418 emails – a study

It’s helpful to look at the big email picture from time to time — across a span of time and an entire segment of our nonprofit industry — to gain a perspective of what’s working, and what standard behavior looks like.

Way back in 2010, Amergent made gifts to 33 cancer centers around the United States, using a newly invented email address. We made online gifts of $25, and sent $20 checks in the same donor’s name. We documented the donor experience, and since then, we’ve been tracking what each of these institutions have sent us, both online and in the mail.

It’s time to look at the first ten months of 2014, and report on what we’ve found, and what we like. An update report in January will provide a view of year-end 2014 e-communications, which we hope will be more intense than the pattern we witnessed so far.

It appears that 2014 is little different from 2011. Many of the cancer centers sent us about the same number of emails this year that they did for the same period in the 12 months right after our gift. Some have still not started to use email as a means of communicating with donors… even those who give online!

inbox-emptyOf the 33 institutions to whom we made gifts, eleven (exactly one-third) sent us not a single email all year. These institutions have sent us virtually  no email since our gift (one, a household name institution, didn’t even send us a thank-you email to acknowledge our gift!).

Of those who “bothered” to send us any, another third (10) sent us about one a month – barely enough so we don’t forget about them, but at least they’re in the game.  Only six cancer centers sent us two or more per month. The runaway leader is Boston’s Dana-Farber Cancer Institute, who has been in the forefront of digital communications among cancer centers since our first gift in 2010. Between “The Jimmy Fund”, DFCI and its many events, we received 107 email messages between New Year’s Day and Halloween – almost three per week!

Over the next few days, I’ll be presenting further analysis of these 418 email messages, including highlights of the most inspiring messages and best subject lines. If you work for a cancer center, contact me so we can discuss your organization’s messages in detail, privately.

Are you investing enough in digital?

ALS home page featuring Ice Bucket Challenge

ALS Association home page

No, this is NOT another “ice bucket challenge” blog post. That’s been covered, and that story isn’t even new. It just validates what Heather Fignar and I, and many others, have been saying for years: give people a reason to have fun, express their creativity, employ social media and mobile technology, integrate it across all channels and all parts of your organization (especially media relations) and you have a good chance at making a splash, (pun intended) if not some real money.

No, this is about meaningful, ongoing investment in digital advertising, and why your nonprofit is probably woefully behind the times. So far behind, that I had to go to big box retail to show you the way. That’s right… a company selling hammers, power saws, kitchen cabinets, and 2″x4″s is kicking your butt in digital revenue.

Home Depot is investing 36% of its total ad budget into digital media, especially email messaging and social media. Print only gets 10%. Digital’s share is increasing. “We like the ROI” says their Chief Financial Officer.

The company says its continued transition to online sales and digital marketing are also key, according to Craig Menear, President, U.S. Retail.

“We’ve shifted to more targeted personalized messaging to become more relevant to customers, and as a result, costs attributable to print advertising are down 60% since 2010, and have been shifted to more efficient advertising.”

So how much does Home Depot sell online? Less than three percent of its sales originate at its new website. What? How can it make money by investing 36% of its ad budget (translation: fundraising budget) in a medium that generates less then three percent of its revenue? Because one doesn’t allocate one’s investment in growth based on the past; one invests based on the future, and Home Depot is betting on digital to drive future sales.

Also, Home Depot knows that the value of its digital investment goes way beyond the amount of orders actually placed online. It knows that handymen and handywomen scope out new product ideas, watch how-to videos, read emails with special offers, and then go into the store to do business “the old-fashioned” way.

Lest you think this is a new trend, an article from 2011 lays out the plan. Home Depot had just embarked on a $1.1 Billion investment in its new website, despite then-current online sales of just one percent of total retail. They knew, according to industry research, that “around 48% of retail sales will be influenced by the Internet in 2011 and projects this to rise to 53% by 2014.”

Sadly, many healthcare nonprofits I know budget their digital investment as if it were part of their continuing, proven, direct mail budget, expecting it to return $4 or $5 in revenue this year from every dollar invested. Then, they don’t even do a good job of measuring the impact of that paltry investment beyond the online donation page.

 

 

 

How many new donors do you need?

One of the most important strategic decisions any development office can make is the allocation of its scarce fundraising resources into new donor acquisition. Yet, this question is often put aside until the rest of the budget is set. The result is disappointing donor growth.

Since new donor acquisition is almost always conducted at a first-year net cash outflow (each new donor may return only $.60 of each $1.00 you invest in its acquisition), it drains resources from other budget items. Of course, it’s also the only way to replace donors who die, move away, or lose interest, and the only way to grow your program in the future.

Here are three strategies, each described in the extreme to illustrate the point:

The “George Allen” approach

George Allen was the winningest football coach of both the Los Angeles Rams and the Washington Redskins. He became famous for trading away future year’s draft choices to acquire quality, veteran football players who produced results immediately. It helped him compile a winning record until the veterans retired. He was let go after the 1977 season, after which the team could do no better than .500 for the next four years.

