craft, fundraising industry

Knowing Your Enemy

Today’s entry was inspired by Kristina Leroux’s post, Writing Assignment: Knowing Your Enemy, on the Nonprofit Marketing Guide blog. She challenged the reader to personify the enemy, whether that enemy is homelessness, apathy, greed, sloth, or something else. During an AFP event a few weeks ago I heard from Jim Schallom at Sherwood Forest that the enemy for fundraisers is “Starbucks”, or the general consumerist mindset. That’s been on my mind, and this challenge completely integrated my fundraising and fiction writing minds.

So here it is:

Dee Dee versus The StarBuck

In the still morning light, before the armies massed at the opposite edges of the valley slopes are fully awake, Edie and Dee Dee walk carefully along a dew-covered path. “I know you’re scared, Dee Dee”, says Edie. “But I believe in you. You’ve been preparing for this moment a long time.” She grasps Dee Dee’s shoulder, and the connection immediately encourages Dee Dee’s troubled heart.

“Yes,” she admits. She doesn’t want to fear, she trusts her training, and she knows that she is on the good side in this fight. But the idea of her upcoming battle with The StarBuck, their nemesis, the bane of their existence, looms large in her mind. She stoops down to the path and gathers a handful of pebbles, dumping them into her supply sack at her waist. Still… “Yes, I’m scared. I know how important this is to all of us.”

“I believe in you,” Edie says. “I wouldn’t have trusted you with such responsibility otherwise.” Dee Dee knows she is telling the truth, and yet the challenge still brings butterflies to her stomach.

Their brief walk returns Edie and Dee Dee to their army’s campsite. Tents fill the small plain in haphazard clumps; volunteers, advocates, and employees alike wander throughout, preparing for the day. A buzz of conversation rises over the morning cookfires, and any who see them give a smile. Today is the day. It is the start of the Annual Campaign. And for the first time Dee Dee, instead of Edie, is to lead the charge.

Across the valley the enemy waits. They go by many names and nicknames, but the most common is “The Something Betters”. That is, everyone over there always has something better to do with their time, their money, their advocacy, than to give it to this side over here, where there is good to be done. Something better like a phone upgrade. Something better like a new automobile lease. Something better like an extra manicure this month, because, well, reasons.

Edie and Dee Dee, though, lead the army fighting the battle to save local homeless animals, to provide them places to live and to provide loving companions for their human partners. They work to make all lives better in the community, not just provide a little more entertainment. And it is sometimes disappointing to see how little progress gets made.

Because so many of the surrounding villagers just don’t know what’s happening. They don’t know of this battle waged here, in this Valley of Public Opinion, to keep the shelters open. They don’t know how the battle is fought for the division of wallets and attention, every day, every week, ever month, every year. They of course have time to keep up with all about the latest government scandals, they know what’s happening half a continent away in the fashion capital of the world, and yet so much opportunity is missed here at home to make a better life with such a small effort. Edie and Dee Dee and their army fight, every day, against the Something Betters, in order to bring about that satisfying community that everyone so deserves.

Today Dee Dee will meet The StarBuck, at noon, in the middle of the plain, to do battle, to fight, to compete for the attention of the world. Should she triumph, her shelter will have earned yet another temporary reprieve. Temporary, for there will always be another Something Better coming along to take its place, and the fight will wage on. Should she fail… Well, that is an option too tragic to consider.

The sun beats hard on the plain as the two armies begin their descent. Dee Dee leads her pack, Edie follows at the rear. Across the way, she can see that The StarBuck, her rival, leading a similar army. She gathers her nerve; this is most important. All those behind her are counting on her to deliver.

They approach, these massed brigades, to support their avatars in this battle. They know that their future, too, hinges on the success or failure of the two who represent them. They stop and wait, in silent anticipation, tension building as Dee Dee and The StarBuck approach one another.

The StarBuck is large, three feet taller than Dee Dee at least. His stout body and broad shoulders bear leather armor destined to rebut the slights of opinion arrows pointed at him. Everyone knows his reputation, too, as a thief, arms snatching coins from unsuspecting consumers with a little drip here, a little dab there, insidiously expanding his effect every day. His armor is decorated with hundreds, perhaps a thousand, shiny baubles proclaiming themselves the Newest! Cheapest! Fastest! Best! He attracts his prey, and they come close, close enough for him to rob their pockets while they are distracted, and after he leaves them wondering just where all their money went.

