If a donor says — “Do not rent my name!” — don’t rent their name.

If a donor says — “Remove me from your email list — remove them.

Above all, don’t ignore them!

Don’t treat them the way Newsmax.com treats me. Not only will you alienate your donor (or subscriber), which would be bad enough. You might in fact irritate them to the point that they will speak out and tell their friends and colleagues. And with social nets, blogs, etc, we know how far the discontent of one person can travel.

I’ve been trying — just about daily, for a month at least — to ‘Unsubscribe’ from the Newsmax Health daily Health Alert. I’ve replied to virtually every Health Alert by using the ‘Unsubscribe’ button. Each time, as you see below, I’ve been promised I will be removed from their email list promptly.

Yet the barrage of messages continues. So I’ve graduated from ‘no longer interested’ to ‘mightily irritated’. And I’m telling my friends and colleagues … thousands of them.

Take that, Newsmax.com! You oughta be fired!

Agitator readers, thanks for bearing with me on this personal rant. And please don’t treat your donors like that!

Tom

This evoked a spirited and thoughtful response from Stephen Hitchcock, now at Bread for the World, and formerly for years at fundraising firm Mal Warwick and Associates. You decide … should Stephen keep his job?

Roger,

I read your April 7 posting about the Target Analytics index, and I think you’ve got it wrong.  In fact, I should be the 84^th fundraiser you fire.  Bread for the World’s direct response program is characterized by most of the “grounds for dismissal” in your posting – especially our “cookie cutter, same-old-same-old plans recycled year after year.”

I believe most of the organizations in the Target index are doing worthy work that is very relevant. These organizations are seeing a declining number of donors and falling revenue because:

(1) Real incomes began declining long before the 2008 decision. Except for modest relief in the Clinton years, the middle class has been under assault since the Reagan administration.

(2) People give when they have a sense of security and optimism about the future. With falling home values, cratered 401Ks, and rising health care costs, few Americans have any sense of financial security.

(3) The past five (ten!) years have been filled with natural and man-made disasters. Americans have responded generously. Many younger individuals have made their first philanthropic gifts to disaster groups – rather than old-line charities.

(4) Subscriber lists have gotten smaller and more costly to rent. A minor factor, but worth mentioning in light of your comments about our over-dependence on list exchanges and cooperative databases.

I appreciate that Tom and you want to be provocative. But I hope you’ll now take an even bigger risk and suggest who should replace the 84 of us whom you’ve fired. What skills do you think these new hires should possess?  What key activities should they engage in?  What will be the measures of their success?

Those of us in the trenches have to negotiate with staff and board members who have no idea how direct response fundraising works – and who think the Internet is fast, free, and environmentally pure. As I and the other 83 fundraisers seek to generate the unrestricted cash revenue that sustains our organizations, we face at least three big challenges:

(a) The true costs of the technology and the staff time necessary to bring online fundraising to a meaningful scale are huge. Open rates, click-through rates, and donation completion are so low it takes hundreds of thousands of email addresses to generate any real revenue – and then there are PayPal and credit card fees to pay. Mobile fundraising comes with additional fees – along with smaller gifts.

(b) “Capturing, integrating, and monetizing of new online donors [those donors and revenue are being captured in the Target index] through the multi-channel programs” is even more expensive and time-consuming. That doesn’t mean we shouldn’t do it, but we need to be honest about what a big part of a nonprofit’s budget must be devoted to operating in the new, digital economy.

(c) Whether it’s online – or on the phones and through the mail – acquiring new donors, thanking them profusely, and communicating effectively requires immense discipline and focus. It may be possible to read War and Peace on your Smartphone while also updating your Facebook page. But the close reading of printed texts, writing complete sentences, and rigorous financial analysis are more useful tools when it comes to raising money. Unfortunately, only a 100 or liberal arts colleges – most with limited enrollments – offer a young people the chance to acquire those skills.

When I began this work of fundraising in 1975, my first boss sent me to a two-day NCDC workshop taught by Jerry Huntsinger.  John Groman was trailing along behind. Almost everyone had concluded that the best donors were aging and dying off – and that the new 1.8 cent nonprofit postal rate would make direct mail obsolete.

