Why you shouldn’t be using Face-to-face fundraising
There has been a great deal of ink spilled about whether or not face-to-face fundraising is a good recruitment channel or not and I can’t believe that people are still using it. Of course, it looks great on the front end and the advocates will tell any fundraiser who questions it that they are not cultivating donors correctly if they are getting high attrition rates. But don’t the figures speak for themselves?
Charity ‘X’ wanted to test Face-to-face [F2F] in FY09 and had a relatively robust 2nd gift welcome programme in place. The above chart shows that prior to the F2F recruitment, regular donors had been staying with the charity at a rate of 96% into their second year. These were mail and ‘phone recruited donors and they were losing 4% from new into Y2. Pretty impressive.
Then in FY10 to FY11 the attrition rate plummets to just over 70% pulled down by the F2F donors. Remember that the attrition rate for the F2F donors is down at 40% but they are pulling the overall % performance down from 96%!
On further examination it turned out that it would take 50 months to break-even — this is harsh cashflow for any organisation and it is difficult to justify this level of investment with donated money.
If anyone is making F2F work — and can support it with numbers that include attrition rates by year — please let me know. Why is this material never presented at fundraising conferences?
Acquiring the right donors
For years now I have been going on like a broken record about charities recruiting low value donors and how they should be focusing on acquiring higher value donors. Despite this we find agencies and charities sending address label packs, pen packs, as well as low value monthly giving at £2 and £3 / month offers. At last year’s IoF Conference there was a high profile session on Incentives in Direct Mail advocating that incentives are fine if it improves response rates. Wrong!
We often examine the data of charities who want to recruit donors that will repay their investment over the next 3+ years. This is in answer to the strategic question “Where should I spend my acquisition budget?” and “What type of donors should we be acquiring?”
If you look at the chart below you will see that when we reviewed the performance of donors by the value of their first gift to the charity, those whose first gift was £25 or more have a much higher value — as you would expect. But look at the difference in value as the years pass by. After 4 years the £100+ 1st gift donors are worth 10x that of donors whose first gift was less than £25. And in most cases this is much higher than this graph illustrates. But….
…as we dug a bit further, we applied all of the costs related to the cultivation of those lower value donors (less than £25 first gift) and what we found was that these donors had cost the charity more to cultivate than they had returned in income. Now imagine what this figure would be like with the 1st gift less than £15 donors; or 1st gift less than £10 donors. Imagine what this figure looks like with incentive-led recruited donors. We could show you and it is an ugly scenario. No charity should be using this method of acquiring new donors unless they look at the 3+ year performance AND they take into account the ongoing cost of cultivating those donors.
Now the argument I often hear from charities who recruit at low value is this: “we recruit at low value and then upgrade the donors from there”. Nice theory, but in actual practice it doesn’t work. Low value donors are more likely to be ‘one and dones’, are less likely to upgrade and, even if they do upgrade, a 50% upgrade of £10 is £15 is still low.
It’s true that higher value donors are more expensive to acquire. But they will stay longer, upgrade more easily and become stronger advocates for your cause.
If you would like to see the LTV analysis of Regular Donors by the value of their first gift then email us and we will send you the findings. Or, if you really want to find out we will undertake it on your own file.
In reality, you will need to recruit a mix of donors by value because of cashflow constraints. Just ensure that you have the correct mix, a solid welcome process and a very capable high value donor relations person or team in place to upgrade donors that do come in with higher gift levels.
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Online high donor
Created for World Vision, an online campaign aimed at high value and major donors to ‘buy shares’ in a community project of their choice. With updates and ongoing donor involvement.
Community Partners
House appeal
Oxfam warm appeal — Annie’s choice, a powerful creative treatment of the dilemma faced by a young girl with HIV Aids that instantly demonstrates the proposition to the donor.
Annie's Choice
