Saturday, January 25, 2003
By Tom Harrison
Here's a prediction for you: When the numbers are all in and counted, 2002 will mark the second consecutive year of a decrease in charitable giving in the U.S. Charities used to double-digit annual growth over the last decade are ill equipped for this sudden and steep reversal.
Yet, while most not-for-profit organizations are paying more to acquire fewer donors and seeing donor income shrink, some nonprofits are not only strong, but growing despite this difficult environment.
Why are some organizations successfully bucking the trend, and what can we all learn from them to improve our results in 2003?
First, the challenge. Individuals account for nearly three-fourths of charitable giving in this country and these individuals are scared.
The economic slump. Terrorism. Talk of War. And, most significantly, the stock market melt down. Consumer confidence is at a nine year low. And charitable giving is dropping along with consumer confidence.
The "same old same old" isn't working anymore To compound the problem even before the economic downturn began, many non-profit fundraisers were already struggling with the challenges of increasing donor value and average gift size in an environment where a large number of nonprofits had become dependent on the use of premiums in mail donor acquisition programs and found themselves competing against each other for new donors in the same pool of mailing lists.
But not all the news is bad. Our oldest and largest client here in the U.S. experienced record income in 2002. Our largest Canadian client experienced record income in 2002 as well. New clients in the human services sector in markets across the country (from Boston to Houston to San Diego) who began working with us this Fall experienced a dramatic increase in acquisition giving.
Why are these organizations succeeding in such difficult times? I believe there are four keys to success:
1. Diversify. Diversify. Diversify. Remember the painful lesson we've learned about the need for diversification in our investments? The same holds true in fundraising.
Successful nonprofits have a balanced fundraising approach with healthy programs in direct response, major gift, planned giving, government funding, corporate/foundation funding and Gifts in Kind. Diversifying reduces risk and maximizes overall income potential.
The other key area for diversification is in new donor acquisition. Direct mail is a vital strategy, but organizations that are overly dependent on direct mail to acquire new donors took a real beating in 2002.
Our most successful clients use direct mail to prospect for new donors, but they also diversify their acquisition across other media channels, including television, space, radio, special events, the Internet and Alternative Response Media (ARM). In fact, one of our largest clients acquired 45% of their new donors through ARM last year. Our research is showing that many of these media channels deliver higher value donors as well.
2. Cultivate relationships that really mean something I'm sorry, but it's not enough to get a gift. To be successful in the hard times nonprofits must bond their donors to their causes. You need to prove to your donors that you are relevant to their lives and that their contribution makes a difference.
Address label mailings may get (low dollar) gifts, but that's not enough to build a relationship with the donor.
We have learned that involvement devices, longer, story-driven copy, three-dimensional packages and even video mailings are highly effective means to build higher quality donors with higher long-term value. We believe that increased donor loyalty is what has fueled our clients' growth during these difficult economic times.
3. Build awareness of your organization People can't give to you if they don't know you're there. People won't give to you until they're convinced of the importance of your work. Every nonprofit needs a strategic public awareness program to support fundraising.
4. Persevere. During times like these when it's more difficult or more costly to raise money, we simply have to work harder and smarter. But never stop.
This was made especially clear after September 11. The charities that continued with their fundraising programs had a tough time, but they continued to raise net income. Then there were the charities that stopped fundraising after September 11, out of fear or sensitivity or paralysis. They raised no money. And some still have not recovered from the mistake.
It's tough out there, but some nonprofits are thriving. They have clear strategic plans. They diversify their fundraising. They use various acquisition channels. They bond their donors to the cause, not just the individual appeal. They tell their stories effectively. And they never, never surrender.
About the Author: Tom Harrison is President of the Russ Reid Company, a marketing and communications agency that helps nonprofit organizations through direct response marketing, public relations and government funding.
You may contact the author at: firstname.lastname@example.org
January 24, 2003