Edited By Paul Clolery

Stealing the best ideas from leading fundraisers

Everyone in fundraising reads and saves the competition's appeals. If something new comes down the pipe, it seems like it is copied in a matter of days. Whether it's crackling copy, graphics or a hot premium, fundraising appeals are hot, despite the lukewarm economy.

At the Direct Marketing Association's 2002 New York NonProfit Conference this past August, The NonProfit Times brought together experts to talk about what's working, what to expect in the mailbox this holiday season, and what's next.

Participating in the discussion were: Catherine Beyer, vice president, marketing, InfoCision Management Corporation, Akron, Ohio; Bobby Dean, director of donor services, Cal Farley's Boys Ranch and Affiliates, Amarillo, Texas; John Mastrobattista, vice president, marketing, Target Analysis Group, Cambridge, Mass.; and Stephen Power, vice president, Newport Creative Communications, Duxbury, Mass.

The session was moderated by Rick Christ, president, npadvisors.com, Oakton, Va., and Paul Clolery, editor-in-chief, The NonProfit Times.

The experts tipped their caps to the past year but quickly set their gaze on the future.

Paul Clolery: What's the smartest thing you've seen somebody else do this year?

Bobby Dean: This was a very unusual year, or it started out to be. Whenever we looked at our fiscal year, which begins October 1, everything was basically in the pipeline. Most of it was on pallets ready to go out. The smartest thing that I saw my colleagues do, and most of the vendors asked their customers to do, is to stay the course, continue to mail.

I know a lot of people backed off. We talked about it. We consulted with our vendors and with other nonprofits. The consensus was let's stay the course. It's going to cost a lot more money to pull it at that point than it is to continue.

We didn't see any negative consequences of that, either. And, everybody I've talked to didn't see anything negative come out of staying the course. I think that's the smartest thing people did last year overall.

Catherine Beyer: Just to dovetail into what Bobby said, a lot of my clients really cut down on testing because they recognized that the environment just wasn't a good one for that.

One of our clients in early spring knew that they were going to get a lot of press for their upcoming national sports event. They over-ordered the programs that they usually give out at the event so that they could send it to major donors and members. They sent them out to their renewals a couple of months prior to the event and saw a big increase in the renewal rate for those members.

Stephen Power: Did they use that event to prospect as well, based on a hoped-for lift in response?

Beyer: They did. They also established a booth on-site and gained new members. It was the first time they had done that.

John Mastrobattista: We don't work with clients on a daily basis, so what we see reflects segmentation strategies, how organizations are analyzing their databases to learn how different donors behave, and developing appropriate treatments or contact strategies. In one case, a university used file overlays and loyalty indicators to craft ticket offers for sporting events at a lower level for new alumni and a higher level for longer-term donors.

We also had many of our clients participate in collaborative benchmarking with other nonprofits on a quarterly basis, rather than only once a year. This group agreed to form an index to allow them to determine differences in trends caused by short term tactical changes, compared to longer-term changes in the philanthropic climate.

Clolery: Now that people have started looking at the numbers in the segmentations more frequently, do you think that's something that they will continue to do? Is this something that is now going to become a standard, or do you think that they will regress back to the way they did things if there is no future national tragedy?

Mastrobattista: Even though September 11 was the initial impetus for this effort, I think they continue to find value by looking at short-term fundraising trends against dramatic week-to-week changes in the economy and financial markets. Even though personal incomes haven't changed that much, donors' feelings of wealth based on their holdings and retirement accounts can have implications for both annual giving and major giving.

As time goes on, we'll see how many organizations will continue participating in these indices. Public broadcasting has made a commitment to their quarterly index for another year, and we hope close to 30 organizations will participate in the national index for the next cycle.

Dean: Did they see an immediate benefit of benchmarking quarterly versus annually?

Mastrobattista: I think that for many of them, the background information allowed them to see how the events of 9/11 and the anthrax scare dramatically depressed acquisitions for all organizations, while house file mailings fared much better.

