The 100% Fallacy A brand-new, custom webinar delivered pro bono, to benefit AFP International. Tom Ahern, your volunteer fundraisingologist. Welcome!

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1 Tom Ahern is one of the country s most sought-after creators of fund-raising messages. The New York Times, Nov The 100% Fallacy A brand-new, custom webinar delivered pro bono, to benefit AFP International Tom Ahern, your volunteer fundraisingologist 1 Welcome! To my darkest show 2 1

2 The 100% Fallacy We could get a 100% response rate. (Giggle.) Anyone can be our donor (Values must match.) Any donor is a great donor (WRONG!) Once acquired, a new donor is likely to stay a long time: Ours for life. (4-6 years.) We need younger donors. (Low ROI except for monthly giving.) 3 Abysmal! 1.6% response rate for acquisition The person in charge of direct mail was disgusted. Direct Mail 2017 Tom Ahern 4 2

3 Respectable acquisition response rate? The person in charge of direct mail didn t know this. ½ of 1% and up (mail 200, receive 1 gift) Direct Mail 2017 Tom Ahern 5 Cumulative renewal response rate annually 40-70% Direct Mail 2017 Tom Ahern 6 3

4 Donor comms The virtuous circle... You ask. You thank. You report. You ask. You thank. You report. You ask. You thank. You report. Appeals, thanks, & newsletters work together. 8 4

5 The part the charity cares about The part the donor cares about The virtuous circle... Appeals, thanks, & newsletters work together. You ask. You thank. You report. You ask. You thank. You report. You ask. You thank. You report. 9 Your thanks and your reports (newsletters) are your HUGS Good hug? Warmth. Acceptance. The strength of the embrace. 10 5

6 Q. Of 10 new donors, how many go on to make a second gift? [ ] 2 [ ] 4 [ ] 6 [ ] 8 11 A. Of 10 new donors, how many go on to make a second gift? [X] 2 [ ] 4 [ ] 6 [ ]

7 Remember, the greatest cause of donor attrition is that the donor did not know she made a difference. Source: Richard Perry, Veritus Group, I made a difference. I made a difference. 14 7

8 Q. What s a good response rate for a print donor newsletter? [ ] 5% of your list gives [ ] 25% of your list gives [ ] 50% of your list gives 15 A. What s a good response rate for a print donor newsletter? [X] 5% of your list gives [ ] 25% of your list gives [ ] 50% of your list gives 16 8

9 Your donor newsletter goes here Source: John Haydon, April Tom Ahern 17 The 100% Fallacy We could get a 100% response rate. (Giggle.) The shiny new thing will save us (Delusional.) Anyone can be our donor (Values must match.) Any donor is a great donor (WRONG!) Once acquired, a new donor is likely to stay a long time: Ours for life. (4-6 years.) We need younger donors. (Low ROI except for monthly giving.) 18 9

10 Q. What percentage of crowdfunding campaigns reach goal? [ ] Almost all [ ] About 50% [ ] A third or less 19 A. What percentage of crowdfunding campaigns reach goal? [ ] Almost all [ ] About 50% [X] A third or less 20 10

11 The Kris Hermanns theory: If you suck at raising money using conventional methods like DM, you ll also suck at raising money using the Shiny New Thing. 21 A. Is direct mail still vitally important in fundraising? [X] Yes [ ] No [ ] Maybe We tried direct mail. It didn t work for us

12 Source: Jeff Brooks, 2014 Direct Mail 2017 Tom Ahern 23 MN environmental advocacy Membership jumped by more than 20% with just one mailing. We added almost 300 new members

13 Page 1 of 6 Membership jumped 20% with 1 letter 25 List Name Count % of gift count Revenue % of revenue Avg gift # mailed Return rate NATIONAL AUDUBON SOCIETY % $1, % $ % WILDERNESS SOCIETY % $ % $ % GREENPEACE % $ % $ % OCEAN CONSERVANCY % $ % $ % ENVIRONMENTAL DEFENSE % $ % $ % SIERRA CLUB % $1, % $ % THE NATURE CONSERV % $ % $ % DEFENDERS OF WILDLIFE % $ % $ % ARBOR DAY FOUNDATION % $ % $ % NATIONAL WILDLIFE FEDERATION % $ % $ % WORLD WILDLIFE FUND % $ % $ % BOAT & YACHT OWNERS DB % $ % $ % MINNEAPOLIS AND SAINT PAUL MAGAZINE % $ % $ % COMPLETE WATERFRONT LIVING % $ % $ % COASTAL LIVING MAG % $ % $ % 297 $10,092 41,302 Source: Friends of the Mississippi River, March 2017 Direct Mail 2017 Tom Ahern

