A Few More Topline Numbers

     Since I posted our direct mail results I've received a few questions about overall costs. Above is my Gross & Net Revenue growth which will give you an idea of costs including staffing.

    For those of you who haven't attended one of my presentations... I started the fundraising programme from scratch on Sept 1st, 2008.  That was exactly two weeks before Lehman Bros. crashed, followed by the Irish Banks and property market. It's been an adventure.

Another little number which might be of interest.

2013 Retention Rate

Let me be clear, 64% is our retention rate for cash(one off) donors. Our retention rate for monthly donors is over 90%.

This is very much a work in progress. 

I hope our team goal becomes your team goal. 

Gettin' Donors & Keepin' Donors

   
I've been making promises about putting the results of MQI's donor communications programme out in public. So here we go. This isn't going to be fancy. It will serve as a reference point for future blogs.

Gettin' donors

Acquisition

     I've been doing direct mail acquisition in Ireland since late 2008. Data has always been a challenge and my results have mostly varied based on the quality of data available. But I use all the same lists everyone else does. No big secrets there. Lisa Sargent began writing for us in Sept 2009. I can't begin to emphasise the importance of good creative.

     With the exception of one or two campaigns that only reached break even, most of our acquisition campaigns have an ROI of 1.2:1 to 1.8:1 (120%-180%).

     In the early years we only spent about €.69-.89 per pack, including postage. Some of our more recent packs have been €.99-1.38 including postage. 

Keepin' donors

Newsletters

     In late 2009 I realised we were losing donors almost as fast as we were bringing them in. We spent 2010 focusing on our internal processes. (Which was just as well, we had run out of usable ACQ lists) I hired my first staff member. We got a donor database and tightened our thank you letter process. Then Lisa Sargent overhauled our newsletter. You can read about that here.  before-and-after case study on Merchants Quay Ireland’s donor newsletter Our newsletter from Summer 2010 had a 2.2% RR before the overhaul. 

     The ROI on our newsletters over the last couple of years has averaged 7:1- 9:1 (700%-900%). We've also seen our Response Rates for Warm Appeals increase as we increased the number and quality of our newsletters.

Warm (House) Appeals

     Response Rates on our Warm Appeals vary by the time of year, naturally. But we also use one appeal a year to focus on converting cash donors to monthly donors and those RR's are a bit lower. The appeals in red are our Christmas Appeals. 

     We've seen a steady upward trend as we improved our newsletter, thank you's, increased the number of mailings and offered opportunities for donor engagement. You'll see that Christmas 2013 was down from the previous year but considering we had Typhoon Haiyan in November and the CRC scandal in Dec, I think we weathered it pretty well.

     I didn't include stats from 2008 - early 2010 because we didn't have a donor database yet. I'm just not certain of the accuracy of my records so I'd rather not put them out in public.

That Mythical Beast... 

the Fundraising Board.

     So here I am again, shaking my head when everyone else is nodding in agreement. 

I read a terrific blog this morning on questions fundraisers should ask the organisation during the interview process. You can read it here: http://t.co/i5gyKoMfuL  *

I agree with pretty much everything except:

2) It’s the job of the board of directors to work with you in setting the development goals and in raising the necessary funds, not yours alone. Does 100% of the board make a gift or get a gift? Are they required to give? How involved is the board in fundraising? Is there a board committee whose sole purpose it is to cultivate donors, to share contacts and to make “the ask”? 

Yes, it is their job. But the reality on the ground, for small and medium sized charities, is far from that ideal. This ideal is flogged constantly at all our fundraising conferences in the US. But it's largely determined by the size of your charity.

First let's take a look at the US charity sector by size. There are over 1.5 million charites. Only about 40,000(2.6%) have a budget over €1 million and only about 10,000(.66%) have a budget over $10 million. (2012 est.)

The bigger the charity, the better it looks on a c.v. to be a board member. Those charities can attract some pretty heavy hitters who have the connections and the confidence to raise big money. Once you have a few heavy hitters it attracts a lot of ambitious people who want to be part of that network.

