One-night stands ruin your fundraising

By Reinier Spruit
On March 9, 2011 At 2:00 pm

Category : loyalty, strategy
Tags : , , ,

Responses : 14 Comments

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“Originally, a one-night stand was a single theatre performance, usually by a guest performer(s) on tour, as opposed to an ongoing engagement. Today, however, the term is more commonly applied to a single sexual encounter, an example of casual sex, in which neither participant has any intention or expectation of a long-term sexual or romantic relationship.” (source: Wikipedia)

Hope I caught your attention. Sex usually does, so I guess you’re still reading. Being new to blogging I recently found out that metaphors usually do the trick. In this blog post a one-night stand opposes the long term focus in fundraising, which is trying to engage in meaningful and lasting supporter relationships.

In my last blog post about donor loyalty I promised to come back on the fact that most fundraising programs are missing a long term angle. There is too much focus on one-night stands. Or at least, lasting supporter relationships are not the center of our attention…

Fundraising is (often) not about short term successes. Sure, you can use windows of opportunity when you see them, but the ultimate goal is to set up a lasting relationship, which will result in more funding over time with less cost. There are not a lot of fundraisers who would disagree with this. However, if you take a closer look at your fundraising programs, you’ll see that in most programs the long term angle is missing in many places.

In direct debit acquisition programs we are more and more aware that donors need to stay longer than the first year. In projections for acquisition programs one of the first things to look at is if first year attrition is taken into account. In many excel docs this very important variable is missing, which causes fundraising campaigns to have great returns on investments, while in fact they don’t. What happens if you take into account the 10%-80% of the donors you’ve recruited who cancel their direct debit in the first year? This can change your ROI drastically.

Basically, a projection of the ROI of a fundraising campaign without first year attrition says absolutely nothing! External agencies who try to pitch you a new campaign, normally leave out this first year attrition, when they present your first year returns to you. And now you know why.

But, then we move on to the following years. Do you project these figures as well? It’s possible that first year ROI could be better for project A than project B. However, project B could still be a better acquisition tool if you take longer term variables into account.

Example: attrition for Project A is 30% in year 1, and then remains 30% in year 2 and 3. The attrition for Project B from year 1 to 3 goes from 40%, to 15%, to 5%. In other words, after 3 years, Project A has only 10% supporters left and Project B 40%, while at a first year glance Project A seems better.

So, the ROI should be projected into the future (I’d say at least 3 years) to make sure you’re making the most efficient investments! And maybe even more important: acquisition programs should be reported on a few years down the line. How many of your donors recruited 3 years ago in your direct dialogue campaign are still with you? This is the information you can use in your long term projections.

But we can also see a lack of long term focus in “warm” campaigns. Strangely enough many fundraisers project and report upgrade or re-activation telemarketing campaigns only for the first year. Wouldn’t it be interesting to know what the effect is on the long-term? Usually an upgrade campaign increases retention, but what if that is not the case for your nonprofit? And if you reactivate your lapsed donors, do you keep track of them, or do they receive the same supporter communication they didn’t find very interesting the first time they went down that road? That can’t be right…

If we don’t focus on the long term, we can’t expect supporters to stay with us on the long term. We need to make decisions right now that will be the basis for our relationship in the future. We need to gather the data to support those decisions. We need to be prepared for better and worse. A one-night stand focus leads to decisions that shorten the relationships with our supporters. In fact, you don’t even start a relationship.

My guess is that in your daily life, you also prefer a meaningful and long lasting relationship instead of that one-night stand? (You don’t need to answer this one, but I would like to hear if this blog post was useful for you…)

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Reinier Spruit (36 blogs on 101fundraising)

Reinier is in love with fundraising since 2001. Ever since he's trying to improve his own fundraising skills and those of others. He founded 101fundraising back in 2010. At the moment working with amazing clients through his one-man fundraising consultancy. Loves running and baseball.


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Comments

  1. I agree completely with the need to focus on long-term results in addition to measuring the short term. For me it starts with the development of success criteria. How will I know my campaign is successful? When you start asking those questions, and then setting up methods for measuring so you can know and not just guess, you’ll start understanding both the short and long term ROI. This allows you to modify your efforts when you see one effort not working quite as well as another.

    Thanks for your enlighted view of the ROI that is often missed.

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  2. So completly right Reinier – long term relationship a crucial, all fundraising would agree but indeed too many fundraising programs lack any focus on this. So lets keep on the awareness raising on this…

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  3. Thank you Donna and Ilja for your comments!

    @Ilja, when are you going to blog about a nice Belgium example?

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  4. am

    the question is how to resist a one night stand as we know how appealing it is….

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  5. On the other end of the spectrum is “caging” new monthly donors. In 2009, we introduced “caging” to our direct-dialogue-acquired donors. Caging donors allows us to bank donations from new monthly donors within a few days of sign up (start-up gifts), rather than waiting until the 15th of the month to do so. The rationale was to increase revenue (through the banking of an additional gift) and to decrease attrition (by identifying banking problems earlier and allowing for swifter follow up in the case of failed payments). An initial analysis was conducted to test the latter assumption, which showed that donors who opted for a start-up gift had lower attrition rates. We continue to monitor.

