Where Are The Donors?
September 15, 2009 Paul Clolery
It’s not unusual that when the economy tanks, donors have to make some hard choices. Should they dump HBO or feed the dog less expensive chow so that they can continue to support the charities of their choice?
A few national studies show that giving declined during 2008 and can charitably be considered “soft” so far in 2009. But not all charities are losing donors. Some of them might be seeing reduced gift amounts, but many charities are holding firm to their donors. It isn’t an easy task. The NonProfit Times convened some industry thought leaders who were attending the recent Bridge to Integrated Marketing & Fundraising Conference at the Gaylord Hotel & Resort in National Harbor, Md.
The panelists this time included Susan M. Loth, director of fundraising, Disabled American Veterans, Geoffrey W. Peters, president and chief executive officer of CDR Fundraising Group and Debbie Snyder, vice president of sales and marketing at Stratmark. The conversation was moderated by Paul Clolery, vice president and editorial director at The NonProfit Times and Rick Christ, head of the NPAdvisors division of Amergent.
Paul Clolery: Welcome to Executive Session. One of the topics I’m hearing constantly is that donors are evaporating, that donors are going away.
There are some widely-reported studies that in the first quarter this year versus the first quarter last year, the numbers of donors is just dropping precipitously. But when you actually talk to people out on the street, the rank and file is saying donors are not going anywhere. About 70 percent of the people who I’ve talked to say: “You know, we’re holding our own” or “We’re doing okay.”
So the question is: What’s wrong with the statistics? Is there a problem with the statistics or are donors going away? Susan, what are you seeing in your file? Susan Loth: We still have slightly more than eight million active donors, which has actually ticked up a little bit. And we have done some other things besides acquisition to help generate some of those re-engaged donors. What we’ve seen more is that they’re not giving as much but the number of donors is still there in the fold.
Clolery: You’ve always had one challenge. A lot of your donors get actuarially mature and at some point you have a pretty good natural turnover just from deaths of donors. Is that correct?
Loth: Our attrition is about 20 percent. But it’s not anything that everyone else isn’t facing. We’ve offset that attrition through our acquisition program for the most part. We’ve gone back into our file and looked harder at the lapse program. Our lapse is a little different from other industry’s programs. We’ve looked at people who are getting ready to lapse and are treating them differently. We’ve re-engaged a lot of donors and brought them back into the fold. So, we haven’t had a lot of fall off, any more than normal. Clolery: What are your clients seeing Geoff? Geoffrey Peters: Similar to what Susan said, we’re not seeing this massive drop off and I think there’s several reasons for it. I suspect that if you actually took the whole industry, maybe there is some validity to the statistics, but if you have a client that’s doing 10 million (mail pieces) a year in prospect and they could’ve been doing 14 million a year, then the fact that the universe to which they are prospecting might have dropped by one million which would be 10 percent, doesn’t really come up because you’re still prospecting to fewer than the universe.
While there are parts of the fundraising industry that are seriously concerned, like corporate where it’s really tough and maybe even some of the major donors, the direct response field, I think, is largely not affected by the recession.
One of the things that we also see that’s been going on for at least five or six years now, is that file sizes might have shrunk slightly, but average gift has gone up, so from a net income point of view, people are holding their own.
