Top Fundraising Strategies For Thriving in Times of Economic Stress

July 14, 2009 By Polly Papsadore

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In the DMA Nonprofit Federation workshop “45 Top Strategies to Survive and Thrive in Today’s Economy” held in May in New York, presenters Lynn Edmonds, president; Bryan Terpstra, vice president of fundraising; Amy Beaudoin, associate creative director; and Kevin Eagan, vice president of production services, all of LW Robbins Associates; and Jenny Floria, senior director of account management at ParadyszMatera, offered practical guidance on the best strategies to strengthen donor relationships and increase net revenue during the economic downturn.

Floria identified the following acquisition tools and techniques as essential to weather the storm and come out poised for growth:

• ZIP it up. ZIP models can be built to improve response, average gift or a combination of metrics. Use a ZIP model on marginally performing lists, or, if you’re in an acquisition-cutting mode, use a model to trim strategically.
• Aim to “meet” your control. If you have a few similarly performing packages, “meet” your control with similarly performing creatives to build a package-rotation strategy. A package-rotation strategy extends the life of your control packages and allows you to mail your core files more frequently with less possibility of list fatigue.
• Regress to find your next mailable universe. Donor lists only comprise 15 percent of the total gross names available on the list market, yet nonprofits rely heavily on donor lists as a part of their acquisition efforts. Open the door to commercial list possibilities by using a list regression model to tap into large publishing or buyer databases.
• Layer long-term value into acquisition planning. Do you know if the donor you’re spending $10 to acquire is worth $10? Balancing the LTV of the donors you’re acquiring with the cost to acquire them is key to making the right changes to your acquisition program to improve your overall direct-mail program’s health.
• Reduce list costs without killing your broker. For mailers who have names on the market, the exchange/rental ratio has a larger impact on net list cost than the price of names rented. Work with your broker and list manager to ensure that you’re optimizing your exchange relationships. Reuse top-performing files to reduce list fees.
• Be merge-purge efficient. A 5 percent decrease in net output rates can increase your net list cost by as much as $12/M. Rip apart your merge process to ensure you’re retaining as many of those names as you’re paying for. Can you reduce the size of your suppression files? Review your list interaction to see if you’ve got some lists knocking each other out, and consider limiting their use within the same merge.

The presenters recommended the following approaches to strengthen relationships with core donors and cut costs:

• Thank all donors promptly and thoughtfully. Seven percent to 15 percent of your program’s revenue should come from your acknowledgement program. If you aren’t there, audit your program. Are you welcoming new donors to your organization? Are you sending out thank-yous within one week of gift receipt? Are you using First Class postage? Are you warm, friendly and appreciative? Are you showing how the donor’s gift is already having an impact?
• Keep your monthly sustainers engaged. Mail your best renewal appeals to this loyal group at least three to four times a year. Make sure you recognize their special relationship with you when you do contact them.
• Step-up recruitment efforts to keep your monthly sustainer group stable or growing. Test “hybrid” single gift/monthly gift reply slips in strong renewal appeals. Test monthly giving stand-alone inserts in regular appeals; also include them in acknowledgements. Try mailing two to four invitation mailings each year to recruit more donors. Telemarketing invitations work well for this offer and should not be cut from your program.
• Treat mid-level donors like major donors. Most nonprofits face the challenge of retaining their mid-level donors ($100 to $5,000 range) and dealing with lower average gifts. And some major donors are not responding to personal contacts during this down economy. Work with your major-gifts team to include certain major donors in the mail program, using high-touch treatments. If you have a branded, mid-level donor society, look for ways to increase participation by lowering the entry point to join. If you start at $500 or $1,000, consider levels at $100 or $250. Be sure to support all your club levels with unique benefits.
• Revisit gift-array testing in your renewal and lapsed donor appeals to counteract declining response rates. Try smaller amounts and multipliers. For instance, for lapsed audiences, instead of last gift and then multipliers from that, test 0.75 of last gift, last gift, 1.25 of last gift and 1.5 of last gift.
• Reduce the costs of your control packages. Change envelope paper from 24-pound to 22-pound stock, reduce colors on components (two color vs. four color), and switch to offset letters vs. personalized, lasered letters.
• Use consolidation and comingle services to reduce postage costs. Cost savings vary depending on volume, number of lots and geographic mailing area, but even small nonprofits can realize significant savings.

Polly Papsadore is director of marketing for LW Robbins Associates.

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