British Fundraising Is in a Crisis – of Courage

By Sean Triner
On April 7, 2016 At 2:00 pm

Category : acquisition, Best posts Q2 2016, database, donors, face-to-face, Latest posts, legacies, strategy

Responses : 6 Comments

As a fundraiser from the UK it  has been really upsetting for  me to watch how many UK fundraisers have been reacting to the negative press that is focused on charity fundraising.

Fundraising consultant Mark Lawson told me the charities’ reactions were mainly  “…lots of people saying ‘I told you so’ rather than a concerted effort to respond.”

I haven’t seen a lot of emphasis on the data. And furthermore, I’m worried that data quoted is often misinterpreted.

The charity sector has seen huge growth

The sector grew at a huge rate over the past twenty years, and this pace is slowing.  Some claim it has stopped.  Although a few charities are enjoying great growth, it certainly isn’t like the olden days any more.

Some of the more established charities have struggled for growth, for example NSPCC. Their reason was ‘because of the difficult economic climate and no legacy growth’.

My old employer, Cancer Research UK has also struggled to continue growth.

These two biggies had grown so much, it is hard to imagine who hasn’t been asked to give to them.  This is not a crisis – but a symptom of success.

The real data about donor loyalty

I’m passionate about using data to drive strategic fundraising decisions. So I had a look at About Loyalty – research by Professor Adrian Sergeant, data company Wood for Trees and long time fundraiser Roger Lawson.

Their research showed that British donors are actually a pretty satisfied bunch.  But that’s not what you’re reading in the UK press.  Well it’s not really much of a story is it?

They looked at commitment, satisfaction and trust and in all categories more than 85% of donors scored four or five (and around 65% scored five).  Imagine any other industry with that much loyalty!

 

Donors are committed. About Loyalty Research.

Donors are committed. About Loyalty Research.

It is not all good news, for example the research showed that ‘average donor lifetime’ was shrinking.  Now 4 years and 10 months.

New fundraising methods

Mark Phillips of bluefrog told me “The leap in to face to face and text to give prospecting has created a generation of donors who don’t really care. Who switch from one organisation to another (or cancel direct debits as and when they choose).”

This would indeed contribute to reducing average life time value. But face to face and text prospecting have brought in a lot of new donors.

Age and donating

We know from data that age is the most important variable in retention.  Channel is also important, but drilling down we see the big influencer within channel is age.  For more on age, see the SOFII featured 101 article You just gotta love older people?

UK fundraising is pretty saturated at the older age brackets. Channel development (like face to face and SMS) is bringing in many new, younger donors.

I haven’t the UK data on this, but I believe it will be similar to ours in Australia (though we are smaller).

Sean_2

We also see rising attrition in Australia. For example, attrition of donors acquired by face to donors increases as the volumes increase. And the attrition is always worse for younger donors.

Increasing volumes and attrition of Australian monthly donors acquired by face to face, by year and age bracket.

Increasing volumes and attrition of Australian monthly donors acquired by face to face, by year and age bracket.

 

From our Australian benchmarking study of 70 charities,  the value of the 2013 acquired F2F donors was about $44m in year 2014.  But the value of 2008 donors in 2009, despite lower attrition, was about $23m.

Second and third year attrition is relatively stable, so the ongoing value of the 2013 donors is much greater than the 2008 donors too – because more lasted more than a year.

What’s next?

The Commission on the Donor Experience should be a great initiative, and I hope they have access to, and understanding of data such as the examples above.

The Commission on the Donor Experience. Well meaning, with aspirational mathematics!

The Commission on the Donor Experience. Well meaning, with aspirational mathematics!

I hope they also defend charities and techniques unfairly dragged through the press – the way the Charity Defense Council is doing in the USA.

I’m worried about good fundraisers and good fundraising organisation sacrificing the right things to do because of the negative press reports.

Here are just a few things that I think will help.

Every good fundraiser knows they should invest more in building relationships with key donors.  Invest in mid value donors and legacies.  Write donor centric copy. Look at what your data says about your donors and use it to make decisions. Talk to the donors that want to talk to you.

But don’t stop doing successful fundraising because some people don’t like it and are blaming good fundraising for the bad press.

PS

I don’t think I’ve mentioned mid-value donors and legacies enough. I think it is really important to work closely with donors on this level. That’s why I am working on a load of online learning sessions with Tom Ahern and Roger Craver over the coming months.  Details here.

Share Button
Sean Triner (5 blogs on 101fundraising)

In 2002, Sean moved to Australia and joined forces with Australian data-expert, Paul Roberts, to form Pareto Fundraising. Their ambition was to apply what they had learned from years of pushing the boundaries in the UK to help Australia’s best charities increase their income and donor bases beyond their dreams. Challenging, fun and always practical, Sean is an energetic speaker who leaves conference, seminar and Masterclass attendees inspired, motivated and buzzing with brilliant ideas about how to take their fundraising to the next level. Sean is also a ‘trained’(!) stand up comedian, deadly snake rescuer and story teller. Useful skills for presenting and article writing.