This is the first year that I’ve ever seen average gifts begin to drop down. That is an economic effect. But, it’s fairly minor. Some 60 percent of our clients are up in volume and up in file size so I just think it’s more situational. Big national charities continue to do well. Clolery: But in the Giving USA numbers show $6.4 billion dollars less given last year than the year before and that’s before the recession really hit. Corporate giving did take a large chunk out. But corporate giving is only about 12 percent of total giving in the country so that didn’t make up for all of the $6 billion fall-off. So there’s got to be money leaking someplace. Loth: Some of the foundations, not corporate foundations, smaller family foundations and trusts, have just taken a hit, too. It’s not so much in our direct mail donors because it’s still a lot of people are on fixed incomes and their fixed income is still coming in regularly. So, that has seemed to be pretty steady. It’s when you get into those higher-level givers where I think it’s a bigger issue because there aren’t as many dollars on the table. Clolery: The United States population is up to about 305 million. There is one live birth every eight seconds and a death every 12 seconds. There is a legal immigrant entering the country every 36 second. The population can’t do anything but climb. Is the increase in the number of people coming into the country or new births having any impact at all at keeping the numbers up? Peters: That’s the wrong part of the demographics to focus on because the demographic changes that are happening that are most important are basically the Baby Boom generation. That’s where the demography matters. Individual giving is 75 percent of all giving. The people who give most of the money to charities are in those upper age groups. And the actual data is more heartening than disheartening. For a long time, in the last, say, 10 years, people were wondering when the Baby Boomers finally hit 65 will they convert and become like their parents and their grandparents. Nobody knew because they weren’t 65.
Well, in the past three years there has been some research done on the leading edge of Baby Boomers, and guess what, as they retire they are becoming like their parents. They are becoming direct mail responsive where they weren’t before. We’re only three years into a 20-year phenomenon, but if that holds up, that means that brighter days are ahead because there is a huge bump demographically about to hit that higher and higher age group. And the percentage of the population that is older than age of 65 is going to continue to climb over the next 20 years. Clolery: But you are also seeing within that Baby Boomer group, people who had their children later in life who still have kids in college. They’re nowhere near retirement. So, are we going to see a delay in that transition to a giving Boomer?
Rick Christ: Well for some of them, I think yes. But there are so many of them in that curve, I think all it will do is stretch out the curve. People have talked about that generation as the pig moving through the belly of the python. I think that the curve will be smoothed out a little bit, which is also okay, on a long-term basis.
Peters: You’ll see another effect, which is not just the having children later but the sandwich generation effect. People are living longer. Some of those same people are taking care of their parents, where in prior years maybe their parents would be dead by then. I agree with Rick, that is an effect, but you can’t make that bulge go away because it’s just too huge.
Loth: The transfer of wealth is still to that generation. That still is happening although in a lot of cases it hasn’t really happened yet.
Debbie Snyder: One of the things we’re finding encouraging about the demographic shift is that people are living longer and so as people are habitual donors and regular donors there are more years for them to give. For the vast majority of our clients, their donor levels are staying even or increasing. Some of the gift amounts are getting smaller and I think that’s caused by the current economic impact because people don’t have as much disposable income. Maybe they were giving a $100 gift and now they’re giving a $50 gift, but they’re still giving a gift. So back to your original point, I would question how the donor is being counted, because I read the same studies that you do and we’re not really seeing that decrease to be true with our clients. Peters: Susan, you and I, we’re dealing with major national charities and almost every time there is a recession these kinds of questions come up. You hear stories of the little charity in a local community that’s doing bread lines or something like that, and they really see a 50 percent drop in revenue, something that we never see.
Snyder: Don’t you think that is because maybe donors go from giving to 10 causes to five and so they pick the five that they know the best and believe are the most sustainable? Christ: And the other thing is that maybe it’s the five that I’m most familiar with, or maybe it’s the five that are still reaching out to me. Snyder: They’ve stewarded you the best. Christ: It might well be the first five in the door. I spoke to two list broker/managers this morning, and one of them said there’s been about a 10 percent slide in the 12-month count. Because of cutbacks at her organization, she’s actually the one entering data and updating list data cards. I asked, “Is it 20 percent?” She said: “No, it’s not that bad.” At least it hasn’t been a cliff, it’s been a slow slide.
Another list broker said to me that one-third of their clients are still mailing, holding to their plans, and they’re growing, and two thirds are cutting back, and son of a gun they’re not getting the numbers, which is kind of comforting to those of us who believe in marketing for nonprofits. Clolery: Didn’t the industry learn from 9/11? The groups that stopped mailing into New York got clobbered. Christ: I brought that point up and the answer is that, yeah, some of us have learned, and some us haven’t, or perhaps believe that this is a different phenomenon. But I think there’s a difference between donors and donations. I think there are fewer donations but as you pointed out Susan, you still have those donors on your file. And if you believe those donors are going to come back, then it pays to continue to mail to them and continue to work with them. In two or three years, when things get better, they’ll come back and might make smaller gifts or fewer gifts, but they’re still donors.
