queer ideas

Three things you need to get right in mid-value fundraising

There has been a surge of interest in mid-value fundraising over the last year, so I thought it might be worth sharing a few thoughts about the technique.

For those who don't know, mid-value fundraising is a focused, engaging and highly personal version of direct marketing that asks wealthier (or more generous) people for gifts of between £250 and £5,000 ($500 to $10,000).

I've used this approach for appeals since way back in the early 1990s when I worked for YMCA England. We developed a cold mailing pack asking for £5,000 that generated an initial ROI of 15:1. But more importantly, the donors were exceptionally loyal (and often very generous). The highest gift that was ever given by a donor originally recruited by that first pack was £5,000,000.

So it's a powerful technique. However, you need to use it with care.

As well as seeing plenty of successes, there have also been a few failures. And if you are thinking of testing whether it is right for you, you'll need to know that it's important that you get your approach right. To help, I thought I'd share the Bluefrog mid-value triangle that focuses on the three key elements we've found to be a major driver of success.

Audience

Who are you writing to? Get this wrong and you could be facing a disaster.

You can obviously source prospects from third-party list brokers, but they need to be squeaky clean in terms of accuracy. In the good old days you could get names from registers of share-holders and you were pretty certain just how wealthy they were. This is no longer the case. Nowadays, most lists of 'wealthy' individuals are compiled from a range of sources and sometimes those lists are not quite as good as you need them to be. At Bluefrog we aren't currently engaged in any cold direct mail aimed at mid-value donors because of this risk.

This leaves you with your current supporter file. This is a great place to start but please remember, just because someone has given you a large gift once, it does not mean they will – or can – again. We've had to develop some very sophisticated propensity models to identify those donors who can afford to give more and actually want to.

So, be very careful who you ask. Many large gifts from individuals could well be the result of in-memoriam collections or community fundraising activities. So look out for unusual amounts in your data. Anything like £870, £2,145 or even £2,783.48 should raise alarm bells – particularly if you've never asked for gifts of that specific size before. If in doubt, call the donor up and ask why they gave before you mail them again. It can save a great deal of upset.

And, on the other side of the coin, if someone gave a large gift once and they were dropped into your standard mailing programme or passed to the high value team where they were lost because they hadn't given quite enough, they may not have a very high opinion of your charity. The sudden appearance of appropriate asks – even in a very good mailing pack – may not actually be noticed or welcomed. All is not necessarily lost, but you may have to kick-start the relationship again before making a request for a significant sum as the donor may well feel unappreciated or unrecognised.

Further to this point, a regular mistake that people make is to mail this pack solely to high value donors that the major donor team has been unable to motivate to give. Don't! You need engaged donors for this to work well. If you aren't willing to focus on your best donors, don't even test it.

Signatory

Who asks matters. I've seen a change in signatory to an appeal dramatically improve and dramatically reduce income on more than one occasion. Your CEO is not always the best person to sign your letter. Wealthier people are much more likely to give if someone they know – or know of – asks for their help. This is particularly true if that person moves in the same social circles as the potential donor or works in the same industry.

And remember, you don't always need to restrict yourself to one signatory. A mid-value mailing can include more than one letter or even have multiple signatories.

Offer

Why you need the money is very important. A general appeal for unrestricted funds is highly unlikely to work. You have to feature projects that a donor will be interested in and be inspired by. I've seen mid-value appeals fail because an initial project that sounded exciting was watered down to the point that it failed to convince a donor that their money would do anything useful at all.

Even if you are focusing on a real project, choose it with care. Not all projects are equally valuable to a donor. Try to focus on work that you know they will want to fund. You need something that will excite and engage. For example, funding the training and equipping of a rural health worker is highly likely to generate a much better response than training an urban social worker in rights' provision.

Once a mid-value donor is engaged they may well give you unrestricted funds, but, it is highly unlikely this will happen with the first mid-value gift. So focus on the donor's specific needs first. And remember, with appropriate treatment, they may even move to regular giving, but only after a relationship exists.

Is it for you?

If you still think the mid-value approach is right for you and your charity, please test first. A mid-value focus can dramatically change the relationship your donors have with you. And once it works, you can even use your appeals for donors who have given smaller gifts as well. It also helps to have a custom landing page as increasing numbers of mid-value donors may well be prompted to give by a mailing, but the process of giving is often undertaken online.

