Direct Response Fundraising
In this chapter we examined direct response fundraising. We outlined the cornerstones of direct response and introduced a framework for acquisition (or recruitment) planning. Thereafter we examined each of the primary recruitment media in turn, before turning to the issue of testing, monitoring and control.
Cornerstones of Direct Response
Holder (1998) argues that direct marketing comprises four components.
It is these four elements together that combine to make direct response a unique discipline within marketing and fundraising.
For additional definitions and resources see:
- Direct Marketing Association
- The Institute of Direct Marketing
- American Marketing Association
- Association of Direct Response Fundraising Counsel
In addition there is an excellent overview of direct response fundraising practice provided by Mal Warwick in a presentation hosted by Henry Stewart Talks. It can be found here.
There are seven key stages in acquisition planning:
- Objectives – Specifying the recruitment objectives to be achieved.
- Segmentation and profiling – deciding which segments of individuals to address and the research and analysis of the existing donor base to develop a broad profile to be used as a starting point in targeting ‘cold’ recruitment efforts.
- Targeting – having developed a detailed donor profile, the information can then be used to tailor the nature of the communication to be received and the channel through which it will be communicated.
- Media selection and planning – allied to the above, media can be selected to reach the intended audience cost-effectively. Integration of the various media to be employed should also be considered at this stage.
- The nature of the fundraising message – how best to communicate the fundraising ‘ask’ in line with the brand and mission of the organization. At this stage the parameters for the creative work and messages will be defined.
- Fulfilment – how the response to the campaign will be handled, followed up and the information stored on the fundraising database.
- Budgeting, control and evaluation – testing, response analysis and tracking.
Cold mail remains the most common form of donor recruitment, even though it has become far less cost effective in recent years. Those charities using cold lists to recruit new donors typically generate only 50 cents back for every dollar of investment. Nonprofits continue to use the medium because costs are similar to those in other media and obviously many donors who are recruited in this way go on to give multiple donations. Making a loss on the first gift is therefore not a problem providing that a healthy return is generated over the full duration of the relationship. For direct mail, break even is usually attained anywhere between 9 and 18 months into a relationship.
In our brief chapter we were unable to discuss in great detail the options for mailing nonprofit communications. In the UK the Royal Mail website provides enlightenment, while in the U.S. the United States Postal Service offers guidance of its own. Nonprofitexpert.com also summarizes the rules for nonprofits using the United States Postal Service.
List Swaps or Reciprocals
The nonprofit sector is unusual in that organizations often exchange the names of supporters for use in recruitment campaigns. These lists of known current givers are much more responsive than ‘cold’ lists, and are supplied free of charge by nonprofits or at a nominal cost by agency intermediaries. They thus recruit new donors very cost-efficiently.
In the UK the agency OCCAM offers a service to clients called Reciprocate where lists of donors can be exchanged between organizations and the process can be managed to ensure that the process is appropriate and sensitive to the need not to bombard individuals with communication.
List swaps can be a cost effective way to acquire a good list of prospective donors, although all the caveats in our chapter should obviously be noted.
MRSS.Com – offers an interesting twist on swaps reporting on ‘cross promotions’ where donors/campaigners to one organization are offered opportunities to engage with another. In this scenario no details are exchanged between organizations, individuals self-select from a communication from their own organization if they have an interest
Mail in many countries can also be delivered unaddressed. These mailings are targeted by zipcode, blanketing all households in a given area. The response rates to unaddressed mail are considerably lower than those generated through personalised direct mail as the targeting is less sophisticated and the mailings less personal. However, the costs of distribution are also much lower as there is no list cost and there is no deduplication, data processing or personalisation involved. Unaddressed mail can reach individuals whose names do not appear on mailing lists and therefore may comprise a fresher audience.
For a UK example of how to target using the system Mosaic click here.
Press and Magazine Advertising
Press and magazine advertising has become very expensive and as a consequence few nonprofits are able to use it successfully for acquisition. That said, there are exceptions, notably ads designed to recruit donors into a high value or regular gift, such as child sponsorship. Emergency appeals can also work well in this format, particularly when the outlet is also covering details of the emergency the focus of the fundraising. They can also work occasionally for other causes when designed particularly well, as is the case with the UNICEF ad depicted in the text.
