How we destroyed our most important asset – and how we’ll mend it

By Charlie Hulme
On August 13, 2015 At 2:00 pm

Category : Best posts Q3 2015, IFC-2015, individuals, Latest posts, loyalty, strategy

Responses : 14 Comments

Preview for IFC session by Charlie Hulme and Ken Burnett ‘How to make relationship fundraising work for you and your donors’

One of the biggest mistakes many in our sector are making in response to the media crisis is to blame the enemy. They forget this whole mess is the result of ignoring their friends. Relationship FR

One of the very best of those friends is Ken Burnett. Back in 1992 Ken wrote the ground-breaking book ‘Relationship Fundraising’. In it he laid out a vision for “…a donor based approach to the business of raising money”.

There are very few fundraisers who haven’t read the book. There are very few fundraisers who have put it into practise.

Critics of the approach dismiss the concept of ‘relationship’ as being idealistic and impractical. While I’m sure their hearts are in the right place their brains clearly aren’t. In the image below you see a study, taken from the commercial world, looking at the value placed on various commodities during mergers and acquisitions.

 

Decline of brand v rise of relationship

The value placed on brand has plummeted whilst the value based on relationship has rocketed.

Relationship is the most important asset we have. It is the only sustainable pathway to growth. So why do we treat it with such contempt?

Of course few would agree with the premise of the question. I doubt there will be a fundraiser at IFC who wouldn’t claim to be ‘donor centric’, ‘emotional’, and an ‘innovative’ ‘storyteller’ focused on ‘engagement’ and ‘satisfaction’. I don’t doubt their sincerity. But let’s look at the facts.

Gurus have been trotting out these rhetorical catchphrases for God knows how long and nothing has changed. We’ve had years of stagnant growth, coupled with horrendous donor retention. To cap it all we’ve even managed to find ourselves on the wrong side of the trying to save the world argument!

It’s going to take more than a soundbite to get out of this mess!

So instead of blaming the enemy maybe it’s time to re-read, and apply, what our friend told us over two decades ago. Ken defined relationship fundraising like this:

“Relationship fundraising is an approach to the marketing of a cause that centers on the unique and special relationship between a nonprofit and each supporter. Its overriding consideration is to care for and develop that bond and to do nothing that might damage or jeopardize it. Every activity is therefore geared towards making sure donors know they are important, valued and considered, which has the effect of maximizing funds per donor in the long term.”

There’s nothing in there to disagree with. So why don’t we do it?

Because we can’t. Somewhere along the way spreadsheets were substituted for thinking. What gets measured is what gets managed. How can we ‘…centre on the unique and special relationship’, how can we ‘…care for and develop a bond’ if we don’t know what they’re based on?

Again some will feel defensive and not accept the premise of the question. But what do we know about donors?

Of course we know who gave, how much, when and by what channel. And of course we know demographic detail. But none of this data, no matter how much you slice and dice it, answers the question of why they gave. None of it tells you what the ‘relationship’ or ‘bond’ is based on.

We know we don’t know anything of depth about donors – which is why easy answer consultants consistently cash in on empty rhetoricbanal sound bites about ‘engaging’, ‘inspiring’, ‘connecting’ and so forth. This is the intellectual equivalent of saying ‘water is wet’ or ‘the sun is hot’. Their guidance is both well intentioned and bleeding obvious. It consistently fails because we don’t have what we need in order to deliver.

Data cannot give you answers to questions you don’t ask.

Success depends upon asking, and acting upon, the right questions. That’s what my session with Ken Burnett at this year’s IFC will focus on. In it (and subsequent 101 posts) we’ll clearly define:

  • How to measure and manage a relationship
  • How to maintain a relationship

The results we’ll share are nothing less than game changing. Charities who have adopted the right methodology and mind-set have:

  • Reduced attrition by 50%
  • Trebled re-donations
  • Increased net profitability by 216%
  • Seen ROI of 943%

None of the above are typos! They’re what happens when you are in relationship with (as opposed to marketing at) your donors. They’re what happens when you listen to your friends.

——————————————————————————–
IFC-2015-logoThis post is part of the 2015 IFC Series. 101fundraising is proud to be the blog partner of the International Fundraising Congress for the 4th year!

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Charlie Hulme (29 blogs on 101fundraising)

Charlie is MD of Donor Voice. He helps charities uncover what, of all the things they do, cause relationship strength and what is harmful. Partners see a massive improvement in performance, value and retention. Voted top speaker at the Institute of Fundraising's National Convention in 2013, he writes frequently for SOFII, 101 Fundraising, the Institute of Fundraising and many others.


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Comments

  1. As always, well and bravely said. Thanks.

     — Reply
    • Thanks Jim – very kind of you to say so. Much appreciated!

       — Reply
  2. Great blog. But I am not always convinced all donors want a relationship as we define it. What do we mean by valued considered and important when so many legacy “pledgers” say they already have the relationship to the cause (I.e, the motivation for a legacy due to a personal experience) and want absolutely no further relationship ….. So can the word “considered” in Ken’s definition include no communication at all?

     — Reply
    • Thanks Richard. I can’t speak for Ken, but my answer is Yes – in fact there is evidence to show you can greatly reduce contact and value.

