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Monday, August 18, 2008
First let me remind my readers that I'm the CEO of a software company whose business is providing fundraising software to non-profits, so I can't claim full objectivity on this topic. That said, I'm pretty tired of reading blog postings and articles from non-profit consultants espousing the virtues of "free" software for various aspects of nonprofit administration -- from constituent relationship management (CRM) and web content management systems (CMS), to online donations, etc. In some cases the products being recommended are open-source software like ebase, Civicrm, SugarCRM, etc. and others are from philanthropic entities set up by for-profit companies like salesforce.com.
Sure, its nice of salesforce.com to provide nonprofits with free licenses for their software, but they are able to do this because their real business is providing salesforce as a sales contact management system for businesses. Adapting salesforce to provide the processes and reporting necessary to meet the unique aspects of nonprofit fundraising is a daunting effort. Of course these consultants have a solution -- just hire a consultant to adapt (customize) the system to meet the needs of your nonprofit. Unfortunately the cost involved often far exceeds what the nonprofit would have to spend to buy a product that is already designed and tailored for non-profit fundraising.
I have a similar criticism of open source products, where the products must be maintained and supported by a community of developers. Again, the motivation -- providing nonprofits with inexpensive software -- is laudable: however the results almost always require the nonprofit to spend far too much time and effort on figuring out how to make it work.
As I noted at the outset, you can reasonably question my objectivity, but take a look at these quotes in a recent article from idealware that presents case-studies of a few nonprofits' experience with general-purpose CRM systems.
From NY-NJ Trail Conference (NNTC)
"While ebase was a low-cost solution for NNTC (ebase can be downloaded for free and used on top of Filemaker Pro), the real cost has come in the staff time it has taken to modify the database. Daniels' deep technical knowledge allowed him to make major changes. The rest of the staff now knows enough to make routine changes as necessary and train each other as new staff members are hired.
Because of his comfort with technology, Daniels did a lot of the CRM implementation himself, though he knows this is not an option for many nonprofits. "Most organizations don't have a high-powered techie to implement a CRM for them, and finding a sophisticated volunteer is not possible for most organizations," he says. "Without sophisticated knowledge you may have to hire consultants."
Words of Wisdom
Daniels cautions against getting locked into a product. In NNTC's case, ebase has not progressed and there is no upgrade path without doing a significant rebuild of the existing data and reports. "Nearly the entire CRM would need to be rewritten to upgrade."
From Washington Toxics Coalition (WTC)
Salesforce itself is free for WTC to use because of Salesforce's donation program (which provides up to 10 licenses for 501(c)3 nonprofits). However, it cost $10,000 for their consulting firm, ONE/Northwest, to migrate WTC's data and build custom features. "We couldn't have done it without them," says Dawson. The project took about four months to go live. For an organization with about a million dollar annual budget, the CRM modification "wasn't chump change," says Dawson."
"Not everything is better in Salesforce. WTC likes to create very specific solicitations to donors based on their interactions with the organization, and it is difficult to print a spreadsheet with a full history of giving. Ebase did this better by storing all donation data in one place. WTC's Consultant, ONE/Northwest, created a custom view of some interactions but not of others."
Here is a link to the complete article which has a lot of other interesting insights and also includes many positive comments http://www.idealware.org/articles/crm_case_studies.php.
My point is simply that non-profits need to realize that the cost of software is just a small component of the total investment in successfully implementing technology. As a software vendor focused entirely on nonprofit technology we have a strong financial incentive to help our clients use our products successfully. We serve as their technology experts, so they can spend their time and energy on their missions and building stronger relationships with their donors and constituents -- not on building software.
Friday, August 1, 2008
A recent article in the Wall Street Journal noted that sales of luxury goods are holding up much better than retail sales in general. The reason is simple: rising gas prices and the slowing economy just have a more dramatic impact on the middle-class. Unfortunately, non-profits are likely to see a similar effect on their fundraising campaigns, with less wealthy donors being more cautious in their donations.
The best strategy to deal with this is obviously to target constituents who are wealthier. Although wealthier supporters often correlate with those who've given you larger gifts, a better strategy is to identify giving potential using prospect research or wealth screening techniques.
A simple and inexpensive technique is to add demographic data to your database using a data enhancement service. For instance, when we do this for clients we compare donor names and addresses to a database of 110 million households. Typically matches will be found for 40-60% of the records. When there is a match we are able to add almost a dozen demographic elements such as head of household age, whether they own or rent, marital status, etc. Most importantly we can add estimated household income. The income data is primarily based on the average for their zip code so it only provides a rough guideline, but it can be invaluable for campaign targeting.
Of course even better than relying on demographics is to use actual data about donor assets such as real estate, stock holdings, etc. Much of this information is available through public and private databases, but sifting through such data can be time-consuming and difficult. The best solution is to screen all or a portion of your database using a wealth screening service such as Wealth Engine. They've developed proprietary techniques to screen as many as 25 different data sources to identify donor assets which are combined into a simple donor giving-potential score that can be used to drive targeting and ask levels. The more detailed information about wealth and assets is of course indispensable for capital campaigns, moves management and major donor development efforts.
