September 2002
The fight against telefundraising restrictions by Lee Cassidy
Recruiting Younger Donors by Mary Beth McIntyre
What's up online by Dan Weeks
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The fight against telefundraising restrictions
by Lee Cassidy
Editors note: For this issue, we felt circumstances warranted a discussion of the recent proposal to impose severe restrictions on telephone fundraising. So we approached Lee Cassidy, Executive Director of the DMA Nonprofit Federation (Washington DC), who has led the outcry against such a measure. Always the consummate professional, Lee immediately asked: "How many words do you need?" Later the same day, he e-mailed the following, which hits the nail right on the head. On September 1, Lee officially retired -- and is now Executive Director Emeritus. And all of us in the fundraising community owe him a debt of gratitude for everything he's done for the nonprofit sector over the years. Thanks, Lee, and nothing but the best!
THE FEDERAL Trade Commission (FTC) has proposed several amendments to the current Telemarketing Sales Rule, including the creation of a national do-not-call registry. This would affect all interstate calls made by commercial organizations.
The FTC has no authority over nonprofits. But it has proposed that calls on behalf of nonprofits made by commercial telephone fundraisers be included in the requirements of the registry.
If the proposal isn't altered and becomes a formal Rule of the FTC, any telephone fundraiser would have to scrub his call list against the registry, probably monthly. He couldn't call any number on the list, unless the owner of the number has given the nonprofit "express verifiable authorization" to call. This requirement would apply even if a prior relationship existed.
Apart from the inconceivable likelihood that many donors, including long-time contributors, would give such express authorization, the proposal has numerous serious flaws:
• The FTC proposes that individuals call an 800-number, punch a few buttons, and the phone from which they are calling from would forever be on the registry. There would be no verification that the owner of the number actually wanted to be on the registry, and the proposal didn't include any means to be removed from the list.
• When the individual moves, the next person to own the number would apparently inherit the listing in the registry, but not know that he or she was listed. The prior owner of the number would possibly not be in the registry with his or her new number.
• The proposal would not preempt the (26 and counting) state do-not-call lists, making it necessary for telephone fundraisers to scrub every list before making a single call.
• The proposal does not cover intrastate calls.
• While the FTC initially claimed minimal cost of setting up and maintaining the registry, it subsequently proposed charging every telephone marketing (and fundraising) firm an annual fee based on the number of area codes called.
• Perhaps most unfairly, the registry would not apply to numerous industries the FTC has no authority over, including banks and credit card companies, telephone companies, insurers regulated by state law, airlines, and many others.
The DMA Nonprofit Federation (DMANF) filed extensive comments on the proposal with the FTC and held two meetings with senior FTC staff members. The comments included serious questions raised by what would amount to suppression of constitutionally protected speech. They also included statements from charities about the disastrous effect on fundraising. (The DMA estimates that telephone fundraising actually brings in more each year than does direct mail.)
Based on the DMANF and other comments, the FTC staff has signalled that it's looking for a "compromise" position relating to the application of the do-not-call registry to nonprofits. One trial balloon was an internal do-not-call list, maintained by each telephone fundraiser. It's unclear whether such a list would apply only to the specific charity on whose behalf the call is made, or to all charity clients of the fundraiser.
The FTC staff has stated that it expects to promulgate a final Rule during October and that it probably would be effective 60 to 90 days thereafter. Depending on what the final Rule requires, it can be assumed that one or more lawsuits will be filed against the FTC.
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Lee M. Cassidy is Executive Director Emeritus of the DMA Nonprofit Federation. To contact DMANF, phone (202) 628-4380 or visit its Web site at www.federationofnonprofits.org. Also, check out the Direct Marketing Association's site at www.the-dma.org.
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Recruiting Younger Donors
by Mary Beth McIntyre
"OUR DONORS ARE DYING!" This cry, much like Chicken Little's, has rung through the air at fundraising conferences and made its way into the pages of fundraising periodicals for years.
