January 2007

YOUNG ALUMNI could be considered a direct mail nightmare for university fundraisers. As a whole, they represent a fast-growing portion of your alumni base, while providing a serious challenge to participation goals.

Weaned on cell phones, e-mail, and text messaging, many are busy establishing careers or struggling with tuition debt. Unless they were provided with a strong sense of institutional loyalty during their campus days, direct mail appeals to these folks often do not generate desired results.

If direct mail is not likely to be effective,does it make sense to do it? I think the answer is emphatically “yes.” Running such a program at slight loss—or even if you don’t come close to breaking even—should be regarded as a long-term investment.

That’s because direct mail is an excellent way to build loyalty and begin a lifelong conversation. The earlier you establish this relationship, the better your long-term prospects.

However, too often fundraisers draft a letter to established donors and then “segment” it for younger alumni by changing a sentence or two. It’s certainly easier, but is it effective?

CHANGE YOUR THINKING

Address young alumni for who they are, and recognize their gifts are likely to be small. Take advantage of direct mail’s flexibility to care for them as a unique audience. The key is to establish the relationship, not the dollars.

You need to be committed and willing to do a few things differently: researching, testing, and, perhaps, changing your strategy. Look at what other schools are doing. (Though there’s no guarantee that what worked at one institution will also work for you. Testing is your best tool.)

THE 40/40/20 RULE

The conventional wisdom in direct marketing is that 40% of your results are attributable to the right audience, 40% to the right offer, and 20% to the right message.

In this case, audience is not a variable. So we need to examine the relative importance of offer versus message, since the offer is twice as important as the message.

Your appeal is fundamentally a “sales” operation. Most young alumni aren’t going to “buy” unless you’re selling something they want. What “customers” want are benefits. So your message needs to describe the benefits the reader receives by responding.

Think in terms of the offer. Adopt the mindset that you’re not soliciting your audience to give money. You’re providing them reasons why donating will benefit them—and informing them of new opportunities.

Most mailings I’ve seen, to the extent they mention benefits at all, refer only to the good feeling of giving back. While important, this shouldn’t be your only selling point. You need to identify as many benefits as you can and include them in every appeal.

Not sure what those benefits are? Ask the people who already know: your donors. By asking them why they give, they can provide you with a wonderful list you can adapt to your younger audience.

GET EMOTIONAL

Direct mail letters can be passionate messages to the reader or institutional pabulum. Treat your young alumni as you would your friend, by introducing those same emotions into your appeals. Humor, pride, desire, even guilt are great motivators.

You attract attention with the envelope, so your “sale” starts there. Envelopes are wonderful vehicles for testing. Introduce color, try dramatic teasers, use different sizes, add humor—anything to make readers pause and wonder what’s inside. This isn’t their father’s (or mother’s) direct mail appeal, so change it!

THE PREMIUM QUESTION

In my opinion, when utilized correctly, premiums always increase response rates. The question is, do they do it profitably?

I don’t think I’ve ever seen a conventional premium (coffee mugs, license plate frames, etc.) used effectively to young alumni. But many programs do extremely well with such upfront “freemiums” as address labels, greeting cards, personalized notepads, and bookmarks.

Before you say, “I’d never cheapen my message with a tacky premium,” consider whether this is institutional policy and/or your own personal preference. Your job is to create unique appeals to your young alumni, while providing immediate benefits. If you set aside your personal preferences, you’re free to try anything.

THE COST OF TESTING

If you don’t try something new, you may miss an opportunity to connect with this important constituency.

Remember, you don’t need to blow your budget to test a new piece. You just need to become resourceful. For example, examine your current postage costs. See if you’re getting every postal discount available. Speak with your printer. She can often suggest ways to test a new envelope size or ink color at little additional cost.

Look at the frequency of your appeals, the type of mail pieces, and the overall quantity mailed. Some schools are mailing less to longtime never-givers and redirecting the savings toward testing their younger audience.

A FINAL THOUGHT

Ultimately, young alumni may not be a dream demographic. But if you want to increase alumni participation, they’re your program’s future. So start the conversation now. They’ll be far more likely to keep up their end of the discussion later.

Paul Barry is Vice President,Nonprofit Client Services, J.M.Perrone Co., 105 Research Road,Hingham MA 02043, phone (781) 741-2200, e-mail pbarry@jmperrone.com.

