May 2009

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1. What comes after the recession?

By Mal Warwick, Editor

Are you thinking that you’ve got enough problems now without being distracted by thoughts of how you’ll raise money a year or two or three from now? I thought so. But hear me out, please.

Right now, as economic conditions bear down more and more heavily on your organization, chances are you’re making changes . . . changes in the ways you raise money, in the programs you trim and the ones you fund fully, perhaps even in the people who work with you. Tough times impose change.

But it’s not enough to survive. No doubt your organization is in business for the long haul, because the vision and mission that drive your efforts can’t be fulfilled this year, or next, or even the one after that. So, it’s essential you keep in mind how the changes you put in place now will affect your chances of thriving once the economy finally starts upward again.

I was given an opportunity to think about this challenge when I was invited to speak briefly at a luncheon held during the Direct Marketing Association Nonprofit Federation Washington Nonprofit Conference in Washington DC, early this year. Three overarching realities clearly stuck out as I thought through the nonprofit sector’s prospects for the future.

First, donors will cease to be statistics.

• Mass mail will be passé. Today’s segmentation tools will be primitive by comparison with tomorrow’s targeting techniques. One-to-one marketing will be a necessity, not a fantasy.

• Large charities clinging to enormous donorfiles will lose ground to those that emphasize donor quality over quantity.

• Donors will shun nonprofits that treat them like numbers. Those that provide superlative donor care will flourish.

Second, new ways will emerge to finance nonprofits.

• Lines will blur among nonprofits, for-profits, and funders. Those who now start nonprofits will favor any organizational form that offers an easy route to funding.

• Social enterprises of all types will bloom, some nonprofit, some for-profit. Corporations will launch their own social services. “Donors” may loan or invest as well as give.

• Social finance will mature, creating large-scale capital markets for nonprofits—and thus competition for us fundraisers.

Donors will invent new forms of engagement.

• Major donor or foundation consortia will flourish, issuing Requests for Proposal (RFPs) to nonprofits and businesses alike to tackle specific problems.

• Donor “Circles of Excellence” will attract big funders to address large, measurable challenges and meet quantifiable objectives.

• Small donors will flock to mutual-fund-like investment vehicles, by-passing individual nonprofits to address broader issues.

Will any of this truly come to pass?

Beats me! Your guess may be as good as mine. However, if you look around the nonprofit sector worldwide with an eye for detail, you’ll probably see signs of many of these possible trends in today’s emerging practices.

But no matter. Today’s conditions and today’s trends won’t define tomorrow’s challenges. Whatever happens, we’ll confront new technologies, new expectations, new opportunities. Yesterday’s tools won’t do the job.

Will you be prepared?

Think about it!

2. Where's Mal?

May 8, 2009 – Rohnert Park CA
Sustainable Enterprise Conference
Panelist: To B or Not to B: How B Corporation helps your company measure and certify your triple bottom line performance
Site: Sonoma Mountain Village

May 12-14, 2009 – Online
IFC Online eConference
Workshop: Using the Internet to fight the recession

May 19, 2009 – Teleconference
NTEN (Nonprofit Technology Network)
Fundraising When Money Is Tight

May 21, 2009 – Webinar
EcoScribe Communications
How to Write Successful Fundraising Letters

May 28, 2009 – San Francisco CA
Tides Center
Workshop and Webinar: Fundraising When Money Is Tight

June 24-27, 2009 – Bangalore India
International Workshop on Resource Mobilisation
Master Class: How to Build a Fundraising Portfolio
Workshop: Recruiting Donors Through Smart Direct Marketing
Site: InfoSys Campus

July 21-23, 2009 – Washington DC
2009 Bridge to Integrated Fundraising Conference
Master Class: The Copy Clinic: Crafting Brilliant Fundraising Letters, Emails, and Telephone Scripts for Breakthrough Fundraising Results
Workshop: The Nitty Gritty of Direct Marketing: Analyzing Direct Mail, Online, and Telephone Fundraising Results
Workshop: Getting Inside the Mind of the Donor
Site: Gaylord Hotel, Resort and Conference Center, National Harbor MD

