Tuesday, June 2, 2009

The (nearly) true value of regular giving

We have just finished presenting a benchmarking report to 21 Australian and New Zealand charities. All the charities hand over their entire transactional databases, pool them and run a full analysis on donor behaviour.

This round we had a special section looking at recession impact over here. We found no big impacts (to December 2008) on individual giving - some appeals were up, some down, some averages up, some response rates down, nothing really out of the ordinary. Recruitment numbers were steady - when they were down, it was for tactical reasons rather than recession.

Australia was not hurting much then; we are still not hurting anywhere near as much as developing world countries, and the likes of UK and USA but we are worried so maybe things won't be so rosy next round.

But one of the things we looked at was the value of regular givers. Looking at all regular giving (automatic debits) we noted that the average face to face was giving about $25 a month, and the average non face to face about $15 a month. By face to face, I mean donors recruited by people on the streets, at events and door to door asking strangers to give a monthly gift.

We know the attrition rate of face to face is much higher, on average than non face to face, but decided to look at the three year value. We were bowled over.

We included upgrades, but not additional gifts (non face to face regular donors are much more likely to respond to additional appeals than face to face reruited regular donors) in the analysis. We found that a $15 per month donor recruited by direct mail gave more than a $25 per month donor within three years.

Extrapolated over eight years, a $15 a month non face to face donor will have given 50% more, not including additional gifts, and the average monthly amount will be twice that of the $25 face to face donors. Also, on average, face to face donors are not likely to be good bequest / legacy prospects within the next two decades - mainly because of their age.

So, why would you ever recruit face to face over non face to face?

Well - face to face offers volume, predictability and low risk (you usually only pay for donors you get, whereas with other methods you normally have to pay for the media regardless of success or failure). Also, face to face can be outsourced giving the organisaiton a smaller liability in terms of internal costs.

Also, the fact is that recruiting non face to face regular givers is usually more expensive, even over eight years you would only be willing to pay 30% more for a non face to face donor and need to wait longer for the payback.

The answer? A balanced portfolio.

Invest in face to face, but balance with R&D into other acquisition methods until you get one working and then, to quote Gregor Drugowitsch who owns a face to face agency, '...If your organisation can obtain significant and sufficient numbers of regular donors through conversion, DM or proven DRTV, then you may want to exhaust those channels first.'

He is right, but those other channels are bloody hard to make work. Face to face still rules the roost on volume and net income in Australia.

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