However, the boards of smaller charities are usually made up of people from the community who have some programmatic expertise, or have volunteered in or been touched by the programmes. They tend to be heavily focused on mission and services, not on fundraising. They hire fundraising staff so they don't have to do it.

Here are the various board scenarios I've seen in action:

The Heavy Hitters - Your charity board is one of the rungs toward the top of the social & business ladder. You probably have a waiting list of people who want to play with the big guys.

The Engaged Board with a variety of skills - They all give, even though some of them only give$100 a year. A few have connections they share. They sell tickets, help bring in a few sponsors and secure auction items for the gala. One or two might....might get involved in a major ask.

The Working Board - These people have all come to the board through some level of involvement or expertise in the programmes. They're generally supportive of fundraising but don't want to be involved.

The Well Meaning but Clueless Board - This is usually a charity moving from all volunteer to their first paid staff, including a fundraiser. They don't understand why you can't just do more bake sales and pub quizzes to bring in the $1 million they hired you to raise. Ah bless... such nice people.

The Nightmare Board - These social climbing showboats want you to make a name for them. They want high profile events and lots of publicity but they bring very little to the table. They'll make your life miserable, blaming you for the failure of all their bad ideas. We've all been there....walk away!

I'm sure there are a number of variations on these themes. But my point is, the ideal that is constantly flogged to us is exactly that, an ideal. So go ahead and work toward it. But, if  you'll only work in charities that meet the ideal... you're a precious little so and so. Good luck with that.

For those of us who work in small and medium sized charities, relax and work with what you've got. You may be able to move it toward the ideal or you may not. But you're still responsible for raising funds. Don't use the Board as an excuse. Work around it...that's just reality. If it's a nightmare, walk away. 

*101FUNDRAISING is a terrific blog. You can follow them on Twitter  @101fundraising

Ugly Stepchild...?

     Anyone who knows me… knows I’m not a secretive person. But up until now I’ve only given random public glimpses into the donor communications programme that built Merchant Quay Ireland’s fundraising income from €200K a year to €2.2mil a year in 5 years(in a recession). Over the next few weeks I plan to put my results out in public. From Acquisition to Appeals and Monthly Giving. Some of it will be beautiful… some of it… not so much. 

     Let’s start with what is often the ugly stepchild of fundraising... the Donor Newsletter.

     Newsletters are a HUGE part of our fundraising programme. A great newsletter tells wonderful stories about how donors are changing the world. A great newsletter also raises funds… by thanking, not asking. Our newsletters average a 7:1 ROI (700% return on investment) and they drive donor loyalty and retention. As you can probably guess, our newsletter is no ugly stepchild… it’s our precious baby.

  My newsletters are written by the extraordinary Lisa Sargent. She also writes a great e-newsletter called The Loyalty Letter. Below is an excerpt.
_________________________________________________________________

Can You (Finally) Ditch Your Donor Newsletter?

Never-Before-Revealed Results Offer New Insights

     Sooner or later, someone in your organisation will ask if it's (finally) time to replace, cut back on, or eliminate entirely, your direct mail donor newsletter. What I reveal here suggests these are the wrong questions to ask altogether... 

     Since 2010 -- as part of a simple donor communications plan that MQI's Head of Fundraising Denisa Casement and I orchestrated – MQI has mailed donor-focused newsletters three times every year.

Until this year, 2014. 

This year, the newsletter increases to four times.

Seriously? Who in this day and age mails more? Why not just switch to email? (After all, it's "free.") 

MQI's direct mail donor newsletter response rates, never before revealed, show you why we upped the ante:

• 2011, response rates of 6.35%, 6.59% and 8.00%.

• 2012, response rates of 7.40%, 7.33%, and 12.08%.

• 2013, response rates of 9.90%, 12.38%, and 12.73%.

Upward trajectory. From a newsletter. And a profitable one, at that.

