It’s often counter intuitive — so business instincts might actually be counterproductive.
By Tom Harrison
Unexpected conflict can erupt at the most awkward times. I was at a wedding reception recently and found myself sitting next to the vice chairman of the board of one of our clients. When he learned who I was, he declared with some passion, “You’re the agency I’m trying to get rid of. Do you realize you’re the largest line item on our budget?!”
Sensing somehow that “Nice to meet you, too” wouldn’t quite cut it, I replied, “Do you mean that we produce the largest income line item on your budget?”
There are a lot of ways to read a long pause in a conversation, aren’t there? You just never know. In this case, he smiled and said, “I honestly never thought about it that way. You’re right. Your agency produces more revenue for us than any other source.”
Thankfully, we went on to have a healthy dialogue about fundraising channels, about the cost of media and printing and postage, and about how the real measure of success is what combination of channels and strategies nets the nonprofit the most dollars to fund its life-saving programs. And about how beautiful the bride looked on her special day. He turned out to be a terrific guy. Our conversation reminded me that some of the best questions about direct-response fundraising programs often come from nonprofit board members.
This challenge is compounded by the fact that most board members are more likely to be major donors than regular donors. They hang out with major donors. They think like major donors, and support causes and offers that resonate with major donors. In other words, they are generally not the audience for your direct-response marketing program and, hence, are not in the best position to pass judgment on your messaging, offers, channels, frequency and even creative approach.
Where can this challenge damage a nonprofit?
I’ve seen otherwise knowledgeable and successful board members:
- advocate that the acquisition budget in digital, mail, DRTV be slashed in order to improve the current year’s net income and fundraising ratios;
- opine that people don’t want to receive letters anymore and the organization should simply email its donors;
- share that someone they know complains about receiving too much email and snail mail, and conclude that the organization should cut back on frequency (and on expenses);
- insist that people want to invest in success, so the organization should emphasize the positive results of its programs rather than showing need; and
- champion “the next big thing” in marketing as a way to attract hipper, younger people to the cause. (Millennials are a vitally important audience to many consumer product companies, but they are not one of the primary, economically viable target audiences for fundraising. They can be effective advocates for nonprofit causes as well as volunteers and event participants. But when targeting for direct-marketing revenue, attracting “younger” donors means trying to get people in their 40s.)
Smart nonprofit leaders recognize that their board members are successful in their own lives and careers because they have the ability to learn and grow. The facts are friendly. Your CEO and chief financial officer can be — in fact, must be — very effective spokespeople with the board to lay out the business case for your direct-response fundraising program. That means you have to make sure your CEO and CFO have all the info and understanding they need. To do this:
- Map out the long-term value of your donors, and explain how you calculated what you can afford to spend to acquire and cultivate them. Get your board used to evaluating everything over the long term — not simply campaign by campaign.
- Show them the money. You’ll be amazed at what happens once business people understand that for every dollar you invest in direct-response fundraising, you net $3 to $4 for your cause.
- Quantify natural attrition and the steps you’re taking to build your largest asset — your active-donor file.
- Map out projections to demonstrate the long-term impact of cutting acquisition — as well as the impact of investing more in successful online and offline acquisition programs.
- Study industry frequency testing, and if necessary, conduct your own cultivation frequency tests to determine the optimum number of appeals based on the response (net revenue) of your donors, not someone’s opinion.
- Run head-to-head tests of your channels (digital, mail, DRTV, phone, events), and calculate the long-term donor value and net revenue over time of donors acquired via each channel to determine the right media mix. And show how the value increases dramatically as you engage with donors through multiple channels.
- Do in-market testing, not simply focus groups, on your best offers (Success/need? Monthly sustainer? Advocacy? Generic/specific? Founder/celebrity/CEO/recipient?), so you can meet the donor where she is, rather than where you (or your board) wish she were.
- Do the analytics to demonstrate the impact of integration not just across channels, but up the entire donor pyramid to show your board how direct-response donors (the bottom of the pyramid) can be migrated to produce monthly contributions, major gifts, capital-campaign support and planned-giving revenues.
- Finally, consider inoculating your board in advance against the stereotypical objections. I once told a conservative, development-shy board of a $20 million nonprofit that we had a way to raise an additional $1.5 million net a year. After explaining the strategy, I warned these board members that they’d probably hear complaints about the fundraising from friends, neighbors and even family, but, “If generating an additional $1.5 million isn’t worth the hassle of complaints, tell me now and we won’t do it. But if we go forward with it, let’s agree that we’re in it together and not going to be discouraged or deterred by complaints.”
The board agreed and, for the first time, actually championed our successful direct-response fundraising efforts. At the next board meeting, the members applauded the results and the development department staff.
To view a downloadable PDF of this article, click here.