14 Raised $56,000 for a local library in one mailing. Written by a non-professional with 2 hours training Dear <first name>, Hey! Story, not stats The hero What gifts do The first words RESPOND staff heard from 4 year old Jane when she arrived at our shelter were, We had to leave because Daddy hit Mommy in the head with a baseball bat. No child should have to live through such trauma! Jane told our shelter staff this because she missed her backpack that she had left behind, along with nearly all of her belongings, when she and her family fled. Children are often forgotten victims of domestic violence. Jane loves simple things like going to school with a brand new backpack and school supplies - funded by donors like you. She skips on her walk to school, wearing a Frozen backpack nearly as tall as her, beaming ear to ear. Jane s mother wants to build a better life for her children, but she had to leave their home with nothing but what they were wearing when they fled. She needs your help, <first name>, to rebuild. Your gift of just $100 helps her buy groceries to be able to cook her children s favorite meals. The vision Families seeking shelter after domestic violence often show up with just the clothes on their back. Your generous donation provides a bed for Jane at night, clean clothes for school in the morning, and caring The shelter staff to help her family find permanent housing. enemy With great appreciation, Danielle Kempe Chief Development Officer The hero The hero P.S. Jane needs your help! Please donate today to give child survivors of domestic violence the chance to be kids again. Personalized offer $41,015 in individual gifts Small domestic violence shelter 28 14

15 LOSO direct mail isn t dead; it s a major source of major gifts Means I know in Italian 29 You mail 10,000 appeals to a good list 1,000 open the envelope 100 make a gift (20 online) 20 of those 100 make a 2 nd gift major gifts 1 eventually makes a bequest 30 15

16 One-in-six of first gifts from $2,500+ donors was through traditional direct mail acquisition, as was one-in-four of first gifts from $1,000-$2,500 donors. Source: American Cancer Society, Analytical Ones via The Agitator, Think of it another way, take away direct mail acquisition and a significant chunk of your future large donors will also go away. Source: American Cancer Society, Analytical Ones via The Agitator,

17 Q. How big was online giving in the US in 2017? [ ] Modest: 5-10% of total [ ] Good: 10-25% of total [ ] Surging: 25-40% of total 33 Q. How big was online giving in the US in 2017? [X] Modest: 5-10% of total [ ] Good: 10-25% of total [ ] Surging: 25-40% of total 34 17

18 Online Giving Reaches Record High in 2016 [at 7.2% of giving across US] Blackbaud, Feb 22, 2017; it didn t improve much the next year 35 Source: Mark Phillips, April

19 For every 1,000 DM packs delivered to supporters in 2016, Judicial Watch raised $3,137. For every 1,000 fundraising [ s] delivered to supporters, groups in our study raised $40. 96,000 s will yield $3,840 in gifts. The amount fell the next year to $38/1K. 37 The 100% Fallacy We could get a 100% response rate. (Giggle.) The shiny new thing will save us (Delusional.) Anyone can be our donor (Values must match.) Any donor is a great donor (WRONG!) Once acquired, a new donor is likely to stay a long time: Ours for life. (4-6 years.) We need younger donors. (Low ROI except for monthly giving.) 38 19

20 Source: Mark Phillips 39 Donors are staggeringly ignorant of the causes they support. -- Richard Radcliffe 40 20

21 DONORS MAY BE IGNORANT, but what they DO have in abundance are their own personal values, interests, beliefs, connections, experiences, upbringing, lost loves, secret passions, regrets, fears, angers, hopes, and built-in empathy [except for psychopaths] The 100% Fallacy We could get a 100% response rate. (Giggle.) The shiny new thing will save us (Delusional.) Anyone can be our donor (Values must match.) Any donor is a great donor (WRONG!) Once acquired, a new donor is likely to stay a long time: Ours for life. (4-6 years.) We need younger donors. (Low ROI except for monthly giving.) 42 21

22 Q. How likely are volunteers to give money, compared to non-volunteers? [ ] Half as likely [ ] Just as likely [ ] Twice as likely 43 A. How likely are volunteers to give money, compared to non-volunteers? [ ] Half as likely [ ] Just as likely [X] Twice as likely 44 22

23 88% of dollars raised comes from 12% of the donors ~ Jay Love, Bloomerang, quoting the Fundraising Effectiveness Project; April 2017, via Pam Grow 45 The 100% Fallacy We could get a 100% response rate. (Giggle.) The shiny new thing will save us (Delusional.) Anyone can be our donor (Values must match.) Any donor is a great donor (WRONG!) Once acquired, a new donor is likely to stay a long time: Ours for life. We need younger donors. (Low ROI except for monthly giving.) 46 23

24 Q. How long will an average donor give to a charity? [ ] 1-3 years [ ] 4-6 years [ ] 7-10 years [ ] more than 10 years 47 A. How long will an average donor give to a charity? [ ] 1-3 years [X] 4-6 years [X] 7-10 years [ ] more than 10 years Monthly donors 48 24

