An Over-Saturated Charitable Experience
In a previous blog post, I briefly examined what appears to be a growing sentiment in the nonprofit industry that direct mail fundraising is somehow flawed. Fundraisers have been slow to abandon outdated business practices or to evolve quick enough to react to the mounting challenges facing nonprofits today—and yes, there are many that we must overcome.
Faced with revenue shortfalls, fundraisers have few, if any, viable or predictable sources of revenue from which to solicit; that is other than resoliciting their best and most responsive donors. As the need for revenue intensifies and the budget gap widens, nonprofits are telling their donors they put more priority on revenue than they do on donor satisfaction and delivering positive giving experiences.
If you are looking for a flaw, that is where I’d focus first, as there is no debate that nonprofits are simply sending too much direct mail, too many emails and phone calls to their best donors—and the consequences can be damaging and long-lasting. The least of which are lower retention rates and campaign performance, continued declines in new donor response rates and prospect universes, among others.
It might not appear to be a big deal, but when it’s occurring throughout the industry simultaneously, the impact can become overwhelming. An example is during the 2016 holiday season, one family (a husband and wife in their mid-80s) received a reported 120 individual direct mail fundraising solicitations (an average of 30 per day)—90 percent of which were from organizations they had never supported before (i.e. prospect packages). Additionally, they received several telemarketing calls every day with a request for a “special year-end” contribution.
The direct mail appeals they received represented the full gamut of nonprofit organizations—national health charities; veteran organizations; Native American groups; national parks and museums; conservation, animal rights and advocacy groups; in addition to many others. In just one week, one family received enough name and address labels to last them several years. They received calendars, greeting cards and pens, membership cards, opportunities to have their gift doubled, Christmas ornaments, notepads, sweepstakes, and even money.
What was interesting is that they actually looked at every package they received, which came in every size, shape and color imaginable. However, they only opened less than two of every 10 they received. And from what I can tell from samples they provided, only a few organizations were lucky enough to receive their support—all of which were charities they currently support. What a waste!
While this isn’t a typical experience, I’d suggest it is becoming more common as fundraisers continue to utilize advanced analytics and solutions like donor co-ops to increase their ability to target the best and most responsive donors and prospects. The growth of co-ops, now up to at least seven in the nonprofit sector, has been astounding. One of the largest co-ops reports having more than 2,500 nonprofit participants and over 70 million “known donors” in its co-op.
You’d be hard pressed to find many, if any, major mailers who aren’t in at least one, if not multiple, co-ops. While usage varies by organization, I’ve heard that in some organizations co-op names comprise more than 85 percent of an acquisition list plan.
Just think about how easy it is for the above donor example to happen. Take a household where both husband and wife are active donors ($15 each) to six different and diverse charities, all of which participate in several co-ops with over 2,000 nonprofits each. Both are high-velocity givers and, therefore, are scored in the top decile and are selected by all participating charities for their early November acquisition campaign. Plus, they are targeted by those charities they currently support and those they supported in the past. The result: One week, 120 different solicitations, 12 percent response to donor mailings and 0 percent response to prospect mailings.
The industry’s best and most responsive donors are being bombarded with charitable solicitations all throughout the year. They are annoyed, frustrated and are promoting their frustrations more vocally than ever before. More donors are requesting limited or reduced mail, that is if they aren’t requesting to be taken off the file altogether.
Donors are giving charities poor grades for failing to meet their giving expectations or for not creating a rewarding or relevant experience. “There is evidence that the pool of charitable donors is actually shrinking; down 13 percent over the past several years. Yes they are literally fed up and abandoning charity altogether.” Pat Frame, principal of Key Acquisition Partners, said.
As an industry, nonprofit is at a critical crossroad. The conversation around donor centricity and the need for creating better experiences has intensified. But is it all rhetoric if organizations are not committed to doing what it takes to bring about meaningful and measurable improvement in donor satisfaction. Even at the expense of less revenue (gross/net) and individual profits, is there widespread belief that short-term sacrifices will result in long-term gains?
If so, then I urge you to participate in finding a better solution—for retaining, reactivating and acquiring donors. We’ll need to develop more effective contact management tools—not just at the organizational level, but also at the donor level. It would be great if co-ops would band together to develop a better operating model that takes the individual donor into account—a solution that would beneficial to both the donor and nonprofit.
It’s time for less talk and more action. Many organizations are already headed down this path, but in isolation, there is little chance they will make a dent in the issues the industry faces. Unless behavior and business practices are changed, fundraising could be on the path to reform measures that include government oversight.
Greg Fox is vice president of nonprofit vertical strategy at Merkle. He joined the company in 2000 to establish a data-driven, strategic fundraising agency group. Fox is a 30-year veteran of direct response fundraising, with expertise in developing innovative fundraising marketing strategies and solutions. He has helped raise hundreds of millions of dollars for many of the largest and most respected fundraising brands in America, and while he has broad-based fundraising experience, he is highly regarded as a leader in the national health-charity sector. Prior to joining Merkle, Fox was a founding partner in TheraCom, a leading provider of full-service specialty pharmacy solutions and marketing strategies that served the healthcare and charitable industries. He also served as vice president of direct response fundraising at the National Cystic Fibrosis Foundation, where he started his career and created the organization’s first national direct response program. Fox is an industry thought-leader, frequent speaker at industry conferences and an active participant in the DMA nonprofit federation. He graduated from Virginia Commonwealth University in Richmond, Va.