I believe the new big thing for charities (and something Roger Craver of The Agitator has pointed out) is something really old-fashioned: talking to your donors face to face. Especially mid-value donors and those considering making bequests.
The charities that grow and raise more money for their beneficiaries are those with a long-term view. They have a cohesive, coordinated and focused strategy.
With only 301 charities (1%) accounting for half of total revenue in Australia, it is relatively easy to get hold of some really fascinating data. Especially when many of the larger charities collaborate in Pareto’s annual benchmarking exercise.
Let’s take direct mail. If you haven’t already got a large database of donors through direct mail, the costs of donor acquisition, setting up a team and database, bringing in the right skills and more can mean it will take years to break even, much less generate funds for the cause.
Despite that, approached holistically, the bottom line is that direct mail, in most countries, still produces one of the very best medium and long term returns of any acquisition.
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You are probably asking… what is this ‘holistically’ caveat? Well, a few things actually. Direct mail-acquired donors produce the best results when:
Preferably more than 50% but at least 35% of acquisition costs are recovered by donations to the acquisition mailing.
Your team works together. Direct mail, bequests, mid value, digital and major donors.
You are focused on maximizing net income in the long term, not on short-term Return on Investment.
There are people prepared to, and trained to, approach and ask donors and bequests for additional funds on a personal basis.
Take this example, based on real data and modelled for a new entrant to direct mail in Australia.
The charity invests $1 million per year, for five years, on direct mail acquisition. Other costs such as ongoing house mailings, calling donors for regular (monthly) gifts, thanking, processing and developing packs are additional to that million but included in the model.
After ten years the charity would have raised over $7 million net. A lot of effort and risk for what is an OK return.
However, what if the charity ‘lifted’ the values of some of these donors through major donor activities? Applying the growth that we have seen the best charities get through their major donor programs, and including some costs for staff and materials, we end up with $13.6 million. Now we are talking growth!
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And what if they were great at legacy fundraising too? Well, they’d be up at $21.3m net, with an annual net income looking forward in excess of $3m which is pretty much in the bag. A superb, reliable and expandable revenue.
Here it is illustrated:
A great chart for your board when you are seeking investment, and a great approach for breaking down internal silos.
If you’d like to learn more about how you can mine this gold, check out my Mid-Value Donor Super Course that is available to all members inside The Fundraisingology Lab.
It’s the quickest, cheapest and easiest way to raise more money for your charity!