My final advice is to move forward carefully, particularly if you can't meet every requirement in the triangle. Asking for a large gift will make you stand out from the crowd. Just make sure it is in a good way.

Why do so many fundraisers like asking for such small gifts?

When Mark Astarita recently compared some charities to pound shops, he was right on the button.

Just like the pile 'em high, sell 'em cheap stores found on our high streets, charities have jumped on the discounting bandwagon.

You'd like to inoculate a child? Yes ma'am. That'll be £3 please. Kerching!

It's never been easier - or cheaper - to change the world. See an ad, call or send a text and within seconds you're being told that you've done something amazing. All you have to do is click on a link to the YouTube video to see the proof.

Why pay more?

And that's the point. Many people won't.

According to CAF's 2012 UK Giving report, there's a large number of people who appear to be acutely price sensitive when it comes to giving to charity. Just look at the 41% of donors who give under £10 each month. Millions of people, but they account for only 5% of the sector's voluntary income.

Whether they can't afford to give more or they don't really want to, the £3 offer seems to be aimed firmly at this price sensitive segment of the market.

Ask for £4 or £5 – as a one off or a monthly gift – and you'll see response rates fall dramatically.

And that's a problem. Just like the pound shop that depends on high volume sales to make a profit, the charity that follows a discounting model needs a large number of donors to make the strategy worthwhile.

And the easiest way to achieve this is to embark on a race to the bottom, where the charity with the lowest priced offer wins – at least in the short term.

After recruitment, the donors are called and converted to regular giving or upgraded. But because it was a low value appeal that drove the first gift, a request for more money tends not to generate a particularly positive response. The result is low conversion, low upgrade values and high attrition.

Take mobile giving for example. What do many £3 donors do when we give them a chance to skip or stop their regular gift? They skip and they stop. And they are doing it in ever increasing numbers.

And just as a pound shop budgets for a high percentage of its cheap and cheerful stock to malfunction and be returned, so the charity starts to look at attrition as a number that needs to be factored into a financial model rather than an indication that something is wrong.

High attrition is nature's way of telling you that your approach to fundraising is based on recruiting a large proportion of people that don't care about your cause. And if people don't care, it's very hard to engage them. People who don't care aren't going to read the communications that you send them, either online or offline.

The result is that a significant number of the donors that stick with you are not active supporters, passionately engaged with your work. Instead many of them are simply people who can't be bothered to cancel. After all, it's only a few quid a month.

But why has discounting exploded across the sector? Why do we ask for so little?

First off it's easy. All you need do is reduce the amount you ask for. Anyone can do it. It helps if your £3 will pay for something tangible like a mosquito net, a blanket, or inoculations, but that's not always essential.

Second, it's perhaps a reflection of the economic times. If people haven't got much cash, surely it's better to reduce the amount we ask for?

Perhaps. But when we see figures from that the Equality Trust showing us that income inequality is at a level last seen at the time of the first world war, it makes you wonder why so many charities are focussed on the most price sensitive sector of donors rather than looking at what the increasingly affluent top 10% of the population can afford to give.

A review of charity fundraising advertisements from just after the first world war shows us that the typical value of a prompted gift amount then was 10 shillings (or 50 pence in today's currency). To place that into context, you could buy 20 pints of beer for 10 shillings in 1920.

With the average pint in 2014 costing the best part of £4, that would be like us asking today for £70 to £80.

That's not something you see very often is it? And I don't really understand why.

For all the talk of an economic revival, the numbers show that it's only really the richest people who are benefitting. Currently the wealthiest 1% of the population hold more wealth than the poorest 50%.

Speak to this affluent group about their attitudes to giving and you'll find their hearts aren't made of stone. They have the same desire to help others as the rest of us. But one fact comes shining through. They don't think that the vast majority of fundraising materials produced by charities today are aimed at them.

So not surprisingly they rarely read them and they rarely respond.

One of the key reasons for this is that charities simply don't ask them for enough. £3 is seen to have such a small impact that it doesn't engage wealthy people either emotionally or rationally.