I was with Mal Warwick & Associates, where I worked for 22 years, most of the time as president. Since 2008, I’ve been an employee of Bread for the World, which had been an MWA client since 1989.  Over the past five years, Bread for the World has been blessed with an 18 percent growth in membership revenue (about 100,000 gifts under $2,500 in 2010) and a contributing membership that grows a couple thousand each year.  Fortunately, the same-old-same old sustains our relevant work.

Thank you for continuing to agitate us.  I hope you’ll take a second look at the Target numbers and offer some substantive suggestions for alternative approaches.  Best wishes in all your endeavors,

Warm regards,
Stephen Hitchcock

Stay tuned for Roger’s response. Meantime, here are two of my reactions …

The only upbeat message from Stephen relates to disaster giving. Personally, I don’t regard ‘gift receiving’ in response to disasters as terribly demanding ‘fundraising’. Yes, I’m happy that Americans continue to show their generosity in response to such events … but — to put perhaps an overly sharp point on it — that would happen if fundraisers did nothing but hold the basket out, wouldn’t it?

Converting those spontaneous gifts into enduring repeat contributions would be fundraising, as I’ve argued at greater length here.

I do resonate with Stephen’s cautionary comments about online fundraising. A growing piece of the pie, but still doesn’t provide the necessary nutrients for most nonprofits. That said, whether online givers are only semi-literate or not, as Stephen sort of suggests, none of us can deny online is the growth channel (at least as the preferred response mechanism) … and may even become, as we’ll explore later this week, the key to future donor acquisition.

Tom

We got this comment from John Whitehead at Water Aid in the UK: “I don’t know if things are similar in the States, but here in the UK I can see a decline in the classic DM skills that underpin so much fundraising, as staffers are seduced by the dubious efficacy of digital marketing.”

Then I saw posts from Joanne Fritz, Guide at About.com for nonprofit stuff, and from Jeff Brooks at Future Fundraising Now bouncing off Joanne’s.

Joanne’s is titled How Not to Thank a Donor During a Disaster, and opens with the words … “I am speechless!” She goes on to describe how lousy a job a group of charities did of acknowledging contributions she made responding to specific appeals regarding the Japan disaster.

Jeff plays off of that, writing How to Create a Disaster Fundraising Disaster. He comments:

“These massive and all-too-common online flubs set back online fundraising (and fundraising in general) every time they happen. They show donors that giving online is frustrating, unrewarding, and often impossible.”

Dead right, Jeff.

Now, what in fundraising could possibly be more elementary than properly thanking a donor?!

Roger complains of complacency and laziness at the top. One also has to wonder … who’s training the folks coming along in the entry and middle ranks of fundraising? Especially in the realm of online fundraising.

Joanne, as she always does, provides plenty of resource links for fundraisers who want to get their ‘thank you’s’ and ‘disaster fundraising’ right.

But will anyone bother to use those resources to improve their capabilities?

Is there any penalty if they don’t? Unfortunately, maybe not in terms of their own jobs. But as Jeff says:

“Every one of us has a responsibility to get it right. Not just for our own organizations’ bottom lines, but for donors and nonprofits in general.”

Amen!

Tom

P.S. I’m surprised at the lack of comment on Roger’s post. Must be that Agitator readers unanimously think he’s on the money.

Not a pretty picture. And frankly, if I were the CEO or a Board Member of one of the 83 big organizations included in this Index, I’d probably be looking for some new resumes to replace some of my status quo fundraisers.

For the 5^th straight year the majority of the large organizations included in the Index – those where the dominant revenue source is direct response – have experienced another lackluster or downright disturbing year.

• Real Index revenue has declined by 13.0% over the past five years, and by 6.9% over the past three years when revenue dollar amounts are adjusted for inflation.

• Over the past five years, new donor numbers have fallen by a cumulative median of 10.3% — that’s an annual decline of 3.6%

• And…there’s been little success at making up the loss through better retention. Retention of first year donors continued to drop again in 2010 with only 46% of the organizations reporting an improvement (0.02%) in retention rates.

With less water flowing into the bucket and little change in the outflow where’s all this going, other than down? The more important question is why is this happening.

• It’s easy to blame it on the economy (but this trend was underway before the economy headed south in 2008).