Because they knew this was a shared experience across all organizations, they didn't overreact and revamp entire acquisition strategies. They could also see that donors were still giving to familiar organizations, so we suspect brand awareness was a factor during the anthrax scare.

Hopefully, seeing information from other organizations helped them stay the course and say: "This is temporary, we shouldn't make dramatic changes in our program until we look at other factors."

Clolery: Well, wouldn't that be the perfect time to make a change, when everybody else is dovetailing and going one way and not changing? Wouldn't that break you out of the group?

Mastrobattista: It doesn't mean organizations shouldn't continue testing. If they feel the economic climate won't reward high-end appeals, more value added appeals with premiums or benefits should be tested. Going against the tide might be a smart thing, but you should always test. There may be other reasons why people are not giving to new organizations. It's sort of like investing in financial markets -- you might be a value investor or growth investor. What's the smart move? You don't know until you try something, and testing is the best way to minimize risk.

Rick Christ: Steve, have you seen people looking at that same macroeconomic level and doing a lot of tweaking with packaging lists, mail dates and other things?

Power: Most of our clients preferred not to make any special reference to September 11 in their mailings, including one client that had "firefighters" in their name. They thought that people would think they were trying to take advantage of it.

Another client, a regional food bank, saw a sharp drop-off immediately after September 11. Their mission is to abolish hunger in the state in 10 years, so when direct mail returns dropped off, it really causes more people to go to bed hungry. They did an emergency appeal. It was selective. They used personalization, and sent the appeal to only major donors.

It was a very successful appeal. It mailed in October and didn't interfere with other appeals that were in the works. Emergency appeals work if there is a real emergency and it's directed to the right people.

Christ: In this case, the emergency was that their donors gave elsewhere.

Power: Money was flowing away from local charities, including their own. They could see the drop-off. They have a very loyal following but everybody was responding to the tragedies in New York and Washington.

Christ: I think that my answer would have been the same as yours, Bobby. The smartest thing was to keep going. We probably all sat in strategy sessions on September 12th or 13th. We know that if we don't mail we'll stop making money, so we need to be out in the mail and do what we can.

Clolery: What are some of the new copy techniques? Catherine, in terms of scripting, are you using any new copy techniques?

Beyer: There's an emphasis on really building rapport, emphasizing the relationship and drawing that into the introduction to a donor, a member, a prospect. If there's any way that they're connected with the organization, reference that right up front. Credibility is a major factor. Our goal is to build credibility immediately and reference how they came on board as a donor or supporter.

Christ: So, it's longer, it's more involved, it's more explanatory, it's more conversational.

Beyer: Exactly. It thanks them for getting involved and gives them a sense of accomplishment and of making an impact.

Mastrobattista: When talking to lapsed donors, how are you addressing them?

Beyer: The same. A donor doesn't know that they're lapsed. They don't think, "oh, I'm in that lapsed category."

Dean: That's an internal term for us.

Beyer: We just get so used to saying they're lapsed donors, but they think they gave to you yesterday or a week ago. You have to talk to them in the exact same way. That's what works the best.

Mastrobattista: In working with our clients, we recommend not acknowledging former donors as lapsed or throwing them into acquisition. We suggest treating them as a renewal: say "thank you" for their previous support but don't reference the fact they have been lapsed for a year or five.

Christ: Steve, does that translate into longer copy in letters or a different tone of copy in direct mail?

Power: I think that it is important to let lapsed donors know that you miss their support. You can do that with laser personalization. Some of our clients use laser letters, including personalized Post-it notes.

Dean: We are spending a lot more time in stewardship with our donors, not really on the acquisition side but with our donors reminding them of the work that their support allows. And, of course, we're always telling a mission-related story about our kids, what they're doing, the successes they're having and sometimes even their failures.

