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What are nonprofit executives facing – right now – in fundraising and donor development?
This report sets out to answer that question, based on the input of more than a dozen US nonprofit professionals at organizations with $14+ billion in combined annual revenues.
These leaders offered their input via telephone interviews conducted over a six-week period, on topics ranging from challenges in donor acquisition to the myths and realities of social media.
They also reveal what’s working – and sometimes, what’s not – along with top communications strategies for keeping their mission top-of-mind with donors and prospects.
(Note: Appendix A, at the end of this report, lists the three questions asked of each nonprofit professional.)
Who Spoke: The Professionals Contributing to This Report,
and the Organizations They Represent
The professionals who contributed to this report did so with the understanding that neither they – nor their organizations – would be identified.
However, much can be learned from a wide-angle view of the organizations and professionals, and the sectors they represent:
FINANCIAL PROFILE OF THE ORGANIZATIONS:
Total combined revenues represented
|$14.5 billion annually**
|Annual revenue range
$2.0 mil - $2.0+ billion
|Annual fundraising expenses
$85,000 - $75 million
|Charity Navigator ratings
1 - 4 Stars
|*Source: Charity Navigator
|** All amounts in U.S. dollars
POSITIONS HELD, AND SECTORS REPRESENTED, BY THOSE INTERVIEWED:
|Director of Marketing and Communications
|Senior Vice President or Vice President (of Development, Direct Response, etc.)
|Director of Development
|Annual Giving Manager
|Fund Development Director
|Vice Chancellor, Development
|Chief Development Officer
|**Note: Positions do not necessarily correspond to sectors in column 2. Also, many positions/sectors are represented by more than one person or organization.
1. Acquisition remains a big challenge.
With consumer sentiment in the US still at a low point, donor acquisition lags at many organizations. Regrettably, a few have halted acquisition efforts altogether; this will likely cause a negative ‘ripple effect’ for years to come.
2. Competition for donors and prospects is fierce.
Compounding economic woes is an increasingly crowded nonprofit landscape. Executives cited the “huge competitive environment” for donors – fueled by a proliferation of organizations that are ever-more sophisticated at marketing – as a growing concern.
3. Marked by “fragile followers,” social media proves effective for some (but not all).
It’s no surprise that when it comes to social media (SM), most organizations represented by this report are working to get their presence “out there” on the major SM networks — Facebook, Twitter, MySpace – and on blogs. And many say that it does appear to be driving traffic to their websites.
More noteworthy observations are:
• the social media communications function, overwhelmingly, is ‘siloed’ – separated from other development and donor communications teams and,
• executives remarked on the fickleness of SM prospects, with more than one referring to them as “fragile followers.”
(Refer to Observations and Recommendations, below, for more details.)
One organization – with a growing base of younger donors – stood alone, having completely transformed its online/social presence over the past three years, and taking a proactive approach to community outreach through, among other efforts, electronic billboards with text-to-give appeals.
For most, a social media presence is “not translating into fundraising yet” – but because this channel can be tested without a large financial investment, SM is on the radar.
4. Donors really are changing.
Virtually every nonprofit leader contributing to this research made reference to the “changing donor,” noting that today’s donors:
• are less loyal
• expect examples of specific, concrete results BUT not delivered in a “transactional” way
• see themselves as investors
• want their communications preferences honored
Regarding younger donors, one senior executive is finding that the biggest trend with under-30s is that most don’t want a direct mail appeal, but a way to “touch and feel before they give.” To that end, the organization that this leader represents has launched a volunteer service program to convert new prospects and nurture existing donors. (Note: new donors for this organization, however, are still acquired mainly through direct mail.)
5. Offline is a contender, and will be for the long haul.
“We have no intention of abandoning direct mail,” one executive flatly stated. This, in fact, is the case at virtually every organization represented in this report. Another noted that although online is the fastest growing channel, it’s still “nowhere near the revenue streams of direct mail” – one more common thread in these interviews.
Additionally, most still use direct mail as a primary acquisition and retention channel. For more, see Observations and Recommendations.
6. Online matters, right now – including e-mail.
Participating executives named online as their fastest growing channel – with one leader predicting a greater than 650% increase, over the next five years, in that revenue stream.
Average online gifts are increasing, too, as more Americans become comfortable giving over the Internet. There is a caveat: online donors, for the most part, renew at lower rates; leaders noted that retention is greatly improved when these donors can be incorporated into the direct mail donor communications stream.
