Raiser Sharpe Tips

How Angry Are Your Donors With You? Take this Quiz and Find Out.

Alan Sharpe — Fri, 18 Nov 2011 15:37:37 +0000

Have you upset one of your donors recently? Just how mad do you suppose they are at you, on a scale of 1 to 10? Take this quiz and find out.

1. Your major gift officer met a donor for lunch and ordered five martinis and spaghetti. 5 points

2. The folks in gift processing mailed a donation thank-you letter but it took over a month to arrive. 5 points

3. You spelled the donor’s name incorrectly. 5 points

4. Your donor asked for no fundraising appeals by mail, but your annual giving officer thought Christmas was an exception. 5 points

5. Your donor asked your office not to phone her, so your receptionist phoned her to say OK. 5 points

6. You asked for a donation in a donation thank-you letter. 5 points

7. Your donor’s spouse died and left you a six-figure bequest, but the folks in direct mail kept addressing your appeals to Mr. and Mrs. 5 points

8. A major donor asked your fundraising coordinator to send him your audited financial statements, but she was busy uploading a photo of her kittens to Twitter and forgot. 5 points

9. Your donor requested that you not acknowledge his gift in your annual report, but you did. 5 points

10. You told a major donor you would follow up in a week, but your Great Dane ate your day planner. 5 points

11. You engraved your wealthiest donor’s name on your donor wall but put it under the wrong giving level (a smaller one). 5 points

12. Your folks in gift processing duplicated the donor’s name in your database. You mailed two appeals to the same person at the same address until asked by the donor to stop. 5 points

13. Your donor has supported you for 10 years but your appeal letters still address her as “Dear Friend.” 5 points

14. Someone put your major donor on hold and made her listen to the local radio station playing, “Give a Little Bit” by Supertramp. 5 points

15. You wrote to Jean Bradshaw as “Mrs.” He’s ticked. 5 points

16. You wrote to Sam Carling as “Mr.” She’s livid. 5 points

17. You wrote to Penelope Bradshaw, 21, as “Miss.” Please hold, an officer from the Canadian Human Rights Commission will be with you in a moment. 5 points

18. Your organization asked for another gift before thanking your donor for the last one. 5 points

19. Your donor attended last year’s gala but was not invited to this year’s gala. 5 points

20. Your new major gifts officer sat next to your most generous supporter at your silent auction, and remained silent. 5 points

How Angry is Your Donor?

Add all your points.

0 points = put on your wings

5 – 15 = blush a little

20 – 40 = blush a lot

45 – 70 = update your resume

75 or more = make sure your last will & testament is current

Need help with your direct mail program?

Download this book now.

Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?

If you need help raising money through the mail , give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

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Answer the Only Question Donors Have and You’ll Raise More Money Fundraising

Alan Sharpe — Fri, 11 Nov 2011 22:07:43 +0000

Your donors have only one question that bothers them.

If you want to acquire more donors, you have to answer it. If you want to raise more net revenue, you need to answer it. And if you want to increase the lifetime value of your donors, you must answer it.

Here’s their question: “How will my donation change the world?”

Donors are confused
Donors ask this question for a number of reasons. For one thing, they’re confused. If they live in Canada and want to support an organization that helps children with cancer, for example, should they donate to the Childhood Cancer Foundation, Canadian Cancer Society, Canadian Research Society, Cancer Recovery Foundation of Canada, Coast to Coast Against Cancer, Wellspring Cancer Support Foundation, Terry Fox Run, or someone else?

Many donors don’t know. Or can’t decide. So given that your non-profit organization has competitors who do similar work, you must tell prospective and current donors exactly how you will use their gift to transform lives. Otherwise your donors may donate somewhere else.

Donors have limited funds
There’s another reason you must tell your donors how their gift will make the world a better place. Some of them are on a fixed income. Others just retired. More than a few have student debt. Or other kinds of debt. Some are broke. Either way, they can’t support as many charities as they’d like, so they give their money to the few causes that promise to make the biggest difference with their gifts.

Donors fund specifics, not generalities
Given the choice between donating to “End Hunger in Your City” or giving a donation that buys “Thanksgiving dinner for $1.73″ for a man at the local homeless mission, you know what the donor will choose. And so does the donor. “How will my donation change the world?” is a question that demands a specific answer, not a general one. Supply the answer and your donor will supply the donation.

Don’t ask for a single donation until you can answer this question. That goes for every campaign, every appeal, every ask throughout the year. And make sure your answer is clear, concrete and compelling. Your donors demand it, no question about it.

Need help with your direct mail program?
Download this book now.
Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?
If you need help raising money through the mail , give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Direct Mail Fundraising Still More Effective than Email

Alan Sharpe — Fri, 04 Nov 2011 15:27:28 +0000

Yes, grandma tweets daily about her arthritis and buys her cat food on eBay, but how does she prefer to donate, online or offline?

Yes, mailing a fundraising letter costs more than sending an email appeal. But which method brings in the most net revenue for most non-profits?

Yes, you prefer to communicate by email than by mail, but which method do your most profitable donors prefer?

The answers to these questions are best settled by the facts. The debate between direct mail fundraising versus online fundraising is settled, at least for the next 10 years. Here’s why.

Fact #1: The majority of donors give their first gift by direct mail
Direct mail is responsible for 75% of new donors. Only 16% of new donors make their first gift online. Source: Blackbaud 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report.

Fact #2: The majority of donated revenue arrives by mail
The typical nonprofit in North America receives more than 75% of its total donated revenue through direct mail but only 10% online. Source: Blackbaud 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report.

Fact #3: The majority of North American donors give through only one channel — direct mail
Most donors give by direct mail as their only vehicle for donations. Source: Blackbaud 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report.

Fact #4: Canadian donors prefer to donate by mail, not email
Forty percent of Canadian donors prefer to mail a cheque, followed by donating in cash or by a cheque made in person. Only 17% prefer to donate online. Source: Marketing Research Group Fact Sheet: Nonprofit and Voluntary Associations. Canada Post, 2007.

Fact #5: Canadian donors prefer to be solicited by mail, not email
The most preferred method of receiving a donation request is through printed mail
addressed to the donor. This method is also the most commonly used, with
two thirds of donors reporting to have received this kind of solicitation in the last year. Source: Marketing Research Group Fact Sheet: Nonprofit and Voluntary Associations. Canada Post, 2007.

Fact #6: Canadians have a higher opinion of direct mail markers than email marketers
When asked for their overall opinion of companies that use direct mail and email advertising, 31% of respondents said they had a positive opinion towards companies using addressed direct mail, while only 15% said the same for email. Source: Consumer Attitudes Towards Direct Marketing, 2008.

Fact #7: Canadians pay attention to direct mail more than email
In response to the question, “To which direct marketing advertising method do you pay the most attention?” 24% of respondents said addressed direct mail but a mere 4% said email. Source: Consumer Attitudes Towards Direct Marketing, 2008.

If you still want to argue about the effectiveness of direct mail fundraising versus email fundraising, look me up in a decade. By then, things may have changed. For now, I’m putting my money where today’s donors put it, on direct mail.

Need help with your direct mail program?
Download this book now.

Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?
If you need help raising money through the mail , give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Win Board Approval for Your Fundraising Budget by Calculating Your Long-Term Donor Value

Alan Sharpe — Fri, 28 Oct 2011 15:14:39 +0000

The ten dumbest words ever spoken in the English language are: “We don’t have money in our fundraising budget for that.”

The people who say this most often are board members. Uninformed board members. Timid board members. Board members who don’t understand that charitable organizations live or die by their donors, and that you and I must spend money to acquire, steward, upgrade and retain our donors.