View the full package here.

2. Action!

by Mal Warwick

WHAT CAN your newsletter do for you? The much-maligned donor newsletter—whether monthly, semimonthly, quarterly, or two or three times annually—is often seen by fundraisers as a throwaway, an off-handed gesture to donors who seem to feel as though they’re not getting their money’s worth without one. For some nonprofit mailers, though, the donor newsletter rises to a prominent place in the annual fundraising schedule.

Take, for example, this worthy recent bulletin from Greenpeace USA (Washington DC). The newsletter itself is a colorful, 18-page booklet measuring 5-1/4 x 8". Though its format is unusual, the most distinctive element in the quarterly package is the combination of a cover letter, action devices, and a standalone promotion for monthly giving, along with a Business Reply Envelope.

Greenpeace USA Development Director Matthew Sherrington relates that response to the newsletter rose with the inclusion of a cover letter—and rose further with the inclusion of action devices like those pictured here.

The upshot? The newsletter more than pays for itself, Greenpeace donors have yet more frequent opportunities to participate in the activist work of the organization, and Greenpeace’s monthly giving program—already including 25% of its donors—continues to grow.

Maybe it’s time for you, too, to rethink what your donor newsletter can do for you?

View entire package here.

3. Seven New Year's resolutions

by Rachel Allison

IN THE EVER-CHANGING WORLD of online fundraising and advocacy, it’s important to remember that, like the New Year’s resolutions we make every year, the fundamentals don’t change often either. As 2007 begins, here are seven resolutions you might consider for your online program:

1.Put your online program on a diet.
What impression do you want to make on your online members this year? You could give every department in your organization free rein to send out the e-mails they want. But come December, your list will have a hazy, undefined idea of your goals and achievements. Instead, your organization can agree to trim the fat and focus your online program around a small number of clearly defined, achievable goals. A tightly focused story like this will ensure that your readers know exactly what you stand for, what you’ve achieved, and why they should donate to you in 2007.

2. Stop trying to be all things to all people.
It’s great to pay attention to what your list is telling you. But don’t let the disparate concerns of all the different demographics on your list become the guiding force of your online program. Make sure the story you decide to tell arises from your organization’s mission, history, and individual brand. Your list members look to you to know what matters in your issue. So make sure you don’t reverse the roles unwittingly.

3. Play well with others.
Your online audience sees your message at a variety of times in a variety of media. Whether you’re following up with new online members on the phone or sending e-mail renewals to your direct mail donors, there are infinite ways you can reinforce your message effectively by maintaining a truly integrated online program.

4. Learn to open up more.
People who send e-mails, people who read emails— in the end we’re all just people, and we all have personal, interesting reasons why we’re involved in the issues we care about. Take the time to embrace and cultivate the personality of your e-mail signers. Photographs, anecdotes, and a personal tone will create a powerful sense of community.

5. Try to have a more positive outlook.

Between Pollyanna and Debbie Downer, there’s a happy medium that your online members crave. But all too often, online programs focus too much on challenges and threats, and forget to remind their members why there’s reason to hope. When you ask your members to get involved this year, remember to tell them exactly how that next piece of legislation, campaign, or project will make a difference— and be sure to celebrate your victories.

6. Be a better listener.
Every good relationship is built on open communication, and your online program is no different. Give your members ample opportunities to weigh in on your issue through surveys, comments on blogs, interactive quizzes, and contests. In the course of getting this all important feedback, you might just end up with some great content and/or stories to highlight in future online communications. No doubt about it, your members will notice and respect this effort to include them in a meaningful way.

7. Try new things. Expand your horizons.
A new day, a new online fad. It can be dizzying, right? While Web 2.0 probably won’t change the fundamentals of your online program, it’s important to keep testing the ways these new tools can enrich your members’ experience. So far, efforts like MySpace, YouTube, and blogs seem to be most effective as cultivation tools rather than techniques for huge list-growth or donations. But you won’t know what they can do for you until you try, so jump right in and try some new things in 2007!

Rachel Allison is Associate Creative Director, Donordigital, 182 Second Street, San Francisco CA 94105, phone (415) 278-9444,fax (415)901- 0112, Web www.donordigital.com, e-mail rachel@donordigital.com.