Christ: The other thing that people said was, “if I rent the same list I rented last year, put them into merge purge, I’m putting fewer names in, because some of those people have mailed less, and fewer of them have grown a lot.”
Some of that I can make up with new testing but I’m not ready to tip the balance and say, “Well, now I’ll do 50 percent testing. I still only want to keep it at 40 percent. I’m going to mail fewer names.”
Now I become part of the problem, because obviously if I mail fewer names I’m going to get fewer new donors in, then you look at outside the market. If I’m the publisher and I can only use hotline donor names, now I’ve got fewer hotline donor names especially, so now I’m producing fewer new subscribers. So there’s this ripple effect that comes along.
If you’re only counting donations to the extent that a 12-month file is really only counting donations not donors, okay, that’s a temporary big input. But I’ve seen another phenomenon that’s really dangerous and that is nonprofits say: “I’m going to mail smarter. I’ve got 15 segments based on recency and frequency and dollar amount and I’m only going to mail the ones that are returning $1 or more per $1 in the mail.”
If you’re only returning 80 percent, we’re not going to mail you. That was really smart this year, but what are you going to do because you can either let your file shrink, or you can make it up in prospecting. But in prospecting, you’re only getting 50 cents back on the $1, maybe 40 cents back on the $1.
I said this when I met with a client and brought some coins. I said: “Give me a dollar” and he gave me a dollar and I gave him 75 cents back. And I said: “Not such a good deal” and he said “No.” So I said: “Give me another dollar” and he gave me another dollar. I gave him $2.25. Well he said, “Well, I like that.” He pulled out a $10 bill and said: “Let’s do more of this” and I said: “No you can’t do anymore of those than you’ve done of the first deal. You’ve got to give me dollars to get the 75 cents back, then you can give me more dollars and get $2.25 back.”
Those donors that you cut back on are worth a lot more lifetime because they’ve been donors. You cut back on them and you’re really hammering yourself over the next three to five years. Clolery: Let’s go back to what you were just saying a few minutes ago about attitudes. People are living longer and somebody who’s been a fan of Charity X or Charity Y is now getting older. They will live longer. One of the questions and answers that always comes up in the studies is, are people afraid that they are going to outlive their money? Is that contributing to the decline in terms of revenue, they’re giving less because they’re afraid they’re going to outlive their money? Peters: I don’t think so. First of all, many of those people are on fixed incomes, or at least partially fixed incomes. They’re certainly all on Social Security and that’s steady. Clolery: But that’s rational. Fear isn’t rational. The fear that you’re going to run out of money. Peters: Let’s take what actually they see. They see how much money is in their bank account. They see how much is in their checking account. Where that affects people is not in immediate giving, like direct response. They’re less likely to say: “I have less money in my will to the ABC charity,” because they’re concerned that if they live a lot longer, or if they get ill and they have medical expenses, they don’t want to be bound by some commitment that they feel they morally made. So they won’t tell you there’s money in their will. Even if you are in the will they’re in the residuary clause. But in terms of current giving, what are they looking at? The NonProfit Times had its own study on what’s the best predictor of giving from an economic cycle and the answer came back M1. What’s M1? Well, it’s how much money is in your bank account today. Loth: I would agree with you. You just don’t know because of the word of mouth element. Christ: I work with some Social Security advocacy clients and one of them issued a press release two days ago that said something like four in 10 seniors are cutting back on their medication. They’re taking pills every other day or two days out of three because they can’t afford it. And five of 10 have cut back to a certain extent on food. It’s staggering to me that fewer than nine in 10 have cut back on charity when they’ve cut back on their own medication and food. Clolery: But isn’t that typical? You don’t think you’ve got it as badly as your neighbor when you see that your neighbor is out of work and thus people give. Christ: Someone said earlier that local charities, food banks, last year many of them had their best years ever by a huge margin. I think that’s why the revenue went up. I think most people, middle-income people, realize that they are two or three rungs on the socio economic ladder above the recipients of people at the food bank. And last year, it was only one or two rungs. And, they knew that. And I’m not saying they were doing this as an investment in their own future but, there are few things that are more tangible, more local and more accountable than gifts to food banks. And, those gifts took off.