August 20, 2009 – San Diego CA
Fundraising Outside the Box Conference
Luncheon Address: Fundraising When Money Is Tight
Workshop: Fundraising When Money Is Tight
Site: Hilton Hotel Downtown

September 2, 2009 – Phoenix AZ
AFP Greater Arizona Chapter
Luncheon Address
Workshops

3. The A, B, Cs of testing (Part 1)

By Peter Schoewe

Everybody agrees that testing is a must in direct marketing. Whatever direct marketing channel you’re using to raise funds—mail, telephone, online, TV, or SMS (“Short Messaging Service,” better known as text messaging)—the only way you can reliably improve your results and build your program is through systematic and disciplined testing.

But what does that mean? While the ability to test is the greatest strength of direct marketing, a poorly conceived test that’s incorrectly executed and analyzed can actually do more harm than good.

The good news is that, if you follow the rules, creating a proper test is straightforward. Here’s a four-step guide to creating a test that could help you improve your fundraising results.

A. Develop a hypothesis.

Never test simply for the sake of testing. If you come up with an idea you would like to test, make sure you can explain why—in simple English. Here are a couple of examples:

• “I believe that by putting a stamp on the return envelope of this appeal, we’ll inspire enough additional donors to respond that it will more than cover the cost of the extra postage.”

• “If we use a shorter call to action on the donate button for this email, it will cause a greater number of people to click through to the donation page.”

If you’re attempting to raise more money, your hypothesis should forecast an increase in the number of people who will respond to your appeal, an increase in the size of the gifts they’ll respond with, a decrease in expense without a corresponding decrease in response or gifts—or some combination of the above.

B. Make sure you’re testing your hypothesis.

The easiest way to muck up a test is to change too many things at once, so you won’t be really sure what caused the difference in the results. To avoid this, you should keep your tests simple, only changing one element at a time. If you’re testing a stamp on a reply envelope, don’t change the copy of the letter at the same time, too.

You can violate this rule only if your hypothesis contains an explicit reason why a combination of changes would interact to create an even greater result. For example, you can’t say “These two things would probably increase response, so let’s test them together.” You must be able to say, “By combining these two things, I believe I would get a greater boost in response than the cumulative boost I would see by testing them in isolation.” It’s an unlikely scenario, so I would avoid the mental gymnastics it requires and just stick to testing one thing at a time.

Stay tuned. In our June issue, Peter will present Steps C and D. And, if you’re looking for a fuller exploration of testing, check out Mal Warwick’s book, Testing, Testing, 1, 2, 3: Raise More Money with Direct Mail Tests.

Peter Schoewe is Senior Account Executive, Mal Warwick Associates, 2550 Ninth Street, Suite 103, Berkeley CA 94710-2516, phone (510) 843-8888, fax (510) 843-0142, Web www.malwarwick.com, email peter@malwarwick.com.

4. Ask Mal

Since 1994, when the Mal Warwick Associates Web site went online, Editor Mal Warwick has answered fundraising questions posed by visitors to the site. Hundreds of those Q&As are available here. Here’s one Mal answered last month

Question: Does including a planned giving message on a direct mail response device really decrease response? My direct mail manager will never let me include such a message in her direct mail pieces.

By planned giving message, I mean a check-off box that says “Please send me more information about including [YOUR ORGANIZATION] in my will” or “I have already included [YOUR ORGANIZATION] in my will and would like to join the legacy society” or things like that. She says that it will distract and confuse people, thereby depressing direct mail revenue. Won’t even let me test. But does let me include material with receipt letters.

I keep telling her that I think it would help to uncover more prospects or legacy donors. Or that I think I should at least be able to test it once in a while.

