Diversification is Key!
Target Analysis has just released its 2009 2nd quarter report …the Index of National Fundraising Performance, - which includes 36 million donors who gave 68 million gifts or, in round numbers, almost $2 billion in donations. The report focuses mainly on direct mail, but also includes web, telemarketing and face to face canvassing. Gifts over $5,000 were excluded.
Once again, to no one’s surprise, all key metrics showed a decline in the 1st half of 2009 when compared to 2008. The main decline continues to be attributed to the low acquisition rate of new donors. Loyal donors have, and will continue to be, the ones who make a difference in an organization’s bottom line.
Direct response donors have been declining over the past 5 years … most noticeably after the hurricanes of 2005. Reason? They are numerous … but the ones that stand out are a declining direct response donor population, the economy and an increased focus by organizations on major gifts.
So - where should you put your limited organizational resources? Should you drop investment in direct response programs … invest only in major gifts, cause marketing, foundations, and planned giving? If anything, what the analysis shows is that organizations that invest across the board are feeling the least impact from the current economic crisis. Diversification is key!
This is not a time for the timid … nonprofits should look at continued investment in all direct response vehicles … including acquisition, cultivation and second gift strategies. Why?
To quote my good friend and Direct Response guru extraordinaire … Roger Craver:
“If an organization truly understands the source of its gifts and understands how the process of upgrading over the years truly works (in spite of what most organizations or consultants do), they would be willing to pay far more for the right type of newly acquired donor. Why? Because in virtually all organizations a significant portion of the major gifts spring from the ‘small’ gift programs and so do significant numbers (although not the majority) of bequests. And when these riches are imputed back to acquisition costs, the return on investment is terrific.”
I couldn’t say it any better myself!
Regards,
Sue
