A little fundraising rant

I had a chat with a Chronicle of Philanthropy reporter yesterday that got me to thinking.

The ostensible subject of our conversation was the most recent Target Analysis study that shows that new donor acquisitions are continuing to fall. It’s officially a trend now.

So now what? Herewith are some thoughts, a bit disjointed but you see where it’s going.

1. The era of cheap direct mail and high response rates in acquisitions is over. The economics of direct mail are failing. That is more or less an uncontroverted fact. It costs more to mail, and fewer new donors come back with each mailing. This trend has been masked somewhat by higher average gifts by donors you already have, but sooner or later, the acquisition crisis is going to affect bottom lines. For some, it already has.
2. What currently passes for an online fundraising model is at best a stopgap. Here is the current online fundraising model: build your prospect list however you can and then bombard them relentlessly with email solicitations. If you’re clever, maybe throw in mail and phone solicitations as well. Repeat, repeat, repeat. This actually works – if not always, a lot of the time. But there are four catches:
• It’s not filling the gap left by direct mail prospecting declines. Partly it can’t. Some of your online joiners are actually responding to your direct mail; they are using your website as a collection device.
• It’s not where most of your donors are coming from. Most of your online donors come in over the transom, not in response to your email. It underscores the dirty little secret of online fundraising: what is supposedly the MOST measurable form of fundraising is actually the LEAST measurable form of fundraising when you take the meaningless metrics out.
• It’s not sustainable. Shock and awe email solicitation over time trains your list members to stop opening your email. Shock and awe email fundraisers enjoy overall open rates for email in the neighborhood of 10 percent. Now granted, for now, among the ten percent who open are givers, but you just wrote off 90% of your list! Can you think of an organization or two that has worn out its email welcome with you?
• It burns relationships that might be important. In this new age of branding and strategic communications, you might have many uses for tens of thousands of concerned individuals who care about you and your mission – as activists, as evangelists, etc. Too bad they’ve tuned you out.
3. This is not just about direct response. This is not just about philanthropy. EVERYTHING is going to change. In his latest book, Meatball Sundae, Seth Godin makes the point that organizations and companies are generally built around the mode of marketing available to them. If your organization began its life between 1970 and 2000, chances are it was built around cheap mail and high response rates. The first victim of expensive mail and low response rates is your fundraising efficiency. And in this era of CharityNavigator, your fundraising efficiency is no secret.

So what is the answer? Beats me. It certainly means focus. And authenticity. And passion. And flipping the funnel. And full disclosure: we engage in many of the same online fundraising tactics that everyone else does. We have to. But we do counsel care and restraint. And we do warn clients that this approach is neither a panacea nor a long-term solution.