The surest way to win board approval for your donor acquisition and stewardship budget is to know your long-term donor value.

Long-term donor value defined
Long-term donor value is simply the gross amount of income you expect to receive from a typical donor during a given timeframe. When you know how much a typical donor is worth to your organization long-term, then you know how much you should be willing to invest to acquire, steward and upgrade that donor.

For example, if you know that your typical donor will donate roughly $1,998 to your charity during the first five years following that donor’s first gift, you should be willing to spend a fair amount of money to acquire and cultivate that donor.

The key to winning board approval is knowing how quickly a typical donor will break even, and how much that donor will give you over time.

How to calculate your long-term donor value

1. Decide on the time period you want to measure following the donor’s first gift. The period could be ten years, five years, three years–any period you want to measure. For the purposes of this illustration, I’m using a period of five years.

2. Choose an acquisition channel. Long-term donor value varies greatly depending on how donors are acquired. So don’t mix up your results. Pick just one channel of acquisition. In this example, we want to know the long-term value of donors acquired through direct mail.

3. Run a query on your donor database to find all the donors who gave their first gift to your organization five years ago in response to a direct mail donor acquisition mailing.

4. Run a report on these donors to find every gift they have ever given to your charity, through every channel (direct mail, phone, monthly, special event, online, bequest and so on).

5. Include the following fields in your report for each gift:

* Donor ID
* Date of gift
* Size of gift

6. Export the results of the report

7. Create a spreadsheet

8. Down the left side of the first column (Column A), create the following rows:

1. Donors Acquired
2. Cumulative Gifts
3. Cumulative Revenue
4. Cumulative Average Gifts Per Donor
5. Average Annual Gift
6. Long-Term Donor Value

9. In the columns to the right, create one column for each year. Our spreadsheet will look like this: Column B is Year 1, Column C is Year 2, Column D is Year 3, Column E is Year 4, Column F is Year 5

10. Populate Column B with the results for Year 1, the year of acquisition. It will look like this:
1. Donors Acquired, 6,856
2. Cumulative Gifts, 10,912
3. Cumulative Revenue, $3,002,975
4. Cumulative Average Gifts Per Donor, 1.6
5. Average Annual Gift, $275
6. Long-Term Donor Value, $438

To see a sample of this spreadsheet, click here.

11. Let’s look at Column B.
Row 1 is the number of donors you acquired in Year 1: 6,856

Row 2 is the total number of gifts these donors gave you in Year 1. Gifts given is larger than donors acquired because some donors gave more than once in Year 1.

Row 3 is the total dollar value of all the donations these donors gave in Year 1, through all channels.

Row 4 is a formula field that divides the Cumulative Gifts (Row 2) by the number of Donors who gave this year (Row 1).

Row 5 is a formula field that divides total revenue received that year (Row 3) by the number of donors (Row 1).

Row 6 is a formula field that multiplies Average Annual Gift (Row 5) by Cumulative Average Gifts Per Donor (Row 4).

To see a sample of this spreadsheet, click here.

13. For the remaining four years, you populate the columns in the same way and end up with a spreadsheet that looks like this (each column is separated by a comma):

Year 1, Year 2, Year 3, Year 4, Year 5
Donors Acquired in Year 1, 6,856
Cumulative Gifts, $10,912, $19,227, $26,553, $33,286, $38,376
Cumulative Average Gifts Per Donor, 1.6, 2.8, 3.9, 4.9, 5.6
Cumulative Revenue, $3,002,975, $4,877,466, $7,051,333, $10,781,172, $13,695,731
Average Annual Gift, $275, $254, $266, $324, $357
Long-Term Donor Value, $438, $712, $1,029, $1,573, $1,998

As you can see, the long-term value of a donor acquired by direct mail is $438 in Year 1 and $1,998 in Year 5. Your results may differ.

To see a sample of this spreadsheet, click here.

Remember this for the long-term
The longer the period of time you choose to calculate long-term donor value, the more important it is that you include every gift ever given by every channel. A new donor acquired by direct mail will likely give you only direct mail gifts for the first few years. But a donor acquired by direct mail who stays with your charity for 20 years may eventually give monthly gifts, contribute to your capital campaign, give at a special event, participate in your walk-a-thon, give online, respond to an email appeal, join your Legacy League, and leave you a sizeable bequest when she passes away.

The key to understanding your long-term donor value is always knowing which donor acquisition channel you are referring to and which gifts you are referring to. In the above example, the long-term donor value calculation is based on all donors acquired by direct mail five years ago and includes all the gifts they ever gave during those five years. Naturally, if this calculation included only their direct mail gifts in that time period, the results would be different.

Now approach your board of directors well-armed
As you can see, when you know what your average long-term donor value is, in other words, when you know how much money a typical donor gives to your charity in a given timeframe, you can approach your board with hard, persuasive evidence for investing in donor acquisition, donor stewardship, monthly donor conversion, bequest marketing, gift upgrading, mid-level-donor stewardship and much more.

To see a sample of this spreadsheet, click here.

Need help with your direct mail program?
Download this book now.
Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?
If you need help raising money through the mail , give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Penelope Burk Versus Donor Behaviour: Direct Mail Fundraising is Not in Decline

Alan Sharpe — Fri, 21 Oct 2011 16:56:32 +0000

Fundraising consultant and researcher Penelope Burk of Cygnus Applied Research says direct mail is declining in popularity. She is wrong.

In her firm’s latest report, The Cygnus Donor Survey: Where Philanthropy is Headed in 2011, Burk says there is “a continuing decline in donors’ desire to transact their gifts through the mail; 26% of those who gave through the mail last year said they plan to give less this way in 2011 (less often, less money or both).

The problem with Burk’s survey is that it reports on what donors say they will do, not on what they actually do. Burk partnered with 40 not-for-profit organizations for her research. But she didn’t ask them if their direct mail programs are growing or shrinking. Instead, she surveyed 22,000 donors from these organizations, and asked these donors what they think of direct mail.

And there’s the problem.

Donors will tell you they receive too much mail. But respond anyway. Donors will tell you they hate receiving fundraising telephone calls during supper. But give over the phone anyway. Donors will tell you they prefer to hear from you by email. But then won’t read your email appeals.

What donors say they will do and what they actually do are often two different things.

I had a neighbor like that. Maurice said he’d never attend an estate sale organized by the local auctioneer because the auctioneer was “as crooked as a snake.” But wouldn’t you know, at the estate sale of a widow neighbor of ours, who was up at the front of the auction, bidding on all the items he wanted? Maurice.

If you want to discover where philanthropy is heading, don’t ask donors what they desire to do next year. Ask charities what they are doing next year.

That’s what the Association of Fundraising Professionals did in the Fall of 2011 with an online poll of its members. Their Quick Poll mirrors what my firm sees happening in the sector, namely, that the majority of charities (61% of poll respondents) are neither abandoning nor decreasing their use of direct mail. A whopping 35% of poll respondents are increasing their use of direct mail.

Direct mail still rules the day in fundraising. Direct-mail giving still brings in the majority of fundraising revenue. The vast majority of charities raise less than 10% of their annual income online.

If you want to discover if direct mail is declining, look at your numbers. They are never mistaken. But donors sometimes are. And so are the researchers who report on those donors’ desires and supposed preferences.

Ask for Email Addresses, Not Donations, in Online Fundraising

Alan Sharpe — Fri, 30 Sep 2011 14:32:28 +0000

The key to raising money online isn’t Facebook or YouTube or Twitter or a donate button on every webpage.