In other words, you can cut or even eliminate acquisition, for a short time. This will result in greater short-term net revenue, but ultimately a decline in your gross and net fundraising. Even if  you retain 80% of donors from one year to the next, after three years, you’ll have only 51% of the donors you started with. I also call this the “Detroit City Bus Maintenance Deferral” method for obvious reasons. Many nonprofits practiced this in 2009 and 2010, and they’re still digging out of their downward revenue spiral.

The Amazon Approach

Jeff Bezos built Amazon into what it is today by plowing virtually all profits back into growth. It was a deliberate, and ultimately successful, attempt to capture market share and grow into a firm that now accounts for 20% of all U.S. e-commerce. He was able to continue this for so many years because he was able to eloquently articulate his plan, and demonstrate successful growth each quarter.

If your board, and your donors, are willing to reward dramatic donor growth year after year in exchange for net revenue to fund the mission, this can be successful for you, too.  Good luck with that.

The Goldilocks Approach

The “just right” donor acquisition strategy takes into account your traditional donor attrition and growth plans. If you lose 10,000 donors per year, and your growth needs require a net growth of 5,000 donors per year,  you need to invest in the addition of 15,000 new donors each year. The chart below illustrates how one organization’s donor acquisition (blue line) fell far short of  donor attrition (red line) over the past four years.

donor_gap

It’s not wrong to be opportunistic at times; if your new donor acquisition is producing good long-term donors, and the budget is available, and the board trusts you, ramp us acquisition beyond the required replacement-and-growth amount.

Nor is it wrong to be frugal; there will be extraordinary circumstances that require budget cuts, and acquisition is no more sacred than any other area of your budget.

Just know, in each case, that you’re saving for, or borrowing from, the future, in each case, and that neither is sustainable in the long run.

 

 

Digital Lessons from the New York Times

Graph showing Newspaper Advertising Revenue, 1950 - 2012
Newspaper Ad Revenue

 

Everyone knows that the newspaper business has been suffering over the last ten years. While  most people believe this has to do with the decline in print newspaper circulation, it’s important to note that digital advertising for newspaper companies is declining as quickly as print revenue.

Not so, of course, with social media sites like Facebook. Social media advertising is growing at double-digit rates. So, why didn’t the newspaper companies get their share?

socia_media_ad_forecast Because they didn’t grasp the shift that was happening, away from daily print media and towards digital. They clung to their old model of print, first denying, then delaying, the digital world, and completely failing to understand how it changed publishing.

A recently-leaked internal memo describes the problems at the Times, and offers some lessons for all nonprofits, and especially those in healthcare:

  • “We are not moving with enough urgency,” it says. They point to upstart publishers like  “HuffingtonPost” and “Business Insider” and say “They are ahead of us.”
  • There is “a cadre of editors who remain unfamiliar with the web.”
  • The report also calls for a profound rethinking of the newsroom’s independence from the rest of the company, in order to involve editorial leaders more deeply in technological decisions.
  • The paper’s Twitter account is run by the newsroom. Its Facebook account is run by the paper’s business side.

Do these observations sound familiar in your healthcare organization? Are you “moving with enough urgency” to communicate with people where they live — increasingly, online? Do you have a “cadre” of senior leadership, either in fundraising or the larger organization, who “remain unfamiliar with the web.” Do you have a “church and state” wall between development and “communications” departments? Do you have to beg for “space” on your organization’s Facebook page? Worse, do you have a separate, red-headed-step-child page for your foundation?

Your healthcare organization, including development, is one entity in the eyes of a public that lives increasingly in a digital world. Your public face needs to reflect that.

Children’s Hospitals – the elite meet in Montreál

The good news is that we’ve basically eliminated infectious disease as a cause of childhood death in the US and Canada. The bad news is that we have an epidemic of new childhood diseases that, while not infectious, have roots in socio-economic conditions and kids’ environment. Our fundraising has to address these new needs, because if we can break some of these links between conditions and health now, we can stop them forever.

Alan Bernstein, OC, PhD, FRSC and President/CEO of the Canadian Institute for Advanced Research in Toronto gave the Woodmark Summit attendees a well-researched, cross-disciplinary kick in the pants to start off the three-day conference, hosted by the Montreál Children’s Hospital this week.

My second healthcare fundraising conference in as many weeks was packed with mostly young gift officers and annual fund professionals — an average of 10 people per hospital. Sessions ran from 7:00 am until 9pm.

Dr. Bernstein discussed the correlation between a child’s socio-economic environment and long-term health. For example, the incidence of obesity is dropping among children whose parents have a bachelor’s degree or higher education, but it is growing more rapidly than ever in families where the parents have a high school diploma at most. Obesity leads to diabetes and cardio-vascular problems which have enormous financial and social costs.

Children are at increasing risk for behavioral and mental health issues. ADHD, Autism, depression, and other mental health issues are on the rise among all segments of the youth population. In addition, children from lower socio-economic families have higher incidence of adult health issues, like arthritis and hypertension, later in life.

