Tuesday, April 14, 2009

Fundraising wisdom from a beginner ski lesson

There’s no way to tell if it was that funky blue envelope that skewed your campaign results or the general collapse of global markets…
unless you also tested the white envelope.

I learned to ski a couple of weeks ago. After learning the fundamentals, but before heading up one of Canada’s mile-high mountains to really put myself in harm’s way, I asked my instructor, “If I suddenly find myself heading toward a cliff, a tree or an immobile human obstacle hunched in terror as I bear down upon it with flailing poles, what do I do? Is there a certain technique to minimize the damage or have the best chance of saving myself?”
The instructor said, “Yes, absolutely. Don’t look at whatever it is you’re trying to avoid. Stare at an object in a safer direction and make yourself go toward it. If you look at what you’re trying to avoid, you will crash right into it each and every time.”
I tested the instructor’s advice. I tested it both ways. First, by not following the advice, of course.

For fundraisers and aspiring skiers alike, it is unnatural, if not impossible at first, to follow the disaster avoidance technique my instructor shared with me. Essentially, “look away if you want to be OK.” There’s a certain satisfaction we get from being in control – from observing the catastrophe unfolding, documenting it and analyzing it with our senses – even as we head toward it at full speed. Following the instructor’s advice, on the other hand, requires temporarily abandoning some perceived control of the situation in order to ultimately regain it. I can distinctly remember the almost immediate effect I experienced when I decided to take my eyes off the snow covered spruce tree accelerating toward me. I shifted my gaze to the pretty horizon as far in the other direction as my neck would go and I immediately felt my efforts to avoid the tree take hold. My skis bit down in the snow as if I actually knew how to command them. I turned away in a satisfying arc, and the tree was no longer an obstacle.

This is not a random analogy but an uncanny match with the climate facing fundraisers and the tools we have to help our organisations succeed in spite of great external challenges. I feel compelled to put my beginner ski lesson experience together with some unfiltered observations on non-profit fundraising behavior in the recession. My work as a fundraising direct marketer connects me with dozens of non-profits in Canada and Europe. I am fortunate to have somewhat of a birds-eye view of several varying responses to economic hardship.

Here are some examples of cases where some of my clients are looking right into the eyes of the recession and are heading on the ideal path to become a casualty of it as a result. Others are actually prospering by embracing recession busting tips and long-term planning strategies that are strong strategies for any economy.

· A regional health organisation is cutting all premium-based control packages (address labels, notecards, etc.) from their fall fundraising direct mail plan. They project a noticeable decline in net revenue as a result. The charity is hoping to maintain a perception among donors that funds are being put to good use when times are tough. The charity acknowledges increases in short-term costs and risk by abandoning their control acquisition packages. And decreased long-term revenue resulting from fewer new donors that will hit the books in subsequent years.

· In response to economic conditions, two large charities eliminated all testing from their direct response fundraising strategies, citing “when times are tough, stick with what works.”

· A regional organization called attention to the declining results of a fundraising appeal by issuing a press release in a newspaper read by their donors and prospects. They publicly acknowledged the drop in results in 2008 compared with 2007 and asked for help making up the shortfall.

· Observed from decision makers in the past sixty days, in response to campaign revenues that were lower this year compared with the same period last year: “Maybe the control copy needs updating. Perhaps our minimum ask level is alienating donors whose financial circumstances have changed. Maybe we should change the package – it might look too expensive in the current economy. Etc.”

· “We can’t compete this year – we’re going to hold off on donor acquisition campaigns until things get better.” I have observed organisations with arts, education and international aid missions curtailing donor acquisition efforts because of apprehension over competitive market positioning. They have expressed an unsubstantiated fear that they cannot compete with other charities. We saw some of these attitudes expressed by fundraisers in the 2008 IFC poll regarding which types of charities would fare best in a declining economy. http://www.afpnet.org/content_documents/Survey%20global%20financial%20crisis.pdf.

Now, here's a rundown of recession busting fundraising solutions, all of which I’ve seen successfully deployed by my clients in response to some of the doom and gloom:

· Stress financial accountability, urgency and critical program information. A charity added a financial accountability insert to all of its donor fundraising appeals beginning in October. The accountability insert does not directly mention the global recession but highlights the specific needs that the non-profit is serving in the community around the time the appeal goes out. In many cases, their case for support has been strengthened by a weak economy because of increased demand for services.

· Avoid emotional “knee-jerk” decisions that will questionably have some kind of perceptual impact with donors but certainly create risk of overall income decline. You can know something about the preferences of a particular donor from what the donor tells you. But the only thing you know about your entire donor file is what the data tells you. Organisations that are already in touch with donor preferences through surveys and engagement techniques avoid making costly assumptions. However, some non-profits are showing a tendency to abandon data driven fundraising outlooks that have served the organization well year after year, in favor of new "insights" and theories on what donors are thinking. If you see this happening, ask "why?" It probably has more to do more with reading into consumer confidence and what's happening on the news than anything your donor data will tell you.

· Cutbacks that are conservation-based, e.g. energy savings and operations strategies, probably should have been in place before times got tough. Think twice about the immediate return on investment associated with implementing cutback decisions. These types of measures are a sound long-term strategy for any organisation but can’t be counted on to produce immediate returns. Focusing on them may distract from activities that have more promise to deliver incremental revenue. This is also not a donor-centric strategy. Don’t expect points from donors for “not wasting energy.” This kind of thing is now expected. Two of my clients recently used space in their newsletters and e-blasts to highlight new internal cost cutting strategies. The article came off as informative and reassuring but the info was not used in direct support of a financial gift.

· Don’t cry poverty. Certainly, don’t spend valuable ad space or dedicate portions of fundraising appeals to talking about how hard conditions are. Surely some donors some will empathize and respond but most will avoid this type of appeal angle altogether. Scarcity of resources creates additional scrutiny for the pool of resources we have left. Surely your core donors will want to hear about your latest accomplishments and funding needs instead of a recap of what’s going on around them.

· Don’t willingly roll over and surrender market share. Fight for it. Donors are individuals but they also react like any market. Individuals make decisions based on information, misinformation, fear, etc. These are the same forces driving the financial markets. Instead of being part of the fear engine, be part of the solution. Engage donors with vocabulary that they connect with in both good times and bad. Be their rock. When fuel prices and stock portfolio values are all over the place, it’s important to underscore the value your non-profit will continue to deliver for each invested donor dollar.

· Forge onward with somewhat of a blue sky attitude. Several of my clients say that they are doing nothing differently as a result of economic hardship. Surrendering market share willingly is perhaps the only absolutely certain way to create a serious long-term income decline and help others profit from your decision at the same time.

· There are certain short-term costs that are just too important to risk cutting. For example, keep investing in revenue-generating initiatives, such as direct response testing. Without testing, it's hard to justify decisions that otherwise carry risk. Don’t be shy about asking partners to help absorb such costs. Throughout the fall of 2008, a regional charity invested roughly $15,000 in tests of completely new direct mail packages. Results show the new innovations will yield roughly $250,000 in cost savings in 2009. ROI is still king.

· Coming up with new ways to analyze and label the problem won’t fix it! Don’t over measure. If you did not have clear and evolved campaign results measurement and testing processes in place before the economy started to slide, this may be a wake up call but it’s no time for drastic departures from what was working for your non-profit before. Reading into the nuances of campaign performance that you cannot isolate through testing is not a valuable investment of time. There’s no way to tell if it was that blue envelope that skewed results or the general collapse of global markets…unless you also tested the white envelope. Instead, consider opportunities to audit your testing and results benchmarking strategy, in search of general improvements.

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