Case Study: Ask and Receive
All donors are not created equal. As in the for-profit world, the most financially valuable ones are the ones who undertake long-term relationships with an organization — those who embrace a nonprofit’s mission and make donations again and again. In a perfect world, fundraisers would be able to discern these individuals from the 70 percent of newly acquired donors whose first gifts are also their last, and invest in them accordingly.
But barring the invention of a working crystal ball, the best nonprofits can do is put new donors to the test before their interest in the cause wanes. At least that’s the strategy that works for Maryland Food Bank, an America’s Second Harvest (recently renamed Feeding America) affiliate that distributes food to more than 1,000 shelters, soup kitchens, pantries and other charitable organizations aross the state of Maryland.
According to Deborah Flateman, Maryland Food Bank’s chief executive officer, implementing a more ambitious schedule of new-donor solicitations — one that asks for that elusive second gift shortly after the first gift is made — has boosted new-donor retention rates.
“We have established a different type of relationship with donors,” she says. “We’re finding out how close they are to our mission and how responsive they are to our requests.”
Room for improvement
Founded in 1979, Maryland Food Bank boasts a diverse and enthusiastic donor base.
“There really isn’t a typical donor,” Flateman says. “The issue of hunger is something that resonates with pretty much everybody.”
Since the introduction of its direct-mail fundraising program in 1997, Maryland Food Bank’s new-donor retention rates have varied from the high 30 percents to the low 40 percents, a range that exceeds sector standards.
“If you get a third of your donors to make that second gift, it’s considered good,” says Kent Rohrbach, vice president of client services for L.W. Robbins Associates, the Holliston, Mass.-based agency that manages Maryland Food Bank’s direct-mail program.
But there’s always room to improve. That’s exactly what Maryland Food Bank set out to do after noticing an unexpected drop in new-donor retention rates in 2006. Concerned the drop could lead to further erosion, the organization was advised by Robbins to adapt its new-donor communications strategy in response to trends observed in the marketplace.
Patterns in new-donor retention
According to Rohrbach, Robbins has noticed distinct patterns in new-donor retention across the nonprofit industry.
“We know that … the more gifts [donors] give in the first year, the higher the retention rate,” he says. “We also know that the longer [the] time that elapses between the date of the first gift and that of the second gift, the less likelihood there is the donor will ever make that second gift.”
Rohrbach adds that work for one Robbins client indicated the critical time period for renewing new donors is three months. After that, the greatest amount of erosion occurred.
This, in particular, presents problems for many nonprofit organizations. Lead times associated with production schedules often mean new donors aren’t inserted into a nonprofit’s normal mail program until several months after their first gifts are received. By then, the critical time for renewal has already passed.
To help its clients overcome this challenge and reach new donors before the window of opportunity closes, Robbins came up with the idea for a new-donor, second-gift mailing. This mailing is timed to reach new donors while their donations are still fresh in their minds. It aims to inspire them to invest in the nonprofit’s work, both emotionally and financially.
“We look at each mailing as giving the donor the opportunity to continue to participate in the work that they’ve begun with their first gift,” Rohrbach explains.
The second-gift mailing package
Maryland Food Bank rolled out the new-donor, second-gift mailing in 2007. The package consists of a folded note card, which contains a thank-you message letting donors know how their donations are being used. Below the message, in handwriting, is the statement: “Thank you for making a difference. Repeating your gift of (amount) would mean so much.”
The package includes a No. 6¾ closed-face return envelope. The return envelope is preaddressed to Maryland Food Bank in handwriting and bears a return label with the donor’s name and address.
These two pieces are mailed in a closed-face, baronial carrier envelope with First Class postage. The outer envelope does not include a return address; the donor’s name, address, city, state and ZIP code are handwritten on the outside.
The new-donor, second-gift mailing is sent to any first-time donor who has made a donation of $5 or more. The number of mailings per month, as well as the number of pieces mailed, varies with seasonal fluctuations in new-donor acquisition. During peak periods, Rohrbach estimates, there are several thousand pieces per month, sent via two monthly mailings.
Because such quantities are relatively small, statistically speaking, segmentation among new donors to deliver even more customized packages is prohibitive.
“We do the same package for everybody, but the gift amount is individualized … based on the amount that donor first gave,” Rohrbach says.
A level of sophistication
The new-donor, second-gift mailing includes a number of personal touches: the size of the envelope, which is similar to that of an invitation or greeting card; the use of First Class postage; and the use of handwritten addresses and inscriptions.
Robbins Account Supervisor Casie Craycraft believes these elements help the new-donor, second-gift mailing stand out from the typical mailbox clutter.
“It took me quite a while to get used to receiving these packages in the mail,” she says. “I honestly thought someone I knew was sending me a note.”
The use of handwriting does increase the cost of the package, Craycraft adds. The mailing costs 31 percent more than a regular appeal. But for Maryland Food Bank, the results justify the means.
“From a fundraising standpoint, there’s a level of sophistication that we continually aspire to so that all of our activities give us a greater yield,” Flateman says. She adds that this sophistication has helped the organization achieve an average gift size across all donors of $80.
The tone of the new-donor, second-gift mailing copy is warm — even personal. As for messaging, “We always try to talk about a life changed … the work of the food bank is the most important thing to exemplify to each donor what [his or her] gift has done,” Rohrbach says.
Year one, new-donor communications
Of course, the new-donor, second-gift mailing is just one part of Maryland Food Bank’s year one, new-donor solicitations. It is actually the second communication a new donor receives following her donation. The first is a thank-you letter that is produced and mailed by Maryland Food Bank staff, usually within two weeks of the time the donation is made.
The thank-you letter is mailed in a No. 10 window envelope with a Maryland Food Bank return address. For donations in excess of $100, the letter is sent in a closed-face envelope. And donors who give $500 or more, whether acquisition or renewals, receive a printed letter that includes a handwritten note from Flateman.
Roughly two weeks after the thank-you acknowledgement hits, new donors receive the second-gift mailing. Then, a month or two later, they’re inserted into the normal contact cycle.
Craycraft says new donors typically receive between four and six renewal letters in the first year. Timing of mailings is closely monitored to avoid any negative impact, and renewal letters are typically sent four to six weeks apart.
“Each letter has a different offer and tells the donor about a different food bank program, allowing them to see the scope of the services the food bank provides for hungry Marylanders,” Craycraft explains.
A rebound in retention
Response rates for Maryland Food Bank’s retention mailings range from 8.5 percent to 13.5 percent, depending on the time of the year. Craycraft says response rates to renewal mailings have not been affected by the introduction of the mailing.
The average response rate for the new-donor, second-gift mailing is 10 percent. It generates an average gift of $38, and the cost is 50 cents on the dollar, Flateman says.
Though the revenue the new-donor, second-gift mailing generates is important, Craycraft stresses that the true measure of its value is retention. Following the mailing’s introduction in 2007 — it was the only change in Maryland Food Bank’s new-donor contact strategy that year — retention of newly acquired donors rebounded from 34.9 percent to 38.85 percent.
Thrilled with the mailing’s success, Flateman has no plans to change it in the near future. But that’s not to say she’s feeling complacent about Maryland Food Bank’s direct-mail fundraising.
On the contrary, the success of the new-donor, second-gift mailing has prompted the organization to reconsider how and how often it approaches all donors for support.
“By having this experience and seeing the response rate, it’s helped us to embrace a more aggressive schedule with number of maildrops, packaging and messaging,” she says. FS
This article originally appeared in the August issue of FS sister publication, Target Marketing.
Amy Syracuse is a London-based freelance writer.