The direct mail slump continues. In fact, Target Analytics’ 2009 Index of National Fundraising Performance for the Third Quarter indicates the decline is speeding up.
What strikes me as most worrisome is that now both donor acquisition and donor development (house file activity) are in trouble. For nearly five years we’ve watched the numbers of new donors decline, but whistled past the graveyard as those losses were made up by rising per donor net income from house files.
No more. As the Target Analysis Index makes clear over the past five years real income adjusted for inflation has declined by 6.3%, the number of donors has fallen by 5.4% and the number of new donors by a whopping 19.4%.
No one has totally dodged the decline:
• 1st year retention rates are down across all of the 8 industry sectors measured;
• No sector is doing as well as it did five years ago, although the “Societal Benefit Sector” (advocacy organizations) is having fewer problems and donors in the “Human Services” sector are rallying to meet recession-induced needs of groups in this area.
• Even the perennial high performing sector –“Animal Welfare” –declined slightly in revenue and new donors beginning in the 3rd Quarter of last year.
Why is this happening? Sure, the recession shares some of the blame, but remember, the downward trend for most organizations was well in place long before the economy crashed. And demographic changes have been underway for as long or longer than this downward trend.
Are fundraisers doing something wrong? Or different? Or both? Have donors’ attitudes changed? Are the internet and social networks playing some unknown or incalculable role?
All of these are, of course, legitimate questions, but there’s a larger issue all of us should be addressing: “Why do so many organizations persist in doing the same old, same old year after year hoping that results will suddenly improve?”
Tomorrow I’ll tackle that issue.
Roger
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Roger, I can’t wait for your post tomorrow. In two words: risk aversion. We fundraisers keep doing what we’ve done before because the infrastructure for mail is more developed than the infrastructure for other channels; because analysis shows that nets for mail at many organizations continue to be significantly higher than nets for other channels; and because most organizations are not willing to take a long view and invest in developing unproven technologies or audiences. (How many organizations for example, are looking to make their fund-raising relevant to Hispanic or Asian donors?) What we “know” dictates what we “do”. So, even when we do experiment with new media (DRTV, mobile phones, social media, email), we tend to use the old advertising, sales “formulas.” At least, this is what we have been saying to ourselves and nonprofit leaders, in my experience. And now, as we watch our returns decline, we are preparing ourselves for limited success or outright failure, compared to the 80s and 90s because there are no easy answers. So what if …
having trained our donor bases, we actually asked them how often they want to hear from us — and honored their requests? What if … we told them stories of success … what if every non-profit leader asked every small donor to an interactive web party … what if we asked donors to prepare the causes they support for success …. Well, I’ll stop now because I’ve begun to ramble. Thank you for these posts. I hope that many more Agitators who read The Agitator will participate in this particular on-line dialogue. Best regards, Kate Mathews
Do you think that possibly the difficulties that some well-known nonprofits have had that are being exploited by the media could have something to do with this? There are many, many, many of us doing great work, but the media only talks about those who are in trouble. I would guess that probably doesn’t help in our ability to engage new donors. Anxious to hear all the other ideas and comments!
While the number of new donors is down for many organizations, we have only seen a small drop if any for the regional/medium-size nonprofits we serve. This may be related to new donors gravitating toward more local organizations where they feel their dollars will have the greatest impact.
Obviously a new donor acquisition approach is needed for many organizations, but I would hate to see this news cause some nonprofits stop their direct mail fundraising efforts. The article today in the Wall Street Journal “Firms Hold Fast to Snail Mail Marketing” is a lesson for all of us.
Hi Kim! Hi Scott!
Kim, on Sunday, I was visiting friends I hadn’t seen in a while, talking about what I do, and one of them said that he’d stopped giving through United Way because of the William Aramony scandal. To me that is ages ago, and affects United Way, not individual charities. But I realized (1) of course it affects individual charities who depend on United Way; and (2) our donor market expects higher ethics of non-profits and has a very long memory. Your point is well taken.
Scott, thanks for the tip on the artcile — I have to go find it! Kate