Free Standing Inserts (FSIs)
Some organizations use inserts into press and magazine titles in the recruitment of new donors. These may be flyers or pamphlets evoking a direct response. To be effective it is critical that the insert attracts the eye as it falls out of the publication, so both sides should be attractive. Inserts can be successful, especially in specialist publications where the reader profile is a suitable match against the prospect profile. When used well, they typically achieve a response rate of six times that which would be generated by off the page advertising, but regrettably they are also substantially more costly. It is necessary to produce the item and to pay the costs of insertion. As with all direct marketing media they should thus be tested to ascertain the return on investment that will ultimately accrue.
Direct dialogue or ‘face-to-face’ fundraising is a relatively recent phenomenon. It originated in Europe in the 1990s and has been very successful in persuading younger individuals to support nonprofits. Taking place on public streets in metropolitan areas or at private sites, fundraisers approach passers-by and engage them in conversation. Potential donors are asked for regular monthly or annual contributions debited directly from their bank account via Electronic Fund Transfers or by credit card payments. Recruiters are clearly identified as representing a nonprofit as they wear a brightly coloured tabard featuring the nonprofit logo. Payment details can be recorded manually but some recruitment agencies are now employing card reader technology allowing donors merely to swipe the relevant payment card for their details to be stored.
You can get a good sense of how the industry works by watching the interview with agency MD Rupert Tappin. His firm have a particular interest in improving retention rates and they have been engaged in a long term study of patterns of retention across the industry in the U.K.
Other sites that may be of interest include the UK’s Public Fundraising Regulatory Association which includes information for nonprofits and donors.
Information is also available from the agencies that specialize in this form of fundraising. One such example is Dialogue Direct who operate in multiple countries
Telephone Fundraising or Telefundraising
Telephone fundraising is used for both donor acquisition and donor development. It can be conducted either by the nonprofits own volunteers/staff or by a specialist agency working on the nonprofit’s behalf. There are now strict rules governing all forms of telephone fundraising, but particularly where this is conducted by agencies. The Direct Marketing Association’s code of conduct and the regulations laid down by both the Federal Communications Commission (FCC) and the Federal Trade Commission must all be respected. The “Fundraising for Nonprofits Under The FTC’s New Telemarketing Sales Rule & DMA Guidelines” flow chart is available for download from the DMA’s website.
Direct Response Television (DRTV)
DRTV is one of the most immediate of all fundraising media in the sense that it can be thoroughly evaluated within 24-48 hours of an advert being aired. Ads may be either long form (30-60 minute slots) or short form (30 seconds to 2 minutes). Long form ads have the advantage that they can paint a richer picture of the organization’s activities and more fully develop the essence of its brand. It has been argued that long form ads favor lesser known organizations while short form ads can be used by organizations that already have a high level of awareness in the target market (Nobles 2007). Other writers such as Aldrich (2004) believe that with the proper creative treatment and message short-form DRTV can work well for all.
The ads below are all classic of the genre.
- ActionAid – Sponsor A Child
- Operation Smile UK – The Story of Arifase
- RSPCA – Biggest Animal Rescue 2
- NSPCC Cartoon Boy
- Without Childline – Who Would Abused Children Talk To?
In our experience radio appeals rarely work well for fundraising unless it is used as part of an integrated campaign supporting other media. In the United States it is used successfully by organization soliciting gifts of large capital items such as cars, for resale and also by faith based organizations as an integral part of their related programming. The ads below are typical of the genre.
- Fergus Finlay – Barnardos Ireland Radio Appeal
- NSPCC Radio Ads
- Real Men Know All About It – Ricky Gervais Ad for The Prostate Cancer Charity
Billboard advertising for nonprofits is increasingly common particularly in cities. Often these are designed to raise awareness, promote service provision, or to educate members of the public about an issue or cause. These are not fundraising ads per se, although the enhanced awareness that they generate can be useful in facilitating fundraising.
By contrast ads designed to stimulate a donation by text message are becoming increasingly common. By texting in to a certain number, a donation, usually of a relatively small amount is reverse billed to the donor’s mobile phone account, appearing on their next statement. Sometimes text messages are used in a two stage solicitation process where the donor is invited to text in to ‘indicate’ their support and a telephone fundraiser calls them back to solicit a donation, usually a regular gift.
The Nature of the Fundraising Message
1. Writing Fundraising Copy
Tips on writing good fundraising are ‘two a penny’ online. The people we admire are listed below. Tom Ahern, Mal Warwick and George Smith are three of the finest copywriters in the world and we recommend their books – all listed at the bottom of the page.