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  6. That’s interesting Rebecca, and a good question AM!

    @Rebecca, I’ve seen similar examples elsewhere, where by smoothening the banking process attrition went down, not only because the first gift was nearly 100%, but also later in the relationship.

    @AM, the one-night stands are simply not allowed, because, given the metaphor, there is no chance of a lasting relationship. However, this doesn’t mean that you can jump through a window of opportunity when you see it coming by… Don’t confuse this with the abovementioned one-night stands, but, sometimes you need to take decisions that are not fully tested, but are just common sense, or is a calculated risk…

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  7. I very much understand where you are coming from in relation to your ‘one night stand’ comments on fundraising. Our organisation has put together fundraising strategies for non-profits that have longevity, sustainability and the ability to grow the funding base over time.

    We have built our business around a value model for the client, social responsibility by supporting the important work of non-profit organisations in a manner that is commercially sustainable. By ensuring that everyone’s needs are catered for, we are able to help grow the Funding base of a Non-Profit organisation, in a very low cost, low risk manner that increases funding over time, not decreases it.

    This common mission approach tided to the natural spending habits or your support base makes it easier for more people to give more. Whilst the marriage/partnership of corporate and fundraising organisations can be a difficult process. The benefits of finding the right model and partnership can be invaluable.

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    • Thanks for your comment Derek! Indeed finding the right partner is a difficult one, but if you have one you better stick together…

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  8. Hi all

    @Rebecca. You are right. Although we don’t cage new F2F (DD) donors. we previously ‘allowed’ donors to choose the begin date. This lead to to delayed start dates been actively pitched as part of the sign-up process. The general rule is that the further away the initial transaction, the higher first debit attrition. DD recruited donors now go into the next available debit run whcih has had a positive impact on attrition and no negative effect on sign-up rates.

    @Reinier. Thank-you for your comments on ROI. I would suggest that alongside ROI, Fundraising Directors should also be doing three or four year net income projections as well. A sole focus on ROI can lead to decisions that look great for ROI (usually a decline in investment..) that will kill net income. Remember we vaccinate children (save whales, dig wells, stop climate change, etc) with net income, not ROI.

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    • Hi John, thanks for you comment!

      I totally agree with you. Focusing on net-income in both your campaigns and the bigger picture seems so obvious, but it’s actually very good to mention. I usually try to increase the income side to better the ROI, but it’s an easy trap to lower your total investment (not to be confused with investment per donor/donation) to improve your ROI.

      John, we would be delighted if you would share your experiences from “down under” with us in one of your own blog posts! Check out http://www.101fundraising.org/join 🙂

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  9. Absolutely agree, too many not-for-profit organisations focus on the short-term $ income and forget about building relationships for long-term sustainable programs. Every organisation needs a ‘superannuation plan’ and if it’s left out of the strategy then donor fatigue sets in with aggressive ‘one night stand’ tactics that exhaust the donor base (individual, corporate or community). Building lasting relationships with supporters is critical to both the organisation and to the supporter who wants to be engaged with your cause.

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  10. I couldn’t agree more… I always use a relationship analogy when I discuss donor cultivation. Treat a donor like a suitor harkening back to the older days of courting…you want to make sure that this relationship is long term not short term so… dates, invitations and conversations…are key to making the donor relationship last. The donors of the 21st century are wise and savvy …a thank you letter and stewardship gift will not suffice…mix email marketing with social networking…invite to small intimate events (a group of 10 or less)….converse via email…etc. I am sure you get it.

    Thanks for the article Reiner Spruit.

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  11. What I’m surprised to learn that no one comments that one should ASK the donor. In the past it has shown that responses via mail or even e-mail are dismally minimal. However, I think this is where social media comes in. Those 20% that produce 80% of the content in social media are much more willing (and able, let’s not forget that: these people have an opinion and are quite into sharing that) to give you input and feedback. Provided you are willing to listen AND to feedback to them: thank you, we heard you, we are working on it/going to do X with this etc.

    Then combine that with proper donor service (knowledgeable, authentic, friendly, respectful) and a loyalty programme that doesn’t have to run up costs (yes, donor meetings, invites to exhibition openings or even an exclusive thank you video via internet). The internet is giving us so much opportunities to do these things against low cost. And yes, some of the donors might be elderly and not internet apt. But as a good daughter, I would bring my laptop to them and show it : )) And as with all gifts: it’s the thought that counts…

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  12. everyone hello,

    this is very exciting info……..i have been trying to get financial back up and clearly can see some of my pitafall and blunders…..i was so excited that some pf plans that were polished perfectly and sounded like promising financial rewards lacked long terms impact…….consequently on the way of my analyzing process i ran into social business program……….i would be glad to stay in touch with participants of this blog on permamnent basis…..:):)

    by the way Reinier congratulations with memorabl number and big success……

    have fun ya`ll

    regards,
    Amirsan

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