TIME TO CHANGE TACTICS?
Lawrence Jackson urges charities to take a closer look at what donors and the community really want – or risk losing their trust.
The late Madison Avenue advertising guru David Ogilvy once said: “The consumer isn’t a moron. She is your wife.” You could say something similar about the relationship between charities and donors…which leads me to wonder – observing current fundraising practices – whether Australia’s charity sector is showing donors the respect they are due.
The cost of competition
In our drive for a share of donors’ wallets – pressured by sector competition and unpredictable financial markets – charities have been swapping donor data, and enticing donations with free gifts and trinkets in their mission to seek ever-higher responses.
Once they’re on board, we send thank you ‘donor care’ mailings. But we can’t help
including a ‘soft donation ask’, as many donors respond generously to any charity
letter. Our raffle and lottery programs boast prizes ranging from cash to electronic
goods and tantalising holidays, even palatial homes, in exchange for people’s support.
However, look closely and you will see cracks beginning to show. Anecdotal evidence is emerging of society’s negative reactions to some of these now commonplace practices.
Some of the observations I have made from my time as a fundraising consultant and practitioner include:
high levels of return mail from direct mail appeals, sometimes up to 7% to 10%, often sent directly back to mail houses because volumes are too large for charities to process internally
very low response rates and average gift levels for premium-based direct mail appeals, highlighted by some of the lowest second-gift rates in years
declining year-on-year donor retention rates, leading to stagnant donor programs from prominent and highly trusted charity brands
irate letters and Facebook messages from donors complaining about activities they see as aggressive and wasteful.
If anyone has any doubts about whether this is a concern, you only need to look at the media storm and industry meltdown that has engulfed the UK’s charity sector – the response to the perception of unethical practices following a loyal elderly donor’s suicide, which was linked in the press to her
being on the mailing list of approximately 3,000 charities. On the flipside is Canada, where the rising #DonorLove movement aims to enhance the satisfaction and retention of people who donate.
It is unlikely Australia will be immune to such developments. Witness Nicky Gemmel’s recent piercing column entitled Charities and the Donation Industry: Sailing into Dangerous Waters in the Weekend Australian. This reluctantly outlines her concerns about both UK and Australian fundraising practices, her views on industry blind spots and her fears of the storm she guesses is ahead.
Welcome to the arms race
As a longstanding practitioner myself, I fully appreciate that donations are essential for charities to serve needy beneficiaries. And securing them is getting harder.
There are around 700,000 not-for-profit organisations in Australia today. These include over 60,000 registered charities and around 25,000 deductible gift recipient-endorsed organisations. However, it seems to me that competition may have set off a fundraising arms race, blindly embraced by the whole sector without sufficient consideration, scrutiny and analysis.
“If you don’t ask, you don’t get” – right? Perhaps. But my sense is it’s time to find the balance between asking and appreciating – in a way that acknowledges people’s authentic motivation for giving and to ensure Australians’ and donors’ trust in charities goes unharmed. After all, that trust is what every charity relies on to survive.
Admittedly, it’s a difficult balance to achieve. But my fear is that otherwise – through overuse and mainstreaming of techniques primarily oriented to increase donations and response – we may be sending the wrong messages to donors.
Wrong, because the act of giving in itself should be a joyful and rewarding experience. This is what truly motivates people’s generosity – and it’s the ethos behind the help charities offer beneficiaries.
As such, it’s the common philosophy that bonds charities and donors. Do supporters really need to be bribed and cajoled to induce their patronage? How long will it be before these practices can’t be sustained in their existing forms?
It’s time to be courageous
In my view, given the signs of donor angst I’ve mentioned, the fundraising industry now requires solid resolve and courage to dispassionately assess the impact over time of some of our practices.
It seems clear that a recalibration is warranted if we are to achieve and maintain more authentic levels of donor engagement.
I suggest we attempt this as follows:
Revert to tactics which tap into donors' authentic motivation for giving.
Honour the sense of personal fulfilment donors feel when contributing to and helping others.
Overcome the temptation and fixation for the short-term donation sugar hit, and rather focus on the far more critical long-term metrics of lifetime value – that is, net income produced from fundraising campaigns over at least a five to seven year donor loyalty period.
Develop capability to accurately measure critical loyalty milestones over the donor journey: namely first year attrition, year-on-year retention and annual gift increase levels.
Factor in the full impact of techniques and tactics employed such as costly premiums, swapping of donor data and cooperative schemes, and precisely determine the long-term net outcome of these.
Consider the impact of our activities on the current and future levels of public trust in charitable organisations.
Keep determining ways to proactively self-regulate and to communicate fundraising practices likely to be well regarded by donors.
Otherwise, what mixed messages are we sending donors about our expectations – and what it means to give? If we aren’t mindful could we be changing the donor ecosystem forever? I hate to imagine what David Ogilvy would think.
Lawrence Jackson
Lawrence is the principal of Catalyst Management, and he has over 16 years of experience as a fundraising, philanthropy and cause marketing practitioner and consultant.
F&P Magazine | June July 2016