Brother can you spare a dime?
My friend Mike Vondran and I recently presented a session at the Success in Fundraising Workshop for the Quad Cities Chapter of the Association of Fundraising Professionals. Mike is the president and CEO of TAG Communications in Davenport and our topic was Direct Mail and Social Media: What Works and What Doesn’t. Today I begin a three-part series that summarizes much of what was presented and discussed.
Part 1 – Know thy donor
Who is giving? How often do they give? How much?
Raising money requires a balance between creating an emotional attachment to your mission and knowing just who will respond to your appeals. There are three data based tools that will help you with the latter part of that equation.
Behavior analysis
What is you average gift? How frequently does your average donor give. What’s the balance between your corporate, institutional and private donors? Quantifying these elements is the first step in determining the potential ROI for your events and appeals. If you’re collecting your data properly, you have the information – you just need to get it.
If you’re organization is like the many that I have worked with over the years, you’ll probably find that the vast majority of your money comes from a very small percentage of your donors. The 80/20 rule (80% of revenue from 20% of customers) doesn’t seem to apply to charities – 85/15 seems more appropriate. This points toward a real need for small charities to solidify their relationships with their major donors. Start this process by evaluating their past behavior.
You might learn that “in-kind” donors write checks reluctantly or that event sponsors don’t respond to direct mail. The efficiency of your annual development plan should rely heavily upon this type of information.
RFM Analysis
Direct mail is the bread and butter fund raising medium for most of the world’s prominent charities. The American Heart Association, Veteran’s of Foreign Wars, the Nature Conservancy, Greenpeace, the Audubon Society, the National Wildlife Federation, the US Olympic Committee, etc, etc, etc – all use direct mail extensively.
Many smaller organizations avoid direct mail because they focus on the investment – not the return. There is no denying that the development costs of a direct mail campaign can seem daunting – but don’t start there. Look at the income side.
An experienced direct mail fund raising professional will recommend three things:
1. Start with a test.
This will make your per piece in-the-mail cost higher, but reduce your total exposure. Test results will guide you in your future decision making.
- Be realistic with your goal.
It’s reasonable to expect a 2-1 or 3-1 return on investment with a first time effort. It will take time before you move consistently into the 3-1 to 5-1 ROI range.
- Perform an RFM analysis on your donor file.
Not everyone on your database will respond to your direct mail effort. RFM analysis provides a means for identifying the most likely respondents. RFM stands for recency, frequency and monetary value and the predictive reliability of those three elements runs in that order. Your most recent donors are the most likely to give to a new effort and your most frequent donors follow them in responsiveness. Monetary value is an effective measure only when combined with the other two.
Each donor is scored on each element relative to the entire donor base. Selecting top potential respondents is key to the success of your mailing.
Donor demographic profiling
Every non-profit needs new donors. Finding them and then engaging them emotionally are your challenges. Once again – start with what you know. How educated are your donors? How old are they? What are their average incomes? Demographic profiling answers those questions.
You have your best chance for acquiring new donors by reaching out to those who are most like your current ones. Your acquisition direct mail lists should be rented using what you’ve learned about those who are giving to you now.
Profiling should also inform your entire development process. Which media are most effective in reaching this audience? Does your imagery reflect the makeup of your donor constituency? Are the mechanics of your presentation demographically appropriate? Here’s a prime example of the latter. Let’s say you determine that your prime donors are over the age of 50. Then why would you design a website that is hard for older folks to read – small and reversed type, etc?
All of the information you need to strengthen your fund raising is buried in your donor database. Start digging.
Next up – “It isn’t about you.”