One of the lessons for all nonprofits is you need be as tangible as possible in your donors’ minds. You need to be as real, as accountable, as local, and you need to be demonstrating that kind of return. “What have you done for me lately?” or, “What have you done for my neighbor, lately?” is the story that you need to be able to tell. That’s what’s going to make people continue to choose you as one of those charities. Clolery: Debbie, one of your largest clients is a food program, what are you learning from those donors? Snyder: Much to your point, there are touching stories of people who are now the recipients of the charities’ aid that they supported for years. Nonprofits that are staying even or ahead of the curve, as opposed to those who are falling behind, are those that are paying attention to some of the transitional issues that are going on demographically and are working to respond to these issues. By that I mean different issues appeal to the population that’s coming into their high donation years than did the generation before.
Looking at and making sure the issues are relevant and timely, that they always have contexts, that people respond to the emotional appeal is important. Another thing tied into that is making sure that nonprofits are offering donors multi-channel ways to be approached.
Donor preference used to be very single focused. Now it’s multi-channel. Some donors want to be reached via direct mail and some donors want to be reached online. Some donors want to be reached via media. What we’re always counseling our clients on is making sure that you need to look at your appeals holistically, figure out how to make sure you’re giving donors a way to engage with you in a channel that is comfortable for them. Those are the charities that are sustaining their growth. Clolery: There are so many channels now that people can give through now. Are they really cost effective to maintain? Is it really cost effective for a charity to invest in all of them? We did a story not too long ago on how a children’s hospital in Arkansas had 5.3 million friends on Facebook. Which is twice the number of the people who live in the state of Arkansas. And in that period of time those 5.3 million friends had donated a grand total of $40,000. Loth: Via Facebook or just in general? Clolery: Via Facebook. There initially wasn’t any crosschecking to find out if they had given other ways. Christ: And that cross analysis is going continue to be very, very difficult. Clolery: Why? Christ: We preach integration and yet the more channels we reach people through, well, we know the channel that they use to make the gift, but what we don’t know the channel or channels, that they used to decide to give.
I probably told the story in a previous executive session about a client who said to us: “We want to do more online because online seems to be growing. We want to cut direct response TV because it’s not doing so well.” DRTV had been the bulk of their income and we said: “Well don’t kill that golden goose just yet. But yeah, we certainly believe you’ve got to do more online.”
Well they cut DRTV and all of a sudden online started to do much worse. We probably could have gone back through the Web traffic stats and shown online traffic spiked after the DRTV ads. The Web was the reply device, it was the closer, it was not the outreach device. It was the combination of Web and DRTV and unfortunately the people who came in through the Web couldn’t be adequately measured back to that DRTV ad. Peters: There are better ways of doing that now. One of the things we do now in DRTV is you have a different call-in number and you have a different URL according to which ad it is so that you can subtract the Web traffic and the telephone traffic off the DRTV and directly attribute the ask to the return.
We’re getting better at how to measure integration across multiple channels. One part of the example Paul cites is social networking — Facebook, Twitter and all that. Not very many people are making any serious money on any of those channels. Christ: Agreed.
Peters: I don’t know the future of those channels. I don’t want to be a naysayer, maybe they’ll be bright, maybe they’ll be wonderful, but not today. We have measured them. If you wanted to, you can Tweet such that the links in Twitter only go to a particular URL, so that you can literally track that. Christ: But you don’t know if that Tweet produced more direct mail results from those people to a substantial extent. There’s some impact, and in the example I told before, the Web site wasn’t in the DRTV ad. People went off on their own and did the research and said: “Maybe I don’t feel comfortable calling a toll-free number. Is this legitimate?”
