The Future of Fundraising..Really

I’m a fundraiser which makes me, pretty much by definition, an optimist. You have to be, to expect people to give you money for, basically, nothing. Except a good feeling.

But even I am starting to become more than a littler perturbed when I survey our current fundraising landscape. Not so much the relentlessly negative media backdrop to our activities, or being embarrassed to say what I do for a living at dinner parties (I don’t get invited to many dinner parties. Actually maybe that’s because I’m a fundraiser*).

No, that all sounds like business as usual to me. What isn’t, are our fundraising results. Or specifically, the results of our new supporter acquisition activities.

Now I had the opportunity a while back to compare one particular UK charity’s fundraising results over a very long period, 15 years. (I could tell you the name but then I’d have to kill you). But a well known charity that’s done pretty good fundraising for a good period of time across a number of channels. They use the same basic collection of donor recruitment channels as 15 years ago and the creative approaches are very similar (some are hardly changed in that time, not from inertia but because they still test well).

With a clear proposition and sensible strategies, you’d expect this charity to have strong results and, comparatively they do. But what a difference a decade and a half makes. In the late 90s, donor recruitment campaign to a regular gift were operating across a number of channels. DRTV campaigns were breaking even after 12 months or so, inserts in 10 months, face to face in 9. Direct mail was a comparative laggard at 18 months. 15 years later, the charity would have bitten your arm off for an 18 month break even on anything. Successful campaigns were breaking even around 24 months, some channels were struggling to achieve 36 month break even.

What was driving down returns over this period wasn’t, mostly, increased costs. TV airtime on a cost per thousand basis isn’t much more expensive than it was in the late 90s, press costs have risen, proportionally as circulations have fallen and postage costs have risen significantly. But, overall the contribution of higher costs to the problem was limited.

The big change was falling response rates. I would estimate that across all channels, response rates for donor acquisition activities for this charity were by 2013 on average one third of what they were in 1998. That’s worth repeating, for every three people responding to a mail piece, or a TV ad or a press insert in 1997, only one person was responding in 2013.

Now that’s just one charity. But there’s plenty of other evidence to support lower response rates. For face to face, we know that daily sign up rates are much lower now than they were when the technique (in its modern incarnation) was introduced in the UK in the late 90s. Then you might sign up one donor an hour. Today, a good performance for a street or door to door fundraiser is two sign ups per day (that’s why it’s expensive, nobody is getting rich here). The average will be lower than this. There is also data from the few robust comparable studies that we have, like Fundratios, that show acquisition results falling over time.

To emphasise, these are the results recruiting new supporters. I don’t see the same pattern for activities aimed at people who are already giving to a cause. There are plenty of donor development programmes that continue to work well, across all channels.

But I still think that, Houston, we’ve got a problem.
We can all come up with a range of reasons why response rates are falling. The media landscape has changed enormously in 15 years. Digital is transforming communications. But I don’t think the explanation of what is happening is that people who used to respond offline are doing so online. The results described above include both online and offline responses. The totals are still lower than offline only was in the 90s.

What I think is happening is that people are responding a lower rates because they are seeing more stuff. There are more charities and more appeals in every channel every year. There’s more of everything else too. More channels to see and more messages of all kinds in every channel. For any message to break through is harder than ever before.

All modern marketers know this. We have gone from a broadcast world where everyone watches TV together for hours to a world where each of us is watching three different things simultaneously for a couple of minutes and going to the next thing after a minute. We know this. Devising strategies to succeed in such a world isn’t as easy.

People who are succeeding either manage to establish cut through, killer brands (Apple) or find and exploit niches which are narrow but deep. That’s hard for charities. Getting cut through for a charity brand is incredibly difficult for a range of reasons of which lack of budget is the most obvious. The difficulty of achieving real differentiation in a market with 164,000 competitors is also significant. And finding market niches is also seriously affected by the competition issue as well as distinctiveness. What we think is a nice may well not be, the public tend to lump charities together under most circumstances.

So should I give up my life membership of the Optimists Guild? And channel the late John Laurie as Private Frazier (Oh God, you’re all too young)..are we all in fact doooomed?

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Not yet.

There is a future. And it can be bright. But it won’t for most charities be in trying to compete in a general market for donors. It will be about niches but the way of finding them will be through communities. All of our charities have people who would care about our cause if we could reach them in the right way. Well, we have more tools for finding people than ever before thanks to digital data. And how it will develop in the future. But being able to identify the right person who might be interested in you is useless until you find the way of reaching them.

And the way to reach them is through their friends. We all know this. We have all experienced this. How many of us have given money to some random charity because our friend asked us? And who wouldn’t have given more if it was a cause we could identify with?

This is why I think fundraising is going to be more and more about social in the future . I don’t mean any of the current social media sites specifically.

I mean in the fact that we can now, under the right circumstances, identify both our target audience and all their friends and connections and, with the right strategies build paths to reach them in a systematic way.

What we will be able to do is to combine the personalised approach of the major donor fundraiser with the methodological rigour of the direct marketer. Take what happens in a very specific form of fundraising, sponsored events and apply it across the board.

This new world will be very challenging. It’s a lot more complicated. It involves managing multiple interactions of which asks will be the smallest (but crucial) part. It will involve an ability to interpret and manipulate data that hardly any current charities have. It will require a complete integration of communications, marketing and fundraising.

It will require…oh all sorts of things that we haven’t even begun to develop.
But this is, I think, the future of fundraising.

*No it’s because I’m boring

2 thoughts on “The Future of Fundraising..Really

  1. Smart blog Tobin. Couldn’t agree more. I suggest you read Stickier Marketing by Grant Leboff to give you some ideas how to get friends to do the marketing for your cause and leverage their social capital. I think some smaller charities are doing this sort of approach as they can’t afford the upfront loss to reach break even on acquisition.

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