Which NFPs make the loudest noise about the Cost of Fundraising?

How do Australia's largest NFPs communicate their cost effectiveness? Are the most sophisticated fundraising organisations supporting positive messaging around the cost of fundraising? Or are they perpetuating a negative, misinformed perception that is harming the sector as a whole?

The best fundraising in Australia comes from both large, sophisticated charities as well as smaller, more agile and necessarily frugal ones.

The same is true for the approach that the sector takes when approaching the question of cost effectiveness.

This survey conducted last month compares the use of Cost of Fundraising messaging and infographics across the largest and most visible not-for-profits across the sector.


By comparing where on the website an organisation communicates how donations are spent, one can get a sense of how much value is associated with this message by each organisation.


Many organisations produce graphics to help express visually where the money goes and to show their cost effectiveness. It aims to combat a perceived negative public sentiment that suggests charities aren’t spending enough on the cause.

Are organisations being foolish to spend money on producing messages that communicate how great they are at saving money? Or are we assuming that audiences – our supporters – are fools?

The COST of Fundraising




Fastmap/IOF research says "integrate"

Key insights from the fastmap research into perceptions of engagement channels on behalf of the IOF UK 

The results suggest that:
• A multi-channel approach is likely to be most successful
• Those targeting 55+ females would be unwise to ignore traditional media
• Carefully-designed back-up material plays a key role in converting interest into support particularly collateral that links to other channels
• Some channels are more likely to generate low rather than high-value donations. This knowledge gives fundraisers the power to match their objectives with the media they select. Maximise recruitment versus immediate donations
• Viral fundraising activity such as the Ice Bucket Challenge and Movember have resulted in people engaging with channels in a different way by challenging and sponsoring friends and colleagues, texting photos and videos and spreading donation phone numbers

Download here: tinyurl.com/pn7s6rd

Cost of Fundraising Infographic

For many NFPs in Australia, the cost of fundraising is a confusing topic. It can be frightening to many leaders who are new to fundraising. And it is difficult to determine an approach given the complexity of the subject and the often misunderstood perception of the donating public.


It's not surprising that organisations with smaller ambitions and less focus on individual giving fundraising will want to challenge the perceived high cost of fundraising among the public. They are quick to point out that gifts are largely going to the cause and they place more importance on communicating strong return on investment statistics and a cost effective approach to administration and fundraising.

Experienced fundraisers would point out that they are wrong to do so; organisations that go to great lengths to tell supporters and website visitors that they spend only 12c in every dollar on fundraising and administration are perpetuating a common misconception that charities should spend all the money they raise on the cause.

I was surprised, and a little dismayed when I started to look at cost of fundraising communication across NFP websites in Australia.

The cost of fundraising infographic is very attractive - and some organisations have created some eye-catching designs to express their penny-minding approach to improving lives or beating cancer. It is very disappointing that some of biggest larger charities - with huge acquisition budgets, large in-house teams, greater efficiencies of scale and larger media buying power - are touting the same cost of fundraising messages as those that have less understanding of what's at stake.

Let's open up some more constructive dialogue on the topic.
Please comment if you have an opinion.

There's nothing emotive about Tax.

It's that time again. Fundraising managers phone their counterparts to try and gauge the success of their Tax appeal as the June 30 deadline draws near. And as the opportunities to change the course of the campaign are whittled down to the last two days of the financial year, the flip of the coin is to send a desperate appeal email in a last ditch attempt to improve success - or avoid disaster.

And most organisations are getting it wrong.

Tax deductibility is a rational concept and it isn't a strong reason to give. Reading the multitude of emails that arrived today and will inevitably arrive tomorrow makes me feel we have completely dismissed so much of what we have learned as fundraisers.

- people give to people
- emotional engagement with the cause will convince people to donate over any rational reason
- the biggest motivating factor is engagement or proximity to the cause


In the last attempt to encourage donations before the deadline, it doesn't seem the best strategy to forget what we have learned. Tax deductibility might be a secondary, rational reason in support of the main argument. But we shouldn't lead on it. Let's hope there is some stronger, more motivating content next year.

