only donors to mission mailings would be difficult.

Whelan said at CRF a long-term, multi-effort raffle usually has one-third of entries coming in with a gift. A shorter-term raffle can see as much as a 50/50 split between entries with or without gifts. Beginning this year, CRF ended its first raffle in August and introduced a second raffle.

“That just freshens it up,” he said. “One thing I can say is that if you do multiple mailings for the same raffle over six months, nine months, whatever period of time – the later efforts do really dip a bit once people have already made their gifts.”

A sweepstakes mailing wouldn’t be complete without a wonderful prize. Whelan said CRF gives the winner a choice — $25,000 or the magazine’s top-rated tested automobile, which isn’t announced until a winner is selected. He said no winner has picked the car so far, which would need to undergo inspection and replace some parts after the rigorous battery of tests run for the ratings. The second raffle prize this year will be an annuity.

New York City-based Thirteen/WNET’s sweepstakes campaign has a catalogue of more than 100 prizes worth more than $150,000 in-kind donations solicited in house, according to Fred Brown Jr., currently senior consultant at Media Group Now.

Brown said the sweepstakes was great for mailing the membership file beyond their membership and traditional direct mail, and also provided an interesting opportunity for companies to donate without advertising. “The sweepstakes allowed them to market their brand, donate a product as another form of in-kind and we took their prize that they offered and packaged it and marketed that back to our membership base,” said Brown.

Companies need to distribute their product in a highly competitive media landscape with limited marketing dollars. Brown explained that nonprofits should use database information, such as spending patterns and demographics, to make a convincing argument why a company should donate a product for a sweepstakes. “We used all that data and information to strategically position [the sweepstakes] to say, ÔIt makes sense for you to do this,'” he said. “They are going to pay attention not just because of your brand, but our strong brand. They are already affiliated.”

Altberg recommended having prizes that support the nonprofit mission. “For example, a history museum or organization could award a family trip with visits and tours to various historic sites, etcetera. Such topical reinforcement can attract and retain a better quality donor for future solicitation,” she said.

Travel prizes sometimes go unclaimed because of taxes or the trip’s timing, said Coneys. “Still, the travel prizes are important because people think they want to go on fabulous trips when they’re reading the prize brochure and that helps boost response,” said Coneys. “But, no one turns down the cash.” NPT