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May 2009

When nonprofits do wrong

I wince every time I see something like this post at Keeping a Close Eye: Funding Incompetence that fingers the American Red Cross and the Smithsonian Institution as "tarnished charitable organizations":

These two charities are representative of a diminished sector that needs to replenish its cherished place with America's trust. Unfortunately, they parallel AIG, Merrill Lynch and the rest of the large financial institutions that are apparently too big to close or sanction. The taxpayers have become the guarantors of their survival.

It's a painful piece to read. I don't know whether it's entirely fair. But I do know two things:

  1. We're likely going to see a lot more of this kind of thing in the coming years. And not all of it is going to be this well-reasoned; some will be completely off-the-wall. Because anybody can say anything online. Be ready for it.
  2. Stories like this may hurt us all in the short term, but help us in the long term ("us" being the honest, ethical, and competent fundraisers). Charity scandals tend to fester for years as people vaguely remember that some charity did something nefarious and they don't want to give to whole categories of organizations as a result. By noting who did exactly what, these stories can place blame where it's due, not on everyone.

What's the ethical nonprofit to do?

  • Be super ethical, all the time. Many actions that used to be tolerated probably won't any more. And many more things that never saw the light of day will become public.
  • Don't participate in sweeping dirt under the rug. If another nonprofit screws up, don't be seen as circling the wagons and protecting the guilty. You'll get painted with the same guilt.
  • Have a plan for responding if you get unjustly painted as an evildoer.

See also this report from the Federal Trade Commission on an operation against some charity bad guys: Operation False Charity.

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The upper limit of asking frequency

Yesterday we noted that there are only a few reasons not to ask your donors to give. The lesson is this: "ask and you will receive."

Up to some point (which I have yet to witness) every appeal you add will produce more net revenue. So why not just mail all the time?

For one thing, there's the threat of insanity. Direct mail is tough work, and getting it right takes a lot of concentration and energy. Then there's the question of relevance: How many distinct, meaningful, relevant appeals can you make before you're either over-repeating yourself or getting irrelevant? (The answer to both of these lie within, as they say.)

But for the sake of argument, let's put all that aside and say you were to mail 52 direct mail impacts a year.

52 impacts would probably produce more net revenue than one appeal -- or than 51. But at the cost of efficiency. Appeals generally have a suppressing effect on appeals mailed before and after them. The closer they are, the stronger the suppression. So while your net might be higher, your ROI would go down, getting closer to 1:1 as your expenses rose faster than your revenue.

How much asking, then, is too much? I'm pretty sure 52 is too much. But I've seen programs that were mailing around 35 impacts a year that raised impressive net revenue with only minimal impact on ROI.

The answer for your organization is: Unless you're already in the 30+ ballpark, you can probably mail more.

Just be aware that sudden, radical increases in frequency are counter-productive -- you'll see a surge of complaints, and not the corresponding increase in response. It works better to grow your revenue by increasing slightly each year until you reach your right frequency.

If you're mailing quarterly now, add one or two impacts. If you're mailing, monthly add two or three impacts during high-response seasons of the year. That's how you maximize revenue through frequency.

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When not to ask for funds

To hear some fundraisers talk, you might believe that one of the coolest secret fundraising weapons around is not asking for money.

It doesn't work.

For the most part, not asking is the quick route to not receiving.

But I do know of three situations when it's better not to ask than to ask:

1. When a donor specifically requests that you not ask.

Common courtesy says you don't talk to someone who doesn't want to be talked to. But in fundraising, it's better than that: When someone requests less communication, they often end up giving as much or more than someone who makes no choice at all. In fact, it works so well, you'd be smart to encourage donors to tell you when and how you should contact them. Just giving them the choice improves their future responsiveness. It's like magic!

2. When it's not worth your money to ask.

With some donors, it might be costing you too much to ask. Someone who gives you $5 will most likely give you $5 each time they give. Pay attention to the costs and revenues of your fundraising by donor giving level. You'll likely find groups where you're paying more to ask than you're getting back. This is often masked by the overall performance of the file as a whole.

Finally, and most important, the main reason not so ask for money:

3. When you don't need any revenue.

Takeaway from all this: If you need money, you should ask for money. With some rare exceptions, more asking means more revenue.

Tomorrow we'll look at the theoretical upper limit to the frequency of asking.

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What a cheese shortage teaches us about fundraising

As of the moment I post this, it's 36 days, one hour, 44 minutes, and 36 seconds until Tillamook Sharp Cheddar goes back on sale.

If you don't live on the West Coast, you may not be aware of Tillamook Sharp Cheddar. If that's the case, I pity you. But right now I also pity myself and cheese-lovers across the Northwest because there's no Tillamook Sharp Cheddar!

