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The Digital Fundraising Tipping Point

Why is the this the first fundraising article featuring Matt Damon and Rachel Weisz, Simon Pegg and Uma Thurman, Naomi Campbell and Sean Triner?

It is not that they are all fundraisers.  Nor is it the case that they have all dated each other. (I know that’s what you’re thinking).

The coincidence is a pure accident.  They were all born in a year significant for digital fundraising.

It is likely that their first computer, like mine, looked something like the ZX81.  It had 1K memory and tiny resolution.

It was the first affordable computer you could buy for £99.

sinclair

Inspired by this device I have been ‘into computers’ and things digital ever since.

A big gamer, sometimes I feel life, work, and outdoor play are just things I have to do in between gaming.

I am a digital dude, an early adopter happy to yarn about the latest trend, an early tweeter, blogger, Skyper and I give all my charity donations online.  I only read (and have written) ebooks.

Born in the same year as those five celebrities, I am part of the first generation of computer consumers.

I am more excited about digital than anything else in fundraising.  It won’t totally replace mail, phone and face to face but it is already integrated in all.

Whether supporting mail appeals, helping generate leads for phone or welcoming a new face to face donors, digital is everywhere.

It will undoubtedly be the biggest channel of fundraising and will drive most innovation and excitement in fundraising over the coming years.

However, fundraising is ultimately about donations; typically aiming for maximum net income from fundraising investment. And so that is where I am obliged to bring in data.

Here is my theory.

The mean age of a ‘classic’ retained donor seems to vary between 64 and 74 in every country where I have looked at enough data.  Of course, this may vary by charity and is influenced by the techniques used to acquire the donors.

Online-acquired donors, for example, tend to be much younger.  But there are not enough of them to influence the average by much.  A larger pool of donors is face to face.

When we look at face to face acquired donors we see the average age is much younger.  The mean age in Australia of retained face to face donors is around 42.

Face to face has had huge growth here for over a decade, and it dominates fundraising for some charities. But across the sector face to face only brings the average age down into the 60s.

 

donor chart

Why is this relevant to digital fundraising and a celebrity list with me added to the end?

All five celebrities, plus me, were born in 1970 and, given a normal life, all would have graduated from college around 1991-1993 (Only fellow Brits Simon and Rachel graduated – Naomi, Matt and Uma were already established in their careers by then).

phone

If you started normal work in the early 90s, you may not have realised but you were on the tipping point of a revolution.

Give or take a year or so, depending on country and employer, people starting office jobs in the 80s didn’t have a computer on the desk.  People starting in the 90s did.

I was soon the cusp I did a maths degree with a fx 7000G calculator.

But within a year of work, I was tapping away in spreadsheets, realising that fundraising was all about understanding the numbers.

Most people born in (and around) 1970 were the first generation of office workers who have always worked with computers.

And we are around 46-47 right now.  Except for face to face giving, we are simply not of donor age.

People born after 1970 (statistically speaking) don’t donate much.  And then, when we do, we are less loyal – younger folk attrite quicker than older people and give less.

chart1

Don’t panic though.  Twenty years ago, younger people didn’t give either.  But when they got older they started to become more generous.

My theory is that people my age now will be giving as much as people in their mid-sixties do now.  But because they have grown up with computers they will be much more likely to be donating online.

At the moment only around 9-12% of donations in Australia, USA, UK, Canada and elsewhere are made online.  And a big proportion of them solicited offline.

But my bet is that by 2030 online will be the #1 channel of donations.

There may be other disruptors that may speed it up.  For example, the cessation of the cheque as a payment method, and the proliferation of goods and services exclusive to the online space.

But a combination of extrapolating, common sense and rational thinking tells us digital is the future.

Just not all of the future.

Best wishes,

Sean

P.S. This is a revised version of an old blog I did a few years ago.  Remarkably, not much changed!

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The Best Way To Get Donations From Under 40s…

What’s the best way to get donations from people under 40 years old?

Wait until they are over 40.  With rare exceptions, little strategic money is donated by people under 40.

Even face to face – aimed at Gen X – finds that older Gen X donors give more than their younger Gen X peers.  That is, 45-year-olds give more than 35-year-olds.

However, that does not mean you shouldn’t communicate with younger people.

Older people almost certainly donated more in the Ice Bucket Challenge than younger people – even though there were likely fewer of them.  But – those older people would not have known about it if it weren’t for the fervent sharing by millennials.

The idea of acquiring donors while they are young because we will make them more likely to support us later is not entirely flawed, but just stepping back and thinking about that logically, it doesn’t quite make sense.

Surely it would be easier to get the more valuable donors in NOW, and only go for the long-term ‘get ‘em in young’ when you have got all of the older ones in first?

I suggest that you look at your current donor database by age. You will likely see a stark correlation between age and every measure of success.  Generally older donors tend to have:

  • Higher average donation.
  • Higher second gift rate.
  • Higher retention (especially in monthly giving).
  • Higher amounts raised (in events).
  • Higher chance of supporting an event again.
  • Higher lifetime value.
  • Higher chance of putting you in their will… and a higher chance of realising that sooner.
  • Higher chance of becoming a major donor.
  • Higher chance of responding to most of your communications.