We're not raising perfect kids and once in a while we'll say that. "Little Johnny is not quite there yet because of what we told you in the story but he's committed to success and this is what your gift is doing to help Johnny."

And we always thank donors up front as an additional acknowledgment. "Thank you again for the great things that you've done for our children. Let me tell you another story."

Power: Bobby, do you ever test your traditional children's story against other themes, like the needs of the organization?

Dean: We really have never tested anything other than some kind of a story. We've been tracking direct mail since 1952. I know that Cal Farley's started doing direct mail four or five years before that.

We have samples of everything that we've ever done. One year we pulled out a piece that was from 1958. Cal Farley was standing in a courtroom of a dusty, West Texas town. That was how the story started. Cal Farley died in 1967 and the boy in the story is a successful rancher in Colorado now. We say that by the end of the story. We don't say Cal Farley's dead, but he is. His tradition still lives on.

Power: I work for children's hospitals where patient stories almost always work. We test variations on the theme occasionally, but a story makes for the most compelling appeal.

Dean: I'm not sure if we want to put an investment out there that has very little chance of return. It may, but I'm not sure that we want to take the risk at this point.

Christ: What worked in 1962, what worked in 1975, can this work again? Techniques and copy strategies and packages tend to go in waves where it's a great idea, we use it a lot, and then we try to find something else. And, maybe it's overuse that made it not work any more and not a global issue that will never let it come back to work again.

Dean: We have done that. We have taken even more dramatic stories about a child and where they came from, and we will update donors on where they are 20, 30 years later. It's more in depth than we did with that story, and we talk about their success.

We often put together a donor dinner somewhere and try to have kids there. We try to put it around a child event somewhere. For instance, we had the state wrestling finals in Austin, Texas. Our kids qualify all the way up and they always do well. So, we planned a dinner around that. Well, none of our kids qualified that year but we already had all these invitations to people who wanted to come to the event.

We scrambled and found alumni who came in and spoke and talked about their experiences. The most recent alumni graduated five or six years ago, and we had one who graduated in the late 1970s. They were all very successful and the donors loved it. They loved the technique of seeing the successes of what they've been giving to all these years.

Clolery: Catherine, talk to us a little bit about how people are coordinating what they're doing, integrating different media.

Beyer: An important way to integrate is as simple as putting the 800-number on all the mailings. It gives donors the opportunity to interact with someone. Likewise, it drives them to the Web site to fill out a petition, driving them to the 800-number so that they can request a free booklet, a free product of some kind.

Then, when the calls are handled, someone is given the opportunity to give a gift or give a larger gift, or become a continuity supporter. In essence, it's prompting them to take action different ways, beyond just a request for a gift. It's really important.

Mastrobattista: We work with about 200 public broadcasting clients, and, of course, they use television or radio as well as direct mail. They also learned a long time ago that on-air pledge donors were not very good direct mail respondents, so they began using telemarketing early on. Many of the more successful stations rely on telemarketing for a larger share of their total revenue stream compared to most other nonprofits, with the exception of certain alumni funds, and these stations have been especially hurt this year.

But despite large decreases, they are continuing to use telemarketing. Public broadcasting is also very innovative in terms of Web-related initiatives. They use their on-air presence, as well as direct mail, to promote giving via the Web. They have been very successful getting email addresses and weaving email cultivation and solicitation into their donor communications plan.

This group of nonprofits is using broadcast, direct mail, telemarketing, and the Web as solicitation, cultivation, and response channels.

Now they have begun researching these multi-channel behaviors. Are people who are direct mail donors starting to give via the Web, and are people acquired via Web renewing via mail? The more successful organizations are looking at various channels trying to figure out the optimal timing for one medium or another and how to complement them.

Christ: Higher-end donors seem to get a bigger package, more information, a longer letter, more personalized at a phenomenal cost per piece. It seems to generate significant additional revenue from those segments, as opposed to mailing the lower-cost piece to those segments.