For the record, this hasn't killed their donor retention rate. Au contraire. It now stands at sixty percent, double that of most U.S. nonprofits. (And no, their file is not dying. We do acquisition rollouts 2-3 times per year. The database has grown over 5X in as many years. Five times.) *see note

So if your direct mail donor newsletter is underperforming, the question is NOT: should we cut back on mailings? 

And it is NOT: Should we replace it with email only?

And it is DEFINITELY NOT: Do we ditch it altogether?

The real questions you should ask are: 

WHAT are we not doing... 

HOW do we do what's right... 

And HOW FAST can we transform our direct mail donor newsletter so it gets (much) better results?

Five years ago, MQI's team took a chance and invested in a relentlessly donor-centric fundraising and communications program.

So the question to ask isn't, Should you ditch your donor newsletter?

The question to ask is, What kind of success story do you want your nonprofit to tell in 5 years?

I'll be anxious to hear it.

    Lisa Sargent

_____________________________________________________________

     Lisa and I will be presenting a masterclass on How to Do Donor Communications for Relationships, Retention and Results at Fundraising Ireland’s National Fundraising Conference.

     We’ll cover all facets of our donor communications and reveal 5 years of detailed results from Donor Acquisition, Appeals and Newsletters.

     To read Lisa’s Loyalty Letter in its entirety, click here

You can follow both of us on Twitter 

@lisasargent2        @DenisaCasement 

*The donor base has grown from approx 500 to over 13,000. Lisa only had figures from our 2nd year on.

This article is a perfect example of what's gone wrong in the corporate marketing world -  CMO optimism at an all time high and yet only 1/3 can demonstrate the quantitative impact of their marketing spend.

http://www.forbes.com/sites/christinemoorman/2013/08/27/chief-marketing-officer-optimism-at-four-year-high-proving-the-value-of-marketing-remains-elusive/  

 

 

Here's a handy pie chart on what CMO's in this survey reported about their social media spend.

 

 

 

Social media is even worse. Only 15% can report proven quantitative impact from their social media marketing spend. What does this mean? It means corporates are spending huge money on marketing budgets with no quantifiable return on investment. Can you say Brand Awareness ... the biggest boondoggle in marketing history. Corporate marketing has moved so far away from direct marketing principles there is no longer pressure to prove your marketing budget increased sales. No "Return On Investment" required...or even possible in many instances.

So why do I care?? Because this is bleeding over into fundraising. The big charities are buying into the nonsense being sold to them by corporate agencies. Awareness is never a bad thing. But if you can't connect the money spent on Brand Awareness to direct results you are into really murky water.

Medium and small charities in particular can't afford this "vanity spend". Direct marketing is about awareness. But it's about targeting the audience most likely to give and raising awareness among them. I've been absolutely appalled by the low results some charities settle for in relation to the money they're spending. You can explain away a low performing campaign as "awareness building" or you can identify it for what it is...a failed direct marketing campaign. Learn from it and move on. But don't try and pretend you've "Built Brand Awareness" when all you've done is waste money on a poorly performing campaign. And stop hiring the agencies* that use Brand Awareness to explain under performing campaigns. The corporate world are happily drinking the KoolAid and throwing good money after bad. Let them keep experimenting and when they finally find something that has demonstrable, quantifiable, bottom line results then we can look at adapting it for fundraising.

* I feel I must defend my agency friends here. There are many very fine agencies who specialise in charity marketing. I think it was Mark Phillips at BlueFrog in London who said "We live and die by our results." This is very true of most agencies who solely serve the charity sector. They are directly focused on both short-term and long-term results. Awareness is built into their campaigns but ultimately they judge everything using good old-fashioned metrics which tell us how many donors they acquired, how much money they raised and the ROI, overall, upfront, over time and by segment. My best advice is to use an agency who specialises in charity work not one that does charity marketing as a part of their portfolio.

Mobile, mobile mobile...

