The Five Warning Signs of Direct-mail Fundraising Trouble

Dec. 6, 2005

By Mark A. Jacobson

Veterans of direct-mail fundraising campaigns know the challenges they face in keeping program ROIs on target: renewing donors acquired by premiums, trying to persuade telephone donors to renew by mail or e-mail, and battling increased lapsing rates among even the best donor segments.

These issues and others like them decide direct-mail results in the here and now. But wouldn't it be great to deal with the challenges that lie at the base of these bigger issues before the Sword of Damocles appears over our heads?

In direct-mail fundraising, it's not uncommon to discover problems exist only after income begins to ebb. Here are a few scenarios that might raise some red flags for your organization before gross income declines:

1. Attrition is not made up by new/recaptured donors. One tried-and-true method of gauging if your program is really growing is to compare the attrition of your 12-month donor file vs. the combined totals of recaptured lapsed donors (from 13-plus months) and new donors during the same year. If you're adding/recapturing more than you're losing, then strategies that increase gift size and frequency can result in real, sustainable growth.

But trouble here can go unnoticed for as much as a few years. During this time, a shrinking base can be upgraded and/or gift frequency increased -- resulting in what appears to be income growth. But it won't last. Within a couple of years, continued roll-backs in the number of donors will become a burden that cannot be offset by the increases in gift size and frequency. Unfortunately, by the time gross income begins to ebb as a result, retention has usually become an extraordinarily difficult trend to reverse.

What to do? First, see if you can increase your recent donor renewals. Decrease your attrition. Even a few percentage points will provide meaningful income, and it will render those donors more likely to give again soon. Second, find small, limited pockets of lapsed donors that will respond favorably to more frequent or improved packages.