Well, I'm not ready to throw my hands up in despair. This is not a crisis: It's an opportunity. Many nonprofit organizations' donorfiles are skewed older. New donors who are joining the ranks are older too -- but these donors are living longer. The causes we raise funds for are contributing to this trend through their life-saving research and quality care. The key question that begs to be answered is: How can we recruit younger donors?
Unfortunately, there's no storehouse of success stories. In fact, there's not a lot of fundraising data available to address this question. Our experience in this area is limited. To gather the necessary information and gain the insight we'll need to meet this challenge, fundraisers will have to work together, both within their own organizations as well as cross-organizationally. After all, this is a challenge and an opportunity we all face.
For the time being, there are several things we can do:
• Determine what you mean by "younger donors." Those from 55 to 64? 45-54? 35-44?
• Conduct research to understand the under-65 donors you already have.
• Set benchmarks and realistic goals for recruiting younger donors.
• Learn what the mavens of "Generational Marketing" can teach us. They've got a lot to say, but we'll have to "right-size" their recommendations for the nonprofit sector.
Let's begin by reviewing what we know about the age distribution of donors today.
How old is old?
The population of the United States breaks down into age groups as indicated in Exhibit 1:
As you can see, more than a third of the population is younger than 25 and is off-limits to most fundraisers under nearly any practical set of assumptions. Currently, about one in every eight Americans is aged 65 or older. Baby Boomers -- predominantly found in the 45 to 54-year age group -- and those in the 55 to 64 group together comprise a larger market: more than one in five Americans. But the current distribution of donors by age presents a very different picture, as shown in Exhibit 2:
Exhibit 2.
Note that -- for six national health organizations -- about half the donors are aged 65 or older. The 45 to 54 and 55 to 64-year groups together number far fewer, and they account for just about as small a proportion of the organizations' revenue. This pattern varies from sector to sector: donors to cultural, health, and relief organizations tend to skew older, while those to environmental, advocacy, and public broadcasting organizations are relatively younger. But the overall pattern is still clearly recognizable. For example, not one of these sectors has any appreciable proportion of under-35 donors.
However, lest we get carried away with the observation that our donors are old (and getting older!), let's take a look at the rising number of persons aged 65 or older. Exhibit 3 (below) shows the steady progression in that number throughout the 20th century and beyond.
Exhibit 3.
The paradigms of our culture are changing. So it is too, in fundraising.
It used to be that age was a controlled variable. Direct mail, almost always the acquisition channel, routinely recruited donors who were predominantly 60 or older. Nowadays, fundraisers have a wide range of acquisition channels, each with its own distinctive age profile. Exhibit 4 (below) shows how dramatically these profiles vary.
Exhibit 4.
Clearly, our donors aren't dying -- they're multiplying. But this data raises a number of challenging questions:
• Since the channel through which a donor is acquired clearly matters (at least as far as age is concerned), and since experience shows that renewal efforts tend to be most successful if they use the same channel as the acquisition, should we stick to the same track when communicating with our donors?
• Should we celebrate loyalty and smaller gifts in the 50 to 65 bracket?
• Based on lifestage issues, should our definition of "lapsed donors" vary?
• Above all, it's obvious that any effort to attract younger donors must not detract from continuing activities designed to cultivate and maximize the value of donors who are 65 or older!
What do we know?
The first step you can take toward recruiting younger donors is to compile everything you know (or could easily learn through file analysis) about your own under-65 donors. The following are among the questions you can find answers to:
• How did they "meet" you -- i.e., by what channel (or, in direct mail, from what lists) did you recruit them?
• How does the retention rate for your younger donors compare to your donorfile as a whole?
• What is their interest in your organization: What motivated them to give to you?
• How does the Long-Term Value of your donors vary by channel (special events, direct mail, telemarketing, Internet)?