I'm wondering if people have to do that, in spite of the fact that now the postage cost has gone up?

Power: I'd say personalization continues to be important in communicating with your best donors. First-class postage is easily justified to get fast delivery. Also, the mail will be forwarded in case their name or address isn't up to date.

Challenge grants can be very effective, where you have an individual who will match gifts up to a maximum of, say, $50,000.

A handwritten, personalized P.S. is a good way to add readership and impact for major gift appeals. There are a couple of companies that specialize in the production of these mailings.

Clolery: It is computerized?

Beyer: It's done by hand.

Clolery: How much does something like that cost?

Beyer: It's $1.25, $1.50. We do that type of piece.

Clolery: When you say $1.25, $1.50, is that in addition to the piece or is it the whole package?

Power: It's the whole package.

Clolery: What does the human personalization add to it, 30 cents, 50 cents?

Beyer: Yes, around that. It depends on the amount of words you use. It's pretty much price based on the length of the copy. With personalization, it's usually around $1.25 to $1.50 for the whole package.

Clolery: Is somebody proofing this to make sure that they have not spelled something wrong or have they slipped through?

Power: These handwritten mailings are usually 100 percent inspected. You're dealing with hundreds of letters, not tens of thousands.

Christ: It goes along with hand insertion, which allows things that you could never do in a letter shop, and yes, it's right. It's hundreds or 1,500, maybe. And yes, it's a week and a half, two-week lead time to do that. But, there's power in doing it.

Beyer: It gets opened. It looks like a birthday card or some sort of communication from your friends so it gets opened.

Power: It can be hand-addressed on the outside carrier, too, which increases readership. Public recognition of donations, such as in a newsletter, is another incentive to continue to support an organization.

Christ: Recognition is especially effective on the Web. We have a couple of places where we're giving people a chance to either sign a petition or make a gift and maybe a gift in honor of somebody else and those names go out there on the Web site.

There's an instant gratification: "I type my name, I press submit." A second later I have a new page, and it shows, "Here's my gift made in honor of so and so." The next person is going to see that. That's just an e-twist on the same recognition.

Power: Giving clubs with tiered levels work well for colleges. That's a good way to turn a regular donor into a major donor. Another way to increase the giving is a monthly giving program with an electronic funds transfer option.

Mastrobattista: Personalization can go well beyond that. Databases are now rich with information about transactions, loyalty, affinities outside the

organization, and appended demographics. Once they identify a large enough segment to economically justify specific treatments, they can start testing different offers and ask strings.

Instead of a $10, $15, $20 ask, they might try $10, $20, $30 or $20, $30, $50 based on wealth indicators from a ZIP code analysis. They might test this in acquisition, or use wealth information in conjunction with donor giving histories to create value models for house files to drive customized ask strings.

Some organizations are testing language tailored to age and gender and even use copywriters who match the profile of the target segment. So, personalization can get into other types of cuts where they can tailor offers based on a wide variety of variables.

Power: Do you see any new trends in premiums?

Dean: We're using more and more personalization in premiums.

Clolery: Other than for mailing labels, what kind of personalization are we talking about?

Dean: We're sending out a test which is a combination of a notepad and name labels.

Power: That's one of the few new premiums in recent years and it appears to be successful.

Dean: Every page of the notepad, 15 pages, is personalized. We think it's going to do well. Of course, it's a test. We're testing it in acquisition, lapsed, and even our regular renewal series. We're testing it everywhere, because we think that it is the new trend.

Power: Two personalized premiums give this package a high perceived value.

Christ: I think a television station in New York just developed a pin. It's a heart with the skyline in it. It doesn't say the name of the organization.

Clolery: With the World Trade Center or without it?

Christ: I didn't study the pin well enough, but it's very much the New York skyline. It's actually something that I know, in Washington certainly, is in style for men to wear these things.

Power: I've seen the pin packages. They're packaged in small, three-dimensional boxes which stand out in the mail.