The other reason is far more worrying. And is down to the fact that price sensitive donors give so little and their attrition is so high, that success often depends on reducing costs.

As a result, thank you and upgrade processes are automated and regularly contracted out. That means that much of the human element is lost. Thousands of new donors are acquired who will never receive an individual and personal communication from the organisation they support.

This leaves the charity without any real idea of the full potential of the donors they are recruiting. But what's much worse is these donors have an experience of giving that is likely to leave them thinking that they aren't really valued – or needed. It's a vicious circle. Donors don't give enough to warrant special treatment, but without special treatment, the donors who can afford to give more, simply won't.

So rather than looking at how we recruit the largest number of donors as quickly and cheaply as possible, we should look at balancing our portfolio of supporters by focusing on what the donors who can give the most, actually want. Particularly when you remember that it's just 6% of donors who give 40% of all voluntary income to charity.

This will be a problem for many charities because it is expensive. It will require them to provide detailed information on the nature of their work, it means they will need to be able justify asking for a large sum and, above all, it will mean changing the way they treat donors. The general thank you letter, email or text with a link to a YouTube video isn't enough. Instead charities must re-learn how to communicate like human beings and show the donors that they are actually valued.

Just as there's no skill required to open up a pound shop, there's no skill required in asking people for very small gifts. Anyone can do it because it's doesn't take a great deal of imagination.

What's harder is creating an offer that supporters will pay a premium for. It might not bring in as many donors as discounting, but the long-term value and loyalty of the donors it does attract will far outweigh the quick wins of being just another charity that drops the donor focus in order to join the £3 a month club.

This is a slightly adapted version of an article I wrote for the September 2014 edition of Third Sector magazine.

£1 Shop photograph adapted from an original by Emily Webber from London Shop Fronts.

Why don't all donors care about impact?

A new report on donor attitudes has just been published by Ipsos Mori. Undertaken on behalf of New Philanthropy Capital, the survey looks at issues of trust, general levels of satisfaction, thoughts on CEO salaries and the importance of impact.

It was this final area that caught my eye. As part of the survey, they asked "How much attention, if any, do you pay to evidence that the organisation is having an impact when you give to charity?".

I was surprised to read that only 9% of the respondents said they paid extremely close attention to impact whereas 50% didn't seem to care that much about how charities use their donations at all.

So maybe we should put less effort into feeding back and use the money elsewhere?

I think that would be a mistake. In my experience, when you show donors how their donation makes a difference, levels of income, loyalty and satisfaction all go shooting up. Supporters also regularly mention feedback as being valued in research. So why does this study suggest so few of them care about what their donations will achieve?

If we look at the data tables, it gives us a few clues.

Interest in impact increases with affluence – from 38% of people in socio-economic groups D and E to 56% amongst ABs. It also increases with age – from just 41% for those aged 18-34 growing to 55% for people aged 55 and over.

It appears that if you are rich in both time and money you are more likely to care about impact.

And that's the point. I'd suggest that what we are seeing here is a distinction between those donors who give small, ad hoc gifts and those who give larger, considered ones.

One wealthy donor summed up this phenomenon quite neatly in a Bluefrog research study a few years back when they compared the difference between giving a 'tit bit' gift and a substantial one...

“I would rather give to a sort of project where you can see the path instead of tit bit amounts, like when they buy a Christmas dinner or a vaccine. I do them all, it’s fine, I know it’s irrational but in my mind I prefer to do one big one, because then I can think about it if I want to."

It's an important point to remember. Small gifts of £2 or £3 don't matter that much simply because the amount is so small. As a result, feedback isn't seen to be that important. But when it comes to larger gifts, the reverse is true. That's when you'd like to know that you made the right decision when you decided to give.

Which raises an interesting question. Just 9% of the population undertakes two-thirds of charitable activity in the UK. How are we going to increase the size of this charitable core, if the vast majority of donors who give smaller sums have no real interest in finding out more about the work of the charities that they support?

The web is older and so are (some of) its users

A rather interesting statistical view of the digital landscape in Europe has just been published by comScore.

The report provides insights on content categories, trends in social networking (and the knock-on effects on email and instant messaging), with a great snapshot of what's happening in online advertising, video, search and smartphone use.