The extent of white mail in direct mail, you like to keep it 5 percent or so, but the extent of white mail gifts online and through other channels is much bigger. I think that we have to continue exploring ways to integrate, and to measure its impact.
Clearly this children’s hospital supporter might have gone overboard in trying to find friends. It’s certainly not about the number of friends, it’s about the quality of those friends, and who are those friends. The $40,000 probably came from 1,000 friends, and probably 1,000 of the first 2,000 friends.
So, yes, you have to be there for those people who want to be there. But just being there isn’t the point. Online is different from direct mail. In online, it’s not the number of people you get. It’s empowering and arming the few who are deep into your cause, and heavily wired themselves.
Malcolm Gladwell talks about the power of the few. They’re the few people who are going to talk about you and talk about your issue and who’re looked up to for their knowledge of your issue. You have to be engaging them because their power is far greater than a recent $50 donor who is going give you 50 bucks. But they’re not going to take your direct mail package, go to Kinkos, make 100 copies of it in full color and give it out to their friends. But they will online do that, and they’re going to talk about you anyway, or your issue. Are they going to talk about you or are they going to talk about your competitor? That depends on whether you’ve engaged them or not so I think that’s a key part of where some of these other media come from. Loth: There’s value in that as well. It can’t always be on tangible dollars because you’re getting outreach and you never know which one of those forwards or which one of those Facebook friends is going to actually get to someone else who does ultimately come in who just doesn’t know about your charity. Even with the strength of the DAV name in our community, discerning DAV from other veterans’ organizations and the Veterans Administration itself is still an issue. It’s good to have all those things but you can’t always look at them for the ROI. Snyder: That’s a good point and your example illustrates the importance of strategy, analytics and testing. We don’t just abandon one channel and say: “Oh, we’re only going to do this.” It all needs to be a balance. It needs to be carefully considered and looked at with some key analytics behind it to help make some predictive decisions about how your donors want to be messaged.
I think it’s important that everything is in balance. And, you’re right that sometimes the ROI is hard to measure. You can get pretty darn granular on exactly what response came from where and you can start making some really strategic decisions. Loth: I would agree with you. I just think you don’t always know because it’s that word of mouth. You don’t really know how it’s all generating out there. Peters: We have one client where they have a multichannel program, and testing it is very complicated for those reasons. This is an organization that does DRTV, does the Internet, does direct mail, and now we’re adding outdoor advertising and kiosk advertising in malls. Kiosk and outdoor advertising reach an unknown audience. There’s no way to measure that. You can again put URLs and phone numbers, but it’s limited to what you can measure.
We’re doing what’s called “Match City Pairs.” If Syracuse, N.Y. and Omaha Neb., prior to intervention, both behave basically the same for the charity, we go into those two cities and in one city we add outdoor advertising. Assuming that there’s no newspaper editor in the Omaha World Herald who’s writing a story about this particular charity, which would obviously confound the results, assuming all of the things can be held equal, if we see a lift in one city, we think that that lift is attributable to adding that additional channel. So even in that kind of very complex scenario, there are methods you can use to try to measure. Christ: That’s what the package consumer retailers have been doing for decades because that’s all they had. That’s very clever of you to steal from them because we’ve been preaching for years they need to take our ideas. Snyder: Sometimes the changes are very simple but lead to a big lift in donations. I’ll give you an example. We have clients who in the past sent out a direct mail piece. The only way you could respond was via direct mail. So you add a URL at the bottom, a dedicated landing page. It’s critical you don’t just add your generic Web site, but you create a landing page specific to that appeal and you add a phone number, a specific phone number that rings specific to that appeal.