Exhibit 5 shows what my firm learned about the retention rate and cumulative lifetime giving of Baby Boomers: that they may not remain as active as Mature donors, but that they contribute a high Long-Term Value.
Exhibit 5.
Clearly, this sort of information will be invaluable as you set out to increase the number of active donors on your file. You'll understand better how and where to recruit them. You'll have the insight needed to begin capturing not just their treasure but their time and talent as well. You'll be in a position to involve them in their areas of interest.
However, before you plunge ahead, make sure you're on firm ground.
• Is this project only your personal priority -- or does it have the support of your boss, the CEO, or the Board? You'll need support from the top to help you through the inevitable bumps in the road.
• Do you have R & D funds in your budget this year? You can't expect this effort to bear fruit quickly. You must expect to be a patient investor.
• Have you set goals and benchmarks for recruiting and retaining younger donors?
But research, budgeting, and planning will only get you to the first stop on your journey. To venture farther into this unfamiliar territory, it's wise to learn everything you can about the emerging field of generational marketing.
Generational marketing
According to an ancient proverb, "Men resemble the times more than they do their fathers." This is the wisdom on which the contemporary pursuit of generational marketing is based.
The Yankelovich Partners, authors of the now-standard text Rocking the Ages, put the same thought in a slightly different way: "Each generation is shaped by different markers; you must walk with them in their shoes, not walk on them in your shoes."
In the broadest terms, generational marketing today deals predominantly with four current generational "cohorts":
(1) Matures, born prior to 1946
(2) Baby Boomers, born during the years 1946 to 1964
(3) Generation X'ers, born 1965 to 1981
(4) Millennials, born after 1981
In Exhibit 6, you can see a humorous take on the contrasting attitudes of the principal generational cohorts. Another interesting perspective is represented in Exhibit 7.
Exhibit 6.
Exhibit 7.
The two groups of greatest interest to us as fundraisers -- because they are all, by definition, over 35 and thus higher-potential fundraising prospects -- are Matures and Boomers. In Rocking the Ages, the Yankelovich Partners note that Matures are dominated by a traditionalist mindset:
• They believe in hard work for its own sake as well as for the rewards it brings.
• They postpone gratification, not just because they fear falling behind if they overspend, but also because they frown on overindulgence.
• Out of concern for life's uncertainties, they "save for a rainy day."
• They respect authority -- institutional as well as personal.
By contrast, the values of Baby Boomers tend to be characterized very differently:
• They possess a sense of privilege or entitlement, feeling they deserve the best life can offer.
• They are rule breakers.
• They have little brand loyalty.
• Nostalgia is a strong hook for them.
• They are highly stressed by the demands of their lives.
• To attract them, products (or offers of any sort!) need to sizzle.
• They are control-oriented and crave opportunities for choice and involvement.
The values of a generation are shaped, in part, by the events of their time: for example, for Matures, the Great Depression and World War II; for Baby Boomers, the postwar economic boom, the assassination of President Kennedy, and the Vietnam War were defining experiences. The larger picture of the factors that shape a generation's attitudes is illustrated in Exhibit 8:
Exhibit 8.
Catering to the next generation
Your organization's priority must be to continue to maximize the value of its relationships with Mature donors. Matures probably account for at least half of your contributed funds. However, it's possible to continue strong stewardship and involvement programs with older donors while also beginning to cater to younger, Boomer donors.
First, understand what Boomers want from your organization. Service on your Board? Public recognition? Opportunities to work on committees? Special events where they might mingle with their peers?
But remember that, with each generation, Americans have become less civic-minded. Exhibit 9, drawn from Robert Putnam's insightful book, Bowling Alone, shows how clear that trend has been.
Exhibit 9.
Moving Boomers up the ladder
Available research has revealed several key facts about Baby Boomers as donors:
• They constitute about half the donors to progressive causes.
• They view contributions as investments, not charity.
• They give more to public interest groups and charities than they do to church.
• They give to fewer causes than their parents.
• They insist that the organizations they support demonstrate progress.