Tillamooksharp

They didn't make enough, and ran out. It takes a long time to make, so we're living without until July 1. And people are taking notice. At places like the Tillamook Fan Club.

Scarcity is compelling. It focuses the mind.

I, like many others, have thought more about Tillamook Sharp Cheddar in the last few days than probably in the entire rest of my life. I really want some, and if I were a bit younger and had fewer things to do, I might even camp outside my supermarket the night before July 1 to make sure I got some. (And since when has a blog about fundraising covered a cheese shortage?)

Scarcity can also power your fundraising. But it needs two qualities:

  1. Be real. Don't make up bogus scarcity. It's probably not believable. Even if you make it believable, it's not ethical.
  2. Seem real. Being real only gets you half-way there. The reality has to make sense to your donors. It has to be easy to understand and clear, not surrounded by a blanket of legalese.

Matching fund offers create a kind of scarcity. There's only a certain amount that can be matched, or there's a limited time to take advantage of the fund.

Time can create scarcity. If there's some reason you have to fund something before it's too late (like somebody will die if we don't send the help right away), emphasize that fact.

Look at the facts about your programs. Look for scarcity. If you have it, trumpet it. I'll celebrate with you over a cheese sandwich -- in July.

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Podcast: Interview with Mal Warwick

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Tight

Don't miss this interview with fundraising legend Mal Warwick, author of the recent book Fundraising When Money Is Tight (as well as many other books on fundraising). Find out how to survive the recession -- including the biggest mistake you can make.

To listen, click here to download the audio file or visit the Fundraising Is Beautiful page here, where you'll find several listening and subscription options.

Or subscribe with iTunes:

Don't let the recession break your spirit

Things are rough for nonprofits.

But not for all of them. Some are humming along at normal funding levels as if the recession were just a disturbing news report from a distant country. Some are even doing better than they've ever done.

I like the way the Jewish Donor Blog puts it: Fundraise Like it Was 2007! Which includes:

  • Have an urgent message.
  • Be relevant.
  • Respond to the recession and call on donors to respond.
  • Pick only the best performing lists....
  • Talk to a trusted expert who knows the business.

You can think and talk and act like a victim of the recession -- but you know where that will get you.

Don't act like there's no recession. It's real, and it hurts. But don't curl up and play possum. Keep raising funds with passion, focus, and an eye on your donors. That way you can minimize the impact of the recession. Or escape it entirely.

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10 ways to get direct mail wrong

There are a lot of ways direct mail acquisition can go wrong, and a lot of them are self-inflicted.

Jerry Huntsinger outlines some of the more dangerous ways we hurt our acquisition efforts in FundRaising Success magazine: 10 Temptations to Avoid in Acquisition Packages.

Each of these is a temptation to overcome:

  1. Starting the project by writing the letter.
  2. Creating the package and then finding out how much it will cost.
  3. Creating a package without first examining what you’re testing against.
  4. Writing any copy without first working out the design for each piece in the package.
  5. Putting teaser copy on the carrier envelope just because everyone else seems to do it.
  6. Trying to win with words.
  7. Saving the reply form for last.
  8. Writing an encyclopedia of every fact about the charity.
  9. Using dense paragraphs.
  10. Finishing your copy without first reading it aloud.

Remember, don't do these things. And don't miss the details at the article. These things happen -- or start to happen -- frighteningly often.

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How to work with your genius

How to work with your genius creativity

Here's a great TED Talk by Elizabeth Gilbert, the author of Eat, Pray, Love.

Her liberating point is that genius isn't something you are, but something you have -- almost an outside force you work with to achieve greatness. (It's about 20 minutes.)

Or go see it here.)

If you don't have the time, here's the nub of what she says (it's toward the end):

Don't be daunted. Just do your job. Continue to show up for your piece of it, whatever that might be. If your job is to dance, do your dance. If the divine, cockeyed genius assigned to your case decides to let some sort of wonderment be glimpsed, for just one moment through your efforts, then "Ole!" And if not, do your dance anyhow. And "Ole!" to you, nonetheless.

Go for it!

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What's your weird green liquor?

Here's some news: Virgin America Airline now offers absinthe in-flight. Since when is an airline adding a particular beverage to its menu news?

In this case it kind of is. In case you hadn't heard, absinthe (also called wormwood and the Green Fairy) has a reputation. It's seen as mysterious, dangerous, mind-altering. It was a banned substance around the world until recently. It only became legal in the US in 2007.

Absinthe

So for Virgin -- which cultivates an edgy, decadent image -- to offer absinthe not only seems mention-worthy, it also fits. It would be downright ghastly if United followed suit. Sort of like Pat Boone singing heavy metal. (Wait; that actually happened, didn't it?)

Here's the important point: They're actually doing something. They had to come up with the idea. They had to go out and get some absinthe.