• And easy to simply shrug and say, “Well, my sector is doing less bad.” (Not true, unless you can take credit for earthquakes, genocide, and war; only the animal welfare folks are truly ‘up.”)

• Or perhaps use a little sleight of hand and blame it on online – “You see, there’s a lot more money coming in online and this is cannibalizing other programs.” Not enough. According to the Index the number of new donors has risen from a bit more than 5% in 2007 to a bit more than 7% in 2010.  Barely enough to stay even.

In fact, there are no easy explanations for why the big 83 are in a downward spiral; only questions. But questions which need to tackled head on:

• Are the large, old organizations that make up the majority of the Index losing their relevance and support?

• Is there a problem in the fact that most of these organizations build a large part of their declining acquisition programs by exchanging names through cooperative data bases and other ‘take in each others’ laundry’ resources?

• Has the quality and innovation of direct response programs declined to the point where ‘cookie cutter’, same-old-same-old plans are simply recycled year after year, to the point where perfection of predictability (despite the declining bottom line) has become the enemy of growth and sustainability?

• Could it be that the rising numbers of new online donors reported in the online studies we’ve reported in The Agitator, are simply not being captured, integrated and monetized through the multi-channel programs that everyone gives lip service, but almost no one ever gets around to implementing?

I suspect it’s a combination of all of these technical reasons. But, mostly I suspect the real culprit is the inability or unwillingness of boards and CEOs to expect more, invest more and demand more from those charged with bringing up the bottom line.

What do you think?

Roger

P.S.  As always, the detailed analysis by the veteran team of Helen Flannery, Rob Harris and Carol Rhine at Target Analytics is worth a thorough read with special attention to the reports on individual sectors. You can get their report here. Go ahead.  Share it with your CEO and Board.

Here’s the story of a donor (Gail) whose loyalty I find truly remarkable, under the circumstances …

• She’s been giving to several groups continuously for thirty years, generally in the $25-$50 range, and generally unrestricted.
• None of the groups has ever acknowledged her cumulative giving.
• Thirty years older and gainfully employed throughout, she sees herself as a viable planned giving prospect.
• She lives in a major metro area where there are probably many donors to the organizations she supports, making face-to-face events probably feasible.
• Two of the groups have about one million active ‘members’ each — that is, these are not organizations that are starved for resources or ‘professional’ fundraising staff.
• Nevertheless, when she called these two groups to find out why they ignored her, their excuses included … limited staff resources, incomplete gift records, no focus to date on ‘donor relationships’.

Gail, your patience and loyalty to these groups is astounding. Clearly, you are much too nice a donor.

I implore you to reveal these groups to me and Roger, so that The Agitator can officially fire them — the fundraising staff, the CEO, the Board … the whole lot of them!

Tom

In case you haven’t, here’s a passage that might interest you. Noting that those who give to charities’ own websites give more over time than donors who give via ‘portal’ or social networking sites, the study observes:

“Charities don’t always do a good job following up with donors who give through portals or social networking sites. At Network for Good, only half of charities that receive funds in this way take advantage of the capability to access donor information for follow-up … Charities that don’t build relationships with portal donors are likely to experience depressed future giving.” [Ed: I'll say!]

“In addition, charity websites generally provide for donor cultivation; portals don’t. Charity website giving happens in a context where the donor stays aware of the charity, while the portal provides convenience to donors looking to donate in one place, but de-emphasizes the charity and its individual ‘personality.’ Portals are all about efficiently collecting the gift.”

This ‘efficient’ portal giving — left without follow-up — amounts to wasteful, unprofitable ‘catch and release’ marketing. I could go on and on about that.

But let’s stay focused on the fact that half the charities who use Network for Good’s platform never access the available donor information for follow-up. It’s been a long time since The Agitator used its “You Ought To Be Fired” tag, but here I’m sorely tempted!

These must be charities without professional fundraisers on staff or at hand. How else could this malfeasance be explained?

