A New Direction for Tomorrow's Direct Mail Fundraising

By Mal Warwick

Copyright © 2004

 

When people talk about trends in fundraising generally, or about direct mail trends specifically, they usually mean fads, not trends. Like whether name-stickers are still working well, or personalized packages are replacing generic ones.

 

To my mind, those aren’t trends. Not even close. I refer to trends as the strategic considerations that make or break our work.

 

For starters, it’s futile to look at the prospects for direct mail fundraising over the long haul without first examining the state of the nonprofit sector and our expectations for its future. These expectations are the assumptions we bring to the table. Here are mine:

 

 The nonprofit sector will continue to face needs greater than its capacity, exacerbated by the widening gap between rich and poor, and will thus demand continuously increasing amounts of money.
 The demographic patterns that characterize U.S. society will continue to evolve, yielding a population that is larger, older, ethnically more diverse, and increasingly well educated.
 The peoples of the world will become interdependent to a degree only hinted at now, driven by global corporate expansion and the accelerating impact of worldwide environmental problems (especially global warming; growing shortages of water, oil, and arable land; overpopulation; and the spread of newly emergent communicable diseases).

 

So, please tune in some other time if you’re wondering about name-stickers. In this column, I’ll continue the discussion I launched in May in this space by reviewing one of the three Big Picture trends that respond to this reality . . . trends that are shaping the present and setting the course for the future direction of direct mail fundraising.

 

Here goes:

Fundraisers—even, at last, many direct mail specialists—are coming to understand that building mutually rewarding relationships with donors is indispensable to the long-term health of a fundraising program.

 

It’s not hard to understand why it’s taking so long for direct mail fundraisers to accept this most fundamental insight of the fundraising world. That’s because, historically, nonprofit direct mail specialists have identified much more closely with commercial marketers than with fundraisers.

 

For example, people in the field gravitate much more readily to the Direct Marketing Association than to the Association of Fundraising Professionals. There are good reasons for this—not the least of which was that, for decades, the fundraising establishment looked down their noses at direct mail practitioners, and fundraising conferences typically offered few educational sessions on direct mail fundraising.

 

Traditionally, fundraisers concerned themselves largely with people of means. By contrast, marketers spoke to people in the mass. With minor modifications, the techniques they developed could be applied to meet the needs of annual funds and other programs that addressed small donors rather than large—and, lo and behold, those marketing techniques worked! For more than three decades (the 50s, 60s, and 70s), direct mail fundraising proved to be a cash cow for a great many nonprofit organizations. As a result, the field came to be dominated by a marketing mind-set that focused our attention on numbers rather than people, treating donors as digits rather than the living, breathing, passionate individuals they are.

 

Oh, granted, marketers in recent years have been chattering about Customer Relationship Management, and, in truth, many have long been fixed on the central importance of the Long-Term Value of the customers. No matter how you cut it, though, direct marketing is a transaction-based process. The purpose of marketing is to sell stuff. And when fundraising is dominated by the same transactional mindset, relationships suffer—and so do long-term results. That approach has brought the field of direct mail fundraising to an impasse.

 

Table 1 illustrates an important long-term trend in direct mail fundraising. (The numbers in this table represent rough, ballpark estimates of prevailing costs and returns. If anything, I believe they understate the trend.)

 

Table 1

Costs and Returns in Donor Acquisition Mail

 

Decade	Cost/pkg	Return/pkg	FR Cost*	Acq Cost^
1950s	$0.05	$0.10	$0.50	$(5)
1960s	0.10	0.15	0.67	(2)
1970s	0.15	0.15	0.00	0
1980s	0.30	0.20	1.50	5
1990s	0.45	0.25	1.80	10
2000s	0.45	0.20	2.20	15

 

* “FR Cost” = Cost to Raise a Dollar
^ “Acq Cost” = average cost to acquire one new donor

 

Now, please don’t rush to the keyboard or pick up the phone to hound me with complaints about inflation and competition. I recognize that these factors have surely helped shape this trend. But I am absolutely convinced that our own practices have played a major role, too:

 

 We have mailed and mailed and mailed some more, ignoring donors’ complaints about mailing too much.
 We have insisted on upgraded gifts in every mailing, abusing the principle that “if you don’t ask, you don’t get”—despite the fact that no more than about one-third of direct mail donors ever upgrade their contributions.
 We have tossed aside those pleading marginal notes from donors, asking us to stop sending that newsletter that never gets read.
 We have cut costs on caging, cashiering, and list maintenance, contenting ourselves with “95% accuracy” in the belief that those donors whose names and addresses are mangled don’t really make much of a financial difference in the larger scheme of things.
 We have taught donors to expect free goodies in the mail in exchange for their “gifts.”
 In short, all too many of us, for far too many years, have treated direct mail donors like dirt.

 

We’re learning to do better now. Thanks to Paul Schervish and his colleagues at Boston College—authors of the now-famous paper heralding the “$41 trillion intergenerational wealth transfer”—we are coming to understand that we pay a very heavy price when we treat direct mail donors poorly. We’re learning that the average bequest in the U.S. is about $35,000—surely a major gift by the standards of almost any nonprofit organization—and that such bequests typically come from donors whose lifetime giving was modest indeed, often no more than $10 or $20 at a time. We understand that people who are mistreated and ignored for years are, shall we say, less likely to do so.

 

Thanks, too, to a Scotsman named Ken Burnett, author of Relationship Fundraising and other seminal books on the topic, we’re learning how to practice our craft in a sensitive manner that strengthens rather than undermines our relationships with donors. We’re coming to understand that the line between annual giving and major gifts—long a hard-and-fast divide in most nonprofit organizations—is arbitrary and largely counterproductive. We’re picking up the techniques to involve donors—by mail, by phone, and in other appropriate ways—so that they become, to lift the title of another of Burnett’s books, Friends for Life.

 

Canadian consultant Penelope Burk has driven home the point with her studies—first in Canada, more recently in the U.S.—that demonstrate the central importance of acknowledging donors’ gifts and keeping them informed about how we’ve used their money.

 

All in all, those fundraisers who are at the forefront of direct mail practice today have come to understand that the best fundraising, and the strongest long-term results, are based on a donor-centered approach.

 

Do you look on your direct mail program in this way? Have you learned to treat your donors as human beings rather than statistics, as people with their own wants and needs and preferences? If not, check out some of these resources. Follow their advice, and they’ll put you squarely on a path to the future of fundraising.