It’s email.

Email is the tool that gets your message into the mind of your donor and persuades her to return to your website to make a donation.

Your charity cannot afford to wait for donors and potential donors to return to your website. You need to give them a reason to return. And you need to give them a way to return. Email is that way.

Which means the number one priority of your website is not to raise money or to acquire donors. It’s to acquire email addresses.

Unless your charity is a national, well-known charity that helps people during emergencies, and unless there is an emergency on right now, most visitors to your website will not donate during their first visit.

You need to start a conversation with them. A conversation that starts with email.

Stop asking for donations and start asking for email addresses instead.

Invite your visitor to complete a survey. Or take a poll. Or sign your petition. Or subscribe to your email newsletter. Or request your e-bulletin.

Use as many creative, compelling, donor-centred ways of persuading your visitors to give you their email address. But don’t simply say, “Enter your email address here to be added to our mailing list.” Instead, offer your visitors something of value that is delivered by email.

Your goal is to acquire as many email addresses as possible. Online fundraising is a numbers game. And the numbers are small. Open rates of 8%. Click-through rates of 2%. With metrics like these, you need to be reaching as many donors and potential donors as possible with every email appeal.

Think tens of thousands. Hundreds of thousands. Aim for quantity. Secure as many email addresses as you possibly can, using as many tactics as you can think of, can afford and can manage.

Then develop a plan for converting a large percentage of the people on your email list to donors. Pretend you are dating. Treat their first visit to your website as the way you happened to meet. Instead of asking for their phone number, you asked for their email address.

In your first series of email messages, start the relationship by helping your potential donor get to know you a little better. Be interesting. Charming. Engaging.

When the time is right, pop the question. Ask for a gift. Direct the reader to your website to make a donation. Then follow up with a heartfelt thank-you letter.

Stop asking for donations and start asking for email addresses, and you’ll succeed at online fundraising.

Learn More
Read Online Fundraising Secrets.
Learn the latest tactics for attracting website visitors and raising money online with compelling webpages, irresistible email appeals and engaging email newsletters.

Need help?
If you need help raising money online, give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Why Average Lifetime Donor Value is the Most Important Metric in Fundraising

Alan Sharpe — Fri, 23 Sep 2011 15:04:37 +0000

Nothing says more about the success of your fundraising program than the lifetime value of your average donor.

Average lifetime value, of course, is the gross income you receive from your typical donor during the time the donor is giving to your charity.

Donors to your charity give different amounts. Some give a lot. Some give a little. Some give often, some give seldom. Some give one gift. Others give multiple gifts. Some give for a year. Others give for decades. Some give through one channel (direct mail, for example). Others give through multiple channels (direct mail, online, phone, special events).

Your goal as a fundraiser is to figure out how long your average donor gives to your organization, and how much that donor gives during that “lifetime.” You should know what this number is for every fundraising channel, and for all channels combined.

If your average lifetime donor value is high, then your donors likely stay with you for a long time. You are doing a good job of donor retention.

If your average lifetime donor value is high, your average donor likely gives through more than one channel during her lifetime (direct mail, phone, online, face to face, for example). You are doing a good job of multi-channel fundraising.

If your average lifetime donor value is high, your typical donor likely increases the size of her gift over time. You are doing a good job of donor upgrading.

If your average lifetime donor value is high, you are likely moving your donors up the “donor pyramid,” from single annual gifts, to multiple monthly gifts, to larger gifts (major or capital), and, eventually, to a bequest when they pass away. You are doing a good job of donor engagement and stewardship.

If your average lifetime donor value is high, you are obviously watching your key donor and revenue metrics, such as net cost to acquire a donor, average gift, attrition rate, renewal rate, average revenue per year per donor, average number of gifts per year per donor, return on investment, cost to raise a dollar, and so on.

If your average lifetime donor value is low, or shrinking, you likely have one of the following problems:

You are attracting the wrong kinds of donors (one-gift, low-dollar)
You are over-soliciting, or under-soliciting
You are treating your donors as paycheques, not people
You are not trying to move your donors up the donor pyramid
You are not segmenting your donors based on recency, frequency and monetary value, and are therefore not maximizing the value of each donor in your database

When your average donors stay with you for a long time, and increase their level of commitment over time, you are clearly creating and maintaining meaningful, mutually beneficial relationships with your supporters. You know that because your average donor lifetime value tells you so.

Give Your Donors What They Want so You Get What You Want

Alan Sharpe — Mon, 12 Sep 2011 00:55:22 +0000

Thank your donors promptly and personally every time they mail you a gift.

Describe how you are using the donor’s last gift the way the donor intended. The majority of long-term, faithful donors give to make a difference, and many will not give again until they know their last gift was put to good use the way they wanted—so show ample proof.

Treat your donors as thoughtful investors who care how their money is spent.

Don’t appeal to short-term motivators, such as fear, that raise plenty of short-term funds but not enough long-term friends.

Give your donors enough information to make an informed opinion about giving. Anticipate the questions and objections that thoughtful people will raise about your organization, your mission and your ask, and answer them in your letter.

Help your donors solve a problem. Donors will not throw money at an impossible situation. They need to have hope that their donation will meet a need. So offer hope.

Don’t promote future tax benefits alone. Instead, stress the difference a donation makes in lives changed and problems solved today. You want donors who believe in your cause, who want to help others more than they help themselves.

Instead of asking for funds that your organization needs, invite donors to accomplish their goals by making the world a better place (by mailing you a gift) .

Think long term. Raising money with mail is a long-term commitment that you need to make to your organization and to your donors. You and I could put together a tear-jerking, guilt-inducing package that manipulated donors into parting with large sums of money, but those kinds of appeals are not sustainable year after year. Take the long-term view.

Remember that your donors are people. And people give to people to help people. This basic fundraising truth means that you must state your organizational needs in human terms whenever possible. “Human interest sells,” as Mal Warwick puts it. You must translate your case for support from non-profit-speak into flesh and blood. Donors want to know how their gift will help people. So give your donors what they want—heart-warming stories about people in need, and how you help them thanks to your donors’ generosity.

When to Ignore Your Direct Mail Fundraising Test Results

Alan Sharpe — Fri, 26 Aug 2011 14:56:17 +0000

Direct mail fundraising is a soccer game where the opposing team keeps moving the goal posts.

A premium that worked last year doesn’t work today. A package design that worked at your last charity doesn’t work at your new one. A proven way to acquiring new donors gradually fails.

How can a tested, proven tactic stop working?

When you test one thing against another in the mail and Thing A outperforms Thing B, you know what works, right? The key to knowing what works in direct mail fundraising is testing, right?

Well, sort of.

There are at least three times when you should ignore your test results.

When Charities are in Different Sectors
I know of two charities. One is a national animal welfare group that relies heavily on premiums (greeting cards, address labels, note pads) to acquire and retain donors. The other charity is a national human rights organization where one in four of its donors hate premiums, never respond to them, and ask the charity to never mail them.

As you can see, a tested tactic that works for one charity will not necessarily work for another. When you move from one charity to another, ignore your test results from your former charity, or at least re-test them to make sure they are valid at your new charity.

When the Test Results are Dated
What worked in the mail once may not work again. When was the last time you received a CD in the mail from America Online (AOL) promoting their dial-up Internet service? There was a time when half of all CDs produced worldwide had an AOL logo on them. In the late 1990s, AOL was signing up new subscribers at the rate of one every six seconds.

No more.