Key points worth highlighting (with a nod to the older demographic that tends to interest fundraisers) include:

• The Dutch and the British spend most time online (31.39 and 30.38 hours / month respectively).
• Europeans spend more time on Facebook than any other site.
• As you might imagine, this means social networking and photo sharing are the fastest growing things to do on the web.
• Which also means that social networking has been the main driver in the growth in display advertising.
• Email use is still growing amongst those aged 35 and over (though nowhere near as fast as social networking).
• There seems to be a shifting preference to watch fewer, longer videos online (the average length of a video is now 5.6 minutes).
• Europe-wide, smartphones account for about 30% of the mobile market.
• 28% of European Facebook users are aged over 45...

...but over 36% of LinkedIn users are in the same age group.

With the significantly older (and wealthier) profile of LinkedIn users, it makes me wonder why I hardly ever hear about it as a fundraising medium. It might not be as sexy as Facebook and Twitter, but with the right offer it could be far more successful.

I personally find LinkedIn a great source of information on attitudes to giving amongst higher-value donors. We are just starting to use it to enhance the higher-value DM appeals that we create at Bluefrog. As you can imagine, It's a great way of learning about prospects. But it's useful in a number of other ways too.

If you're new to fundraising on LinkedIn, you might find these tips or this case study useful.

I'd also suggest you download the full paper from comScore (it's available here free of charge but registration is required). You'll also find the 2010 US digital review and the 2010 mobile year in review at the same site.

What do high value donors actually value?

The 2010 Bank of America / Merill Lynch Study of High Net Worth Philanthropy has just been published.

Though this blog takes the UK fundraising perspective, we can learn a great deal from what's happening in other markets and this series of US studies deserves serious attention on our side of the Atlantic (and elsewhere).

So much of what they report has been remarkably close to what we've found in Bluefrog's qualitative research into higher value donors (you can download a number of our reports free of charge by clicking here or checking out the listing over on the left hand column - you'll need to scroll down the page a little for the links).

The full Bank of America / Merill Lynch report can be downloaded here. You'll also find a detailed synopsis and a twenty minute video outlining the main findings.

But if you are too busy for that, here are my highlights:

Commitment is steady (to favoured charities) but giving has declined

Donors tend to place their charities in a league table and It's important to stay near the top. This study found that just over a third of donors stopped giving to at least one organisation in 2009 (with 27% turning their back on two charities).

The overall average gift amounts fell by 35% in comparison to 2007.

Most (83%) usually give in response to disasters and for more than nine out of ten donors, this gift was in addition to their regular charitable giving.

People want value from their gifts

Knowing that their gift made a difference was top of the list of motivations (there's a clue there for getting to the top of a donor's charity league table). Feeling financially secure came a close second along with knowing that the organisation was efficient in using donations.

Giving is increasingly undertaken by families - not just individuals

I think this is going to be an issue of growing importance. Over two-thirds of those surveyed spoke of the collaborative nature of their decision making. If families give, the recognition should be for the family. Not just the individual.

Special is normal

High value donors are used to special treatment and come to see it as the norm. If you fail to match their expectations you are unlikely to build a lasting relationship. This study found that asking too often and asking for inappropriate amounts were the most likely ways to turn a donor off (59%).

It's blindingly obvious, but there's a simple way to ascertain how often donors want to give and what they see as appropriate levels of support – ask them – either face to face or on the telephone.

Donors like a guaranteed return

Wealthy people may be willing to take a risk with their financial investments, but when it came to their charitable work, just 23% reported high levels of risk tolerance, with 26% being completely risk adverse.

Though some donors may want to fund innovative, risky projects, the majority want their money to fund work with a high chance of success. How do you tell the difference? It's easy. Ask.

In conclusion

In short, these highly valuable supporters want a personal relationship where they retain a level of control over how you communicate with them and how their money is used. By responding to that need, you'll increase your chances of building a long-lasting, mutually beneficial relationship.

Or as one high value donor put it recently...

"You don't have the bargaining power in this relationship. This is a totally voluntary thing. A charitable act...any attempt to force me will get my back up."

Understanding the barriers to giving

Donors don't particularly like to say no to charities.