Mal answers: I routinely advise clients to include a check-off for legacy giving information in appeals to their donors. (I’ve also seen some prospect packages that include this option on the reply device, but I don’t recommend that practice—not because I have proof that it depresses response, but because I feel simplicity is one key to success in donor acquisition.) I don’t recall ever testing this proposition, but I’m convinced that the added revenue in bequest expectancies that comes from the occasional inquiry will far outweigh any possible dampening of response. And I doubt very much that response is actually reduced by offering this option.

It’s equally important what sort of information you provide in response to the inquiries you receive. I would not recommend offering information if (1) all you’ve got to send is a simple off-the-shelf booklet along the lines of “Do you have a will?” such as those provided by any one of several established companies; if (2) you respond with a flood of complex information about all the tax-avoidance and income-generating possibilities of planned giving; and/or (3) if the examples you provide to donors highlight the multi-million-dollar legacy gifts of major donors. Bequests—which come predominantly from people who are not rich—are the main event in “planned giving,” and far too many specialists forget that.

Should you be allowed to test? Of course! I can’t imagine any seasoned direct mail manager being unwilling to allow such an important test.

5. Something to smile about

By Managing Editor Deborah Block and Paul Karps

Thanking a donor for making that gift is always critical—and especially when, in such a horrid economy, contributing to a nonprofit is a luxury for many Americans.

So all of us involved in this newsletter have always been forceful proponents of sending prompt and appropriately grateful acknowledgments . . . and never more so than right now.

But have you ever considered a two-part thank-you process? If not, this clever package from The Smile Train (New York NY) could change your mind.

Coming after an initial acknowledgment, the #10 window outer features the intriguing and very personal teaser, “Here are the pictures I promised to send you!”

Inside, the brief, one-page letter begins, “When I sent you a thank you letter a few months ago, I promised to send you a picture of a child we were able to help thanks to your support.”

Copy then goes on to explain that the photo is of a baby in Argentina with a cleft palate and how he had corrective surgery because of The Smile Train.

As you can see here, the enclosed photos are before-and-after shots of the eight-month-old little boy. And though there's no reply form—and no Ask in the letter—a return envelope is included.

Along with the concept of following up a thank-you, the look of this mailing is interesting. It has a very homespun, deliberately “old-fashioned” appearance. In fact, copy seemed to be typed on an actual typewriter. While the photos mimic a color Xerox—rather than glossy, offset printing.

What's the reason behind this modest style? The group may be emphasizing its low overhead. (A quote reprinted from The New York Times next to the letter's masthead proclaims, “ . . . one of the most productive charities—dollar for deed—in the world.”)

Even so, we're not sure anyone out there would believe an organization sophisticated enough to correct cleft palates wouldn't have computers at its disposal.

Yet the overall effect of the package is friendly, thoughtful, and appreciative. Note, for example, the informality of the signer's name, using only “Brian.” (Not to mention the smiley face. Then again, it is The Smile Train.)

The package has everything to do with relationship building. And that's what a thank-you—or even a follow-up thank-you—is really all about!

To see this entire package, click here.

Copywriters Deborah Block and Paul Karps are partners in BK Kreative, 1010 Varsity Court, Mountain View CA 94040, phone (650) 962-1499, email bkkreative@aol.com.

6. Who is your 10-year donor?

By Tom Belford

If your nonprofit has been around long enough, you might be lucky enough to have a small percentage of donors who have stuck around for 10 years plus.

What do you know about these special people?

Do you think they were just “born” loyal?

Have you ever surveyed or interviewed them? (If so, did you find out why they were loyal to your organization and not all the other riff-raff?)

Have you tried to determine or record the types of non-fundraising interactions they’ve had with your organization?

Was there some distinctive pattern to their early giving behavior?

How does any of that intelligence compare to similar information about your expires . . . the folks you’ve lost (or, depending on your perspective, abandoned you)?