Outer envelopes are another good example. Every charity used to mail plain #10 envelopes. Then one charity put teaser copy on its envelopes and saw a lift in response.

Other charities heard about it, copied the tactic, and soon every charity that put teaser copy on its outer envelopes saw a lift in response. Years later, when everyone was using teasers, a charity mailed a plain #10 envelope and saw a lift in response. Plain envelopes were suddenly different.

Be prepared to ignore your test results if they are from tests conducted a while ago. Technology changes. Donors change. Test results change.

When Your Sample Size is Too Small
To get test results that you can trust you need to receive at least 50 responses. To get 50 responses at a 1% response rate, you must mail at least 5,000 pieces. If you are mailing two packages and measuring the difference in results between the two of them (response rate, average gift, cost to raise a dollar, for example), then you must mail at least 5,000 of each package for a total mailing quantity of 10,000. If your test sample is smaller than 5,000 pieces of mail, don’t trust your results.

Another time you should not trust direct mail fundraising test results is when they are someone else’s results. Mine, for example. If you want to be confident that what I’m saying is valid, test my advice for yourself. I always tell the truth, but what is true for me may not be true for you. There are no absolute truths in direct mail fundraising, except this one: There are no absolute truths in direct mail fundraising.

Learn More
Attend my six-part tele-seminar, How to Run a Successful Direct Mail Fundraising Program. Taught over the phone six Saturdays in a row. My most popular seminar. Starts September 3, 2011. Early Bird Special expires August 27, 2011. Details.

Need help?
If you need help writing, designing, personalizing or mailing your fundraising appeals, or managing your direct mail fundraising program, give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

How to Discover How Many Donors You Need to Reach Your Annual Revenue Goal

Alan Sharpe — Fri, 19 Aug 2011 15:34:28 +0000

Does your charity need to double or triple or quadruple its income over the next five or ten years? Are you trying to figure out how to do that? Follow these simple steps to discover how many donors you’ll likely need to reach your goal.

Let’s assume you need to raise $1 million annually.

Step 1: List your giving methods.
Open a new spreadsheet. In Column A, list the methods you’ll use to raise funds from donors. Your column will look something like this:

INDIVIDUALS
Direct Mail
Email
Major Gifts
Monthly Giving
Online

INSTITUTIONS
Corporations
Foundations
Government

Step 2: Assign a percentage of your total revenue goal to each fundraising method.
Most charities raise 80% of their annual income from individuals and the remaining 20% from institutions. In Column B, assign a percentage to each method to show the percentage of your annual revenue goal you’ll raise from each method. Your column will look like this:

INDIVIDUALS: PORTION OF ANNUAL REVENUE GOAL, %
Direct Mail: 30%
Email: 10%
Major Gifts: 20%
Monthly Giving: 10%
Online: 10%
SUB-TOTAL: 80%

INSTITUTIONS: PORTION OF ANNUAL REVENUE GOAL, %
Corporations: 5%
Foundations: 10%
Government: 5%
SUB-TOTAL: 20%
GRAND TOTAL: 100%

Step 3: Calculate how much revenue will come from each fundraising method.
In Column C, multiply your annual revenue goal (in this case, $1 million), by the percentage revenue goal for each method. Your results will look like this:

INDIVIDUALS: PORTION OF ANNUAL REVENUE GOAL, $
Direct Mail: $300,000
Email: $100,000
Major Gifts: $200,000
Monthly Giving: $100,000
Online: $100,000
SUB-TOTAL: $800,000

INSTITUTIONS: PORTION OF ANNUAL REVENUE GOAL, $
Corporations: $50,000
Foundations: $100,000
Government: $50,000
SUB-TOTAL: $200,000
GRAND TOTAL: $1,000,000

Step 4: Calculate your average annual revenue per donor, per fundraising method.
Based on your experience with donors from each fundraising method, calculate in Column D how much each donor will donate each year, on average. Your column will look like this:

INDIVIDUALS: AVERAGE ANNUAL REVENUE PER DONOR TYPE
Direct Mail Donor: $80
Email Donor: $80
Major Donor: $10,000
Monthly Donor: $360 ($30/mo.)
Online Donor: $150

INSTITUTIONS: AVERAGE ANNUAL REVENUE PER DONOR TYPE
Corporation: $10,000
Foundation: $20,000
Government: $50,000

Step 5: Calculate how many donors you’ll need per fundraising method to reach your annual revenue goal.
In Column E, divide your revenue goal per method (Step 3) by the average annual revenue per donor type (Step 4). Your column will look like this:

INDIVIDUALS: DONORS NEEDED TO REACH $1 MILLION ANNUAL GOAL
Direct Mail Donors: 3,750
Email Donors: 1,250
Major Donors: 20
Monthly Donors: 278
Online Donors: 667
SUB-TOTAL: 5,964

INSTITUTIONS: DONORS NEEDED TO REACH $1 MILLION ANNUAL GOAL
Corporations: 5
Foundations: 5
Government: 1
SUB-TOTAL: 11
GRAND TOTAL: 5,975

Thus, to reach this hypothetical annual fundraising goal of $1 million, you’ll need to acquire 5,975 donors. Your results will vary, of course, depending on the fundraising methods you use, the percentage of your annual revenue goal you aim to generate with each method, and your average annual revenue per donor type. But the same principles apply.

Boost Your Fundraising Letter Response Rates and Revenue with Five Simple Segmentations

Alan Sharpe — Fri, 12 Aug 2011 14:50:56 +0000

I was 44 years old, about to adopt my second child, and was sitting in my lawyer’s office, looking over his updated draft of my will.

Everything looked fine except for one small mistake. Throughout the document, he referred to me as Neil Sharpe. “I, Neil Sharpe, being of sound mind and body, do declare this to be my last will and testament.”

Well, it certainly was my last will and testament using that lawyer, because my name is not Neil. The will he drafted was invalid. It would never have worked after my death, or Neil’s death, for that matter.

Your fundraising letter can flop just as badly with your donor if it sounds as though you don’t know her. The same letter mailed to every donor in your database can’t help but sound generic and impersonal. The same letter that thanks current donors for their support sounds silly when addressed to someone who hasn’t given a donation in three years.

So if you’re a direct mail fundraiser and you want to increase your response rates or gross revenue, invest in some simple letter personalization. Invest in simple letter changes that show your donor that you know him. The more personal you make your letter, the more likely your donor is to read it, believe it, and respond.

The easiest way to personalize your letter is to segment it into donor groups. There are five main donor groups: new donors, current donors, lapsed donors, monthly donors, giving-circle donors.

1. New donors
A new donor is someone who has just given her first gift, and has never given before. In your letter, acknowledge that the donor is new. Thank her for that first gift. Thank her for joining a group of like-minded people (your other donors). Welcome her.

2. Current donors
A current donor is someone who has given a donation during the last 12 months. So acknowledge that. You can refer to his “recent support,” or “continued support.’ Or you can even mention that you are grateful for his most recent gift, received on “such-and-such a date.”

3. Lapsed donors
A lapsed donor is someone who hasn’t given a gift during the last 12 months, but did give a gift in the 12 months before that, or the 12 months before that, or the 12 months before that. A donor who hasn’t given a gift in four or more years isn’t lapsed, but dormant.

Let a lapsed donor know that you miss her support. Don’t speak to her as a current donor. Don’t say “your recent gift is changing the world,” because it isn’t. It was spent long ago. The secret with lapsed donors is to say you miss them rather than their money. “I haven’t heard from you for a while” sounds more personal and friendly than, “Neil, you haven’t made a gift in over two years.”