You’d be amazed at the amount of lift those two very simple things, as part of a direct mail strategy, can add. In terms of where do all the donors go, it’s keeping in mind that donors are changing in how they want to respond. Give them options that are not necessarily costly to the nonprofit, that just require a bit of strategy and some communication within the organization to make sure that you’re delivering the same message through all of your channels. Clolery: Roughly 15 years ago, the typical donor was a white female in her early 60s, living somewhere just west of Des Moines. What’s the average donor looking like now? With all these new channels, with all this transition in the economy, with all these new people coming into the country, what’s the basic donor look like these days? Peters: Donors have more choices, so you see more demographic segmentation depending on the charity. For example, a veterans’ charity might skew a lot older, particularly if it’s an old-line charity that’s been around for a lot of years. But then you might have a new veterans’ charity that is only focused on post 9/11 veterans. They skew a lot younger because of the nature of the beneficiaries that they work with. Then you see that the child adoption charities, the child sponsorship charities, they tend to skew toward 40-year-old females as opposed to 50- or 60-year-olds.
Christ: You brought up two great examples. For one thing, there are three times the number of charities than there were 15 years ago. So there are more people that appeal to more choices and that skews the average. The other thing, in the child sponsorship, the average donor doesn’t exist. If you drew a composite picture there’s nobody who meets that criteria.
There are four or five very distinct, different composite pictures of donors. One of them, and this is the most interesting to me, is the young, urban, single, well-educated professional woman, who wants a relationship with a child, but doesn’t want a husband, thank you very much. And so, they adopt a kid in Portugal. There are empty-nesters. As I’ve explained to those groups, my family is not going to do that. We have enough kids. We have no more room on our refrigerator for another piece of art work. That may well change, when the last one leaves the house, (from my lips to God’s ears). Clolery: Another refrigerator magnet and your kitchen becomes an MRI. Christ: I’ve always preached about the myth of the average. It’s never been more true than it is today. There’s no average charity. There’s no average donor. It’s not important that any one of your readers knows what the average donor is. It’s important that they know who their donors are, and what their unique sub-segments are, and how to approach them and what channels they’re using. Peters: That segmentation phenomena also is partly another way to handle the question that we’re addressing. If you think about it, most of the charities that do significant direct mail programs are larger charities with larger donor bases. The fact that there’s been a proliferation of charities means that some of the list that the person you talked to is updating, that are showing a 10 percent drop, some of those donors disappeared from their lists and ended up on another list. They’re not accounting for that list because we now have more list brokers. We have more lists. We have more charities. Are the donors really going away or are the donors spreading out and making choices just like they’re making choices on the method by which they give? They’re also making choices about to whom to give.
Loth: A lot of charities are merging now, too. All of sudden they’ve got combined lists. Are they (donors) going to support it? Or with re-branding, are they still supporting that organization like their parents did? That remains to be seen, too.
Even foundations that we’ve talked to, they’re also looking at charities differently. They want to know if they’re going to be in existence so when you’re filling out foundation grants and applications, they want to see your numbers or financials and look at things differently. Now it’s a question of sustainability. Are you really going to be in the market place if we give you are money?
Clolery: So how do you make that case to a donor who you’re mailing to that you’re sustainable?
Snyder: You show relevance.
Clolery: Relevance means stability? Just because you’re relevant you’re stable?
Snyder: You have to make sure your cause is still relevant to conditions in the world today and the things that appeal to people. You also, of course, have to have transparency. We’ve been dealing with that for years. Ever since 9/11, transparency has been a huge issue with nonprofits and their donors. That’s just something you never go backwards from. It changed the face of philanthropy forever, at least in this country, and established the need for transparency. Donors want to know what charities are doing with their money. They want to know they are doing something relevant with it. Christ: You are exactly right and yes, relevancy equals sustainability. A huge bank account will protect you from irrelevancy until the bank account runs out. There are countless corporations in the United States that prove that on a regular basis. But relevancy is the only sure indicator of sustainability, although transparency is really key there, too. That also speaks to accountability and good stewardship. It’s not enough just to be relevant. But if you’re not relevant, nothing else matters.
