Monday, June 18, 2012

Introduction to Direct Response Fundraising

Association Of Social Work Boards - Introduction to Direct Response Fundraising
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Direct response does exactly what it says - goes to the donor to get a direct response to a ask for a donation. It gives population the opening to conduce to a cause directly. And it's amazingly effective. Even in this day of internet marketing, there's still something fine about direct mail. It's tangible, and because it's in the mail, the recipient is far more likely to see it (instead of hitting delete without noticing the topic). And it continues to help non-profit organizations raise hundreds of millions of dollars every year.

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I have worked in the non-profit field for more than 25 years, starting with a job fundraising for a community development society in the South Bronx. Specifically, my job was to begin and build a direct mail campaign.

Because my father was in fee of fundraising for an international non-profit, I had great exposure to and familiarity with direct mail and its value. It was a extraordinary way to raise both money for and awareness of a cause. Its most bright attribute? It gave population all over the New York region the ability to do something concrete to help a cause about which they cared deeply or just a little bit. And population did care about helping the South Bronx.

This was back in the day when the South Bronx looked like bombs had dropped, full of burned-out buildings and barren landscapes that spread for acres. President Ford had recently told New York to "drop dead" while President Carter stood amid the rubble at Charlotte road promising to do something to help the South Bronx. Meanwhile, the movie "Fort Apache" was busy scaring America and Tom Wolfe was doing research for his dreadful book, The Bonfire of the Vanities.

Our campaign worked, in part because we began when concern for the population of the South Bronx was reaching its crest. Our first donor acquisition packages went out to population who already were donors to community development and anti-poverty causes. We promised to change our lists with the organizations whose lists we borrowed - a convention that continues to this day. The fact behind this: population who already give through the mail are more likely to give to someone else society through the mail. And population who reserve one collective cause are more likely to reserve someone else one. There were lists we rented, too, because we knew those donors were very good prospects yet we couldn't arrange a trade.

The initial mailings were very small in number - 50,000 pieces was the most we mailed at one time. And many mailings were smaller. We never mailed less than 10,000 pieces, however, because we wouldn't create enough responses to see if the single package was effective. Our direct mail agenda ultimately grew to comprise 3,000 donors and create more than 0,000 a year in income.

Since that first job, I've overseen a lot of direct mail fundraising. For 11 years, I was the administrative Director of City Harvest, an anti-hunger group in New York City that generated 60% of its million each year funding from individuals. While I was there, we quintupled our donor base to more than 50,000 donors.

In my early days, I learned that we were doing very well when 1.5% of the population we asked for money well made a gift. In fact, any response rate over 1% is determined good in the direct response field. I opinion these response rates to direct mail pieces were amazingly low considering that we raised more money than we spent on the donor acquisition mailing.

The extraordinary thing about direct response is that we can obtain lots and lots of data about who responds to what, over what duration of time, with how much, at what time of year, etc. The first time a direct mail package is used, we mail to a fairly small set of possible donors in order to see what the response rate will be. At City Harvest, we once did a new donor acquisition mailing and got a 2.5% response rate - almost unheard of and quite noted in the non-profit direct mail universe (and much copied).

If a package gets a prosperous response, then you "roll out" the package to a much bigger group of possible donors (usually comprised of lists of donors to other charities). That becomes a "control package." It will remain the control package until someone else donor acquisition package exceeds its midpoint response rate.

A direct mail package consists of any pieces:

* a letter describing the organization's work and well asking for a gift, signed usually by the organization's chief executive

* a response device with the possible donor's name and address and listing any gift amounts (as well as providing information about getting the organization's financial reports)

* a reply envelope (either unstamped or a postage-paid firm Reply Envelope or Bre)

Sometimes, the package includes a brief fact sheet or brochure to additional educate the possible donor about the organization's work and its impact.

Testing new packages goes on all the time, all the time with small groups of possible donors. Other tests also are done, with possible and with current donors - envelope size, real stamp versus engine stamp, celebrity signer versus Ceo, enclosing pictures or not, the list goes on and on. Only one thing is tested at a time, though - it's the only way to cut off what works or not.

One example: We tested either to comprise a firm reply envelope (with the society paying for return postage) or contribute an envelope that required man to put on their own stamp. We found there was a slightly higher response rate to the no-stamp envelope - not statistically primary but enough to let us know that we could stop using Bres which cost us a lot of money. (Charities pay the postage And a handling fee - it well does matter when you add your own postage).

I also learned that it becomes increasingly difficult to cover the costs of acquiring new donors, the more pieces you mail. So why continue trying to obtain new donors? Because once your society gains a donor, it's very likely those donors will make someone else gift. Donor "renewals" are what yield the real fundraising income.

It turns out that it costs far less to get someone else gift from a donor than it does to get the first gift. There are no lists to rent, less printing to pay for, fewer stamps to be purchased. Most important: donor "acquisition" mailings are investments in the future. population who give or 0 to an acquisition campaign may give two or three times that number the next time. They may do that over three to five years. Also, a new donor may come to be what we call a major donor - man who gives at least 00. And some donors ultimately come to be so curious in and committed to the society that they join the Board of Directors and both give and help raise tens or hundreds of thousands of dollars.

If an society wants to start a direct mail program, it's best to talk to population at organizations that already raise money this way. There are also many consultants who can help. The Direct Marketing association has a non-profit arm full of experts.

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