August 2005

How to design your bequest mailing by Gwen Chapman

Part I of our interview with Beverly Kempf

With monthly giving continuing to be extremely popular in the fundraising world, there's one area that doesn't generally receive much attention . . . though it's critical to the success of any sustainer effort. We're referring to the back-end fulfillment process after a donor pledges to become a sustainer.

So for insight and expertise, we turned to Beverly Kempf. Her firm, Payment Solutions (Bethesda MD), manages monthly giving programs: maintaining the database, making the payments, and providing reports back to the nonprofit.

Payments are typically made through either credit cards or electronic funds transfer (EFT) using a bank or savings account.

The old way

The third traditional way to make payments is by sending the sustainer a monthly reminder and trusting her to respond with a check. However, this has proven to be not only more expensive, but also harder to fulfill. "So," says Kempf, "I don't personally think it's the best way to have people pay into a monthly giving program."

Her perspective is that people who become check payers would probably opt for credit card or EFT if they weren't given the check payer option. "You're kind of degrading the number of automated people by offering the check payer option."

What's more, Kempf explains that if given all three choices, "donors will probably choose the check payer option because they're in control. Or they perceive they might be in control. They'll pay you when they feel like it."

The old days are over

Kempf also notes that using checks is "the way a lot of agencies started their programs. And I think that was realistic back then because the whole concept of EFT was new."

Now, however, as EFT has grown in popularity — along with the increased use of credit card billing — this is no longer an issue. "I think people know what bank debits are. They're paying utilities and all kinds of things by debiting bank accounts."

Deciding between EFT and credit cards boils down to cost versus ease of getting the donor to choose one or the other.

The cost factor

Credit cards will almost always be more expensive. That's because the nonprofit ends up paying both a percentage of the monthly charge to the credit card company (usually 2-1/2 — 3-1/2%) and a per-item charge (ranging from 10 cents up to 40 cents, with 15-20 cents being typical). Credit card companies are starting to levy a monthly service fee, as well.

With EFT, though, the nonprofit will only have a per item fee of 10-15 cents. But based on the size of the group's existing bank account, that fee can oftentimes be offset by compensating balances. As a result, Kempf says that "in many cases the organizations are not paying very much, if anything, out of pocket."

The ease factor

The problem with getting people to commit through EFT lies in the legal requirement of securing written authorization from the donor. This poses a problem in telemarketing, which can only take one-time EFT gifts by phone and not recurring charges. Telemarketers are forced to fulfill the EFT pledge by obtaining a signature through the mail, making it a two-step process. Credit card giving, on the other hand, has no such restriction.

In mail solicitations that offer both options, Kempf says that for most organizations "we used to see a two-to-one advantage for credit cards over EFT. But I'm not seeing that so much anymore. It's getting more equal and approaching 50-50. I think it's just that the EFT option is getting so much better known now."

This was Part I of our interview with Beverly Kempf. Next issue, in Part II, we'll explore what Kempf has to say about the pitfalls in setting up and maintaining a successful sustainer program.

How to design your bequest mailing
By Gwen Chapman

As research conducted by Sargeant and Jay (and reported last year in this e-newsletter) has revealed, the level of family need appears to be the greatest barrier to including a legacy. Intuitively, we've always known this to be true. But now the research should fuel our confidence as development professionals to address this barrier.

Almost 60% of donors who hadn't yet planned a bequest (supporters) speculated that if they were to do so, they would make a bequest of a specific amount or a percentage of their estate. But more than 60% of donors who had already included a bequest (pledgers) had planned a residual bequest. Clearly, the pledgers have discovered that by including a residual bequest for a nonprofit, they can take care of family need first — thus overcoming a significant barrier.

Supporters were significantly more likely than pledgers to agree that not having enough money to make it worth-while offering such a gift is a significant barrier to including a bequest. Another barrier brought to light was not wanting to commit now in case their interests change over time.

Here's how can you apply these discoveries to the design of your next bequest mailing . . .

Stress that a bequest of any size would be appreciated and have critical impact. If your organization allocates unrestricted bequest income to a pooled endowment fund, be sure to tell donors. The impact of a bequest pooled with other bequests in any endowment will be magnified for lasting legacy impact.

Acknowledge that family and loved ones come first, and invite the donor to leave a residual bequest for your organization. (Review the standard legal wording you offer donors who inquire about bequest wording. Chances are, the reference to a residual bequest is listed last. Reverse the order, so that a residual bequest comes first.)

Include a statement that reassures the donor that her revocable gift can be changed at any time. Most donors in the Sargeant and Jay research (67%) said they wouldn't tell an organization if they had included a bequest. Mal Warwick & Associates has received the same response from donors in focus groups. Donors are afraid they'll change their minds, or that information about their gift will be shared with other organizations. Dispel these concerns. Reassure the donor that any information she shares is confidential. The word "confidential" should appear on the response form and the reply envelope. The reply envelope should be addressed to an individual by name. Your bequest mailing should not be perceived by the recipient as the latest in a string of solicitations. You're writing to the donor about a very sensitive matter, and the package should be highly personalized —just as you would personalize a letter if you were asking a donor for a substantial annual gift. For many donors who leave a bequest, it will be the biggest gift they ever give — truly the ultimate gift.

Immediately upon receiving the envelope, the recipient should recognize it contains something significant. A low-cost direct mail package format will probably look very much like every solicitation package the donor receives from your organization. Rather than mail a cheap package that looks like direct mail, send a quality package to fewer people. Make the package look distinctly unlike direct mail. The package should look like a personal communication.

What's up online
By Dan Weeks

San Francisco's Tenderloin district has long been a gritty place, whose inhabitants are often just one step from living on the street. Since 1981, the Tenderloin Neighborhood Development Corporation (TNDC) has been working to change that by providing safe, affordable housing with support services for low-income people.

TNDC houses 3,000 extremely low-income people in 1,600 apartments and residential hotel rooms in 21 buildings. Their Web site features fun graphics, a cool virtual tour, property portfolios, and a video of TNDC Executive Director Bro. Kelly Cullen speaking. Check it out at http://tndc.org.

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August 2005

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