25 LTV Lifetime Value (LTV): The metric that matters most in both commercial marketing... AND fundraising 49 Q. Which gives you the highest Return on Investment (ROI)? [ ] Direct mail appeals [ ] Events [ ] Gifts in wills (bequests) [ ] Major gifts fundraising You spend $1, you make how much? 50 25

26 A. Which gives you the highest Return on Investment (ROI)? [ ] Direct mail appeals [ ] Events [X] Gifts in wills (bequests) [ ] Major gifts fundraising 51 Comparisons of Lifetime Value (LTV) LTV of a one-time donor (U lose $): $50/average? Gives same amount for 10 years (rare): $500 Converts to $10/monthly gift for 10 years (conversion takes work): around $1,200 Becomes a $1,000/annual donor: around $9,000 Leaves a charitable bequest: $50,000 or more Looking at LTV helps you prioritize your activities and investments. It is Dr. Adrian Sargeant s most important metric

27 LTV tells fundraisers to focus on... Dr. Adrian Sargeant, the world s foremost researcher into fundraising matters persuading more donors to sign up as monthly donors moving mid-value donors into higher giving marketing charitable bequests 53 A. In Australia, legacy gifts (bequests) account for how much of the annual fundraising haul? [ ] 5% [ ] 10% [X] 20% 54 27

28 Sad. President Trump 55 Q. How soon after you begin a serious bequest marketing effort will your first legacy gift arrive? [ ] Within 3 years [ ] Within 6 years [ ] Within 12 years 56 28

29 Q. How soon after you begin a serious bequest marketing effort will your first legacy gift arrive? [X] Within 3 years [ ] Within 6 years [ ] Within 12 years 57 In 2016, 44% of US households had Wills. That s 55 million Wills total. For households age 65 and up, 70% have a Will. Source: Gallup, 2016 TOM AHERN

30 Had your predecessor 10 years ago fired up a competent bequest marketing program, today your organization would be swimming in money. So, what s your excuse? 59 Had your predecessor 10 years ago fired up a competent bequest marketing program, today your organization would be swimming in money. What s your excuse? 60 30

31 The 100% Fallacy We could get a 100% response rate. (Giggle.) The shiny new thing will save us (Delusional.) Anyone can be our donor (Values must match.) Any donor is a great donor (WRONG!) Once acquired, a new donor is likely to stay a long time: Ours for life. We need younger donors % of millennials donated to charity last year ~ Huffington Post Is THAT where the real money is? Low ROI... unless you acquire them as 62 monthly donors. 31

32 Donor Who? 63 Her! PS: that s all she wants from your organization. Source: Mark Phillips, Bluefrog SUBSCRIBE 64 32

33 Donors by age (percentage) 4% 11% 46% 17% < % 75 exactly 66 Big nonprofit community hospital system in California 33

34 87 70 Active donors 70 Will you help 61 it fly? 1 st -time donors 67 Thought for today... Boomers (those born between 1946 and 1964) began to outnumber their elders in the donor-aged population starting in This monster demographic group is going to be the backbone of charitable giving from now until the mid-2030s. SUBSCRIBE Source: Jeff Brooks, Future Fundraising Now,

35 Q. Which generation consumes the most online content? [ ] Generation Y/Millennials / Born [ ] Generation X / Born [ ] Baby Boomers / Born [ ] Mature/Silents / Born A. Which generation consumes the most online content? [ ] Generation Y/Millennials / Born [ ] Generation X / Born [X] Baby Boomers / Born [ ] Mature/Silents / Born

36 The Biggest Fallacy of All? Fundraising is easy. You don t need to know much to do it. Only true if stagnation and burn-out are your organization s goals. 71 A. How many charities are now registered in the US? [ ] 500,000 [ ] 1 million [X] Almost 2 million Making America great again! President Trump There are a lot more charities now... competing for a shrinking pool of US donors

37 A. Which are better, stats or stories? [ ] Stats [ ] Stories [X] Depends on your audience 73 Numbers don t move typical individual donors A data dump: Statistics mean much more to insiders than to outsiders 74 37

38 INSIDERS In- and outsiders OUTSIDERS Gov t grants Foundations Individuals Meet criteria Show promise Win a fight Specialists Specialists Generalists Rational Aspirational Emotional Stats Stats Stories 75 Source: Dan Ariely, Duke U.,

39 This new research produces TWICE as many donations. Are you keeping up? 77 I see so many small organizations on these never-ending event & grant treadmills... Source: Pam Grow, 2018, 20K Twitter followers They re the only fundraising activities you can hope to succeed at with zero training... Sad. President Trump 78 39

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