4. Monthly donors
No need to tell you what a monthly donor is. But donors who give a gift every month are usually excluded from your regular appeal letters, so if you are writing them, asking for a special gift, let them know that you know that they already support your charity with an automatic gift every 30 days. Show your gratitude for their regular support. Acknowledge that you are asking them to make an extra, special gift above and beyond their regular monthly one.

5. Giving-circle donors
If you have a mid-level donor program or a giving circle for donors who donate above a given level (the President’s Circle for $1,000 donors, for example), then these donors will be especially offended if you don’t acknowledge their membership. So do. Enough said.

Dividing your letter into four segments is easy. Simply write the letter, then reserve a paragraph on page one where you speak to each donor segment individually (personalizing page one of your letter but leaving the following pages generic is the cheapest way to personalize). Then give your lettershop the text for your letter, show where the variable paragraph appears, and supply four paragraphs of text to go into that place in the letter, a different paragraph for each donor segment. Then give the lettershop your mailing list, and, for each donor in the list, name the donor segment the donor belongs to.

Personalization works. I once worked at a national charity. I turned their generic fundraising letters into personalized letters that spoke to each donor individually, and showed the donor that the organization knew who they were. My executive director, who signed all the letters, began receiving all sorts of mail and phone calls from donors, thanking him for his letters. As he travelled the country and met with donors, he heard the same refrain: “Thank you so much for your letters. They sound like they’re written just to me.”

Which isn’t surprising, since they were.

Questions to Answer Before Requesting a Quote from a Direct Mail Fundraising Consultant

Alan Sharpe — Tue, 09 Aug 2011 14:47:25 +0000

If your charity wants to retain the services of a direct mail fundraising firm to conduct your next mailing, answer these questions before you pick up the phone. You’ll save yourself a lot of time, and give the firm everything they need to give you an accurate quote.

Your organization

What is the name of your charity?
What does your charity do?
Is your charity local, regional, national or international?
What is your address?
What is your phone number?
What is your website address?
What is the name and job title of your primary contact person for this mailing?
What is this person’s phone number and email address?
What is your annual budget from all sources (fundraising, government grants, product sales, membership fees, and so on)?
How much money do you raise each year through direct mail?

Your donor database

How many donors, of all kinds, current and lapsed, do you have in your donor database?
How many of those donors give a donation in a typical year?
In a typical year, how many donors stop giving?

Direct mail donor acquisition

Do you acquire donors through the mail?
If yes, how many acquisition mailings do you mail each year?
How many pieces do you mail for each acquisition mailing?
How many donors do you acquire per mailing, on average?
Do you use premiums in your acquisition mailings?
What is your average net cost to acquire a donor?

Donor renewal

How many times do you mail your donors each year, asking for a donation?
How many pieces do you mail each time?
What is an average response rate for a renewal mailing?
What is your average gift for a renewal mailing?
Do you have a donor newsletter that you mail?
If yes, how many times a year do you mail your donor newsletter?

Monthly giving

Do you have a monthly giving program?
If yes, how many monthly donors do you have?
How do you acquire your monthly donors?
What is the size of an average monthly gift?

If your mailing is to acquire new donors

What is your case for support for this mailing?
How many pieces do you want to mail?
Is your charity able to trade names with other charities?
If yes, how many names can you trade?
How many names do you want to rent?
Do you have any rental lists in mind (ones that have worked well in the past)?
What do you want to test with this mailing?
Do you have a control package?
What are you imagining this package will consist of (size of outer envelope? size of letterhead? length of letter in pages? reply device attached or detached? business reply envelope?)
Will there be a premium in this mailing?
Will there be an insert, such as a donor survey or a petition?
What is your budget for this mailing?
Which of the following are included in your budget?
Strategy
Writing
Design
List rental
Printing
Premium (front-end or back-end)
Lettershop
Postage
Taxes

If your mailing is to renew current and lapsed donors

What is your case for support for this mailing?
What are you imagining this package will consist of (size of outer envelope? size of letterhead? length of letter in pages? reply device attached or detached? business reply envelope?)
Do you want to segment your letter (new donors, current donors, lapsed donors, monthly donors, for example)?
If yes, what are the segments?
Will your letter or reply device suggest donation amounts based on the donor’s last gift, or some other criteria?
What do you want to test with this mailing?
What is your budget for this mailing?
Which of the following are included in your budget?
Strategy
Writing
Design
Printing
Premium (front-end or back-end)
Lettershop
Postage
Taxes

Learn More
Read Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?
If you need help writing, designing or mailing your fundraising appeals, give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Don’t Measure Fundraising Costs, But Cost-Effectiveness.

Alan Sharpe — Fri, 29 Jul 2011 11:50:39 +0000

The only number in fundraising that matters is net revenue.

Net revenue is the money you have left over after you subtract your fundraising expenses from your fundraising income. Net revenue is the only money you can do mission with. The more net revenue you have, the more good you can do in the world.

You would think that board members would encourage their charities to raise as much net revenue as possible. But plenty of them don’t. They instead obsess over fundraising costs, and pressure their fundraising staff to cut fundraising costs wherever possible.

This is foolish and short-sighted. It’s the equivalent of cutting your office energy costs in half by not heating in winter and not air conditioning in summer. And losing all your employees.

It’s the equivalent of travelling to a famine-stricken area of Africa with life-saving supplies, but choosing the cheapest method of travel, row boat, instead of a Boeing 777, arriving three months late, and everyone having died while you were in the middle of the Atlantic Ocean saving money.

People who obsess over fundraising costs instead of net revenue are looking at the wrong end of the horse. You discover the health of a horse by examining its eyes, ears, nose and gums. The other end doesn’t tell you much.

Arbitrarily cutting your fundraising costs is foolish if it reduces your net revenue, wouldn’t you agree?

Increasing your fundraising costs is wise if it increases your net revenue, wouldn’t you agree?

Remember that there are only three ways to increase your net revenue:

1. Reduce your costs
2. Get donors to increase the size or frequency of their gifts
3. Get more donors

To persuade donors to increase the size or frequency of their gifts, you have to increase your fundraising costs (by mailing them more often, for example). To get more donors, you have to increase your costs.

Naturally, if you can reduce your costs without reducing your net revenue, you should. For example, if a fundraising letter printed in black raises just as much money as a letter printed in colour, but costs less to print, you should print in black. But if printing in colour brings in more net revenue, despite it costing more, you should print in colour.

If your board demands that you cut costs, insist that you cut costs for the right reason. And there’s only one right reason. Cut your fundraising costs not because cutting costs is always good (it ain’t). Only cut if doing so boosts your net revenue, because boosting net revenue is always good.

If cutting your fundraising costs boosts your net revenue, cut. If increasing your fundraising costs boosts your net revenue, increase. Keep your eye on the right end of the horse and you’ll raise more money, and do more good with it to change the world.

Learn More
Read Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?
If you need help crafting effective direct mail letters, give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Five Indisputable Laws of Direct Mail Donor Acquisition

Alan Sharpe — Fri, 22 Jul 2011 14:49:55 +0000

I am not a prophet, I am not the son of a prophet, but I do serve on the board of a non-profit. And I’ve discovered through the years that charities who succeed at acquiring donors through the mail obey five immutable laws of direct mail fundraising. These laws aren’t carved in stone. But they should be.

Law #1: You Will Mail at Least One Campaign a Year
The only way to consistently grow your donor database and increase your revenue is to acquire new donors every year. If you go a year without mailing a donor acquisition package, you will experience a drop in current donors, a drop in new donors, and a drop in revenue.