Too many nonprofits (and businesses) want to skip that doing something part. They want to proclaim what they're like with their brand standards and leave it at that. As if you can go about business as usual, but everyone will think more highly of you. Which is about as effective as if Virgin went around saying Oooh! Absinthe! We're so cool! -- without coming up with some actual absinthe.

Forget the puffery. Nobody is fooled any more. If you want to get people's attention, you need more than a brand image. You've got to do something. And it had better stand out.

Thanks to Donor Engagement blog for the tip.

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25 Random Things About Fundraising

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Here's my column in this month's FundRaising Success magazine, 25 Random Things About Fundraising.

Teaser: 22. Givers are more happy than nongivers. They're 43 percent more likely to say they are "very happy." Nongivers, on the other hand, are three and a half times as likely to say they're "not happy at all."

What it takes to make your message viral

Everyone's clamoring to have their story "go viral." Wouldn't it be great to many millions of people seeing what you do and eagerly passing it along to their friends?

A recent column in Fast Company by Dan Heath and Chip Heath, Three Secrets to Make a Message Go Viral, suggestions three elements a story must have in order to go viral:

  1. It's emotional
  2. When someone shares it, they feel like they're doing a public service.
  3. A "trigger" -- an environmental reminder to talk about it.

Their example is that old (and false) story that there's a gang initiation where members drive around at night with their headlights off, then kill any other driver who flashes their lights at them. It's emotional (raises the possibility of sudden random violence), if you tell someone else, you think you may be saving their life, and it has a trigger -- every once in a while you see a car driving at night with its headlights off. All the elements for a viral.

Getting all that in one package is a tall order. You can't just churn that out like a press release. Some observers believe it's impossible to create a real viral message, that only a magic and rare combination of the right elements and the zeitgeist of the moment have to come together on their own.

I don't think it's impossible. But do think it's so tough it's the next closest thing to impossible.

So if you're thinking of creating a viral message, think hard. You've got a tough assignment ahead of you.

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More users give up on Twitter than stay with it

If you blog about Twitter, your post starts popping up all over Twitter. It's one big self-referential echo-chamber.

The other funny thing about Twitter is the retention rate, as reported in Adweek: Twitter's Audience Has a 'No Return' Policy. Here's the point:

Over 60 percent of people who sign up to use the popular ... micro-blogging platform do not return to using it the following month.... In other words, Twitter currently has just a 40 percent retention rate, up from 30 percent in previous months -- indicating an "I don't get it factor" among new users....

(In fact, Joseph Jaffe called Twitter "a giant Ponzi Scheme.)"

I bring it up because the phenomenal growth rate of Twitter has fueled a kind of hysteria that everyone must get on board or be left behind. Maybe. But don't count on it.

Twitter has its uses. And maybe it -- or something like it -- will continue to matter to a lot of people for a long time. But we don't know that yet.

If I were a nonprofit, I'd dabble in Twitter. Learn what's going on. See if my constituents are there.

But if you want to motivate action and raise funds, go back a generation or more: email, search-engine marketing, postal mail, broadcast and print media ... it's easy to call those things dead, but each one of them is still much bigger and more advanced than Twitter. If I had to place a bet on which will go away first -- Twitter or postal mail -- I'd bet that the post will outlast. And continue to outperform for the foreseeable future.

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Survey: Folks not too satisfied with nonprofit websites

How good are nonprofit websites? Not so great, it would seem. Survey research from ForeSee Results, Trends in Constituent Satisfaction with Nonprofit Websites (PDF, registration required), puts the average nonprofit website satisfaction score of 73 (out of 100).

This is survey research, so it tells what people say, not necessarily what they really do, but it's interesting nonetheless. And hardly surprising.

According to the study, website satisfaction has a strong correlation to the behaviors we want. Satisfied users are:

  • 49% more likely to donate.
  • 38% more likely to volunteer.
  • 57% more likely to have a favorable overall impression of the organization.
  • 65% more likely to recommend the site to others.
  • 55% more likely to return to the site.

Did that get your attention? The study says what needs the most improvement are website functionality and expression of the organizations' image. Get cracking.

Thanks to Katya's Nonprofit Marketing Blog for the tip.

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Who's down -- and why

A new study from Target Analytics, Index of National Fundraising Performance - Fourth quarter of 2008 (PDF), has the bad news:

  • Fundraising revenue (among study participants) is down 3.3%.
  • The number of new donors down 6.9% (and that's more worrisome because that's future revenue not to be had).
  • 63% of organizations in study had lower revenue.
  • The fundraising sector that's down the most is health charities, with revenue down 7.2%, number of new donors down 11.3%, and 78% of the health organizations in the survey experiencing a drop.
  • Two sectors are up: animal welfare (up 5.1%) and international relief (up 1.1%).

