Why It’s Great to Have Friends With Benefits
Consider the following nonprofit appeal:
“Our mission is to enable a child’s right to clean, safe and sustainable water on the world’s driest continent, Africa. Funds are being raised to build multi-village solar-powered water systems in the lowlands of the Amhara Region of Ethiopia. Please help us transform lives forever by donating!”
The organization’s message is delivered via multiple channels. One channel yields a response of one in 2,500—.04 percent. Another channel’s response is one in four—25 percent.
According to Blackbaud, that is the difference in the rate of return for the average direct response vs. peer-to-peer campaign. The difference is pretty dramatic. And yet, we hear this all the time, “I can make more money at lower expense by asking for a donation rather than asking a constituent to fundraise for me.”
Is that true? What do the numbers tell us?
The numbers that many quote when identifying the “cost per dollar raised” via various revenue sources come from the 1999 book, “Fund-Raising: Evaluating and Managing the Fund Development Process.” With regards to direct mail, the statistics are as follows:
|Fundraising Activity/Method||Average Cost to Raise One Dollar|
|Direct Mail Acquisition||$ 1.00 to $1.25 per dollar raised|
|Direct Mail Renewal||$0.20 per dollar raised|
The Association of Fundraising Professionals cites similar numbers. This information is no longer available online, since the metric is often used to bash nonprofits. We applaud the decision to take these statistics offline.
|Fundraising Activity/Method||Average Cost to Raise One Dollar|
|Direct Mail Acquisition (with a 1 percent or better rate of return)||$ 1.25 to $1.50 per dollar raised.|
|Direct Mail Renewal (with a 50 percent or better rate of return)||$0.25 per dollar raised.|
Source: Affinity Resources
So, what are the costs associated with a typical peer-to-peer program? A typical program starting from scratch looks like this:
Year 1: Revenue neutral / slight loss (including setup of platforms and systems)
Year 2: Revenue neutral to $0.75 to raise $1.00
At Maturity: $0.25 - $0.35 to raise $1.00
For a mature peer-to-peer program that is purely digital, it takes less than $.15 to raise $1.
When you start looking at the efficiency of human delivery of donation requests, the comparisons become quite remarkable. While “costs to raise a dollar” metrics are falling from favor (for good reason), for these purposes, they are handy.
Here is another way to look at it:
- The mail piece is to direct response what the human is to peer-to-peer fundraising.
- Email is to digital fundraising what the human is to peer-to-peer fundraising.
The human is the delivery device of your message in peer-to-peer fundraising. That human delivers your message to a “list,” which they have vetted for responsiveness. The message delivered is as credible as any marketing message could be. A friend delivered it to a friend. The message comes from a trusted source, which has some personal connection and a history with the recipient. The human is a very efficient delivery device.
In the breakout of various revenue sources, monies collected via peer-to-peer fundraising (using a human) isn’t represented. Instead, peer-to-peer is grouped with “special events” because, often, peer-to-peer fundraising culminates in an event.
It is a mistake to do this.
The most productive peer-to-peer fundraising events do not spend big money on events. Spending big money on events is actually counterproductive, because this conveys the message that the organization is in a transactional relationship with its volunteer fundraisers. That is bad, because we know that people who are in transactional relationships do not stay over the long haul.
But the interesting thing about peer-to-peer is what else is produced as a by-product of the fundraising effort. Here’s where the “friend with benefits” part comes in…
We are getting people to deliver a message to the perfect list, in an age when you cannot buy a list. And from that we are getting some enormous benefits:
- Data collection and new donor acquisition—the average peer-to-peer fundraiser gets four contributions from first-time donors to the organization (Blackbaud).
- Self-reinforcement—every time the volunteer fundraiser asks for a donation for a particular nonprofit, they are more likely to continue the same pattern of behavior.
- Self-donation—fundraisers almost always self-donate (Blackbaud).
Jeanette Russell, senior solutions marketer at Blackbaud, sums it up this way:
“Friends asking friends for donations is much more than a dollar-based transaction, like mail. Peer driven fundraising taps into "new power" values which are the core drivers of modern mobilization, which many of today's successful companies are based on. It's also how many people like to engage with causes.
A one-time or even recurring donation gives you revenue, but people powered fundraising gives you the power of the network and a new fundraising source, which far outweighs money alone.
Why not get the donation and the network behind it! It's a great way to diversify your revenue and build your people power. Who doesn't need more volunteers, advocates, social ambassadors? Volunteer-driven fundraising allows you to move your people through your engagement path, while helping you meet critical fundraising goals.
Whatever you call it, investing in your supporters to get their friends involved through fundraising will be a defining nonprofit strategy of the 21st century.”
Katrina VanHuss and Otis Fulton have written a book, Dollar Dash, on the psychology of peer-to-peer fundraising. Click here to download the first chapter, courtesy of NonProfit PRO!
Katrina VanHuss is the CEO of Turnkey, a U.S.-based strategy and execution firm for nonprofit fundraising campaigns. Katrina has been instilling passion in volunteer fundraisers since 1989 when she founded the company. Turnkey’s clients include most of the top thirty U.S. peer-to-peer campaigns — Susan G. Komen, the Cystic Fibrosis Foundation, the ALS Association, the Leukemia & Lymphoma Society, as well as some international organizations, like UNICEF.
Otis Fulton is a psychologist who joined Turnkey in 2013 as its consumer behavior expert. He works with clients to apply psychological principles to fundraising. He is a much-sought-after copywriter for nonprofit messaging. He has written campaigns for St. Jude’s Children’s Research Hospital, The March of Dimes, the USO and dozens of other organizations.
Now as a married couple, Katrina and Otis almost never stop talking about fundraising, volunteerism, and human decision-making – much to the chagrin of most dinner companions.
Katrina and Otis present regularly at clients’ national conferences, as well as at BBCon, NonProfit Pro P2P, Peer to Peer Forum, and others. They write a weekly column for NonProfit PRO and are the co-authors of the 2017 book, "Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising." They live in Richmond, Virginia, USA.