Law #2: You Will Establish a Control Package
The key to success in direct mail donor acquisition is to acquire as many donors as possible at the lowest cost. The key is to establish as quickly as possible which direct mail package generates these results for you. Mail different packages to the same lists and see which package pulls in the most donors for the lowest cost. The winner becomes your control package. Mail that control package every year, and test other packages against it (test letter length, case for support, premiums, package design, inserts and so on), until a test package eventually outperforms your control package. Some control packages are so successful they are still in the mail after a decade.

Law 3: You Will Test Lists
The most important factor in your success at acquiring donors through the mail is not what you mail or when you mail but who you mail. You can mail a terrific letter to a lousy list and it will bomb. You can mail a mediocre letter to a terrific list and it can deliver acceptable results. The only way to discover which lists generate the most donors at the lowest cost is to test lists.

Law #4: You Will Interpret Your Results Correctly
Don’t get distracted by your Average Gift, Response Rate, Net Income, Cost Per Piece or Cost to Raise a Dollar. The only number that matters in acquiring new donors with paper and postage is Net Cost Per Donor Acquired.

Calculate your Net Cost Per Donor Acquired by dividing your net income (income minus expenses) by the number of donors acquired.

The biggest mistake you can make is thinking that a donor acquisition mailing is a failure if it loses money. Direct mail donor acquisition mailings almost always lose money. But they gain donors. The key metric is not how much money you gained or lost, but how much money you had to spend to acquire each new donor. Don’t look at costs, but cost-effectiveness.

Law #5: You Will Focus on Lifetime Value
You can acquire hundreds of thousands of donors cost-effectively every year but still fail at donor acquisition. That’s because the success of each acquisition campaign depends on how many new donors go on to make a second gift, a third gift, a fourth gift (you get the idea), and how many of these same new donors eventually increase their giving, join your monthly giving program, contribute to your capital campaigns, give a major gift and leave a legacy in their wills.

The key to donor retention, subsequent gifts and increased lifetime value is stewardship. Thank your new donors promptly (with a thank-you letter), welcome them to your organization (with a welcome kit), demonstrate how their gift is making a difference (with a donor newsletter), and ask them for a second gift (with a fundraising letter) sooner rather than later.

Learn More
Read Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?
If you need help acquiring donors through the mail, give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Dramatize Your Fundraising Letters with Client Testimonials

Alan Sharpe — Fri, 15 Jul 2011 20:24:25 +0000

A reader of my newsletter asked me:

“How do I most effectively integrate a participant story into an annual campaign ask letter? What effective ways do you see participant stories being told in a letter? Could a story/profile be attached separately after the letter? I really believe that the stories of the participants who are served by my agency should be highlighted front and centre in our annual direct mail campaign. They are stories of life change, personal courage, and perseverance. At a recent fundraising conference, I heard how donors build their most lasting commitments with agencies when their hearts/spirits are touched by the cause of the organization. Speaking to hearts wins over speaking to “heads” almost every time. In my mind, there is no better way to speak to hearts than to present a participant success story.” Brian

Well, Brian, there are four ways to include what you call “participant stories” into your direct mail fundraising appeals. I call these stories “client testimonials.” A client testimonial is either a statement made by someone, or a story told by someone, who has benefitted from the services your charity delivers. Here’s how to use testimonials in your direct mail appeals.

1. As a short quote, incorporated into a paragraph. Used for quotes that take up no more than two lines. Example: “Alison and Edgar Whalin are grateful to you for your support of Habitat for Humanity. ‘Since moving into our home two years ago, our quality of life has improved by leaps and bounds,’ they say.”

2. As a block quote. Used for quotes that take up somewhere between three and eight lines. Example:

“Since moving into our home two years ago, our quality of life has improved by leaps and bounds. We are now planning things that only seemed like wishes before, and our faith in all things possible has been restored . . . . We’ve gained a new respect for our neighbourhood, we take pride in ownership and best of all we can extend an invitation to “come to our house.” These things might seem foolish to some people but we are bursting with pride and joy at what we like to call our “Little piece of Paradise.” ― Alison and Edgar Whalin.

3. As a lift note. Used for lengthy testimonials. Usually a sheet of paper, roughly eight-by-five inches in dimension flat, and folding to form a booklet measuring four inches wide and five inches tall.

4. As a letter in itself, where the author of the letter essentially gives one long testimonial, and requests a donation as well. Testimonial letters that are written by the client are particularly powerful when the story is emotional, riveting and told well.

The main drawback of these letters is that the writer, being a client of your charity and not a person in leadership, cannot speak authoritatively on behalf of your organization. The client cannot speak about organizational needs or strategic plans or your case for support, for example, or thank your donor for her last gift.

The easy way to overcome this challenge is to include with the client testimonial a supplementary letter written by your executive director (or the person who usually signs your fundraising letters). This extra letter introduces the client, says something about the client’s relationship with the charity, describes why the charity has sent the donor the client testimonial letter, requests a donation, and says what they donation will be used for.

—-
Learn More
Read “How to Use Testimonials to Inspire and Persuade Your Direct Mail Donors.” Find, feature and format other people’s words to overcome donor skepticism, prove your point, build trust and attract donations. www.raisersharpe.com/handbooks/H25-Testimonials.htm

Need help?
If you need help crafting effective direct mail letters, give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Invest in Donor Acquisition Yearly, or Die

Alan Sharpe — Fri, 08 Jul 2011 19:17:59 +0000

Read through the diaries of the pioneers who settled the Western parts of the United States and Canada and you’ll discover that the most desperate act of hunger was to eat your seed corn. Eating your seed corn sealed your death, even though it prolonged your life for a while.

Charities today are making the same deadly mistake.

What is seed corn? Seed corn looks like popping corn–hard, yellow kernels. You plant corn by placing the kernels in the ground one at a time, spaced out, and covering them with soil. Then you wait around five months for the kernels to sprout, grow into stalks and bear ears that you harvest and eat.

One kernel of seed corn produces one stalk, which produces at least one ear, which contains around 500 kernels. So if you plant one kernel, you harvest 500 kernels. That’s a good return on investment. But to reap the harvest, you have to plant the seed corn. And you have to wait for the results.

The dangerous thing about seed corn is that you can eat it instead of planting it. In pioneer days, a desperate, starving family would divide the hard kernels of seed corn and eat them, knowing they were destroying their hope for the coming season. They prolonged their lives for a while at the expense of their future.

Some boards of directors, scared of spending money during this recession (I’m writing in 2011), are instructing their charities to cut budgets for donor acquisition. Some boards are demanding that all donor acquisition activity cease until the economy improves. “We can’t spend money now hoping for a return tomorrow,” they say.

They are eating their seed corn. Here’s why.

Reason #1: Your donor file will shrink
If your charity is normal, the percentage of active donors in your database shrinks by up to 15 percent each year. The average rate of attrition is 7%.

Donor attrition is a fact of life (or a fact of death, depending on how you look at it) at every non-profit organization. Donors move. Donors lose their jobs. Donors divorce. Donors retire. Donors die. Their giving stops. You can’t do anything to stop it.

This inevitable, weekly, natural donor attrition is the main reason you must invest money in donor acquisition each year. You need to acquire new donors to replace the ones who stop giving. If you cut acquisition, the number of active donors in your database will shrink every year. Guaranteed.

Reason #2: You will lose money
Boards of directors slash or eliminate donor acquisition budgets because they’re misguided. They think reducing spending saves money. Well, cutting donor acquisition does save money in the short-term, obviously. If your donor acquisition budget is $200,000 a year and you eliminate donor acquisition, then you immediately save $200,000, boost your net income, and deserve a promotion and the corner office.