Dee Dee is armed, though, with her weapons of choice. The stones in her sack represent all her tools, all her little tricks she has picked up along the years. She knows she will not convince The StarBuck to retreat with words, so she remains silent while he shouts.

“Ha ha, little one!” His voice rings out over the masses. “You have nothing. Nothing! What do you give them?” He sweeps an arm to indicate the whole world. “Better? Faster? Tastier? No! Not even a guarantee. You give them nothing! You should walk away now, before we destroy you forever.” He sneers, and Dee Dee can see the bright white of his teeth, many shades whiter than normal, only available through the latest and greatest bleaching technique. He reaches into his pack and pulls out a mug, tossing it across the space to her. It bounces and spills, double-mocha extra whip foaming across the grass. “Here,” he says, “drown your sorrows in that and be gone.”

Dee Dee stares at the pointless waste, and says nothing. Instead, she reaches into her sack and takes out a stone. On it are etched the words “Direct Mail Campaign: 345 adoptions last year”. She places the stone into her sling, winds, and fires, the missile aiming directly for The StarBuck’s exposed head. It strikes him on the chin and rocks him backwards. The next says “Case Study: How We Educated 912 With FREE Classes”, and it connects with his temple. The StarBuck is wounded, dizzy, staggering. She loads up yet another.

“E-mail follow-up: Partnerships with hundreds of businesses and thousands of volunteers” flies across the space, strikes the StarBuck at the cheek, and spins him around. He staggers but does not fall. His strength and resilience are evident. Dee Dee has one last chance. She takes out the largest, heaviest stone from her bag. On it is written “Matching Gifts”, and she loads it into her sling. She feels the weight, the power, the importance of this moment. Her arm winds up; she releases just as The StarBuck turns to face her once more.

The stone arcs towards him, in silent slow motion as the massed crowds wait breathless, and as it strikes him between the eyes he rocks back, back, back, until the only sound is a loud crash as The StarBuck hits the ground.

Nobody moves.

And then, from behind her, a cheer erupts, as her dedicated soldiers watch the Something Betters launch into disarray and scatter. They flee at the loss of their leader; they run back to their hiding holes in the discount marts and strip malls and e-tailers. Dee Dee has won the day; she and the army have saved the shelter for another year.

Edie appears beside Dee Dee and gives her another hug. “Well done,” she says, “I knew you would do it,” and Dee Dee floats on the emotional high of the moment, feeling hundreds of hands pressing in to congratulate her too. Her smile overwhelms her, and she cannot turn it off. Why should she? The Annual Campaign is a success, and for one more year there will be contentment in the village.

THE END

(FOR NOW)

fundraising industry

Impressions of the DMFA Awards

Last week I attended the DMFA Awards (formerly DMFA Package of the Year) in New York City. This is the profession’s signature event of the year and showcases the best of the best in direct marketing for fundraising. It was my first time attending, and I came away with some new conclusions and reinforcements of others. The results are in, I won’t comment on that because I’m not a voting member of the DMFA, but you can read about the winners here.

Today, though, I’m offering 4 takeaways (and 1 bonus!) about the event.

 

1. Acquisition Really Is That Difficult

The conventional wisdom is that using direct mail to acquire new donors is plagued by high costs, low success, and low returns on investment. The numbers reinforce that conclusion. There were 7 packages entered in this category. Of those, the least expensive clocked in at a cost of $1.09 to raise $1. More than half are $1.66 or more, with multiple packages over $2.00. That means, if you spent $16,600 on a package, you would get a return of only $10,000, losing money.

The reason for such high costs is the extremely low return and low average gift. With response rates in the 0.5% to 1.5% range, and average gifts less than $40, it just doesn’t result in any profit for the organization after including package development, postage, list rental, and creative costs. Conventional wisdom holds for these “best of the best”. Should other nonprofits expect any better?

Naturally, I ask, If direct mail acquisition is so expensive, why do it at all? The answer is in #2 below.

 

2. Renewal Really Is Where You Make It Up

With response rates at 6%, and average gifts at $142, it’s no surprise that Renewal mailings are where nonprofits really see the value of direct mail. Efficiency improves dramatically, because: you’re mailing to proven names, you’re mailing to a much smaller group, and the people who you’re mailing to already have some connection to the organization you can build on. And it shows.

