In my previous posts, I have discussed some of the most important implications of Regulating Fundraising for the Future: Trust in Charities, Confidence in Fundraising Regulation (aka the Etherington Report) on the future of fundraising. The catalyst for the Etherington Report was what the report described as “public concern over intrusive or aggressive fundraising methods” resulting from “high-profile cases of malpractice” particularly the death of 92-year-old Olive Cooke, who, it was widely reported, had been hounded by nonstop fundraising calls and letters for years.
The report noted that Britain’s Fundraising Standards Board (FRSB) had received 48,000 complaints against charities in 2013, mostly regarding excessive mail solicitations. While the report pointed out that this was out of an estimated 20 billion donor contacts that year alone, Ken Burnett, managing trustee for the Showcase of Fundraising Innovation and Inspiration (SOFII) and author of Relationship Fundraising: A Donor Based Approach to the Business of Raising Money, believes that it’s still 48,000 too many — and he’s not alone.
“We need to focus less on repeated requests that are designed to wear down our donors and learn more about being inspiring,” Burnett says.
Burnett has long championed an emphasis on marketing approaches that are based on “shared emotions, truth, and commitment” — in other words, using marketing techniques not to secure gifts but to secure relationships that lead to gifts. It is a subtle distinction that Burnett says many fundraisers often overlook. It also requires nonprofits to reframe fundraising expenditures in terms of the lifetime value of a donor, rather than the average cost per gift. And in a post-recession economy in which fundraising costs are on the rise and nonprofits are increasingly looking to individual giving to offset declines in grant funding, that can be a very tough case to make.
Twenty-five years ago, Burnet hoped to counter the then prevailing “churn and burn” paradigm that focused on the money rather than the people sending it. “But my fundraising vision was still not based on what the donor wants,” Burnett has written. “I ran a direct marketing agency. Though I tried to switch its focus toward communication, I still described our enterprise as marketing and communications specialists, putting marketing first. Why was marketing a mistake> Because our very success at it had enable us to downplay the donor experience, which is what we should have focused on to build the long-term, 40-year-plus relationships we need. As a result, we’re hemorrhaging our lifeblood while paying a fortune in acquisition just to stand still.
“The escalating cost of acquisition has now, in places, reached proportions impossible to justify unless we succeed in keeping donors a lot longer,” Burnett adds. “Yet, despite persistent protestations of being donor-let and a few inspirational examples of relationship fundraising, our sector seems locked into the ‘you give, we get’ mindset, with the fundraising equivalent of persistent hard selling the norm and brilliant customer experiences the hard-to-find exception.”
Fully aware that many people will see his change of heart as biting the hand that has fed fundraising so well for so long, Burnett points out that the biggest argument against marketing is a simple one: donors don’t like being marketed to. The difference is, donors now have the means to express their displeasure in ways that directly — and immediately — affect a nonprofit’s bottom line.
The ubiquity of “Unsubscribe” buttons has made it easier than ever for donors to terminate their relationships with charities on impulse — even when they continue to care about the cause. And with many nonprofits struggling with donor retention, every loss of a committed and passionate donor is a blow to the bottom line.
Despite what its name might suggest, relationship fundraising is very much a traditional data-driven approach. Marketing is, and always has been, about treating people as individuals, not as numbers. That is because the best marketers know that if you focus on the gift, that’s all you’ll get. If you focus on the donor, you’ll get all the gifts that the donor has yet to give. And the data prove it.
According to the 2015 Fundraising Effectiveness Survey Report, the median donor retention rate was 43 percent in 2014. That is, only 43 percent of 2013 donors made repeat gifts to participating nonprofits in 2014. When looking at new donor retention, for donors giving less than $100, the retention rate was only 18 percent compared with 47 percent for those giving more than $250. The same trend was seen in repeat donor retention: Donors giving less than $100 had an average retention rate of 53.5 percent over the last seven years compared with donors giving more than $250, which demonstrated an average of 76 percent retention. Does this say something about the way the different donors are stewarded or their relationships with organizations?
In his article “Relationship Fundraising and Marketing: Friends or Foes?” major-gifts fundraiser Roewen Wishart, CFRE, addressed what he called the “false dichotomy” that many fundraisers believe separates donor-focused fundraising from marketing. Relationship-based campaigns rely just as much on strategies, goals, quantitative data, and outcomes as transaction-based ones; where they differ is that a relationship-focused campaign necessarily requires a longer-term view of the return on investment.
“Relationship fundraising does not mean abandoning or neglecting how we ask for money,” Wishart writes. “It does mean that the transaction is the result, not the goal — and being careful with steps that reduce donor choice or favor quick returns over higher long-term returns, even where there is short-term cost.”
This post was adapted from “Inspiring Better: How Relationship Fundraising Can Win Back Skeptical Donors and Change the Way Fundraisers Think about Approaching Them” by Paul Lagasse, Advancing Philanthropy, Spring 2016 (reprinted with permission) You can read the whole article here.