But wait a year and see what happens.

A year later your revenue will plummet. That’s because for every current donor you lose, you lose revenue. And for every new donor you should have acquired, but didn’t, because you eliminated donor acquisition, you lose revenue.

A year later, at least 7% of your donors will have stopped giving, and you’ll notice that on your bottom line. It will be smaller. Two, three, four, five years later, the missing income from all the new donors you never acquired will be as obvious as a FORECLOSURE sign stapled to your front door.

Reason #3: Your lifetime donor value will suffer
How much is each lost donor worth? Find out by calculating how much a typical donor gives to your charity during the donor’s lifetime. It’s likely hundreds of dollars. In some cases, thousands. How many of these donors are you willing to lose each week without replacing them?

The donor that you don’t acquire today won’t respond to your most successful direct mail appeals. She won’t join your monthly giving program in two years. She won’t give you a major gift in eight years. She won’t leave you a bequest in her Will when she passes away.

The majority of donors who join monthly giving programs, make major gifts and leave bequests are annual donors. They are already donors to the charity. Most were acquired through direct mail. They have a high lifetime value only because they gave that first new gift. If you don’t get that first gift, you don’t get the new donor. And if you don’t get the new donor, you don’t get any of the revenue that follows. The lifetime value of every donor not acquired this year is zero.

Reason #4: Your mission will suffer without new donors
Net income (fundraising revenue minus fundraising costs) is the only income you can use to carry out your mission. The higher your net income, the more you can do to improve the world. Every time you lose a donor, your capacity to bring about meaningful change diminishes. Every time you acquire a new donor, it increases.

If you want your donor file to grow, if you want your revenue from monthly gifts, major gifts and bequests to grow, if you want to continue transforming lives, you must invest in donor acquisition every year. You must plant your seed corn.

Legacy Fundraising: Why You Must Start a Bequest Marketing Program Now

Alan Sharpe — Mon, 04 Jul 2011 16:44:12 +0000

Never before has there been more money available to your organization than right now.

Members of the “Greatest Generation,” those who lived through the Great Depression and the Second World War, now in their 80s and 90s, are collectively leaving billions of dollars to charitable causes in the United States and Canada.

Their preferred vehicle for giving isn’t a check. Or a credit card. It’s a simple charitable bequest in their Will. If you are not marketing your bequest program to this generation with all the resources you have available, you are missing what many are calling the greatest opportunity in the history of fundraising.

1. Donors are leaving bequests to other charities, so why not yours?
Donors in the United States gave $17.44 billion to charities through bequests in 2005. This amount represents seven percent of all charitable giving for that year. This figure is going to grow during the next few decades because we are in the midst of the largest transfer of wealth the world has ever seen.

2. The time is now
Between now and 2052, Baby Boomers and their parents will transfer roughly $14 trillion of their assets to the next generation. Around seven percent of that amount will be in the form of bequests to charities. There has never been a better time to be promoting bequests to your donors as a way to leave a lasting legacy.

3. Inexpensive to get started
A bequest program can be started with a minimum of investment. You can start by inserting a simple phrase in your letterhead, direct mail appeals and donor newsletters: “Please remember Chary ABC in your Will.” Doing so won’t cost you a penny, and will generate bequests over time.

4. Average bequest is large
How many times a year does someone walk into your office with a check for $30,000? That’s the size of an average bequest these days. It’s the equivalent of a major gift, and you can receive it even if you do not have a major gifts program or a major gifts officer. And chances are that it will be an unrestricted bequest, which means your charity can use it any way you please.

5. Cost to raise a dollar is nominal
If you host a lavish fundraising event, you can expect to spend around 75 cents to raise a dollar. If you mail a fundraising letter, you can expect to spend around 15 cents to raise a dollar. But if you ask for a bequest by letter or phone, you can expect to spend less than a cent to raise a dollar. That’s because the costs of marketing a bequest program are so small and average bequests are so large. Bequest marketing delivers the highest return on investment of any fundraising method.

6. Many of your wealthiest donors will make their largest gift at death
Your wealthiest donors are in their 70s and 80s. They grew up during the Great Depression, a time that taught them the importance of saving and investing. They have spent their lives accumulating wealth. They are savers, not spenders. Being savers, many of these donors will not make six- and seven-figure gifts in their lifetime. Instead, they will make their largest gifts to charity when they pass away, through bequests in their wills.

If you want to double, triple, or even quadruple your planned giving income, start a bequest marketing program today. If you’re not inviting your donors to leave bequests to your charity in their Wills, just remember that other charities are.

Direct Mail Donor Acquisition Tests: Five Ways to Evaluate Your Results

Alan Sharpe — Fri, 17 Jun 2011 13:18:16 +0000

If you drop a donor acquisition package in the mail as a test and it generates a response rate of 17%, can you say your campaign was a success? No.

If your donor acquisition test mailing generates an average gift of $125, can you say without fear of contradiction that your test was a success? No.

So how do you know if your direct mail donor acquisition test mailing was a feat or a failure? Answer enough of these questions in the affirmative to satisfy your boss, board, or banker.

1. Is your net cost per donor acquired acceptable?
Back in the day, which is to say, in the 1970s, charities mailed donor acquisition packages that generated a net profit. In other words, the revenue that the campaigns generated not only covered the costs of the campaign (writing, design, printing, list rentals, lettershop, postage), but also generated a profit. In those days, new donors more than covered the cost of their own acquisition.

Today, you should expect to lose money acquiring donors through the mail. How much you’re willing to “lose” is up to you and your board. After all, the “loss’ is really an investment. Your net cost per donor acquired is the investment you have to make to grow your donor database.

You calculate your net cost per donor acquired by subtracting your expenses from your revenue, and dividing the result by the number of donors acquired.

For example:
Number of pieces mailed: 50,000
Cost of the mailing: $50,000
Responses (donors): 500
Response rate: 1%
Revenue (total gifts): $34,000
Average gift: $68
Net Revenue: -$16,000
Net Cost Per Donor Acquired: $32

In this example, the charity suffers a net loss of $16,000. Some board members will look at that number and say the mailing was a failure and is never to be repeated. But look closer. The charity also acquired 500 donors. Many of whom will donate again. Each of those donors cost $32 to acquire. The charity will both break even and make a net profit with these new donors, assuming at least 48% of them give another gift of $68.

The safest way to pick an acceptable cost per donor acquired is to calculate the lifetime value of your average donor acquired by mail. If the amount of money you receive from your average direct-mail-acquired donor is many times greater than the cost of acquisition (four times greater, for example; the ratio is up to you), you can justify the cost of acquisition.

Another consideration is time until you reach break-even. How many months do you have to wait before your average direct-mail-acquired donor gives you enough money in donations to cover the cost of their acquisition? In other words, how many months from date of acquisition must you wait until your new donor starts giving you donations you can use for mission?

You can measure this in months and number of gifts. For example (using the figures from the above example), “Our typical donor acquired by direct mail must subsequently donate at least $32 to cover the cost of their acquisition so that we break even. Our new donors typically cover the cost of their acquisition and generate a net profit of $36 with their second donation, which they typically make within four months of date of acquisition.”

2. Is your average gift acceptable?
Some acquisition methods, such as premiums and trinkets, tend to generate a lower average gift than other methods. Are you happy with the average gift that your test generated? Just remember that your goal in donor acquisition is not to raise money. It’s to acquire donors. Money raised is secondary.