As bad as this example is, the truth is that even astute marketers and fundraisers have lapses where they forget to do the obvious customer relationship building. Two examples …

One. Last Christmas, I purchased a number of gifts online from a kids-oriented website. I’ve never heard back from these folks, even though they have all the data they need at hand to at least ‘remind’ me during the holiday season of my Santa proclivities. To say nothing of following up in the interim … Might the kids I bought for have birthdays? Were they happy with their gifts? Did I find it convenient to shop online? The answer to all three questions is YES … I could be a great customer, but I won’t be, because I’ve lost track of the website’s name.

Second. Well over a year ago, I stopped making gifts in response to online appeals from an organization I had supported previously. Since then, I’ve received additional e-appeals at least every other week from this group — dozens of appeals. But they’ve never bothered to ask me why I’m not responding. Haven’t they noticed yet? Or is it easier to just keep emailing me and hope I’ll have an epiphany?

If I sometimes sound Neanderthal on newfangled subjects like fundraising via social nets and mobile, it’s just that I can’t see the wisdom of charging into these areas — with demonstrably less pay-off — before getting right the absolute fundamentals of donor cultivation. Too often, I’m reminded — as with Network for Good’s study — that too many in our field don’t seem to be getting the basics down.

Tom

In 1995 Clayton Christensen coined the terms “disruptive technology” and “disruptive innovations” to describe technological innovations, products or services that use a “disruptive” strategy rather than “revolutionary” or “sustaining” strategies to overturn dominant or status quo products in a market.

“Disruptive innovations” can occasionally come to dominate an existing market, either by filling a role that the older technologies couldn’t — as cheaper, smaller sized flash memory is doing in the personal data storage area. Or by successfully moving up-market through performance improvements until finally displacing the market leaders and incumbents — as digital photography replaced film photography as the front-runner.

Which leads me to wonder if the “disruptive innovation” of peer-to-peer philanthropy – the third party giving sites like Global Giving, Kiva, DonorsChoose and Social Actions – will eventually replace the big, brand name nonprofits? Afterall, dozens of these sites have sprung up in recent years and they’re raising tens of millions of dollars for good causes. Many experts in the field are predicting exponential growth.

Last week’s Chronicle of Philanthropy carried a well-researched, well-analyzed piece on the rising number and early successes of the on-line peer-to-peer philanthropy groups with websites that enable small donors to make gifts or loans directly to charities, individuals or schools.

While the piece mainly focused on the issue of if and how these groups should charge administrative fees for their services, a quote from Charles Best, the founder of DonorsChoose – whose volume is doubling nearly every year — made a point about why these sites are increasing in popularity.

“Our Web site does attract some people who have become skeptical about writing checks to big institutions. They didn’t know where their money was going, and didn’t have a connection to people touched by their gifts.”

For the past three years we’ve been warning Agitator readers that “brand organizations” should no longer take for granted their brand dominance and the security it provides. And here’s yet another wake up call.

Of course the rise of these peer-to-peer sites bespeaks innovation. But quite frankly, this rising phenomenon speaks equally to the laziness and head-in-the-sand attitude of too many of the big boys who should have, could have, and still can be making a similar case and approach for themselves.

Part of the reluctance no doubt goes to the almost genetic aversion big groups have for earmarking contributions. (“We’re writing and asking you to support programs about water quality, but we really want some funds for the new office building.”)

But the fact is growing numbers of today’s donors – as seen in a variety of surveys including our most recent DonorTrends 2008 Survey and in the rising popularity of sites like GlobalGiving – want to be more directly involved in the objects of their beneficence.

Is it too late for the big boys? Have they missed the boat? I posed these questions to Dennis Whittle, the former World Bank exec who founded GlobalGiving eight years ago. Dennis, whose gentle words and steel-like determination make him the great fundraising pioneer he is, diplomatically answered my questions by reminding me of the "Innovator’s Dilemma".

“Innovator’s Dilemma” — a term also coined by Clayton Christensen in his 1997 book titled the same — describes how incumbents typically compete by continually adding new features or more complexity, eventually overshooting the requirements of their target market and providing an opportunity for upstart competitors to provide a lower-cost "good enough" solution.

In kicking this around with my colleague Ryann Miller, the Managing Director of DonorTrends, who watches online developments like a hawk, it’s clear that the “problem” the larger charities have isn’t one of technology. After all, they too have online donation pages, and most have very in-depth programmatic operations that extend far, far beyond the web and technology.