That's because charities are great. When you give to them, you demonstrate to yourself and others that you are both kind and generous.

But what does refusing to give say about you?

It might be something a little unpleasant. As a result, many donors create emotional 'barriers' to help them deflect any accompanying negative feelings.

At Bluefrog, we've identified three main barriers that any good fundraising strategy needs to tackle if it is to be effective:

• Feeling unable to give
• Thinking that a gift will be ineffective
  
• Feeling unengaged by the charity or the cause.

You can read more about the barriers and how you tackle them here.

I mention them because I've been writing a paper on higher value donors and have found a couple of good pieces of research that will add to our understanding this particular part of the fundraising process.

The first was produced for HMRC by Ipsos Mori and can be downloaded here (PDF).

The second was produced by Barclays Wealth in co-operation with Ledbury Research and can be downloaded here (PDF).

As you'll see, only a third of wealthy people currently donate more than 1% of their net worth to charity.

But both papers identify that this group could give far more – both in terms of time and money – if it wasn't for the barriers that restrict their engagement. The Ipsos Mori paper is particularly interesting as it uncovers a growing desire amongst wealthy donors to retain control over the timing and destination of their donations.

I've also discovered a video that takes a look at a group of very wealthy people discussing why one of them doesn't like giving to charity. You won't necessarily learn much from it, but it will hopefully make you smile.

What would make a donor give more to charity?

Back in 2006, a Bank of America / Indiana University study looking at the charitable motivations of high net-worth individuals identified a very simple fact.

It's a fact that at Bluefrog, we see time and time again in our research.

When donors are asked what would motivate them to give more, few talk about the attraction of an organisational brand, shared values or knowing more about the goals of a charity.

What is important is that they know the charity is using funds efficiently and effectively. Usually phrased in 'donor speak' as an organisation having 'low administration costs'.

Just behind, is the desire to determine what impact their gift makes. Donors want to know what their £100 or $100 has actually helped achieve.

It's a distinction around the concept of responsibility that more charities would do well to emphasise.

Though the charity is responsible for effective use of the donation, the donor is responsible for the life that is changed.

The more we recognise this simple fact and demonstrate it to our donors, the more money we will raise.

How do donors choose which charity to give to?

I've just read a very interesting piece from Beth Breeze in Civil Society looking at how donors decide which charities to support.

As we've seen in other pieces of research, donors continue to struggle to distinguish one organisation from another.

They feel restricted by the lack of information. This makes it difficult for them to weigh up the differences between charities.

Unable to make the 'best' choice, they fall back on different strategies to help them make the decision as to which ones they should support.

Beth has identified three main approaches:

Taste-based

Supporting a charity that undertakes the work that matters to them. This might be work of high need such as giving after a disaster, but also might include borderline charitable activities such as restoring steam engines.

Personal experience

Beth describes this in terms of people creating 'philanthropic autobiographies' based on their life experiences. It relates support for charities to positive contact. Donors often described favoured organisations as being "near to the heart" or "admired".

Path dependent

Support based on past actions. Few donors disregard past giving behaviour and were seen to make "incremental changes to their portfolio of favoured charities, adding new recipients that fit within pre-existing categories that have already been mentally 'approved'."

These are further influenced by ties of loyalty and the influence of celebrities and authority figures.

But it's the impact of the lack of knowledge that is most revealing. Judgements on charity competence were often based on how little money was spent on staff salaries and on whether overheads were low.

And obviously, given the fact that mailing packs are the main interface, they were often seen as an indicator of general efficiency. Interestingly, Beth found that too few communications is as bad as too many.

Her solution is to give the donor control over what they receive. That's advice which is right on the button.

But few organisations actually ask donors. Those that do get some startling results.

In any case, the research shows that donors are content to 'muddle through'. This is backed up by Blackbaud's 2009 State of the Not-for-Profit Industry Survey (PDF), which reports that donors don't seem to make any extra demands for feedback on how donations are being spent – only 1 in 5 UK charities have seen any increased interest in more feedback.

But the fact is, when we show donors what they have helped achieve, we drive significant levels of engagement. Supporters aren't necessarily driven by successful outcomes if they don't feel any ownership.