Dean: Those are becoming a highly perceived value trend, the box package, anyway. I think any box in the mail is great, whether it's pretty cards or whatever.

Power: I've seen T-shirts used as a front end premium, too.

Dean: Yes, it's amazing what they can do, and I've seen little T-shirts that are in the cube. They mail that and you open it up and it expands like those sponges.

Clolery: I don't know if you want anything expanding with somebody that's opening it these days.

Beyer: In terms of the major donors, some of the things that we have found very successful are giving them an opportunity to get involved, as well as recognizing their giving. An innovative way to do that is with a conference call where you invite some major donors, maybe a couple of hundred, to take part in a conference call, send them a postcard inviting them to call an 800-number.

This works very well when there is a well-known spokesperson of the organization who can conduct a 30-minute, 20-minute, 15-minute conference call and then allow some people to ask questions or have some people in there asking questions.

Power: So, it's interactive?

Beyer: It can be. It's great because the organization can monitor the participants online from an Internet site set up by the phone carrier. You can know exactly which donors called in and participated. You can see that Mr. Jones and Mr. Smith are online and then you can send a follow-up mailing to the folks who did call in saying "thank you for participating."

Power: You know they were there?

Beyer: And the folks who didn't (call-in), you can send them a CD or a tape cassette of the conference call saying, "Hey, here's what you missed. But, we'd love it if you could help us with this project."

It is relatively cheap. And for the people who were involved, their response rate was double the norm for the next three mailings.

Christ: Someday the Web technology will be such, the comfort level will be such, that you can do that on an even larger scale. I'm an evangelist for the Web, but I can tell you I've had some very frustrating times trying to do that. But a teleconference, what an easy thing to do.

Dean: Is there any appeal on the part of what they're doing with that?

Beyer: It really works the best when there is a very timely, urgent project. It works well with, say, organizations that are advocacy groups. If there's something coming up in Congress that their supporters need to know about, or they're trying to pass a bill, they can get their members on the line and get them involved.

Christ: In each postage rate hike it's not just the rates that go up. There are some twists. The balance of rates changes, the proportion between one rate and another changes. There was a time when mailing a first-class postcard was cheaper than what was then called a bulk-rate letter of about the same size.

It's like a tax increase, where all of a sudden it makes sense to do this with your money instead of that. Is there any good news in this postage rate change?

Power: I'm not aware of any loophole. I'd like to know more about it.

Dean: We have one thing that we've been testing, and everybody's tested this to death: the business reply or the courtesy reply. We tested it very heavily last year, and we didn't see any downturn from using courtesy reply. We saw about the same results. Of course, the costs are less on the back end.

We didn't roll out with that this year. There's a lot of things we were unsure about last year even though we had a pretty good year and nothing really hurt us terribly with anthrax and those other issues.

We're not so sure that the testing we did really did better because of the situation; so we're re-testing some things this year, and that's one of the things we're re-testing.

Clolery: Explain to the readers what a courtesy reply is.

Dean: A courtesy reply is the respondent has to put postage on the envelope to get it back to us. Business reply envelope, we furnish the postage on the way back. In and on top of that, there's an additional fee.

Christ: What most donors don't know is that it's not just 37 cents. It's 37 plus a fee. And so that means the average gift needs to increase.

Dean: Yes, you have to have more to pay that off, and we've gone through the time of "putting your first-class stamp on will help offset." But, again, they don't understand that there's an additional charge on top of that besides the first-class postage. We're looking at that very heavily this year because 40 cents on every return is a lot of money.

Power: Paying the return is a form of premium, an incentive to respond.

Christ: Well, I think it's more than just a premium. I think it's also the fact that nobody can throw a stamped envelope in the garbage without wincing and saying, "There's a waste of postage here." In fact, I've seen it done in certain urgent political situations where people have done an express mail or priority mail, a priority where "I've paid the postage for priority mail to come back because it's not just your gift that's so important. It's your gift by Friday that's so important," and it's $3 and change for the reply mail fee.

