When less is more

By Rachel Beer
On August 18, 2015 At 2:00 pm

Category : acquisition, database, direct mail, individuals, Latest posts, loyalty, retention

Responses : 6 Comments

For almost as long as I’ve been a fundraiser, I’ve struggled with the disconnect between the notion that more donors equals more funds raised and the reality – that I’ve seen too often – that the quest for volume results in less net income for the charity.

Yet it persists. The psychology is powerful. More donors is better. More donors means we’re growing income. More donors is more.

Except when it’s not.Screen Shot 2015-08-17 at 23.54.17

Because charities often have to over-simplify their work in pursuit of more donors. Because fewer people respond to a more complex message. And we want more of them, so we steer clear of telling the really important stories, and sharing some of the really important context, sacrificing engagement with the breadth and depth of what the charity really does in pursuit of more donors.

More donors that know less about what your charity does, why, and how. Less about the challenges it faces. Less about why it needs funds to do this work. More, less engaged, less informed donors. More donors that care less than you’d ideally want. But, hey, there are more of them! That’s good, right?

The thing is that fewer donors – often they’re the ones that took the time to read a little more, to understand, that were prepared to give more than £3 because they really cared, because they have a personal connection to the cause, or even just because they engaged more deeply – might actually mean more.

giphyYet many charities seem fixated – oddly – with getting as many people as possible who don’t really care much about their causes to give really quite small amounts. Amounts that they can afford to give without really thinking about it.

But these high volume, low value strategies all too often mean the charity only needs to recruit yet more donors, because people that don’t really care that much don’t tend give again.

And that’s one of the reasons things are in such a mess now. Because, if charities weren’t so preoccupied with donor numbers, there wouldn’t be as much need for the mass-market techniques that have spawned the unethical practices that the media has picked up on, because people don’t really appreciate them.

As a member of the public that happens to also be a professional fundraiser, I have to say, I’m with them.

The only numbers we’re really aiming for are positive net income figures and all the rest are performance indicators – the ones that show us how to reach the best net income figures in the most cost-effective way. They are a means to an end, not an end in themselves.

But many people still believe that more donors equals more funds.

It’s obvious.

But everything is not always what it seems.

Take charity X – a well-established charity, raising millions every year (and, let’s not forget, needing to spend as many of those millions on its important work).

I worked with this charity a few years’ back now and was astonished to discover how much money it was unknowingly wasting on mailing appeals to people who weren’t giving. Analyses of their data unearthed this fact, a new targeting model enabled them to focus their budgets on the donors that were continuing to support them, and not to waste precious budget on mailing those that weren’t.

giphyBut the resistance we met! The disbelief. Because our recommendation was to exclude the donors that were not giving, despite having received numerous appeals, to support beyond their first donation – and there were so many of them. Surely it was madness to mail only a fraction of the names on the database when there were so many more?! What were we thinking? No matter the empirical evidence, it just didn’t feel right. And what is it they say about your perception being your reality?

More is more. Less equals less. It stands to reason, surely?

Except when it doesn’t.

A combination of better targeting, to the donors that were giving, and who had potential to, and more appropriate prompting of the responsive donors on the database increased charity X’s net income by over 326% – reversing a long‐term decline in net income resulting from a high volume, low value donor acquisition strategy (perceived as successful simply because it was bringing in so many new donors).

That’s only one example, and an overly simplified one to illustrate a point – which, I hope that it goes some way towards doing. I can think of many more examples that illustrate the point, but I’m aware that drawing attention to a problem isn’t the same as providing the solution, and a blog post can only be so long. So, for now, I’ll leave you with a few questions to consider, if you don’t already know the answers to them:

  1. What is the proportion of the donors on your database that have only given one gift? For many charities that invest budget in donor acquisition programmes, the data I’ve seen suggests it’s the majority. For all I know, it could be the vast majority, and it wouldn’t surprise me at all if that were the case.
  2. Do you know anything about the donors that have made more than one gift to your charity? Several gifts? And what about those that have continued giving for years? Do you know what makes them different?
  3. Do you know how and where might you find more of those more than one-time donors? And the even-more-than-two-gift donors?

Because those are the donors your charity needs. Those are the donors that it’s really worth your charity investing other donors’ donations to recruit – the donors that will give more than the value of the cost of recruiting them. The few that are worth so much more.

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Rachel Beer (14 blogs on 101fundraising)

Rachel Beer has worked as a direct marketer and fundraiser since 1995. She created NFPtweetup - a regular series of events to promote effective use of technology in the charity sector, which is now in its 8th year - and is well known as a fundraising expert, digital specialist and strategist for the third sector. She writes and speaks regularly on these subjects and is Head of Fundraising at an international development charity.


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Comments

  1. Completely agree Rachel, charities need to develop a strategy that asks new donors to give again but also has a cut off point for stopping asking those that don’t want to.

     — Reply
    • Thanks Morag. Absolutely.
      I remember that conversation with the charity in the example. It went around in circles for a good while, because whenever we reached the the point where we said, ‘and, after that point, they don’t receive anymore direct mail’, someone would always say, ‘and then what do we send them?’!

       — Reply
  2. Excellent point very clearly explained. Thanks. Your post here is very useful for practitioners trying to make this case to the powers at their respective charities.

     — Reply
    • Thanks for the kind words, Jim. Glad you liked it.

       — Reply
  3. I can’t agree with you more! When a prospective nonprofit client says, “We need more donors!” My answer is ALWAYS “What are you doing to steward your current donors?” Usually nothing!

     — Reply
  4. If donors are only giving once, then the most likely diagnosis is that the charity is not asking them often enough, not that they’re asking too often.

    There are certainly a lot of people who give once to Direct Mail and never give again, and yes it’s the job of any reputable direct response agency to make recommendations on which segments are going to produce long-term value.

    The strategy you recommended to only mail donors who currently give is extremely dangerous for the charity. Dangerous because it looks great in year 1, okay in year 2, and it’s only in years 3-5 when even those “good donors” start to suffer attrition, that the charity realizes how totally hooped they actually are.

    Running an effective Direct Response fundraising program is all about producing long-term value. Does the charity in the example know the 10-year value of their DM-acquired donors? That’s a much better indicator of long-term ROI than the number that made a 2nd gift within 12 months.

    That being said, it’s absolutely true that we all need to do a better job of donor stewardship.

     — Reply