- Tips from Tom Ahern
- Tips from Mal Warwick
- 12 tips from George Smith. We reference a number of these in the textbook – but take the opportunity to learn from the master! Visit the sofii site, log on and search for George’s page.
We also enjoyed the following dissertation. Frank C. Dickerson from Claremont University has been studying the structure of our fundraising language concluding that ‘The Way We Write Is All Wrong.’
2. Illustration, Typeface and Design
As we noted in the chapter Colin Wheildon is very much the authority in this domain and all the senior fundraisers we know have a copy of his book on their shelves. The following two links open more of a window on this world examining Wheildon’s ideas from a purely fundraising perspective;
Testing, Monitoring and Control
The control of donor acquisition campaigns initially involves the tracking and testing of pilots. The beauty of direct marketing techniques is that opportunities for testing abound, and therefore the risk of mistakes are lessened. Testing against controls is a way of life for direct response fundraisers, conducted on a cyclical basis as a source of continuous improvement. Creative, media, timing and response mechanism variants can be tracked and tested before any rollout is arranged. The control of tests can become very complex and processes must be in place to ensure that only significant variables are tested and that the tests are properly managed. Testing represents a sizeable investment of budget and always carries a risk of poor return on investment. For this reason test budgets are usually set as no more than 10 per cent of the total media budget. Sample sizes should likewise be limited to sufficient minimum quantities, so that the majority of the prospect base can be contacted with the most proven and cost-effective control communication.
We post three additional resources here that we believe offer value.
Again we offer a link to Mal Warwick’s website. He offers help and guidance in this domain and has also written the book that we regard as the testing gold standard ‘Testing, testing, testing, 1, 2, 3’. He provides a handy confidence level calculator.
We also like the practitioner summary of the need for testing provided by Arthur Middleton Hughes, writing for DM News.
And finally, offer a link to a white paper published by the DMA. ‘Breaking The Ceiling On Direct Marketing Response Through Testing Initiatives: An Overview of 20 Years of Testing Results’ was written by G.A. Wright and Tricia B. Fischer. It draws on experience from the commercial domain, so the results they refer to must be interpreted with care (and tested in the nonprofit domain!) but it provides a useful illustration of some of the knowledge that can accrue from testing
2. Monitoring and Control
The following metrics may be employed in direct response campaigns
- Percentage response – the response rate received to the original communication
- $ Cost per response – the total cost of the campaign divided by the number of respondents
- Percentage Conversion – if the purpose of the original communication was merely to solicit enquiries it will also be necessary to examine the percentage of enquiries that ultimately offered a donation.
- $ Cost per Donor – total cost of the campaign divided by the number of donors attracted.
- $ Revenue per Donor – total value of donations divided by the number of donors attracted.
- $ Profit per Donor – total profit from a campaign (if any) divided by the number of donors attracted.
- $ Lifetime Value per Customer – mean projected lifetime value for donors recruited by a particular campaign.
- Return on Investment – either calculated as an immediate return (i.e an ROI for the recruitment campaign itself) or a projected return given the forecast lifetime value of the donors recruited.
Users in the U.K. will find Rapidata’s Charity Direct Debit Tracking Report 2014 offers a wealth of useful information on regular payments to charities by direct debit. It provides, for example, some of the first evidence that charitable giving is bouncing back after the recession and for the first time offers data on the average value of a direct debit donation and the cyclical nature of cancellations.
- Ahern T (2007) How to Write Fundraising Materials That Raise More Money: The Art, the Science, the Secrets, Emerson and Church, Medfield, MA.
- Smith G (1996) Asking Properly, The White Lion Press, Kermarquer, France.
- Vögele S (1992) Handbook of Direct Mail: The Dialogue Method of Direct Written Sales Communication, Prentice Hall, New York.
- Warwick M (2003) Testing, Testing 1, 2, 3: Raise More Money with Direct Mail Tests, Jossey Bass, San Francisco.
- Warwick M (2004) Revolution in the Mailbox: Your Guide To Successful Direct Mail Fundraising, Jossey Bass, San Francisco.
- Warwick M (2008) How To Write Successful Fundraising Letters, Jossey Bass, San Francisco.
- Wheildon C (2005) Type & Layout: Are You Communicating or Just Making Pretty Shapes?, The Worsley Press, Gainsville, FL.
Fundraising is the gentle art of teaching the joy of giving.Henry Rosso