At the heart of the Innovator’s Dilemma for the larger, older, most historically successful nonprofits is the bind of general or unrestricted funds philosophy and the need to find ways to ‘earmark’ and connect donors and recipients in a better way. It’s less about one OR the other, and more about borrowing ideas from each, and mutually benefiting from the unique selling points of the third party fundraisers and embedding them in the all-too-staid conventional groups.

And of course, it’s all about mindset. And the willingness to adapt and change.

If CEOs and fundraisers in the big incumbent organizations affected by the rise of peer-to-peer philanthropy aren’t concerned and figuring out how to incorporate the innovating and compelling aspects of this new phenomenon, they oughta be fired!

Roger

Twenty-three nonprofits provided research access to their donors in this category … typically the 1% of donors in their universe who give almost one-third of the money.

The report drips with valuable data and insights. In fact, if you raise charitable money and do not read this report, you oughta be fired!

On the other hand, the firms and individuals who produced this report, of course, deserve a raise! And kudos too to the groups who shared their donors for the project.

No single blog post can do justice to the richness of information in The Wired Wealthy. So I won’t dribble out a bunch of teaser factoids here.

Instead, to encourage you to read it yourself, I’m simply going to list some of the questions you will find answers to (or at least guidance on): 

• Can you treat all your "Wired Wealthy" alike? The authors found three segments within the Wired Wealthy universe — Relationship Seekers, All Business and Casual Connectors. What are their critical differences and what are the implications for communicating with each segment online?
• How do these donors relate to whiz-bang online stuff like videos and social networking tools and sites?
• How do they grade (your) nonprofit websites? How often and why do they visit them? [Warning: some depressing news here.]
• How much of (your) email communications do they read … and how do they grade them? [More depressing news! Clue: the report refers to an "inspiration gap."]
• What kinds of online communication would be welcomed by all three segments of the Wired Wealthy?
• Do they expect to be giving more money online in the future? How do they feel about direct mail?
• What online activities do they undertake in support of the causes and charities they contribute to?
• Just how important is it to be responsive to the individual preferences of these donors and to customize communications accordingly? [This is a Pass/Fail question!]
• To what degree are nonprofits honing special online approaches to the Wired Wealthy, and are the right people involved?

If these questions — and insight into their answers — are not important to you, then either you are not a fundraiser, or you are not a fundraiser with a future!

Read The Wired Wealthy!

Tom

P.S. The Agitator has just completed its own DonorTrends survey of donor giving preferences and behaviors, as well as donor reputation rankings for about 100 leading nonprofits. This research updates key data from our 2005 DonorTrends survey, and will fuel a fresh series of white papers and briefs. Watch this space!

The context was Sean asking whether philanthropists should speak out about nonprofits they considered to be ineffective.

What a remarkable position for a grantmaker to take, effectively … "even if they suck, we love them!"

That grantmaker oughta be fired.

It’s bad enough that hard-working, ethical, well-performing nonprofits must be saddled with public cynicism generated by the scum "charities" … the paper ones that live to rip-off donors by throwing most of their income into salaries and controlled marketing vendors.

These practices and charities pull down the reputation of the entire sector … and provide plenty of fodder for tabloid-level coverage of the charity/nonprofit world. So we have plenty of pinhead coverage of "fundraising efficiencies" and breathless reporting of outright scams.

But then compound this trust-busting by evidencing to the public an attitude that performance doesn’t matter. After all, we’re all doing god’s work.

Performance does matter. The problems are too big to be addressed even remotely by the philanthropic monies on the table. There’s not a dollar to spare. Consequently, there’s certainly not a dollar to spare on nonprofits that are ineffective.

In fact, there’s not a dollar to spare on nonprofits that are just "OK" in comparison to others in their field who are superlative.

The nonprofit world has proven remarkably resistant to Darwinian natural selection …survival of the fittest. Unfortunately, that’s in part because of the muddle-headed attitude of too many old-school grantmakers and donors like the one cited by Sean.

We need much more attention to performance and, while one-size-fits-all metrics aren’t appropriate, we need far more rigor in assessment and transparency in sharing those assessments.

Letting a thousand flowers bloom has turned into an impossible to penetrate or manage infestation of weeds. 

Tom