3. Is your response rate acceptable?
If you’ve conducted tests before, you know what your average response rate is. Did this test beat that average, or come under? If you have a goal for how many new donors you want to acquire this year, can you meet that goal with this response rate, and by mailing these lists again, or lists just like them? Remember that your goal is to acquire as many donors as possible (at an acceptable cost, of course). So the higher your response rate, the better.

4. Did enough of the lists you tested generate acceptable results?
In your test, you likely mailed at least 50,000 pieces to 10 or more lists. Some of those lists performed better than others, right? Measure your net cost per donor acquired, response rate and average gift for each list. Did enough of the lists generate the results you were after, so that you can confidently mail those lists again?

5. Did you beat your control?
In your test, you likely mailed two or more packages, each one with a different look, message and case for support. One of those packages was likely your control package (the one you’ve been mailing over and over because no other package can beat it). Did any of the packages beat your control? If one did, figure out why, repeat your test to be sure, and your test will have been a success.

Each of these metrics helps you discover, to a point, if your direct mail donor acquisition test was a success. No single metric tells you everything. You must exercise good judgment. But pay particular attention to your net cost per donor acquired. That’s the most useful metric. After all, your response rate, even if it’s in the double digits, doesn’t tell you if you made a net profit. And your average gift, even if it’s $200, doesn’t tell you if you made a net profit. But your net cost per donor acquired tells you two things: (1) if you made a net profit, and (2) how much you had to spend to acquire each donor.

Learn More
Read Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?
If you need help acquiring, renewing or upgrading direct mail donors, give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

How to Get a Second Gift from a New Direct Mail Donor

Alan Sharpe — Tue, 14 Jun 2011 14:05:47 +0000

If your charity is at all typical, you will lose 65% of the donors you acquire by direct mail in the first year alone.

In other words, only 35% of the donors you acquire through direct mail will give you a second gift. Most donors acquired through the mail are acquired at a net loss (you must spend money to acquire each donor), so you can see how important it is for you to do all that you can to encourage first-time donors to give again.

Here are the main reasons new donors do not give a second gift:

1. You acquire the wrong kind of donor
Donors acquired with premiums, trinkets and lotteries tend to fall away at a higher rate than donors acquired with a simple ask.

2. You ignore them
If you do not thank your new donors soon enough, or tell them what you are doing with their gift, or welcome them to your organization, they will not likely mail you a second gift.

3. You write them too often
If all you do with new donors is add them to your mailing list and then bombard them with an appeal letter each month, you will likely lose them.

4. You do not ask again soon enough
The key to securing a second gift is to ask early and ask often. Your enemy is the calendar. For every week that elapses after you have received the donor’s first gift, and where you do not ask for a second gift, your chances of losing your newly acquired donor increase. The worst thing you can do is delay four, five, six months or longer before going back to your new donor for a second gift. By that time, many will have forgotten that they even made the first gift.

To increase your percentage of new donors who go on to give a second gift, do four things:

1. Thank them promptly, personally and particularly for their first gift.

2. Send them a welcome kit. Tell them why they are a valuable part of your organization. Include anything in the welcome kit (brochure, newsletter, welcome letter, FAQs, testimonials) that draws donors closer to your mission and the people you help.

3. Show them how you are using their gift to change the world. You can do this most effectively with a donor-centred newsletter filled with pictures and stories that show donor dollars at work.

4. Ask for a second gift within eight weeks of receiving the first gift. The single largest factor in determining if you receive a second gift is how long you wait before asking for it. The longer you wait, the less likely you are to secure that all-important second donation.

Learn More
Read Mail Superiority: How to Run a Profitable Annual Direct Mail Fundraising Program.

Need help?
If you need help acquiring, renewing or upgrading direct mail donors, give me a call at Harvey McKinnon Associates, at (416) 537-2904 ext. 212

Twenty Postal Strike Survival Tips for Charities and Non-Profits

Alan Sharpe — Fri, 03 Jun 2011 16:04:50 +0000

What should you do if your charity raises money through the mail but your country’s postal workers are about to strike, or are already on strike?

Naturally, you’re troubled.

Most charities in Canada that are not places of worship raise a substantial portion of their operating budget using fundraising letters. Many charities also rely on the mail to recruit new donors, keep their donors up to date with newsletters, invite donors to special events, conduct donor surveys, and issue charitable tax receipts and thank-you letters. So a strike by postal workers isn’t just an inconvenience. It threatens a charity’s very existence.

Here are some ways to survive a postal strike.

In the weeks before the postal workers go on strike, write to your donors. Tell them that a strike is imminent, and give the anticipated strike date if possible.
Describe how the strike will affect your donors’ ability to communicate with you, and your ability to communicate with your donors, by mail.
Warn your donors to expect delays in receiving their gift acknowledgement letters, since their mail gifts, and you thank-you letters, will likely be delayed in the mail system.
If the labour action involves rotating strikes in cities across the country rather than a nationwide general strike, warn your donors to still expect delays, since the location and duration of each strike is unpredictable.
Give your donors a way to keep current on the status of the strike by showing them where to sign up for email bulletins, text alerts and media releases issued by the postal labour union and the postal service. Direct donors to the websites of each party in the strike.
Encourage your donors to make their donations using other methods, such as email, phone, online, text and in person.
Before the strike begins, make contingency plans for sending your appeals by email, provided you have the technical ability and sufficient email addresses to do so profitably.
If you are going to solicit gifts during the strike by email, write to donors whose email addresses you do not have on file, and invite them to give you their email addresses. Give donors an incentive, such as a gift certificate, for doing so (you’ll acquire more addresses this way).
If you anticipate that the strike will be prolonged, consider phoning your high-value donors and asking for a gift. Mention the impact of the strike and encourage them to either phone your charity or give online. Do this throughout the duration of the strike.
If you anticipate that the strike will be prolonged, write to your donors before the strike and invite them to join your monthly giving program. If some are reluctant, invite them to give a gift each month, however small, for the duration of the strike only. Stress your need for daily funds to continue helping the people you serve.
Before the strike begins, invite your most frequent and generous donors to mail you a series of post-dated cheques.
Before the strike begins, invite your donors to add your charity as an Internet banking payee so that they can donate to your cause when they pay their bills online.
Ramp up your homepage so that it makes a clear, compelling request for donations (perhaps even mentioning your inability to receive donations in the mail, and stressing the need for visitors to donate online or by phone instead).
Revise your Twitter homepage so that it stresses your need for funds during the strike, and then solicit donations in some of your tweets.
Post a provocative, viral video on YouTube that shows the predicament your charity will be in if you stop receiving gifts during the postal strike. Make a strong request for funds, and direct viewers to your donation page, or even better, to a special landing page dedicated to the strike.
Post regular status updates to your Facebook page so that your fans, friends, donors, advocates, members and everyone else is reminded regularly of your need for funds.
While the strike is on, email your gift acknowledgement letters, charitable gift receipts, newsletters and special event invitations.
If your charity has to cancel a fundraising event because of the postal strike, host the event online instead as a creative, fun, tongue-in-cheek non-event. (“Our Black Tie Non-Event will NOT take place on (date). Cocktails will NOT be served at 5:30 p.m. Dinner will NOT be served at 7 p.m. NO program will be held at 8:30 p.m.)
When the strike is over, and you have a backlog of gift acknowledgement letters to mail, mention in each letter that you are sorry for the delay in thanking the donor.
When the strike is over, don’t be tempted to persuade as many donors as possible to start giving online instead of by mail. The majority of today’s donors prefer the mail. Gifts made by email and online still make up less than 10% of the revenue for most charities in North America.