Cathedral divides fundraising revenue into three categories: Major Donors, Institutions and Individual Donors. The first, Major Donor cultivation, is all about the personal connection and establishing a trust-based relationship between individuals. The threshold amount for a major donor is defined by each organization. Institutional funding typically involves grant applications, which is a much more technical exercise, requiring research, writing, reporting, etc. Individual donors, those too small to be classified as major donors, are obtained usually through traditional mail, online fundraising or annual appeals and annual events. The key to successful fundraising from individual donors is all about volume. Each individual donor may give only $25, but if you have 10,000 of them, the overall impact on your organization can be significant.
This Topic of the Month focuses on individual donors, donor communications and the volume approach, as well as the best practices of traditional direct mail fundraising campaigns and electronic fundraising campaigns.
Traditional Direct Mail Marketing
Traditional direct mail marketing continues to be strong despite the advent of online marketing and social media. Certainly, the amount of solicitations and catalogs that continue to arrive in our mailbox suggests that traditional direct mail marketing is alive and well. In 2016 online giving as a percentage of total fundraising revenue reached a record high – 7.2% of total fundraising revenue, excluding grants.1 That means over 92% of fundraising revenue comes from other sources – including traditional direct mail marketing! Perhaps the news of the imminent death of traditional direct mail marketing in the nonprofit sector has been greatly exaggerated.
Traditional direct mail marketing is an important source of individual donations for many nonprofit organizations. However, it is important to monitor the total cost of direct mail, which has increased significantly over the last decade, and continue to consider potential alternative approaches to donor solicitation that might yield a higher return under the circumstances. Cathedral believes that those organizations successfully using traditional direct mail marketing should continue with it, but to closely watch the numbers to stay ahead of any diminishing returns. For those organizations not using traditional direct mail marketing, or those not having much success with that approach, electronic fundraising may be a more effective and forward-looking donor acquisition tool for volume-based marketing and solicitation of individual donations.
Best Practices of Traditional Direct Mail Marketing
Traditional direct mail fundraising best practices would include:
Segment your individual donor base into groups with similar attributes and tailor your messaging to fit the group. Some organizations segment their donor base – by giving levels, frequency of giving, demographics such as age, geography, etc. – and tailor their “ask” and follow-up communications accordingly to fit specific the donor group. Successful segmentation is key to cost-effective direct mail communications.
Use a pre-paid Business Reply Envelope (BRE) or Return Address Envelope (RAE). The usage of BRE versus RAE should be tested by each organization. Typically, the BRE is more effective for higher dollar donors and for donor acquisition; however, RAE is more efficient in donor renewal.
Suggest a specific giving amount and what the amount will accomplish. Trends show that individuals are more likely to respond to a fundraising request when a specific giving amount is suggested. Recipient response increases when that amount is attributed to achieving the mission. For example, “A $5.00 donation will provide school supplies to an African child in need. A $25 donation will provide school supplies and school tuition for one academic year.” Donors also want to know the impact of their giving. For example, “Donors like you helped provide school supplies and tuition so that 1,000 children in Africa could attend school last year.”
Know when “urgent” or “emergency” language is appropriate to use and use it sparingly. The fable of “a boy who cries wolf” certainly applies here. If every mailing says the organization will perish without a donation received, the donor will not be able to ascertain when an appeal is actually urgent. Likewise, if an organization or mission appears to be always in danger, it may appear that the organization is not using its funds responsibly or that a small donation will not make a difference in the overwhelming amount of need.
Follow up with additional mailings. The frequency of mailings and follow up mailings are often topics of debate. One perspective is that an organization does not want to fatigue its donor base and send mailings so often that the requests are ignored. Another view is that an organization will not receive if it does not ask. Experts tend to suggest favorable outcomes when mailing out follow-up letters 2-4 weeks after a regular appeal, targeting the higher-dollar donors who have not responded, and/or sending a personalized follow-up letter.
Communicate with donors from time-to-time without making a specific donation request. Periodic newsletters or other communications to donors keep them mindful your organization, the importance of the work being done and the impact of your organization.
Include information about corporate matching on the donor cards. Many donors work for corporations that “match” charitable contributions made by their employees. This effectively doubles the donation. Donors should be encouraged to explore the availability of corporate matching and complete the necessary paperwork.