4. Comparing lists by Long-Term Value

By Suzie McGuire

ON FIRST TESTING and rolling out an acquisition list, you might be bowled over by the beauty of its terrific response rate or new-donor acquisition cost. But first impressions aren’t enough. It’s important to track each list’s acquisition cost over time—and to monitor that cost in comparison with the Long-Term Value of the donors you recruit.

Your Long-Term Value formula will take into account what proportion of donors acquired from each list give again, the number of additional gifts they give, their retention rates, and the return on your investment in acquiring those donors. When you run these numbers, you may find surprises in store for you.

I’ll use one mailing as an example and then compare initial performance to subsequent giving over a 10-month period.

(1) The best-performing lists in your acquisition mailing may not be your best lists when it comes to long-term retention.

The best-performing list in one mailing yielded a 2.12% response with a $30.60 average gift and turned a net profit of $9 per acquired donor. Over the course of 10 months, we were able to retain 29% of the original donors. Although the list performed best in the initial mailing, the retention rate was lower than the 35% average. I’ll continue to keep this list in future plans, but will balance the volume with other lists that have better retention rates.

(2) Poorly performing lists may be diamonds in the rough.

A list may initially look unresponsive, but over time it can pick up steam. In the same mailing another list yielded a 0.76% response with a $23.63 average gift and a cost to acquire a donor of $35. This list would probably not make the initial cut if I didn’t look at Long-Term Value. Over the course of 10 months, we retained 45% of the donors, and this list has become the most valuable list in terms of long term retention for this client. I’ll continue to keep it in the plan and will refine selections on the list to improve initial response.

(3) Keep an eye on catalog, subscriber, and modeled compiled lists.

In this mailing, a modeled database received a 0.72% response with a $35.80 average gift and a cost to acquire a donor of $18. If I ranked the list plan by cost to acquire a donor, this list would not be included in future plans. But its retention rate of 36% is relatively high, and it has brought in a great deal of additional revenue. I’ll continue to use this list and will refine selections to increase the percentage of response or reduce list costs to improve the cost to acquire a donor.

In the same mailing I used a high-end catalog list. Its initial response was only 0.48% with a $57.50 average gift and a cost to acquire a donor of $25. If I was only looking at cost to acquire a donor, this list would not be included in my next plan. Its retention rate was 36%, only slightly higher than the average for the mailing. However, its donors have brought in the most revenue over time. Fewer donors jumped on board in the acquisition mailing, but they gave more subsequent gifts at more generous amounts. I’m definitely keeping this list in my next list plan and will look at ways to refine list selections to improve the initial response rate.

You can also use Long-Term Value to study particular list markets or package formats. If you are testing new list markets, you may want to view performance over time by market. Or you may want to study how premium-acquired donors respond over time. Your broker can assist you with this type of analysis as it pertains to your particular program and its challenges.

Suzie McGuire is a Consultant at Mal Warwick Associates Inc., 2550 Ninth Street, Suite 103, Berkeley CA 94710-2516, phone (510) 843-8888 ext. 250, fax (510) 843-0142, Web www.malwarwick.com, e-mail suzie@malwarwick.com.

5. A picture says it all

by Deborah Block & Paul Karps

FOR ALL the talk these days about the pros and cons of using teaser copy on an outer envelope, it’s fascinating to come across a carrier that’s able to say so much . . . without using a single word. It’s the classic case of how a picture can indeed be worth a thousand words!

The package was a donor appeal mailed by Habitat for Humanity (Americus GA). The 6 x 9" outer shown here is absolutely striking, the black-and-white photo standing on its own as an eloquent statement about urban housing. In fact, the addition of any words might have served to detract from the power of the message. The back of the envelope continues the sobering theme, with the only copy being Habitat’s name and address on the back flap— printed in a simple white on black.

In typical Habitat fashion, a four-page letter tells the story of one low-income family’s battle with urban housing. Significantly, no specific mention is made of the photo used on the outer.

However, a cropped version of the same photo is used in a four-color insert on “Urban Poverty Around the World.” Printed on glossy stock, the folded piece measures 5-1/2 x 8-1/2". It opens to display two black-and-white photos, with the repeated photo on the left side. These panels then unfold to display a full 22 x 8-1/2" discussion of urban poverty in the U.S. and world—including photos, statistics, and a chart to show “Why We Must Succeed.”