Dr. Bernstein is not calling for massive governmental wealth redistribution (and certainly, neither am I). What he did say, however, was that we as healthcare fundraising professionals need to refocus our efforts on programs that will provide screening and treatment for young children. We need to work not only with healthcare providers, but also with social service agencies and especially with educational institutions who have great influence on families and children.

Each child we can reach now can not only become a healthier adult, but in turn can help raise a new generation of healthier kids.

Annual fund donors lead to major gifts

Wealth overlays alone do not generate major gifts!

At #NACCDOPAN, the conference of the National Association of Cancer Center Development Officers, Michael  Hibler of Johns Hopkins’ Sidney Kimmel Cancer Center, and Cindy McGirk of Tampa’s Moffitt Cancer Center talked about ways to use data to enhance the major and planned giving efforts of their institutions.

Cindy exploded the myth that you can take your annual fund donors, overlay a wealth screening tool, and then stop mailing and calling the top-ranked donors, turning them over to a major gifts officer. First, wealth screening alone does not indicate the propensity to make major gifts. Second, abandoning traditional annual fund contacts via mail, phone, and email leads of course to fewer gifts.

What works, according to Michael, is a more complicated analysis that includes wealth ratings but that also includes data from their own donor database, including the longevity of giving, number of gifts, and other data.

Indeed, we at Amergent have run complicated regression analyses that search for factors that correlate between donor data and major or planned gift donors. In other words, if a piece of data tends to be much more common among planned or major gift donors than it is in the general donor population, that donor looks more like a planned gift donor, and that donor would rank higher on the list. Common data elements that correlate to planned giving status include the length of the donor relationship and the number of gifts given. The size of the gifts do not matter much.

Interestingly, there is a high inverse relationship between the gap between first and second gifts and the propensity to be a planned gift donor. In other words, the shorter the time between a donor’s first and second gift, even if both were made 20 years ago, the more likely they are to be a planned gift donor. So, if you want to help grow your population of planned giving prospects over the next ten or more years, thank new donors quickly, cultivate them, and get them to make a second gift quickly.

How do Michael and Cindy use these major and planned gift indicators? One way is to run wealth screening in almost real-time against newly admitted patients (who did not opt out of such communications). When a high-propensity patient is admitted, the major gift officers talk to the patient’s doctor, and ask them to “listen for cues” that indicate an interest in giving. Partnerships with physicians is key to identifying good prospects to visit.

How are you using your data?

All nonprofits are tech nonprofits

“all technology problems are ultimately leadership problems.”

Leigh Kessler, VP at CharityEngine,  asked on LinkedIn: “A Key theme from #14NTC, the NTEN conference, was ‘all nonprofits are tech nonprofits.’ Any tips on how people can become better technocrats, even those to whom it doesn’t come easily?”

(By the way, if you are unfamiliar with NTEN or its conference, you should know that you have a great resource available to you.

My response to Leigh was this:

One of the tips came up in Saturday’s keynote, and in many informal conversations I had throughout NTC: listen to everyone. Most people know how they’d like to do their job more efficiently and effectively than YOU know how to do their job. Those we serve need to be empowered more to help themselves. The key frustration of young people at NTC (and there were so many young people there!) was that they feel they have limited voice within their organizations, yet they need to drag their organizations (their words) into higher levels of technological capacity.

Leigh then pressed me for ways to empower those younger techies in our nonprofit organizations.

First, kudos to the organizations that invested $2500 or more for their young people to leave the office for 3+ days and attend NTC. If they want to realize a return on that investment, they need to expect those young techies to present a 30-minute talk on “what I learned at NTC and how it relates to us” to a wide swath of the nonprofit organization. NTEN works because there is almost no hierarchy — members talk to each other directly. As Michael Enos said on Friday, “turn your org chart sideways, because work gets done between the lateral boxes, not up and down the chart.” (view the entire discussion here.)

Specifically, how can young people be heard? We older people need to ask them hard questions, then shut up and listen. Then, instead of saying “that won’t work because…” we need to say, “that might work, if…” We need to let them try. Even Yogi Berra got it: “A fellow can observe a lot just by watching.”

This leads to my belief, first considered at the first NTC I attended in 2005, that all technology problems are ultimately leadership problems. Organizations that lead well, that cultivate leadership at all levels, will implement the technology ideas brought to them by young people at NTC, as well as from other sources. “Top-down” theory X organizations will never hear the ideas.

A large food bank leader explained that he’s trying to use technology to enable his food suppliers to work directly with the soup kitchens and others who use the food. This is leading to more direct deliveries, bypassing the food band completely in some cases.

“If we can get out of the business of moving food around, we can focus more on the business of finding fresh food and getting it to the people who need it,” he said. Mobile GIS-based tools (which is a part of every smartphone) and better communication networks will make this possible.

What are we doing in healthcare, and specifically in healthcare fundraising, to use technology to listen more to our donors, to connect them with the specific causes they want to fund, and to show them the results of their “investment?”

As I wrote for The NonProfit Times, (http://bit.ly/1jgp5in and http://bit.ly/NJx1hz)  technology won’t fix the problems your nonprofit is trying to solve. It will enable your people to tackle those problems in new ways that might be much more efficient than your old ways.