Last week I was in London for the IoF National Fundraising Conference. The hottest sessions were about mobile campaigns or how to integrate mobile into a multichannel campaign. I really enjoyed the sessions. The charities and agencies presenting were honest about what was working and what wasn't and what kind of ROI's to expect. All really good information from really sharp people pushing the charity sector to try and keep up with the commercial sector. There was a lot of talk about text to give and a lot of talk about making sure your website is optimised for mobile viewing and particularly mobile donations. There was also a good bit of hype from various vendors trying to tell us where we should be spending our budgets so we don't get left behind by the "revolution".

But... (I always seem to have a big but) I wasn't hearing much discussion about mobile browsing based on age cohort. I was interested to see this study included in our Squared Online reading list. The bar graph at the top of the page is from this study on mobile device ownership.

http://www.museumsandtheweb.com/mw2012/papers/digital_media_in_everyday_life_a_snapshot_of_d

 The age cohort I'm most interested in are the over 50's. Research over many decades and across many countries has consistently shown that in fundraising, our most consistent and highest value donors are over 50. The most obvious reason is, of course, they have more money. But it also has to do with their stage of life. They're into the "empty nest" stage of their lives. They're generally settled into homes that are nearly or completely paid off and they no longer have a growing family on which to spend their money. As they head toward their 60's their focus turns from acquiring money to leaving a mark on the world. Many turn to charitable work as a way to express and support  their values.

So... the fact that smart phone users account for only 20-25% of 50-65 yr-olds and less than 10% of 65+ means the rush to mobile for charity fundraising is largely leaving out our most valuable donors. The exception is text to give which doesn't require a smart phone. All the other mobile strategies were aimed at the smart phone market. This study was done in the US in 2011. So smart phone usage would have continued to rise among all cohorts. But our most valuable donors, the 65+ cohort, though growing fast, is still far behind the younger cohorts in mobile web browsing. I'm currently living in Ireland and the 60+ cohort here are a good few years behind their peers in the US and the UK in adopting technology.

And... I'm now learning about digital marketing and the many channels of social media being used to market and build awareness of brands. What I'm really not hearing enough about is the very different ways digital media is used by different age cohorts. In charity marketing I'm seeing organisations throwing a lot of time and money into marketing channels predominantly used by 20-30 somethings. This age cohort, although civic minded and well intentioned, doesn't have the disposable income to be high value donors and once acquired their attrition rate is very high compared to older donors. Once you do get them to give to a charity they aren't going to stick around long. Their lives are in flux and they're heading into child rearing years when all their income will be consumed by their growing families. This is great news for companies selling products consumed by families but not optimal for charities looking for long-term, high value donors.

What does this mean?  This means charity fundraisers need to know where the money is. They need to understand how this cohort shops and gathers information and what channels are most appropriate for building lasting relationships. How is the 50-60yr cohort using digital? And what about the 65+? What mediums do they trust most? Nick, one of our Squared Online instructors, also cited an interesting study showing that people trust print and TV more than digital. I suspect this trend is stronger among an older cohort.

How do we cut through the hype? This is where good research is like gold. For every channel we study I'm going to be asking the very tiresome questions: "Do over 50's use this? Are over 60's using this channel at all? How do the 50+ and 65+ cohorts use social media?" I will be combing the internet for digital use statistics broken down by age or generational categories. The digital revolution is happening at a different pace according to age cohort and I want to understand those differences.

Here We Go...

I'm up and sitting at a computer for the first time in over a week. I have literally been "phoning it in" from bed for the last week and a half. All I've managed to do is tweet on my phone between naps and Dr. visits. The good news is I don't have whooping cough and I'm no longer quarantined. I promise it will get better from here.

I was officially un-quarantined on Thursday in time for the Irish Fundraising Awards. My team at Merchants Quay Ireland were short-listed in 4 categories and won 2 awards: 

Best Fundraising Team
Best Legacy Campaign

Fantastic night! We even skyped in our copywriter from Connecticut for the ceremony.

The best part of the Fundraising Awards is getting to air kiss all those people you usually only communicate with via email and Linkedin.