Isn’t it time to find out?

—Tom Belford in The Agitator

7. What is news?

By Tom Ahern

You have a donor newsletter. You want it to help you retain donors and bring in additional gifts. So, what kinds of stories should you run?

For starters, there’s one key reason donors will pay more than a few seconds’ attention to something in your newsletter. It has nothing to do with you . . . and everything to do with the programming of the typical human brain.

Here's the natural law: Neuroscience has determined that humans respond autonomically to anything new in our environment. And it doesn't matter whether that new thing is important or not. A speck of pepper in a bowl of oatmeal attracts the mind’s eye just as firmly as an elephant walking on the lawn.

But it gets better.

Not only does our brain swerve involuntarily toward anything new, it takes real pleasure in doing so. Using MRIs, scientists now can watch our minds at work. Last year, they reported an amazing discovery: An encounter with new information stimulates a pleasure center in the human brain.

Now you know why marketers consider the word “new” one of the crown jewels of persuasion: It has mystical powers. And so do new-ish words like future, secret, hidden, hints, tips, update, private, confidential, mystery, discover, unveil, expose, reveal, divulge. Items like “Did you know?”, “Myths and Facts,” or “Frequently Asked Questions” also have intrinsic news value because they promise to tell the reader something she didn't know.

Sadly, most donor newsletters I see take little or no advantage of the mind’s love affair with the new.

Instead, they run pretty much the same photo over and over (child development agencies, I’m talking to you). Instead, they devote much of their ink to things that have already happened (like a long-past golf tournament). Instead, they devote their front page—the sacred parking space reserved for the most important news—to a wearisome “letter from the Executive Director” issue after issue, a “worst practice” that somehow over the years has become a nonprofit industry standard.

If you want someone to read your donor newsletter, it must have news. New news, not boring old news. So, what is news, after all?

Anything new is news. Honestly, it’s just that simple: The new is, by definition, news. It will hook the brain. Let's look at what that means in the context of a donor newsletter.

A new trend that could have a baleful influence on your mission is news. A new anecdote or report from the field demonstrating how your donor-supported mission has changed a life is news. A new season of artistic offerings—any upcoming event—is news. A new gift that has moved your organization significantly closer to achieving your vision is news. A new member of your legacy society is news. A new challenge grant a donor can use to multiply her impact is news. A new piece of intriguing information your donors can find on your Website is news. A new award for your outstanding work is news. Even a familiar scene photographed from a new perspective is news.

Takeaway: David Ogilvy founded one of the world's great ad agencies on his belief that “you will never bore anyone into buying your product or service.” Similarly, you will never bore anyone into making a gift. And yet many nonprofit communications seem to operate from exactly the opposite principle: “If I bore you enough, you’ll give me money.” Embrace the neuroscience. Give your donors pleasure. Talk about the new.

Reprinted with permission from the Ahern E-Newsletter: About Donor Communications. Copyright © 2008 by Tom Ahern.

8. Mr. Fundraiser, tear down those walls!

By Jeff Brooks

One of the reasons it’s hard to connect with donors is that we build walls between ourselves and our donors. The commercial world has the same problem, as noted in the Logic+Emotion blog at Walls of Separation.

There are nonprofit versions of every one of these walls. And each of these walls diminishes the fundraising effectiveness of those nonprofits.

I can think of a couple more walls that many nonprofits put up:

• Unrestricted funds. Many are so hell-bent on raising only unrestricted funds from their donors that they can’t even think clearly about connecting with donors about how donors can and should and want to make the world a better place. Fundraising becomes an exercise in evasion.

• Silo mentality. Too many organizations can’t align their direct mail, their online marketing, their public relations campaigns, their events—because those all happen in different (often mutually suspicious or even hostile) departments. That guarantees a confusing experience for the many donors you have that cross your departmental lines.

Tear ’em down!

Jeff Brooks writes the Donor Power Blog for Merkle Domain.