Costs to raise $1 are as low as $0.04, with many below $0.30. The average is only $0.23, which means to replace the $10,000 you got in Acquisition giving, you only need to spend $2,300 this year. That’s now a $7,700 profit, which overcomes the loss from the year before.

Plus, these mailings represent just one campaign. Throughout the year an organization may produce 4 or 5 or up to 10 packages. If each one garners a 5%-6% response, that’s potentially 30%-50% of your mailing list giving again. It’s easy to see that Renewal is an essential part of fundraising, and should never be taken for granted. Doing so would mean ignoring a big opportunity and leaving a lot of money on the table, so to speak.

 

3. These People Are Not Naive

In any industry there are best practices for a reason: because they continue to work. The Mid-Level Renewal packages have higher cost to create and mail compared to standard Renewal and Acquisition packages. Average cost per piece for Acquisition is about $0.55, while Renewal is $0.93 and Mid-Level Renewal goes up to $1.90. This is because these donors have a tendency to give more, so it makes sense to spend more asking them to give. More color printing, more special reports, more benefits such as tickets to events, etc. The result is often higher response rates and higher average gifts ($307) in this category, leading to more money for the organization. That’s a good thing.

However, because of the need to “spend more to get more”, it does not translate into more efficient fundraising. The cost to raise $1 on Mid-Level Renewals is still about $0.20, which means you’re not really getting more bang for your buck here.

It simply means that you’ve got to continue doing this, and doing it well, because mid-level donors are that much closer to your highest tier, where you can start talking about large gifts and bequests. Should you try to cut costs and squeeze the pipeline, downstream giving would certainly suffer from the resultant smaller, less engaged donor pool.

 

4. It’s Hard To Compare Apples And Term Papers

E-mail is becoming more popular, because of the significantly lower production and distribution costs. For a while many predicted this, and the cultural shift to electronic communications, would lead to the death of direct mail . However, the existence of the DMFA (and all its members) nullifies that conclusion. The reason? E-mail fundraising just isn’t that much better than direct mail. Costs to raise $1 for this category range widely, but average around $0.18. So while you can potentially have a wider, easier, faster reach with e-mail, it’s not going to be kicking direct mail to the curb any time soon.

As well, e-mail response rates are a tenth (or worse) of physical direct mail, so it’s hard to make comparisons as to which is better for the organization. It’s almost like comparing two completely different types of things, like a piece of fruit and an academic exercise. Ultimately you need both, and used in their own right ways.

The final category of awards is Multichannel. That is, perhaps there’s an e-mail campaign integrated with direct mail. Or you’ve got some Facebook ads along with a series of e-mail blasts. How do you measure all of these “impressions”? Is an e-mail worth the same as a Google ad? What about reTweets, do they get included? And where is the measure of the return on investment from your donor seeing 6 different ads, then navigating to the website independently, and donating there? It’s daunting to create a holistic view of how this channel works, and because of the lack of standardization, it is hard to know what numbers (impressions, clicks, etc.) represent better results here.

Because there is so much disparity in what defines this category I’ll fall back on the cost to raise $1. And, here, like everything above, the average works out to about $0.21. All told, this may be the wave of the future. But, like e-mail’s inability to dislodge traditional mail’s place as a staple of fundraising, integrated digital impressions will become another tool, but not the only one.

 

Conclusion

This was my first time attending the event. I found the participants welcoming, willing to talk and listen to my story when I told it, and extremely competent in their respective areas of expertise. There is no magic trick that will make one campaign stand out against all the rest competing for attention, and most fundraising is about the same efficiency. I learned a lot, made some important connections, and look forward attending again next year. This meeting reinforced some of the assumptions I’d been making and invalidated others. For that alone it was worthwhile.

 

Bonus Impression – The After-Party Is More Than Just Socializing

Just like the for-profit business events I’ve attended in the past, I was able to hang around long enough to get invited over to the after-party. There I got to continue some conversations and make some new impressions. And, just like in the for-profit world, once you get people a little more relaxed and out of the “show” of the main event, they’ll start giving you their real opinions. Like which companies are just screwing up the southeast region, and who could be doing a whole lot better by changing to that other supplier with the lower overhead cost.

These aren’t the things you’ll hear about in any of the general sessions or over lunch at a traditional business conference or meeting. But they’re where a good portion of the real work gets done. I’m very grateful for the chance to play “fly on the wall” to a couple of these conversations, and I hope to be able to leverage these insights for the benefit of all in the future.