Recession busting resources from NCVO

Charles Bosher from NCVO (a UK charity industry body) brought to my attention their resources specifically for charities dealing with the recession. Although British, the lessons in lots of the articles are useful wherever you are.

The article on ensuring Future financial sustainability is in itself a great resource - with links to step-by-step type documents, how to assess your fundraising mix etc.

Plenty of other stuff, mostly from a very strategic point of view, not so much tactical fundraising - but tactics are nothing with strategy.

Sean

Charitable Donations Fell by Nearly 6% in 2008, the Sharpest Drop in 53 Years

According to the new edition of Giving USA, donations were down in the US in 2008. Some evidence to back up a pile of anecdotes.

I am getting my copy soon, so will blog in more detail, but in the meantime check out what Paula Wasley has to say in The Chronicle of Philanthropy.

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.

Innovate or Die

Tribe Chief Marcello Inniara is obsessed with innovation. And he is good at it, having led Greenpeace Argentina's now famous campaign to save crucial forest a few years back - all from an online approach.

And not surprisingly, he wants us all to innovate in times of stress.

Being with him for half an hour is inspiring - and makes you start to push your own boundaries. I am really chuffed that he is coming to Australia to the F&P run Australasian Fundraising Forum this winter (August for us) to inspire Aussies.

One of my clients (I'll call him Al) is also obsessed - but this obsession is recruiting regular givers, cheap. Really cheap. Al currently pays about $280 per donor (giving about $25 a month) from Australian face to face providers.

He also knows than non face to face regular donors giving about $15 a month actually give more on average, over three years than face to face - mainly due to attrition. (I will put up another blog about this tomorrow).

So this means, in theory, he should be willing to pay more than $280 per donor for these but Al is not satisfied. He wants to get donors cheaper, because there is a way - we just need to find it, and online is our mutually preferred 'best bet'.

We told him he has unreasonable expectations - 'massive charities aren't achieving it' we said. At first frustrating, the Pareto team then went to the pub - and felt inspired.

All of us felt lifted by the challenge. His doggedness and determination is coming through, and we want to be part of it. He will force innovation.

I still need to remind him that there will be failures on the way, but we are really up for it. But maybe the recession has forced you to innovate? Any ridiculous ideas to share - that have worked or failed? I love the Ask Richard idea below, but other recession busting tricks welcome.

Marcelo's blog is well worth checking out, short and sweet ideas worth adding to your feed.

Sean

Charities and Recession on Radio National

Following a rather excellent 'Background Briefing' about charities in Australia, ABC Radio National hosted a pretty interesting show last night. I thought it was great, but am biased.

Some interesting thoughts from the public, and a host who started off pretty negative about face to face (direct dialogue) ended with a positive angle on it.

Check out the program here.

And last weeks Background Briefing here.

Innovation in times of stress

FBI used to be my favourite radio station when I lived in Sydney. They are a community radio station and I used to be a donor.

They are in trouble, financially, and have gone out with a great idea 'Ask Richard'. Basically asking people to suggest an idea on how to get $1m from Richard Branson.

Good luck to them! Check it out here.

You can follow @askrichard on twitter - if you are not twitter savvy, this is a good excuse to get into it. Much of it is rubbish like 'Just got up, my bed is so hard. Why am I so tired...!?' but it is easy to get away from that stuff.

There is tons of good information, such as one passed on from Mark Philips (bluefrog) about a 'secret meeting' of top philanthropists; you can read about this meeting here.

Sean

Turn media prices on their heads

Just a thought.

Charity A runs a new program to recruit new donors.
Spend is $30k on development fees and $200k on media (print, online, newspaper ads - whatever).

They recruit 1,000 new donors giving an average of $100 ie $100,000 income.

So they raise a net of -$130,000. In the results report a line will appear that the net cost of the donors was $130 each ie cost per acquisition (CPA) = $130. The projected rollout cost, which has no fees would be $100 per donor.

Now this particular charity knows that with its donor development program it needs to actually recruit donors at $50 per donor to make the exercise worthwhile. So, in this case the job is deemed to have missed target (it failed) and it is back to the drawing board.

But let's not start again.

There is a global financial crisis - media sellers are meant to be struggling. Surely a win-win here is to go back to the media seller and say "We will buy your media again - and we will buy four times as much, but at half the price." They get twice the income, and Charity A's cost per acquisition is now acceptable.

I know it seems naive, but if we all take this approach we can take real advantage of what should be a buyers market. There is no need to screw them - just get the price that works for you.

Anyone succeed at this please let me know. And if you try and fail, let me know too.

Sean