E-mail, of course, runs hand in hand with online’s growth. Like social media, nonprofit leaders note that e-mail is marked by fragile followers, though considering benchmark open and click-through rates published by entities like Convio and NTEN, it’s clear that donors and prospects continue to respond to e-mail newsletters and appeals.
7. Integrated, multi-channel marketing holds huge promise.
The nonprofit executives interviewed for this report are either actively researching, or already using, integrated marketing: coordinating delivery of direct mail and e-mail messaging, bookending a direct mail campaign with e-mail alerts, referring donors to URLs in direct mail campaigns, plus a host of other tactics.
The biggest challenge identified here, by most, is consistency: like social media, online and offline efforts often take place in silos, so some organizations are still struggling to achieve a uniform ‘voice’ across e-mail and direct mail channels.
Observations and Recommendations
1. The quality and consistency of your post-acquisition donor communications matters more than ever; and until this fact isn’t simply acknowledged – but acted upon – retention rates will likely suffer.
The major impediment here, noted an executive at one of the largest organizations, is simply that even today, quality communications are seen as “desirable, not a necessity”... and that most still “don’t value the importance of good communication.”
Of course, based on many of the findings in this report, it’s clear that follow-up donor communications – online and especially offline – hold the key to loyalty and retention. For example:
• Online donors, e-mail subscribers and social media followers are fragile, so your follow-up communications are critical for converting a SM audience to e mail subscribers and online donors, and for improved retention, to direct mail donor care communications
• Donors now expect more (and thanks to channel proliferation they are marketed to ever-more frequently), so your message must be concise, clear, accessible and with a uniform voice across channels
• Steep nonprofit competition means that regular, relevant communications that resonate emotionally are key to staying top-of-mind with donors.
2. Consider making story-based and relationship fundraising a bigger part of the donor communications mix.
At one organization, an executive noted that they have seen a 25% boost in gifts from existing donors, by shifting to a more story-oriented communications style. Overall, the number of communications that donors receive from this charity each year has actually increased; however, the mix now includes more newsletters and fewer direct mail appeals.
This leader remarked that there is far less transactional fundraising going on in these messages, saying it’s “all about personal impact” – an insight offered by a number of others in this survey – and “very little hard numbers.”
The strategy may be effective because it appears to capitalize on the changing donor mindset noted earlier in this report.
3. Find a way to eliminate creative silos when integrating campaigns and when using multi-channel communications.
As noted, the biggest challenge here is consistency: of voice, tone, image, etc.
At least one organization represented in this report is planning to bring its direct mail function in-house, two to three years down the road, in an effort to gain more control over uniformity of messaging.
Control and consistency are particularly important as more and more donors now view your work and your communications across multiple channels, and especially if these communications carry the signature of a single, high-level leader: a harmonious tone and style is vital.
* * *
Appendix A: Interview Questions
Three open-ended questions were asked of every nonprofit leader interviewed:
Q1. What do you see as your biggest day-to-day challenge right now, in terms of communicating with existing donors and acquiring new supporters?
Q2. Are there any trends or opportunities you see in fundraising and donor development, and how are you reacting to – or capitalizing on – that?
Q3. We hear a lot of talk about social media these days, often accompanied by statements like “direct mail is dead,” or “e mail is dead.” So my question is, how big a role do e-mail and direct mail play in your organization’s fundraising and development communications, as opposed to social media, and how big a role do you predict these channels will play in the future?
On Sharing this Report (and a Note of Thanks)
My original intent was that this report be prepared for – and available exclusively to – the professionals who agreed to be interviewed. About three weeks after its release, The Land Trust Alliance asked for permission to share the report with member organizations in the alliance’s e-news. When it garnered the highest click-throughs of any article in the issue, I decided to share with all the readers of my e-news, The Loyalty Letter.
So here it is.
Thanks from the heart, to every one of you, for the remarkable work you do to make the world a little nicer for the rest of us. And to those who agreed to be interviewed (whether or not we were ultimately able to connect), thanks for sharing a slice of your busy day with me.
Yes, you may share. Here’s how:
This report is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
That means you can share freely with others in your organization and within your own professional and social networks. You can also print and share copies with members of your board, or at a presentation. But please do so with full attribution to Lisa Sargent and Sargent Communications, and include a link to the report on my website. According to the license, you may not alter, transform or build upon this work.
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