From Rome, with love
On October 27, 2016 At 2:00 pm
Responses : 3 Comments
When you are going back to your own country after twenty years abroad, it’s like you have never been there. You have to re-learn many rules, customs and social norms. You have to reconnect with a past that is already future.
I thought having raised funds in so many markets and for many organizations around the world would have given me an edge in this specific market. I found out that, while many things are different and very peculiar to Italy, other are just revealing a broader picture of fundraising, including many challenges that are the same around the world.
From this particular observatory, and reflecting back also on the past twenty years, I want to share some insights about our industry and practice. Italy is a very mature market, Italians are very generous, technology is well developed, including digital, and competition is fierce. However, the overall amount of funds raised by charities and the percentage of people giving has not changed substantially in the last twenty years. And this is a trend we share with many other countries.
Viewed from the Coliseum, fundraising seems to have lost the capacity to adapt to the contemporary world. I think this is mainly due to three major misconceptions at the very core of our business. The volume/push model, the emotion-less fundraising and the illusion of corporate and philanthropic giving.
1.Volume/push model. Across the organizations and causes, the business model is driven by volume. More face to face dialoguers, more mailing, more calls, more social media. And obviously more campaigns and more asks. We still spend energy and resources on this very principle convinced that if we do more, if we push and ask for more, new donors and more funds will come, as long as we respect the sacred ROI (even though the way we calculate it is questionable).
At the very center of this misconception is the simple fact that we don’t know why people give and why they stop giving. We pretend to know, looking and analyzing the transactional data (RFM) and in fact we know nothing. I look with astonishment at various data that shows how charities are loosing between 30 and 50% of the newly acquired regular donors and 40-50% of the new one off donors.
From this point of view Italy is just like any other country. In US every 100 donors gained was offset by 96 lost through attrition and every $100 gained was offset by $91 lost, according to Bloomerang. A relevant part of this misconception is that automation and technology can solve the problem. If I personalize and segment donors through technology and automate my personalized messages everything will be fine. Efficiency is in the real, authentic, one to one conversation and experience not in automation.
We simply push to donors what we think is important and what we think donors need to know. We are unable to set up specific and relevant conversations for each and every donor, in a specific moment of their life, and we fail to appeal to their values and identity. The UK fundraising crisis is not just a media driven scandal. It is a sign of the failure of business as usual, driven by volume.
2. Emotion-less fundraising. I keep hearing from fundraisers that we need to create an emotional connection with donors. Right. And what does this mean? It is what I think, or what my boss thinks or it is what my agency suggests? Emotions are more sophisticated than what we believe and are the subject of a science that can measure and analyze them. The lack of a scientific approach to emotions also drive fundraisers, or many of them, to believe that sadness and guilty are what really drives people to give. This is also a very narrow and misleading approach. Sadness is a powerful emotion and can drive people to donate, but, and it is a big but, not in isolation and not per se. Emotions are more sophisticated and complex than sadness. Like Paul Ekman and the Dalai Lama described in their “Atlas of Emotions” emotion is “an automatic appraisal, influenced by our evolutionary and personal pasts, in which we sense that something important to our welfare is occurring and a set of physiological changes and behaviors begin to deal with the situation. In particular, different emotions efficiently coordinate response systems, thereby helping us respond to important challenges or opportunities”. There are six core emotions not just one, and they are interplaying in daily life also when we have been asked to give. Thinking that the best or only way to raise funds is to make someone guilty or sad is another indication of how poor and old fashioned fundraising is.
Let me give you an example. Italy is a country with the highest percentage of aging population in the world. Italian National Bank estimates that €107 billion will be transferred through legacies in the next 3 years. Therefore, knowing that historically our target is a 65+ year old without kids, we developed a campaign based on a specific emotional conversation for people in this specific phase of their life. We want to tell a story to discuss two things: one day you are going to die, but you have a chance to be remembered and be immortal. We tested the approach, together with other creative approaches, in a “brain lab”, where we measured 25 data sets per second, including heartbeat, eye tracking, etc., and arousal while people watched the spot. What we found out is that donors respond better emotionally exactly when the spot saying “when you will no longer be here on this earth” and when there is the call to action, so that people are ready to do something, like calling a number or going on the web site.
Needless to say that the campaign is going extremely well in terms of response and requests to leave a legacy.
3. The illusion of corporate and philanthropic giving. And here it comes the “leadership giving” and the big money. There is no fundraising model or organization which doesn’t have a strategy and dedicated resources to deal with corporate giving and major donors. And rightly so. However, companies provide only 2% of the UK voluntary sector’s income and in the US 5% (although we need to consider 15% from foundations which also include corporate foundations). As far as HNWI are concerned, both in UK and in US both average giving and median giving as a percentage of income have been declining in the recent years. So there is no doubt that there is a lot of money potentially at stake. But my point is too often, in many organizations, these two areas are overrated and again treated as sacred cows, like the ROI. Similar to the volume/push model here we think that simply asking big, asking for more (even though researched and well prepared and supported by peers who can ask on our behalf) would be enough to win a big check. The reality is that fundraising has not evolved in this area either and charities have not been able to substantially increase the number of the amount corporations and HNWIs giving. I believe that we don’t talk the same language, we fail to engage with them and again the pure asking drive is not enough. I am thinking that the impact investing universe is estimated between $400 million and $1 trillion, much more money that philanthropy or CSR can ever release. But here we talk investments and returns, not philanthropy or giving. And I think fundraising is lagging behind with the philanthropic approach.
I don’t have a magic formula and I recognize that Italy is a peculiar market. However, I believe that our business model – and the misconceptions behind it – is seriously outdated and old fashioned. Pushing and asking for more will simply irritate more people and diffuse a wide lack of trust in charities. The answer is not asking less, it is asking right to the right people. It is creating memorable and specific experiences and conversations for that specific donors that appeal to their values and identities. It is doing less but with more focus and value. And maybe with more love.
And don’t forget. Rome is beautiful even in autumn or winter. So please come visit and let’s talk about a different kind of fundraising.