Metrics

Good News/Bad News

The 2019 M+R Benchmark Report is out and, like most assessments of 2018, it offers a mixed perspective.

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“Another way of looking at 2018 online revenue: nonprofits were poised, with nearly perfect balance, between growth and decline.”

So, how you see the year may depend which side of that fence you were on!

Overall, online revenue was up by 1%, virtually flat, compared to last year’s 23% increase.

The report points out some bright spots.

  • Revenue from recurring monthly gifts grew 17% and now accounts for 16% of online revenue.

  • Social media has experienced growth, with Facebook Fundraisers providing a sizable boost for some organizations.

Both of these trends underscore the importance of engaged, committed donors.

It notes some areas for concern as well.

  • Email, while still the “workhorse” of online fundraising saw declines open and click-through rates and an 8% fall-off in revenue. Meanwhile, lists continue to grow (up 5%) as do the number of messages per subscriber (up 8%).

  • Retention is falling. Only 25% of donors who made a first time gift in 2017 gave again in 2018. For the smallest givers ($25 or less) that drops to 10%.

And there are some areas in which the jury is still out.

  • Digital ad budgets grew by 144%, with just over half (55%) committed to direct fundraising, and the balance to lead generation (23%) or awareness and education (21%). Return on that investment is difficult to measure; it’s often not immediate or directly attributable.

  • Mobile web traffic continues to grow, currently accounting for 48% of visitors compared to 44% for desktop users. However, desktop users account for 63% of gifts and 71% of revenue. Again there are a number of possible reasons, from demographic changes to privacy concerns.

So, what does it mean to you?

It likely depends. The report is based on multi-year data provided by 135 non-profit organizations. There’s a lot of good information to be distilled, including dramatic variance among some sectors. You may need to dig into the details to figure out what applies to you.

Assessing 2018 Fundraising Results

A recent headline – “Dec. 31, 2018: The Day Fundraising as We Know It... Died?” – reflected some of the conversations I’ve been having with clients and colleagues.

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How are your 2018 results looking? Preliminary reports seem to be mixed: some organizations are up slightly; some are down dramatically.

A number of broad market concerns are being cited.

The new tax law. From the outset, there have been fears that increasing the size of the standard deduction would cause a decrease in the number of people making charitable contributions. A number of studies appear to support this. For example, the Fundraising Effectiveness Project’s Quarterly Fundraising Report for Q3 2018 showed a 4.3% decline in the number of donors and a 2.6% drop in revenue (compared to 2017 results).

A volatile economy. From early November to Christmas, the Dow Jones Industrial Average shed nearly 17% of its overall value. What impact might that have had, especially among older donors nearing or already in retirement?

Contentious political environment. Nationally, the polarization leading up to the 2018 mid-term elections appears to have continued, culminating in a government shutdown just prior to Christmas. Internationally, pivotal trade partnerships and political alliances  appear to be precarious as well. Is this an additional concern? Even a distraction?

Donor fatigue. While giving was strong in 2017 – Giving USA reported a 5.2% increase in giving by individuals – some interpreted it as a short term reaction to the 2016 election results. In the months since, more organizations seem to be sending more appeals than ever before, hoping to maintain or even increase fundraising budgets.

So, what’s an individual development director to do?

While broad market forces may be beyond your control, the specific acquisition, retention and reactivation strategies you can implement are not. Some of the trends that appear to be working among our clients:

  • More targeted versioning, in both email and direct mail appeals

  • Acknowledgement of prior involvement and giving

  • Increased emphasis on monthly/sustainer programs

  • More careful monitoring and management of retention status

  • Increased use of social media as engagement tool

What’s working for you? Please chime in on Facebook and Twitter.

Let ‘Em Know You Know?

Do your version appeals recognize a constituent’s prior involvement?

Past donors know they’ve given money. Volunteers know they’ve given time. Event attendees may think of themselves as having given both. To what extent should you recognize that involvement?

We recently had the opportunity to test this for a client that typically mails appeals to both active donors and non-donors (to help defray the cost of acquisition).

Among the active donors, a small group of really loyal constituents – major and mid-level donors – represent about 6% of the donor base but typically account for 40% to 50% of the revenue generated by each mailing. 

Any increase in response from this key segment could make a significant difference in the overall performance of the mailing.

We tested a personalized letter in a closed-face envelope on an earlier mailing; the increase in revenue more than offset higher production costs. (We had tested deeper in active donors and found this wasn’t the case among lower dollar supporters.)

Now we wondered if versioning letter copy to acknowledge these donors’ past support would further increase response.

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The results were mixed in terms of response rates: up slightly among major donors and down slightly among mid-level donors. However, our a/b segments were small and the overall variance wasn't enough to be statistically significant. 

There were nearly four times more mid-level than major donors, which skews the overall response rate. However, major donors on average give nearly three times as much.

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In both major and mid-level segments, donors receiving the letter acknowledging past support tended to give more. The higher average gift amplified the higher response rate among major donors and offset the lower rate among the mid-level group.

Overall, the increase in return-per-piece-mailed would have more than justified the additional production expense of versioning the letter. As it was, since we were already personalizing the salutation there was actually very little increase involved.

So, when and how should you version? 

When it pays for itself, is the simple answer. I'd typically expect a higher return on a versioned letter; but you won't know until you measure it. 

What are the differences that matter to your donors?