Add your comment

XHTML : You may use these tags : <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>



Comments

  1. Hi Sean,

    Interesting article.

    Apologies but I may be misunderstanding some of your data but here are a couple of questions for you on the back of your article.

    – I appreciate that you have not shown us all the data but your last graph suggests to me increasing year 1 acquisition followed by higher levels of subsequent year 1 attrition. This does not strike me as ideal. Also, trying to interpolate your revenue figures in conjunction with your increasing acquisition figures (the 2008-2009 vs 2013-2014 pattern) it also seems to me that individual donors in 2013 were being persuaded to give more as a first ask than in 2008 (it would be good to see the full yoy figures to confirm or refute this)? If this is true then is this not exactly what the industry is being criticised for – getting more people to give more but then more of them leave (ie they felt pressured in the first instance to give?)

    – I am also interested in your observation around satisfaction. Indeed you seem to have a very satisfied set of donors but you are also seeing higher levels of attrition. Does that not just mean that the dissatisfied ones are voting with their feet and you are left with less donors but they are happy? Personally I would rather have a larger donor base that was not quite so happy as it “should” cost less to make existing donors more happy than to have to recruit a whole new set of donors?

    Am I way off with these thoughts?

    Cheers,

    Dougy

     — Reply
    • Hi Dougy
      If you had seen my unedited version you would have had had all those answers (where known)! I had to cut it dramatically though. Too complex.
      Simple answers:
      – Attrition increasing year on year: Definitely, and second gift rates of donors tend to get worse, life time value decreases and average values increase.
      Mathematically as a market increases this tends to be the case in most consumer goods sales. You end up with more customers, lower average customer value but more high value customers.
      Why?
      Whether selling wine, credit cards or insurance we have to work harder to get more people.
      In any relatively mature charity database (even in the 80s) the 3000 donors you already have are likely to be more valuable than the next 3000. And the next 3000 are likely to cost more too.
      When we start, we pick the low hanging fruit; people keen to give. Think ‘tribes’. Your mates are easy, your mates’ mates are tougher but strangers are really hard.
      But then we have to work harder and harder. This increases costs, which may lead to increase in price point. Charities that buck that trend would probably have better retention, but have to balance that with lower initial returns.
      Digital donations are relatively new, with lower volumes of data, but we see average donation decreasing, but that will likely reverse over the next decade.
      Point 2 coming separately….

       — Reply
      • Thanks Sean,

        Good and very detailed response!!

        On point 1 I am still not clear though as what you say seems to be contradicting what I thought your graph and “one liner” on amount of first giving showed. I thought (albeit lots of missing information) that new donors in 2013 per head seem to be giving more than new donors per head in 2008. As you have access to all the data is that true or not? If this is not true then I get your points but if it is true then I don’t get your point about “low hanging fruit” etc? Can you tell us the average first gift size in 2008 and the average first gift size in 2013?

        Also in terms of both my points I am not that concerned about the maths of donor profitability but much more concerned about the potential longer term impact on the sector going forward from 2016 re donor happiness and loyalty which you have not really convinced me on yet? If first year attrition continues to increase in the way your graph shows for all age bands up to age 74 then surely this shows there is a potential crisis around a corner at some point in the future, this needs to be addressed, no?

         — Reply
    • Dougy again… On your second point….
      Higher rates of attrition *could* be explained by my first point: Larger volume, younger people = more donors, more satisfied donors (by volume) AND higher attrition.
      A chart I had to cut shows the decreasing second gift rates in cash donations in Australia but huge increasing volumes over the last 5 years. The net effect: Many more second gift donors. As you know, second gift is very important for one-off donors.
      For example
      2010 we get 200,000 new donors across the charities
      Second gift rate 45%
      = 90000 second gift donors.
      2014 we have 400,000 new donors
      Second gift rate 35%
      = 140000 second gift donors.
      It probably means the break even point is further away, but we have 50000 more people donating into the future, 50000 more potential legacies and 5000-10000 more mid value donors.
      In the long term, we can see a healthy income from these donors.
      We just presented the new benchmarking data, and it showed members here in Australia raised about 30% of revenue in 2015 from donors acquired *before* 2005. And that wasn’t including bequests.
      When we plan or budget we often look at 1 yr, 3 yr or 5 yr ROI or LTV. We need to remember the long tail too.

      Finally, I would rather have a larger donor base that was not quite so happy too. But in that database, I would hope to have MORE happy donors than not happy.

      I will blog about the longevity thing on seantriner.com, but in the meantime a very relevant series of webinars relevant to this discussion is kicking off next week. Roger Craver (the agitator) and me will presenting a free webinar on mid value donors, in your time zone.

      http://www.seantriner.com/2016/03/webinar-on-mid-value-donors.html

       — Reply
    • Dougy – if you have more queries, rather than a ‘to and fro’ on here, please contact me direct and we can publish a summary in comments on here if need be!
      Catch me on LinkedIn or email my firstname.surname @ paretotundraising.com

       — Reply