More asks to high-value donors = more income

I don't suggest that asking for large gifts by mail is the right approach. However, this blog, published by everybody's friends at Future Fundraising Now references a study discussed on Grizzly Blog and points to the importance of frequent communication and asks for donations of our higher value supporters in much the same way as standard mail responders. 

Future Fundraising Now: More mail, more money


More mail, more money

Posted: 03 Dec 2014 04:59 AM PST

The Grizzard Blog shares one of those scary pieces of knowledge that live in the major donor world: Stop Mailing The Major Donors!

Actually, don't stop mailing the major donors.

The post reports on a test where five hundred $500+ donors were sent a list of the 12 direct mail appeals they were scheduled to receive in the coming year. They were given the chance to opt out of as many of those 12 as they liked. If they didn't respond, they'd get all 12.

37%, of those donors returned instructions. The highest number of appeals any of them selected was 3.

At the end of the year, they compared the group that received all 12 mailings to the group that had identified those mailings they wanted. 

The result was interesting: The donors who received all 12 mailings gave 35% more than those who restricted their appeals. 

This is a bit of a surprise to me. It's normal for a group getting less mail to give less. But usually, giving donors choice -- any kind of choice -- results in more giving. I'd have expected the positive impact of choice to outweigh the negative impact of less contact. Silly me.

There may have been something about the nature of this choice that pointed the donors in the wrong direction. If you think about it, those donors said no over and over again. Nine times or more. That sets a pattern.

But there's an important lesson here: Less mail, less giving. That's true in nearly every situation. Including major donors.

Never assume donors will give more or retain longer if they get less contact. It almost never works that way.

   

Innovative Greens Direct Mail Campaign - Victorian State Election

Fantastic campaign arrived in my letter-box yesterday. It stood out among the hate-inspiring anti-labor leaflets and multitude of Liberal propaganda that I've received in the last two months. Good stuff - keep it up @Greens #Vicvotes


4 insights from 2 top donors

As Published - fpadmin | 04 November 2014 
The key role of the chief executive officer and board in gift-making decisions was elaborated on two of Australia's most generous philanthropists – Simon Mordant AM and John Grill AO – at F&P's recent major gifts seminar, Liz Henderson reveals.
John Grill and Simon Mordant smallerA nonprofit’s chief executive officer and board have a central role to play in the process of major donors deciding to make a significant gift.
This was just one point made by John Grill (left) and Simon Mordant (right) – Australian philanthropists who between them have donated more than $35 million – in a candid interview at F&P’s recent Art & Science of Major Gifts Seminar in Sydney.
Mordant also stated that lack of engagement by a chief executive officer had been a factor in him ending his involvement with an organisation. While Grill said “too small” a vision of what he could help to achieve had prevented him committing large gifts in the past, and that he believes nonprofits should be prepared to cater to donors’ say in where their money goes.
The pair have plenty of experience in both major gift-giving and big business. Mordant is a long-time corporate advisor and recently retired managing director of the global investment banking company Greenhill, who with his wife Catriona started making significant charity gifts 15 years ago after they resolved to give away all their wealth during their lifetime. In 2010 they gave $15 million to support a major re-development at the Museum of Contemporary Art.
As for Grill, in 2012 he supported excellence in industry through a $20 million gift to establish the John Grill Centre for Project Leadership at the University of Sydney, where he studied himself before going on to become chief executive officer of international resources and energy company WorleyParsons.
Here are four of their insights:
1. Nonprofit leadership has a key role in major giving 
SM: We've got to believe in the governance, the chair, the board. We've got to feel very passionate about the CEO and the vision the CEO has. We want to spend time with the CEO’s team and make sure it is cohesive. With institutions we feel passionate about and where we believe in the CEO and the board, we're very comfortable to support core overheads.
JG: I think if you’re going to get major gifts or major projects being undertaken for your charity or nonprofit organisation, unless the CEO is involved it’s very unlikely to happen. Because you’re very unlikely to satisfy the demands of the donor and make them feel they are contributing to a worthwhile part of what you’re doing.
2. Lack of executive engagement can end relationships 
SM: I’ve had a couple of experiences with institutions we’ve supported where we’ve drifted apart – either because the CEO hasn’t wanted the level of engagement that we’ve sought, or there’s been a change in CEO and the incoming CEO has taken a different approach. Catriona and I have both been on boards, contributed meaningfully, served for years and at the appropriate time come off the boards - and never heard from the institution again. And you scratch your head a little bit.
3. Big vision inspires big gifts
JG: I’ve looked at giving a donation and really haven’t been able to sort out an arrangement that I was prepared to support – and in some cases, because the charity, in my view, weren’t thinking in a large enough manner. They had too small a view of what I might do, I suppose. And I think if they’d be prepared to come up with a bigger plan in the area I thought of, I probably would have supported it.
4. Charities should try to meet donor requests
JG: Sometimes, if they want to get that donation, they have to change what they are doing in an area. I think that, increasingly, donors will want to have a say in how the money is used: not directly, but certainly in how it’s streamed and if there is a particular project they think should be developed with their money. The charity should work with that donor to try to achieve that aim. And if they can, they get the money. If they can’t, they won’t.
 Liz Henderson is the editor of Fundraising & Philanthropy Magazine.