Bluefrog demonstrated this with our research on mid-value donors back in 2007. Beth's research seems to back this up:

"Donors' prime concern may often be as much about maximising personal satisfaction than seeking the best social outcomes...our findings suggest this outlook is not exclusive to major donors."

The focus for charities must be less on building self-congratulatory brands. Rather than using WE to talk about what the charity has done, the emphasis should be on allowing donors to engage in what they believe in by bringing them as close as possible to the work they have made possible. The word YOU is far more powerful in this respect.

In developing  communication plans, charities would be well advised to take some advice from the pizza restaurant on the right. People don't want to support the best charity in the world, they want to support the charity that is best for them.

You'll find the full research on www.cgap.org.uk soon. Beth will announce the publication on twitter. You can follow her at @UKCPhilanthropy.

When should you use suggested donation levels?

A short while ago, Google shared details of a test they undertook on "one of the disaster relief donation drives on Google.com".

The goal was to discover the ideal suggested donation level at times of an emergency – $20, $50, $100 or no prompt at all.

Full details are available here. But in short, they discovered that not using a prompt generated the highest number of donations and the highest level of income.

Does that mean you should start removing suggested donation levels from your appeals?

No.

Suggestion levels can have a powerful positive impact on both response rates and average gift. They simply need to be used intelligently.

People often have preconceived comfort levels for deciding what to give and prompting is the main way you can get people to re-consider them.

They are particularly important – absolutely essential in fact – for recruiting and upgrading mid-value donors (those that give from £100 up to £5,000).

How much do you want? is one of the key questions that donors ask (have a read of The 11 Questions Every Donor Asks if you are interested in finding out what goes on in a donor's mind when they are considering a gift). If you don't answer it, they will often give you far less than you are looking for.

By prompting (and justifying) very high suggested gifts to people who can afford them, you can generate very high levels of income and very high ROIs - even at recruitment. This pack that I developed when I worked at the YMCA, back in the early 1990's generated ROIs of up to 13:1 on cold - but very carefully targeted – lists!

At Bluefrog, we find that the majority of mid-level packs generate gifts that are at or very close to prompt levels.

Low value files (where people are giving cash gifts of between £5 and £25) are different. Even if a pack has a specific price justification, donors very often ignore it, giving their usual amount instead.

This is further complicated with emergency appeals. People will often give much higher gifts at times of obvious and extreme need, when past giving behaviour can be ignored.

Prompting can uplift low value donors. It might only be by £1 or £2, but it does work. What is most important is to test and to keep an eye on how donors respond because it doesn't necessarily work for every donor nor every charity.

At the end of the day, it is how your donors respond that is important and if, when you look at your data, you find that some of them see suggested donation levels as a turn off, the answer is simple. Don't use them.

For the rest of the file however, they are a very important tool that should be regularly used to increase donor engagement and levels of income.

City bonuses – another reason to be cheerful

One of the range of strange but incredibly useful activities we undertake at Bluefrog is keeping a close eye on the various global stock-markets.

Much of the success of our high-value donor recruitment programmes can be directly related to our approach of targeting men and women with fairly large lumps of available cash.

The city is a pretty good source of these people, and as much we might like to think of them all as a bunch of uncaring fat cats, there are a good number that give substantial amounts to charity.

Unfortunately, if they are not getting bonuses, they become less generous. It's something that has become more and more obvious over the last couple of years. Though response rates have been fine, average gift has taken a bit of a beating.

As part of our planning for the next six month financial cycle, we have been comparing recruitment ROI with movements in the FTSE 100. Chart 1 shows the FTSE over the last three years overlaid with a trend line.

Chart 2 shows a representative example of high value recruitment ROI achieved since the start to 2007 compared to the FTSE 100.The similarity is startling. As the FTSE started its tail spin so did the size of average gifts.

What is exciting me at present is we are now starting to see the stock market rise and with it will be the return of bonuses, dividends and profits. The influx of this income into city wallets and purses will be followed by donations to charity.

As Chart 2 shows, we have seen a plateau and now some real growth in ROI on some of our recruitment activity and with pay packets beginning to expand, I'm very confident that average gift will continue to rise.  

The proof will be in our appeals, but I'm approaching this Christmas in a very bullish state of mind.