The 8-1/4 x 5-1/4" reply device—printed only in black—features a smaller version of the outer envelope’s photo. This time, though, it’s screened back. An 8-1/2 x 5-5/8" BRE, again printed in black only, completes the package. All in all, the starkness of the black-and-white photo—used throughout the package, yet never directly referred to—stands as a visual challenge to the donor. As in, you’re not really going to let this sort of thing continue . . . are you? And that’s worth at least a thousand words, don’t you think?

View package here.

6. Six gifts

by Mal Warwick

DO YOU AGREE that fundraising is about building relationships—not about money? Great! But what sort of relationships are we talking about? In what ways will these relationships be expressed? Isn’t money, after all, at least one of those ways?

Well, obviously. But, broadly speaking, donors have the capacity to contribute six gifts:

Money, certainly, is the most obvious of those. Time quickly comes to mind, too—volunteer time, of course. In-kind gifts are also an obvious possibility.

These are each tangible gifts that donors can bring to the table, and we normally tell ourselves that all this is more than enough to worry about. But there are several intangible gifts as well, sometimes far more consequential ones:

Information in the form of market insight is part of the picture—the sort of information we can gleam from market research and day-to-day contact with our donors. However, some donors possess specialized information and skills and can serve as advisers, either formal or informal—sometimes even taking technically demanding jobs on staff on a volunteer basis.

Voice permits any donor to become your organization’s “ambassador”—a fundraiser, recruiter, or public relations representative whose active involvement can lower your fundraising costs, supplement your marketing efforts, and help build your donorfile.

Influence is within reach of every donor— presumably, every one of us has some degree of influence over others—but it can become of strategic importance when particular donors are well connected with key individuals at corporations, foundations, or government
agencies.

Intuitively, this all makes perfect sense. We nod our heads upon hearing it. But engineering our fundraising programs to make use of this broader definition of what donorsbring to the table is quite another matter for most of us.

As a practical matter, what can we do to capitalize on an understanding of the Six Gifts donors can contribute? The fundamental requirement is that you establish a dialogue with your donors.

In the case of major donors or declared legacy prospects, dialogue often comes easily. It’s our job as fundraisers to talk to them, if we possibly can. Not so with the overwhelming majority of contributors, especially in the context of large files of direct mail or online supporters. Here, establishing and maintaining dialogue with donors requires the artful and ongoing use of surveys, questionnaires, and other involvement devices—not the sort of involvement device favored by so many mailers (bogus “surveys” that are discarded upon receipt, phony “petitions” or “declarations of support”), but real questionnaires that solicit serious answers to serious questions.

If you’re prepared to strike out in the direction of genuine, two-way communication, then the possibilities will come quickly to mind— questions such as the following:

* Do you serve on the board of any charitable foundation?
* If so, which one?
* Are you well acquainted with trustees of any charitable foundation(s)?
* If so, which one(s)?
* Do you have a will or living trust?
* If so, have you made provisions for philanthropic gifts in your will or living trust?
* Have you provided for a legacy gift to [our organization]?
* Are you interested in receiving more information about legacy gifts to [our organization]?

You get the point. And this is only the beginning of where your imagination might take you.

Don’t be shy with your donors! You’ll find that large numbers of them will gladly, even enthusiastically, answer any questions you may care to ask.

7. Keeping it fresh

by Deborah Block and Paul Karps

EVERY NOW and then there might be a successful donor appeal or series you’d like to re-send to your supporters. Why not? Why reinvent the wheel? You can take that existing package, freshen it up, and re-mail it to the same people.

As freelance writers, we’re sometimes asked to do just that—particularly with a membership or annual renewal series. In effect, it’s a great way to recycle packages that are proven winners and give them some additional shelf life.

Here, then, are a few of the ways we spruce up existing copy. Hopefully, you’ll be able to use some of these tips to give a fresh coat of paint to your own packages!

START WITH FINAL COPY
To begin, make sure you have the final copy version of the package as it last mailed to donors— including all components. This is your baseline. Then highlight any and all edits, so you can see exactly what changes are being made.