      You’re absolutley right that the definition of ‘relationship’ has been watered down to mean something soft, fuzzy and sentimental. When all it means is how is one thing connected to another. It’s impossible to relate if I’m not seeking to understand and build that connection.

       — Reply
      • Typed that reply a bit fast! Should read you can reduce volume and increase value!!!

        I know of a major charity whose ‘do not contact’ file is identical in every defining charactoristic to a control group except one; LTV. Value is more than double for those with zero contact!

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  3. The answer to the fundraising sector’s so called “problems” is not to go back and read some book written 23 years ago, nor is to discard the many advanced data analytic tools that have come along since.

    And it is questionable whether we even have a “problem” to begin with. A single tabloid newspaper, in one country — the UK — mostly made up a story about the circumstances of one person’s suicide. That is hardly a “crisis”. Outside of the UK, it is having zero impact on charitable giving, and it is questionable whether it is or will have any lasting long term impact in the UK itself.

    The answer to this so called “crisis” is not to go back and re-read some book that we all supposedly, collectively “mis-read” or “didn’t understand”.

    Ken Burnett is not god, this is not Armageddon, and redemption is not going to be achieved by repenting our supposedly evil ways.

    And where on earth do you get the idea that spreadsheets and advanced data analytics are bad, or that they have not made any meaningful contribution to fundraising? Data is the future of fundraising, and many charities are making tremendous strides forward — by using sound reasoning and logic, backed by data, and not by worshiping at the alter of a vaguely defined and often contradictory pseudo-religion called Relationship Fundraising.

     — Reply
    • Thanks for your opinion Derek – always good to get a different take.

      The crisis is zero growth, horrendous retention and trust in the toilet. All of which adds up to little if any impact on mission.

      Data and spreadsheets are not bad in and of themselves. They’re just an incomplete picture – not because they are inadequate tools, but because of how we use them. We ignore anything beyond transactional and demographic info. So they cannot answer the two questions that matter; why do people give and why do they leave.

      Of course charities can (and do) try and avoid the questions by simply churning out more volume at ever increasing costs and diminishing returns. But it’s not working and it’s not sustainable.

      The results for business as usual and for change are both known. The results for the latter are way better and way cheaper.

       — Reply
      • Hi Charlie,

        Your claim that there is zero growth in charity fundraising is factual untrue. Your characterization that retention is horrendous is a superlative exaggeration and your claim that trust is in the toilet is a load of crap.

        Data analytics are not limited to transactional and demographic variables, and those variables are extremely powerful. And most certain of all is that they do in fact explain donor behaviour much more accurately than Ken Burnett’s methodologically sloppy, day-dream of a book called Relationship Fundraising.

        You are welcome to worship at his feet, but fundraising is better off, and is growing bigger everyday, thanks to transactional data, demographic data and the wide range of meta-date available today and the many advanced tools and techniques which are making the philanthropic sector thrive and flourish all over the world.

         — Reply
        • Hi Derek – I’m happy to have a conversation any time chulme@thedonorvoice.com (and I sent you a LinkedIn request if you want to talk properly). But these rants are childish.

          Here is one data report that shows giving has dropped (of course there are many others) https://www.cafonline.org/about-us/publications/2015-publications/uk-giving-2014.aspx

          With the greatest of respect I’d suggest the only data you’re analysing is your own, through a very narrow world view, and not the sharpest of methodology.

          Seriously, if you want to talk by all means get in contact. If you just want to take shots you’re very welcome, but please drop me a line to let me know you’ve done so. I’m as proud of my work as you doubtless are of yours. I’m very comfortable agreeing to disagree. But this way of doing it isn’t very grown up.

          All the best,

          Charlie

           — Reply
          • Charlie,

            The so-called “report” you just provided is a survey of donors. It is not a factual report on actual donor behaviour.

            It also does not show “zero growth” in fundraising. It does not show “horrendous” retention rates, and it does not show that “trust is in the toilet”.

            Actual data — transactional data — of actual donor activity and actual money — shows a very different picture of the growth in the charity sector, and how donors actually behave.

            There is a reason why you don’t want people to look at spreadsheets, data and actual donor transactions. That reason is because it doesn’t support or validate your self-serving, doomsday characterisation of the sector.

            And you’re welcome to call me names all you want. My childish answer to that is, Google: Psychological Projection.

             — 
          • Derek this is tedious now. I welcome intelligent feedback, and sincere debate. But you haven’t read, or understood, what you’re raging against.

            You won’t find me saying anything against data, spreadsheets, or any other analytic tool. Where you will find me to be critical is in the application of them. The trouble with mindless deference to a spreadsheet is data cannot answer questions you don’t ask.

            Avinash Kaushik, digital marketing evangelist for Google said that, “It cannot, no matter how much you torture the data, tell you WHY something happened.”

            I’m sure you’d agree ‘why’ is a pretty important question? Wouldn’t it be good to know why someone gave? Wouldn’t it be good to know why someone left? There are answers to these questions, but they won’t be found on anyone’s spreadsheet until we start collecting, and acting on, the right data

             — 
  4. These results are what happens when we buy your product Charlie yes?

     — Reply
  5. Pingback: Computer Says Yes | (Fund) Raising Voices