If anyone can ever show me some data on younger people giving in strategic volumes – please let me know!!

By the way, would you like to learn how you can motivate ANYONE to donate to your cause? Then check out our Irresistible Communications Course in The Fundraisingology Lab.

Sean

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Are Millennials Really Worth Targeting for Fundraising?

We all want younger donors.  But is it worth the investment?

Certainly, it is for donors around the 40-year-old mark – face to face (direct dialogue) has done really well there getting millions of people around that age to give.  But what about younger?

The idea that by getting donors in early, we will make them more likely to support us later is not entirely flawed, but just stepping back and thinking about that logically, it breaks down.

Surely it would be easier to get the more valuable donors in NOW, and only go for the long term get ‘em in young when you have got all of the older ones in?

I suggest:

Look at your current donor database by age, you will likely see a stark correlation between age and every measure of success.  Generally, older donors tend to:

  1. Higher ave donation
  2. Higher second gift rate
  3. Higher retention (especially in monthly giving)
  4. Higher amounts raised (in events)
  5. Higher chance of supporting an event again
  6. Higher lifetime value
  7. Higher chance of putting you in their will and higher chance of realising that sooner
  8. Higher chance of becoming a major donor
  9. Higher chance of responding to most of your communications

In regular/monthly giving the upwards trend tends to stop going up over 67/70 years old.

In cash / direct mail it doesn’t seem to ever stop going up.

And when you take that line to people below about 40 you begin to see that the Return on Investment over (say) five years is simply not worth the effort.

In other words – older donors are better.

Why?

One theory is that charities are simply not good at marketing to younger people.

I don’t believe this, because thousands of brilliant charities try all the time and fail, and have done for years with tons of ideas.

Maybe it is true – after all, before face to face charities had repeatedly tried and failed.  But it seems the effort of finding the magic has wasted far too much charity time and money already.

My theory is a bit more simple, and shared with pretty much every fundraiser who has ever looked at demographic data as well as fundraising data:

The older you get, the more disposable income you have.  Then, when you get REALLY old, some peoples disposable income may go down, but the asset in your legacy is still going up.

Should we write off young people then?

Not at all.  They like purchasing cheap quick things, like Ice bucket Challenge (IBC).

But note, probably more than 80% of the revenue raised for IBC would have come from just 20% of the participants.  And that 20% will be heavily represented by older participants.

In other words, they got loads of young people involved, but most of the actual $ will have come from people over 40 or 45.  We see this in all events.

But having 8,000 young people to an event, effectively funded by 2,000 old people could have other benefits – for campaigning for example.

All fundraisers WANT young people to give.  They really believe in it! I really wish it was so too! But wishing something were true doesn’t make it true.

In the table below, the age of donors – across about 70 charities, where age is known, you can see there are some younger groups.  But even within those younger groups (like face to face regular givers, averaging 43 years old), we see all of the points I made above still hold true.

Gift Classification Channel Income Donors (age known) Age at recruitment
Regular Gift Street/Mall

Face to Face

$165,216,714    620,857 43
Cash Direct Mail $78,436,142    612,500 70
Regular Gift Phone $24,150,667    100,655 54
Regular Gift Other $25,153,095      72,101 54
Child Sponsorship Street/Mall

Face to Face

$36,042,920      68,052 44
Regular Gift Direct Mail $21,022,016      64,000 61
Child Sponsorship TV $26,524,368      42,876 47
Child Sponsorship Other $27,903,102      43,071 47
Gift To Child Direct Mail $7,091,384      82,601 52
Regular Gift Online $11,190,781      30,828 44
Regular Gift Door to Door Face to Face $4,931,672      19,558 44
Child Sponsorship Online $8,977,320      15,126 41
Child Sponsorship Phone $7,064,422      12,601 48
Child Sponsorship Direct Mail $7,722,054      11,543 54
Child Sponsorship Door to Door Face to Face $5,488,382        8,830 45

The trend for all the other areas looks like that too.  i.e. older DM donors are better, as are older online donors etc.

And even in bequests from regular (sustainer/monthly) givers.

The chart below shows that older people communicated with by direct mail, including appeals, are more likely to donate (there are more of them) AND they give more after their initial gift than younger ones.

Put simply, an average 75-year-old paying by cheque will give over 7x their initial gift in 5 years, but a 35-year-old cheque donor (of which there are not many) gives about 4 times as much.  A MASSIVE difference. And for credit cards, it is 7x and 5x, still a BIG difference when you consider how expensive and tight the costs of donor acquisition are.

In major donor giving… older is better.

On Facebook… Successful (fundraising) charities have profiles like this…

The bottom line:

There is no measure that I can find anywhere that tells a fundraiser that younger people are a priority over older donors.  The only time we need to go for younger people is after we have:

* Exhausted sources of older donors AND

* Following best practice with donor-centric and frequent communications with them AND

* We have a great mid value donor program AND

* We have a great legacy/bequest program AND

* We have established a face to face sustainer/monthly/regular giving program (or can’t for some reason)

Only when we can tick all those boxes should we start mass marketing on a strategic level to younger people.

OR

* Involving younger people is core to your mission.

Find out how you can fundraise more effectively by targeting the right audience by checking out The Fundraisingology Lab. Click here for more information.

Sean

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