Australia, Christmas appeals and the economic downturn: Results and interpretation

Introduction

I have compared results of nearly 30 charities in Australia raising funds for a diverse range of causes. The smallest has about 3,000 donors, the largest well over 100,000.

I wanted to know if the there was a pattern – any decline in income that could indicate economic downturn impact. I ignored targets, and just compared year on year, as close to like for like as I could get, looking at the most recent appeal cycle, Oct-Nov 2008 (Christmas appeals).

My main measure was ‘income per thousand letters mailed to known donors’. I didn’t have costs available, but income per thousand ‘smooths’ costs, giving me a more realistic reflection of the performance of the donor file. These results are just warm donors – ie donors who have given before.

Through the Pareto Benchmarking Insights group, we had compared mid-year (May-June) appeals between 2007 and 2008. There was no difference that could be attributed to the economy then, but things have got worse in the past six months.

Would Christmas 08 appeals be worse than Christmas 07?

Methodology

I had available gross income, average donation and response rate across each and all of charities who supplied that data, comparing Christmas 07 with Christmas 08. I then calculated income per thousand. All the data was just 'warm' donors - ie donors who have given before.

If the economy was harming donation levels more in December 2008 than December 2007 we would expect Christmas 2008 income per thousand mailings to perform much worse than the previous year.

The bottom line

• In total, Christmas 08 raised 9% more per thousand mailed than Christmas 07.
• Half of the charities had a higher income per thousand, the other half a lower income per thousand.
• Christmas 08 total gross income was 2% less than Christmas 07 - This is despite the fact that the charities mailed 10% fewer people
• Lower response rate was biggest variable contributing to those that raised less
  

Interpretation

This is pretty benign data. It is nowhere near strong enough to tell us that the economic downturn is having any impact on charities.

On the face of it, there’s not enough evidence to conclude that the economy has been a significant factor to date on warm appeal mailing results – we just don’t know.

Like many, I feel as though the economic mess should be harming fundraising but the fact that it is so marginal provides us with no proof.

The slight decline in gross can be attributed to the fact that most of those who had bigger declines have not been recruiting many new donors and so therefore mailed fewer. Later, we need to investigate to see if the reason they are not recruiting so many donors is due to the economy.

Conclusion

From this sample, I cannot conclude that the worsening economy has, by December 2008, directly harmed or reduced the amount given by a selection of charities own donors in Australia.

There is no need for panic. But despite all the non-evidence, I am still feeling fearful of what is to come.

Whatever country we are in, we don’t know how things are going to pan out, and must be prepared for the potential scenarios.

Also, it is important to note that the very nature of comparing warm results mailings is actually looking at how your best donors are responding to the economy. We know that they can be pretty resilient – but we also know that no matter how dedicated they are, a small percentage still attrite (stop donating).

Some more useful measures, which we are investigating in our Benchmarking Insights* program, include:
1. Acquisition volumes
2. Acquisition ROI
3. Regular Giving attrition
4. Attrition among high value donors
5. Attrition among low value donors
6. Unsolicited gift volumes

What to do - strategically
1) All the stuff you should be doing anyway – it is written in tons of fundraising books and papers, just make sure you are doing it.
2) Carry on with your acquisition, but budget for things to be tougher.
3) Do some scenario planning; look at your strategy and work out how it would turn out depending on two or three ‘what if’ scenarios (see Mal Warwick’s new ‘Fundraising When Money is Tight’ for more details – when it is published next month).

* Australian, Hong Kong and Canadian charities may still join the Benchmarking Insights co-operative, which is a member led group of charities sharing results just email benchmarking@paretofundraising.com for more information. Other countries - let us know if you are interested.

Sean