FACT-CHECKING
You can then move on to identifying factual information about who the group is and what it’s been doing. Using the latest material available, update these facts and figures as needed. Sometimes the tweaks are obvious: like changing 2006 to 2007 or the number of people served from 65,000 to 75,000. The key is to be thorough and not miss the little things. Such as remembering your organization is now in its 39th year, not 38th.

REVISE THE OVERALL THEME
While it’s not always the case, you may need to revise the broader message in your appeal(s). Perhaps there’s been a change in your group’s mission. Or you want to put a new spin on your work. Or maybe there’s a new catchphrase or tagline you want to spotlight.

You should go through the entire package— the outer envelope, letter, insert, reply slip, and reply envelope—to see where you can plug in this new angle. At a minimum, try to incorporate it into the letter’s Asks and in the reply’s call-to-action. But you might also try to sneak some of this new language in wherever you can.

REPLACE PROGRAMS
Next up is switching out programmatic detail with brand-new material about different projects and/or developments at the organization. The trick is to keep as close as possible to the original format—since you already know it’s working for you—and find analogous new programs to talk about.

For example, if on the letter’s first page you have one paragraph for each of three success stories, replace those paragraphs with three new (and comparable) victories. On page two, if there are three bullets about the challenges ahead, go ahead and replace those with three new challenges. In other words, stick to the strategy that’s proven successful for you.

TIE UP LOOSE ENDS
Once you’ve completed all of the above, review for style and consistency. That’s a fancy way of saying you’ll want your changes to make sense and not conflict with what remains from the original copy. So don’t repeat certain words, phrases, and sentence structures—always a no-no in our book. That way the letter will flow at least as well as the first version.

Managing Editor Deborah Block and Paul Karps are partners in BK Kreative,1010 Varsity Court, Mountain View CA 94040, phone (650) 962-9562, fax (650) 962-1499, e-mail bkkreative@aol.com.

8. Tips & Tidbits

Really?

“Just three percent of the nation’s wealthiest households are responsible for nearly two thirds of charitable giving by individuals”—some $126 billion in 2005.

So reports Paul Clolery in The NonProfit Times on a study conducted for the Bank of America by the Center on Philanthropy at Indiana University. The data emerged from a study of 948 households with income greater than $200,000 per year or assets in excess of $1 million.

Other surprises in the study:

Americans overall contribute 36% to religion, but high networth individuals give only 22% to religious organizations. Wealthy donors also favor educational and arts and cultural organizations far more than the national average. “Giving back” is more important than “living a legacy,” according to the donors interviewed in this study.

As Clolery reports, “those who write checks are also likely to volunteer their time—and the more time volunteered, the bigger the check.

“Even major tax policy changes would not impact their giving.”

Entrepreneurs contribute vastly more than donors with inherited wealth.

Seventy-one percent of interviewees reported they would give more if organizations spent less on administration. Fifty-eight percent said they’d contribute more generously if they were able to measure the impact of their gifts.

Puzzler

Experience shows that Ask tests often bring to light significant differences in response rate and average gift. Since such tests are also inexpensive, they’re a favorite of many mailers. So it was that one of our clients at Mal Warwick Associates recently resolved to compare two different Ask strings, a relatively unorthodox form of Ask test.

Within a larger acquisition mailing, 70,000 prospect names were divided into two equal panels of 35,000 each. One group was mailed with the following Ask string: $15, $25, $50, $____.

The other group was asked for: $20, $30, $50, $100, $____.

Here were the results:

Ask	$15,25,50	$20,30,50,100
Gifts	304	257
%	0.86%	0.73%
Gross	$5,988	$5,910
Avg.	$19.69	$22.99
$/M	$171	$168

* $/M = revenue per thousand letters mailed

Note that the difference in response rates is statistically significant. So is the difference in average gifts.

So, which Ask string won the test?

What we have here, of course, is another instance of Chairman Mal’s First and Last Law of Fundraising: “It depends.” - M.W.

Boomers!

How old do you look and feel? According to AARP and reported in Target Marketing, most Baby Boomers consider themselves seven years younger than their true age. So if you think you're writing to a 55-year-old, better think again!

Competition!

If you think the competition's stiffer than it was just a few years ago, you're not imagining anything. According to Giving USA - as recounted in Fundraising Success - there were 855,095 registered 501(c)3 groups in 2001. By 2005, that figure had grown to 1,045,979 . That's a whopping 22% increase in five years!

January 2007

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