Exercising Self-Control - an interesting insight


As published by Lumosity.

You could train your self-control with a technique that’s so easy, you can do it while you eat, flip channels, or brush your teeth. It might just be possible according to a new research study in which 70 college students went through 2 weeks of self-control training that involved using their non-dominant hands in everyday life. 
The strength theory of self-control
Many scientists liken self-control to a muscle: the more you use it, the more fatigued it becomes. If you’ve lifted weights until you’re sore, you’re more likely to drop a heavy bag of groceries; and if you’ve used your self-control until it’s drained, you might snap at a well-meaning friend. 

According to the researchers who conducted this 2013 study, the strength model also has a theoretical upside. They hypothesized that the students in this study could strengthen self-control in the long run — in the way that a body builder eventually strengthens his muscles after weeks of training — by practicing self-control more often. In this case, students would train by resisting the urge to use their dominant hands. 
How the study exercised self-control and tested aggression
At the beginning of the study, each student answered an Aggression Questionnaire to help researchers understand their natural aggression and anger levels. 

The students were then split into two groups: a training group and a control group. Over the next two weeks, the training group was told to exert self-control by using their non-dominant hands as much as possible for everyday tasks. The trainers filled out online diaries and answered text messages from the researchers to help stay on track. The control group received generic texts and questions during this time period.
After two weeks, all students came back to the lab to take part in two experimental tasks designed to provoke anger and aggressive behavior — and to help researchers measure how successful training had been.
First, students were told to present their life goals to a stranger over video chat. As far as the students knew, this stranger was meant to give constructive feedback. In reality, the stranger’s goal was to provoke anger: instead of real feedback, students got a barrage of insults. Immediately afterwards students answered questions about their anger levels

Next came a disguised test of aggressive behavior: students were told to play a competitive game against the same insulting stranger. If they won, they could punish their opponent with a loud blast of white noise. In reality, the “games” were rigged so that the students won every time, and the length and loudness of their blasts gave researchers an opportunity to measure aggression levels.
Less anger linked to self-control training
In the survey administered after the students received insulting feedback, the training group reported feeling less angry than the control group.
And when researchers looked only at students with high Aggression Questionnaire scores, an even more striking difference came out. The naturally aggressive people who didn’t undergo self-control training tended to deliver more aggressive blasts of noise, as expected; but the naturally aggressive people who did train self-control showed no unusually aggressive behavior.
What’s next?
Self-control is one of the more fascinating aspects of human behavior. While this study examined practicing self-control in a very specific situation, this ability can have far-reaching effects on other aspects of everyday life. In a past study, for example, researchers found that people perceive coworkers with higher self-control as better at their jobs. And anecdotally, all of us can remember a time when self-control felt crucial to a task.
That’s why it’s so encouraging to see researchers explore such a simple, accessible technique for training self-control. While further research remains to be done, the non-dominant hand technique is yet another way you can challenge yourself during your regular routine. Next time you play a Lumosity impulse control game like Color Match, add to the challenge by using your non-dominant hand.

Could this be the worst use of survey information ever witnessed?