Peters: From a marketing point of view I would say longevity is pretty useful.
Christ: It’s an indicator.
Peters: To be able to say to a potential donor we’ve been around 50 years we plan to be around another 50, is a pretty powerful statement compared to we’ve been around two years and we’re really hoping to make it to next.
Christ: Well, although where would you have invested money three months ago Geoff, Smart Cars or GM?
Clolery: GM, but only for a few days because you have to play the stock price swing.
Christ: I guess it’s an indicator.
Clolery: I wasn’t joking. With GM you put a few bucks in, and a couple of days later you take a few bucks out because the price would have swung. Even if it swung 50 cents a share, you made money depending on how much stock you had. Do you think that people are looking at charities like they would an investment? Christ: I don’t think so. We don’t have short-term profits to offer them, the only thing we have to offer them is … Clolery: Yeah, but you have short-term results like disaster relief.
Christ: But they’re not interested in short-term results. They’re interested in what they getting out of it. They’re not getting short-term results out of it. They’re getting out of it…
Peters: The cure. They want the result. They want the cure.
Christ: In some cases, I think what they want is the pleasure of the gift. I think they want the satisfaction, the emotional satisfaction, of the gift. We’re the only business where we don’t give anything back. That’s not true. We give back, that satisfaction, that smile, that feeling, that warmth. That warmth goes away if they think we’re squandering their money or we’re not working toward something that they care deeply about. But it’s the warmth that we need to keep giving them, and that’s why they continue to give.
Clolery: That’s Rick, Mr. Warmth.
Loth: It’s a feeling they have where they might not be able to volunteer or they might not do something else but they’re easing their conscious a little bit too and helping someone else when they know that they have more than another.
Clolery: We always learn something from a particular set of challenges. What have charities learned since everyone’s 401(k) went out the window and the economy stood still? Snyder: I think our charitable clients, the ones that are succeeding have learned, the importance of donor stewardship in good times and tough times. Their direct response plan, the strategy behind the direct response, has to cover the things we’ve talked about today. It has to have an emotional appeal to touch and motivate the donor. But it also has to speak to relevancy, to sustainability, to why the donor should choose this cause if they’ve got a limited pie to invest in nonprofits.
I think they’ve learned that they have to be continuously thinking ahead and responding to the needs of donors and stewarding that donor’s interest and building a relationship with that donor over time so that the donor will hang with them through tough times.
Clolery: This is almost sounding like Tim Horton’s versus Dunkin’ Donuts. We’ve got charities pretty much delivering the same doughnut but maybe it has a different topping on it. How does just being a good steward bring a donor into the house and keep it in the house when the someone else’s strawberry topping might just look better next week?
Loth: Part of that is the relevance of your organization. As a veterans’ charity, had we been dealing with these types of economic times 15 to 20 years ago we might have had a greater degree of difficulty. The fact that there’s a war going on makes us more worthy of a contribution.
The relevance of your cause is certainly a factor. You can’t control that necessarily but it’s certainly going to give you more market share.
Christ: Other people are making your case for you. In this case it’s the nightly news. Clolery: Any surprises out there? Christ: If there’s one thing that would surprise you, coming from my mouth, is empathy. It’s empathy to the extent that we can talk to donors and say: “You’re cutting back; so are we.” The other part of that empathy is listening. When you listen to the donors, and one of my colleagues uses the phrase “donor speak,” it’s the words they’re using that we need to use. It’s not about your fancy new white paper. Forget it.
The best way to do that is to go out and ask the donors what they think on an issue and listen to them, and then either call them or send them an email and ask them a couple open-ended questions and then use those words when you write to them back. We’re realizing that there’s this disconnect where we want to do more and more and more and there’s this position of uncertainty in the future and we need to respect that.