Clolery: What can consumers expect to see in terms of solicitation this holiday season whether it be mail, phone, TV, radio, in person?

Mastrobattista: Email, lots more email.

Clolery: From where are you getting good email lists?

Mastrobattista: The house lists, not acquisitions. I'm not aware of any nonprofit that has a big success story doing email acquisitions. Maybe there are, I just don't know about them. Many organizations report success cultivating existing donors with newsletters or capturing renewals via email. They are becoming more systematic about integrating email appeals and cultivation into the overall donor communications plan and experimenting with timing.

Dean: We're just experimenting with emails. We've captured email addresses from our donors who say "yes, you may correspond with me via email."

We haven't seen a huge boon that's really helped us out. We do like the fact that we have another way to contact them and continue to build that relationship. And, they tend to like that.

Power: Getting people to "opt-on" to the organization's email list is the way to do it. I recently saw a letter from a national health cause inviting me to be on their email list to receive health information and health bulletins. It was very friendly and they guaranteed that no one else would be communicating with you at this email address. It was well done.

Their mission is health education information, so the Internet has already proven to be cost-effective for distributing information and newsletters. The cost savings for printing and postage is significant.

Christ: I have a question. What are you waiting for? What I mean by that is what sort of new technology, creative breakthrough, interaction, event is hopeful, on the horizon? For example, for me, it is getting more email addresses for our donors so that we have this additional way of reaching them.

Power: Increased revenue generation is a high priority for all direct mail fundraisers. Development directors are always trying to create the breakthrough, through careful testing and results analysis. Unfortunately, the major challenge for many charities in 2002 is the steady decline in direct mail donations and income that started early in the year.

Mailings to proven lists with proven packages are generating returns 20 to 30 percent below historic levels, which is shocking and unprecedented.

We think the deterioration of small gift fundraising through direct mail is the result of a sudden shift in consumer sentiment. The typical direct mail donor is 55 or older, retired or near retirement. This segment of the population has seen their retirement nest egg decline sharply in 2001 and 2002. With less disposable income, they are curtailing spending, including their small donations to worthy causes they have supported in the past.

Are others seeing evidence of this?

Dean: We haven't really seen that. I know of organizations that have experienced that, but we've been very fortunate that our loyal donors have continued to give. One of our expectations, though, is as we capture more emails that they'll be more responsive to give online. We'd love to have more EFT or monthly credit card givers who we can charge their credit card every month, and we're working toward that.

Mastrobattista: Some organizations are using the Web to give donors access to their own status or go into a piece of the database to update their own addresses and other information.

Dean: We only give them access to information they've given us over the Web in that manner. But if somebody gives us their email address in the mail, then we do turn around and send them a quick acknowledgement to their email address thanking them for their gift and that a paper acknowledgement is on its way.

Clolery: How far ahead are people planning right now? You're probably going to be in the mail in a couple of weeks with the holiday appeal. What are people working on now? Are they working on the spring campaign? Are they working on next summer's campaigns?

Power: Planning for next year. Some clients are curtailing acquisition this year to wait and see. Acquisition mailings lose money. There's a limit to how much you can afford to lose. The key question is if you'll get the necessary return on investment from renewal mailings. Charities with modest budgets have to monitor their results carefully.

Clolery: Is it a nearly instant reaction rather than trending at this point? Are people trying to make a sharp left turn or sharp right turn?

Beyer: I've seen a lot of my clients cut back. I don't do so much acquisition, but lapsed donor recapture. This last year has been a cutback on things that are more marginal on the return and cut back on the tests as a whole.

Just in the last couple of months I've seen the resumption of "okay, let's get back on track and go after some of the things that we were talking about last year." It's been a long time coming, longer than I thought.

© 2006 The NonProfit Times Privacy Policy