Really Integrating Direct Mail with Major Donors and Bequests

Really Integrating Direct Mail with Major Donors and Bequests

I believe the new big thing for charities (and something Roger Craver from picked up in his latest blog) is something really old fashioned: talking to your donors face to face. Especially mid value donors and bequests.

The charities that grow and raise more money for their beneficiaries are those with a long term view. They have a cohesive, coordinated and focused strategy.

With only 301 charities (1%) accounting for half of total revenue in Australia it is relatively easy to get hold of some really fascinating data. Especially when many of the larger charities collaborate in Pareto’s annual benchmarking exercise.

Pareto Benchmarking screenshot

Let’s take direct mail.  If you haven’t already got a large database of donors through direct mail, the costs of donor acquisition, setting up a team and database, bringing in the right skills and more can mean it will take years to break even from fundraising in this way.

Even though direct mail is still the largest source of donors in Australia (and many other countries, including USA) it could be a marginal activity to start with. And there could be better options for many.

But if you look at the data and can work ‘without silos’, direct mail integrated with legacies and major donors – using mail, phone and shanks’ pony (visit donors) – you can make this combined approach the best long term bet for your cause.

Take this example, based on real data and modelled for a new entrant to direct mail in Australia.

The charity invests $1m per annum, for five years, on direct mail acquisition.  Other costs such as ongoing house mailings, calling donors for regular (monthly) gifts, thanking, processing and developing packs are additional to that million but included in the model.

After ten years the charity would have raised over $7m net.  A lot of effort and risk for what is an OK return.

However, what if the charity ‘lifted’ the values of some of these donors through major donor activities? Applying the growth that we have seen the best charities get through their major donor programs, and including some costs for staff and materials, we end up with $13.6m.  Now we are talking growth!

And what if they were great at legacy fundraising too? Well, they’d be up at $21.3m net, with an annual net income looking forward in excess of $3m which is pretty much in the bag.  A superb, reliable and expandable revenue.

Here it is illustrated:

LTV_Acq_Model_10years_2016_showing importance of beq and md fixed costs set
A great chart for your board when you are after investment, and a great approach for breaking down those internal silos.

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