Clolery: Isn’t that counter intuitive to what the donor is seeing? You just used the phrase, “You’re cutting back, so are we.” Wouldn’t the argument be you’re cutting back, the economy stinks, we need to do more. We’re not cutting back. We’re doing more? Christ: If you’re a food bank, absolutely. I’m not a copywriter, so the exact words may be different. But I think that to the extent maybe we’re cutting back on overhead, or whatever it is, we’re being good stewards. Maybe the economy is just helping us focus on all of their concerns. Peters: The surprise for me has been the difficulty some development directors have had dealing with their boards of directors. I think the development directors got the lesson of 9/11 and various other things that have happened over a number of years and they understand “staying the course” makes a lot of sense. But the number of times I’ve been called in by the development director to go meet with their board of directors, because the board of directors picks up the newspaper and reads: “Unemployment Reaches a Record High” and of course, with all respect to newspaper reporters …
Peters: …the headline reads “Record Unemployment 9 Percent,” it doesn’t’ read “91 Percent of People Are Still Employed.” The point is their boards are reading the commercial information, sales are down, retail sales are down, banks are bankrupt, blah blah blah. They don’t ask: “What is the implication of that for our fundraising program for this charity on which I serve on the board?” They immediately go into crisis mode and say: “Let’s cut.”
In the case of one development director, they cut $1 million out of acquisition. She said, “I don’t know what they think they’re doing, but they sure aren’t helping.” The kind of thing that blows my mind is the boards aren’t asking their own staff. The scares that you saw during 9/11, where people got out of the mail and got hurt, they read The NonProfit Times the next year and found that the people who didn’t get out of the mail didn’t get hurt. The development directors know better but aren’t being asked the questions. That’s really a shame. Clolery: Once around the table, what’s the best thing you’ve seen in the last six months somebody else has done? Christ: Use video more to tell, to show, what’s happening with people’s money. Fewer words, more video. Loth: For us, it’s more the brand raising and watching other people doing a really effective job of communicating a need and reinforcing who they are. Peters: I saw a direct mail package that blew me away. It was a reprint of a New York Times front page from 50 years ago reminding people of why the charity existed and the history. I thought it was extraordinarily effective. Snyder: I look at a lot of direct mail pieces and I’ve seen people doing some really clever things, not only with the content of the direct mail but with the way in which it’s delivered. There are some interesting packaging ideas out there that I think are very eye catching and cost effective. Clolery: Reasonable people have long argued the use of premium versus not using premiums. In these economic times are charities still using premiums without fear that the donor is going to say: “Wait a minute, you just spent how much on that?” Peters: It continues and the results are pretty much the same as they used to be. Loth: They work. Peters: And 60 to 70 percent of all the appeals out there are premium based. There’s a reason for it. Clolery: Is the premium changing? Is it staying more labels rather than sending an umbrella or a coffee cup? Peters: There’s been a lot of experimentation with the high-end premiums and mostly they’ve been by charities that are desperate to build a file but have not actually got much of a file. Most of the main line charities that are mailing in quantity are not sending expensive things in the mail. Maybe there’s a little bit more experimentation now with back end premiums, but I don’t think that’s changed and the metrics haven’t changed that much.
For years we heard: “Anybody who mails a premium, their donors can’t be very valuable.” Now we have the benefit of all of our Long Term Value studies, and it shows that, it’s probably true that a straight letter donor is more valuable than a premium donor if you can wait 6.2 years for the lines to cross. There is truth to the story, but there’s another part of the statement you need to make sure everybody knows about. Loth: We’d all be unemployed by that point because they would have moved on to the next development. Clolery: Is there anything that we haven’t touched on? Would anybody would like to revisit or make a comment? Peters: We still have no clue where all the donors went. We could do a song, ‘Where Have All The Donors Gone?’
Loth: I think government interaction with the new president, you really don’t know what’s going to happen out there. You know we have charity reform, charitable giving, what’s going to happen there? We have increases in taxes, we’re staring down healthcare changes, everyone is scared about all that, how that’s impact them and who is it impacting? There’s so much uncertainty with all of that it’s playing on the minds of everyone, and it could play heavily on the minds of the Boomers again than it does the people who are current donors.