Scrub your donor database to keep it current and relevant. The “list” or donor database is all important for effective traditional direct mail marketing. If the organization’s donor database has information that is out of date, incorrect or not segmented to reflect your targeted donors, the mailing will not achieve the desired result. Careful scrutiny of the organization’s donor database prior to major mailings will eliminate the cost of mailings otherwise destined to fail in delivering donations to your organization.
Consider implementing a monthly/recurring giving strategy. Monthly giving is expected to continue to increase. Regardless of the size of your organization, it tends to be effective program and easy to implement.2
Try to upgrade donors by increasing individually tiered giving suggestions. For example, Mr. and Mrs. Smith generally write one $25 check/month to an organization. When that organization does its traditional appeal, the lowest tiered suggestion for Mr. and Mrs. Smith will be $25, providing them an opportunity to give $50 or even $100 If Mr. and Mrs. Smith select $50, the next solicitation will have $50 as the lowest suggested tiered giving amount. This generally requires a sophisticated donor relationship management system. Organizations should not attempt to upgrade the “ask” of the entire donor base without carefully testing it with a few key donors and/or reviewing donor giving history.
Until the 1950s, fundraising by nonprofit organizations was mostly focused on major donor cultivation. The traditional direct mail tactic of the 1950s to 1980s changed this donor-centric approach to a focus on the ability to reach the masses. While the average gift declined, it was more than offset by an increase in the number of donors/donations. This method proved to be extremely successful and the field became dominated by a marketing mind-set that focused on volume. The development of electronic fundraising has allowed organizations to reach the masses while maintaining a donor-centered approach. Electronic solicitations or online giving is now increasing each year for nonprofit organizations of all sizes.
Best Practices of Direct Electronic Solicitations
When done right, online fundraising can be one of the most cost-effective methods for obtaining individual donations for a nonprofit. In addition to the best practices of traditional direct mail marketing, there are additional best practices for direct electronic solicitations:
The development of electronic fundraising has allowed organizations to reach the masses while maintaining a donor-centered approach.
Define the target audience. The targeted audience for an electronic fundraising initiative should be similar to that of a traditional direct mail solicitation. The more information an organization has about its donors, the more relevant and effective the email message can be to each specific donor group.
Use appropriately-timed messaging. Timing is everything in sending email donation requests. Emails should be sent at appropriate times – for example, to coincide with current news events related to your organization’s mission, upcoming organization events, holidays or year-end giving.
Monitor the frequency of communication. Donor fatigue is always a concern and it is important to know when enough is enough. Each organization should determine its own respective “limit”. A good way to know whether an organization is sending too many email messages, or not enough, is by listening to their audience through limited market Critical to the success of electronic fundraising to ensure email promotions are not annoying, but still done frequently enough to be effective.
Present a clear and consistent message. Particularly for those organizations engaging in both traditional direct mail marketing and online fundraising, the mission and message should be the same across all mediums. Any inconsistencies will turn donors away.
Stand out from the pack. The number of nonprofits is growing each year and there may be other organizations that address similar needs or provide similar services.2 Use your website to differentiate your organization, tell your story, highlight successes and the impact your organization is having, show how it uses it funds in carrying out its mission, and present opportunities for donors to get involved in your organization.
Ensure your website, donor forms and email messages are mobile device-friendly. The percentage of online donations made on a mobile device is increasing each year, consistent with the increase in consumer online purchases using a mobile device.
Take advantage of #GivingTuesday 2017. #GivingTuesday is heavily promoted in the media in November. An organization’s messaging on its website and properly-timed emails should take advantage of the increased attention on charitable giving at this time.
Don’t forget December 31 charitable requests. While many are planning New Year’s Eve celebrations or preparing their New Year’s Resolutions, there are procrastinators making last minute donations online to get their tax deductions! Targeted giving requests should be considered.
Be creative! All fundraisers struggle with getting and keeping the attention of donors. It is important for organizations to creatively address their need. The entire electronic platform of an organization is the medium to test new ideas.
Note that this section addresses direct electronic solicitation and does not speak to all forms of less-aggressive online fundraising strategies available to an organization, including websites banner advertisements, blogs, pay-per-click, etc.
Any fundraising method, whether traditional mailing or electronic, can be a highly profitable fundraising method if implemented correctly. More importantly, these fundraising methods should not be the only strategy utilized by the organization, but rather should be complementary instruments in garnering donations through relationship cultivation, special fundraising events and other activities.
1 Blackbaud Institute for Philanthropic Impact. “2016 Charitable Giving Report.”
3 Barden, Pamela. “5 Fundraising Trends That Aren’t Going Away in 2017.”