• Boomer men give annually, women as needed.
As you begin to approach younger prospective donors, make sure you're touching all the bases. Understand their motivation. Ask lots of questions -- and listen to the answers. Make sure you're well prepared to present "what's in it for them." Focus on Boomers' peers more than their mentors. They feel the older generation is much different. Find out whether they prefer meeting face-to-face, by telephone, by e-mail, or by letter?
Generational targeting
If your organization has lots of donors -- more than 100,000, say -- and ample funds for R & D, generational targeting, perhaps even including gender targeting, may make sense for you. Varying the message, the format, and the offers to suit each generational cohort could pay off. After all (in theory at least), targeting yields greater rewards. Preparing the right message for the right channel to reach the right people is what direct marketing is all about.
However, if you don't have hundreds of thousands of donors and the deep pockets that would allow you to test to your heart's content, you can still learn a lot about the art of generational marketing from those who have been leading the way.
The best example is probably the AARP (formerly the American Association for Retired Persons) -- which dispensed with its old name as part of a concerted effort to attract more Boomers as members.
AARP members now receive different magazines, depending on their age. The covers of Modern Maturity (targeting guess who: Matures) picture icons of traditionalism, such as Colin Powell and Quincy Jones. My Generation, intended for Boomers, displays the likes of Sally Field and a special feature entitled "Our Search for Meaning."
Some environmental organizations and advocacy groups have waded into the generational marketing waters. But public broadcasters have gone further.
At public radio station KVIE (Sacramento CA), for example, Mature members receive a renewal notice that includes the copy shown in Exhibit 10:
Exhibit 10.
Meanwhile, Boomer members of KVIE receive the copy reproduced in Exhibit 11:
Exhibit 11.
Getting ready for the future
In closing, here are a few tips about how to advance your efforts to recruit younger donors.
• Collaborate with other nonprofits to make research on younger donors affordable.
• Gain all the insight you can about the hooks and angles that will appeal to your younger donors.
• Give value to Time and Talent as well as Treasure in your future marketing efforts to recognize and connect better with your donors.
• Look at your organization through the eyes of Boomers and X'ers. Make sure they think you and your mission are relevant!
• If your Board isn't diverse generationally, start hunting for younger directors. Understand what other channels work well for younger donors. If necessary, invest in building your capacity to use these channels effectively.
• Gather data, test your messaging, and explore multi-channel fundraising efforts.
• If you don't already have it, gain support at the top of your organization. Ultimately, it will prove crucial to have the CEO and the Board behind you.
• Finally, volunteer to speak at an upcoming fundraising conference and share what you've learned.
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This Special Report was adapted from a presentation by Mary Beth McIntyre at the 2nd Annual Western Non-Profit Conference, June 5, 2002, in San Francisco, sponsored by the DMA Nonprofit Federation. Mary Beth McIntyre is Vice President, Sales and Innovation Services, Target Analysis Group, 1030 Massachusetts Avenue, Cambridge MA 02138, phone (617) 583-8610, fax (617) 354-0895, e-mail mmcintyre@targetanalysis.com, Web www.targetanalysis.com.
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What's up online
by Dan Weeks
A disturbing new poll shows that support for the First Amendment has eroded significantly since Sept. 11 and that 49% of Americans now think that the constitutional amendment on free speech goes too far in the rights it guarantees. That's up by ten points from a year ago.
The poll was commissioned by the First Amendment Center, based in Arlington, Va., whose parent organization, the Freedom Forum, funds it. The Freedom Forum is "a nonpartisan foundation dedicated to free press, free speech and free spirit for all people."
Visit www.freedomforum.org, where you'll find links to its three main priorities: the Newseum, First Amendment freedoms, and newsroom diversity. You'll also find publications, webcasts, today's news, and links to like-minded organizations, all in a well-organized and colorful website. However, you won't find a "donate" or "give" button, as all funds are from an endowment, so they don't take donations.
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