This is not good marketing. Someone at Australia Post has convinced this company to spend money on targeting potential art investors via the lifestyle survey. Below is how they think an email communication on this subject should look:


Let's bullet what is wrong:
  • Why is it branded from Australia Post?
  • I'm not their target audience (not CEO, not an investor, not old or wealthy)
  • Why is there a pen writing on a computer screen?
  • Why is Grace Kelly worth more than gold? 
  • Can I rent Andy Warhol?


Paul

Revolutionary design for people living on less than $4 a day


D-Rev's Krista Donaldson tells McKinsey about a radical approach to medical design that is changing the lives of the world's poorest people. To read the transcript visit here.

Interestingly D-Rev - which stands for Design Revolution - has found that their mission cannot end with innovative designs.

Experience has taught D-Rev that in order to ensure their products are reserved for the people who really need them, they have to be responsible for the manufacture and distribution. The goal is to make sure an $80 knee is distributed to prosthetic clinics around the world and sold for $80 to low income recipients. In the US, an equivalent item would cost $6,000 and without this level of logistical responsibility, D-Rev products might be provided to clinics and individuals at a greater cost than intended.

Australia Post reduced deliveries should be seen as a big threat to direct mail

Many charities have spoken about the impact of a saturated direct mail environment and there is a level of criticism of the industry for sending too much mail - much of which lands in letter boxes on the same day.

If you are of the opinion that charity mail is being lost in the clutter, imagine what the situation will be like if Australia Post is successful in it's campaign to reduce the number of delivery days from five to three. Visit this link to read my article last month which encouraged people to acknowledge the importance of daily mail delivery as a public service which is still necessary for thousands of Australians. 

If Australia Post is allowed to make this change, direct mail responses will be impacted. If a supporter is forced to receive a week's worth of mail in three days rather than five, or worse, if their mail is held at a post office to be picked up in person, the clutter will increase and individuals will be far less likely to respond and donate.

Already the most significant expense in any direct mail campaign is the postage and these costs are unlikely to decrease as a result of reduced delivery days. More certainly, the number of responses received by charities - and therefore the amount of funds raised - will shrink. 

Are charities concerned about the potential impact? Should the not-for-profit sector be involved in the debate? Let's start talking: #charitymail





Australia Post 'user-pays' model could hurt charities

As Australia Post struggles to adapt to a changing communications environment, floated solutions to a dire financial situation could be a serious threat to the not-for-profit sector.

Recently, Aus Post Chairman, John Stanhope, suggested that a service charge to receive daily deliveries could be implemented to help pay for a $218m deficit, which is largely the result of fewer letters being posted. The move would result in many Australians accepting a less frequent service, which would hurt businesses and charities as well as individuals.

Let’s look at it from Mr Stanhope’s point of view. As the volume of post shifts to parcels rather than letters, and the effectiveness and importance of online increases, surely mail is less important, right?
"If you want it fast, you pay for it," Mr Stanhope said. "You want it more related to the cost base, so if you are happy enough for your letter to be delivered less frequently then you pay less, if you want it more frequent you pay more”

Unfortunately this point of view is a generalisation and it ignores the function of mail as a service in the public interest.

Millions of Australians still rely on post to receive and pay bills, to be informed of government and community announcements or keep up to date with notices of local infrastructure and service changes. Most households aren’t aware when this information is coming or whether it’s important or not – so how can they be made responsible for it?

The risk is that the importance of the frequency of that communication might not be clear to the recipient; people who choose not to pay for daily mail might be negatively impacted.

The ABC makes an important argument about the negative impact on low-income earners and people living in regional areas. But the consequences of ‘user-pays mail’ could have significance across demographic and geographic boundaries.

Being someone who checks his post box once a week, I personally don’t see value in receiving daily deliveries – so I’m unlikely to pay for it – and I’m not motivated to look at the potential impact on my household financially or socially. I will almost certainly receive less frequent bill payment reminders or community information notices – this could cost me financially and limit opportunities for me to be involved with my local community.


While mail is still important to such a large proportion of the population; so long as individuals open and read almost all the mail they receive; Australia Post will remain a vital national provider of communication. This message needs to be communicated to Mr Stanhope and Australia Post to ensure this model, or approaches like it, are not adopted now or in the future.