But to me, the big surprise to me is that the human services sector is down 3.4%. In a down economy, when the very situations these organizations are built to help change are everywhere and top of mind, why are they raising less money?

Several of our Merkle clients in that sector are seeing their best fundraising in recent memory, and none in that sector are down.

Now it could be the quality of their fundraising counsel (ahem), but it's also because their message resonates more than ever during hard times. We're just working to bring fundraising and reality together -- and it works.

Fundraisers in the human services sector should not be down! (Even if they don't work with Merkle!)

My only explanation (which I can't prove): Too many of them lack relevance. They're doing the same old fundraising they always do. They aren't responding to the recession, so they aren't calling on donors to respond. Maybe they're following the old "Don't Admit There's a Problem" myth.

Whatever the case, the path to success is to be real. Whatever sector you're in.

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Don't get your briefs in a twist

If you like to succeed at fundraising, one of the best things you can do is plan your project by writing a brief. And make it thorough, complete, and well-considered.

I'm not the only one who thinks so. That's the message at the Queer Ideas blog: 5 ways to screw up a brief. Here are the five things to avoid:

  1. Don't show the brief to the people who will sign off the creative work.
  2. Define the target market as simply a broad demographic.
  3. Put in a list of all your brand values or refer to a website that lists all the brand values.
  4. Set your target as 'raising as much money as possible.'
  5. Put as much as possible in your single-minded proposition.

These are all symptoms of sloppiness, and they are all too common. But the biggest and most common way that people screw up a brief is not doing it at all.

If you want a project to go well, put down its goals, message, audience, and other important requirements in writing. Make sure everyone understands and owns those requirements.

If you have some general goals and beliefs about how a project should turn out, just tossing it to a copywriter will usually not accomplish the miracle of organizing your thoughts for you. In fact, you'll likely end up more confused and further away from completion than you were when you started. Not to mention all the time you'll waste along the way.

An hour spent at the beginning of project defining and planning what you intend to accomplish saves many hours later on.

(See also Don't go out without your briefs.)

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The little lie in marketing and how to avoid it

Want to know why most advertising is so ineffective? Check out these photos from the West Virginia Surf Report, at Fast Food: Ads vs. Reality:

Here's the Arby's Beef 'n' Cheddar Sandwich as depicted in marketing ... and how it really looks. (Go see the rest; there are a bunch of them.)

Beefcheddar Beefcheddar1

I don't know about you, but my first reaction (after a slight gag reflex) was so what? I don't expect the real thing to match the idealized version, and I don't think anybody does.

But isn't that the whole problem with marketing? Isn't that why hardly anyone believes marketing any more?

Most marketers are utterly trapped in a world of fakery. There's no way they could hire a food photographer who wouldn't doll up the food in a way that's miles removed from reality. It simply can't happen.

The honorable thing would be to change the processes in the fast food restaurants to their food bore some resemblance of the marketing. But that would cost too much. At least that's the excuse.

So they tell the white lie to their customers, and nobody cares because nobody believes the lie. In fact hardly anybody can imagine a world where the lie isn't the only thing being said.

When something authentic and true comes along, that's where the customers will go. Imagine seeing a food ad that not only looks yummy, but also looks real. Imagine a fast-food experience that wasn't a total disconnect form the one you saw in the ads.

Nonprofit marketing is less tempted to play along with the lie, partly because our truth is pretty cool to begin with, partly because we can't really afford to pay for it. But with the lie so pervasive, and with ad agencies eager to get some nonprofit branding work in their portfolio, we're all at risk.

If your brand message -- or any other marketing you do -- is built on an idealized unreality, you're not only unethical, you're ineffective.

Print out these two pictures, the real and the phony, and use it to remind yourself not to fall into that trap.

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Podcast: Put your heart into fundraising

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An interview with Cass Wheeler, former CEO of the American Heart Association and author of the new book You've Gotta Have Heart: Achieving Purpose Beyond Profit in the Social Sector. Don't miss what this wise CEO has to say about people who are good at fundraising, how to make sure you get the right people, how to set bold goals, and how the right people with audacious goals can radically change a whole organization.

To listen, click here to download the audio file or visit the Fundraising Is Beautiful page here, where you'll find several listening and subscription options.

Or subscribe with iTunes:

What is this blog all about?

If you're serious about raising money from donors, you need to get serious about donors. More than ever before, donors are insisting that you share power with them, not treating them like passive ATMs. This blog is about the ways you can do that -- and the rewards that await you and your donors when you do.

About the Blogger

DonorPower Blog is penned by Merkle's Power Blogging Team, led by Greg Fox, our senior vice president of strategy. Working with Greg is a police line-up of guest "artists", fundraising pros all, who like to pose as blogatorialists when the sun goes down. You can reach this blog, and any of our regular contributors, at
donorpowerblog [at] merkleinc [dot] com. See this blog's policies.


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