Now is the perfect time to pursue either of these screening techniques so you can have the resulting wealth information to use in your year-end fundraising campaign.Labels: prospect research, wealth screening
Thursday, July 10, 2008
A few months ago I wrote a paper entitled Demystifying Credit Card Processing for Non-profits. The document has a lot of great information to help not-for-profit organizations understand the types of processing solutions available, merchant account and processing fees, etc., but I have to admit that I was wrong when I said, "I can't imagine someone who has stolen a credit card going online to make a fraudulent donation to their favorite non-profit, but the credit card companies don't see it that way." I was commenting on the higher processing rates (based on greater fraud levels) that are charged for MOTO (the acronym is for mail order/telephone order but also applies to all not face-to-face) transactions .
Well recently I learned that a client of ours that uses our Weblink system for collecting online donations had a spike in their form activity with lots of rejected transactions. It turns out that online donation pages are sometimes targeted by credit card fraud criminals since the forms usually make it very easy to make a card payment -- without the complexities of ordering something. That's perfect for someone who needs to test a lot of stolen cards to see which ones are still valid and can be used.
Often an automated system is used to rapidly make sequential attempts, testing each card in a stolen file. Therefore one solution is to use challenge codes, where the person completing the form has to type in some hard to decifer letters that can't easily be interpreted by a computer. The problem is that this also creates an impediment (although a small one) to anyone who legitimately wants to make a donation. Nonprofits certainly don't want to make it harder for someone to give, so instead we implemented a system that monitors form activity and blocks suspicious activity. It has been active for several weeks and has successfully protected at least one other fraud attack.
Needless to say however, I'm revising that section of the whitepaper. Live and learn!Labels: credit card processing, online donations
Monday, July 7, 2008
Sure it's a rhetorical question. But are you really encouraging online donations in your direct mail solicitations? Not just by mentioning it as an option, but making it clear that it is the fastest, easiest and most cost effective way for the donor to give to your cause. Why not even offer an incentive for those who make their donation online?
Why push donors to give online?
It generates larger gifts - As much as 30% more according to studies I've read!
Collects email addresses - Virtually 100% of online donors will provide their current email address vs. much lower rates when you ask for the email address by other means.
Increases website visitors - Giving you an opportunity to tell them more about your programs and achievements.
Potential to promote recurring gifts - A well-designed donation page can present donors the option and encourage them to make a recurring monthly pledge, instead of one-time gift. By doing this via an online (vs. paper) form it's easier to step the donor through providing the necessary information and authorization.
Encouraging donors to make their gift online might take a little initial effort but I can assure you that the long-term benefits will make it well worthwhile.Labels: donor email addresses, online donations
Tuesday, July 1, 2008
Why do donors stop giving?
Sometimes they may no longer be interested in your cause, but frequently it is just that they forget or misplace your solicitation, given the many distractions in their busy lives.
Every time we ask for their support, we're asking them to take action -- write a check or go to a website to make a donation. Even if a high percentage of them do it, some percentage won't. The effect over time is pretty dramatic. For instance if each year 75% of those who gave the prior year renew their support, 100 donors in year 1 will become 32 donors in year 5 (100 *.75*.75*.75*.75=31.6).
A great solution is to stop giving donors a decision to make when you ask every year. If you don't already have one, establish a monthly recurring giving program. Yes it takes a bit more effort to get donors to sign up, but they just need to make that decision once. Let them know that they can discontinue their commitment at any time -- but now it requires them to take action to stop giving. You've now harnessed one of the most reliable aspects of human behavior -- inertia.
In studies by Harvey McKinnon, author of Hidden Gold and a leading authority on monthly giving programs, donors that enroll in monthly pledge programs generate at least 800% more in donations over their life-time.
If you'd like to learn more about tools and techniques for establishing sustaining or recurring gift plans you are welcome to download a free article we wrote called Creating A Successful Preauthorized Gift ProgramLabels: donor attrition, Monthly giving, recurring gifts, sustaining donors
Monday, June 16, 2008
Calculating the life time value (LTV) of a typical donor is relatively simple and very useful. You just need to know your average annual donation amount per donor and your donor attrition rate (the percentage of donors that stop giving each year). To compute LTV just plug those numbers into the following formula:
Avg Annual donation / (attrition rate) = Life time expected donations
($100/yr)/(.10) = $1000
Although it might be more accurate to discount the value of future contributions to present value, it requires a slightly more complex computation and the effect is mostly offset by the likely increase in average donation amounts over time.
Knowing the LTV not only allows you to make better decisions about how much is reasonable to spend on acquiring new donors, but also gives you an important metric to track and improve on. Although it is certainly great to improve the average annual donation figure, your most dramatic results can come from improving (reducing) your donor attrition rate. For instance in the example above, reducing your attrition rate to 5% from 10% increases the LTV to $2000.
Of course improving your attrition rate by that much isn't easy, but it can be done. I believe the easiest way to achieve a dramatic reduction in donor attrition is by eliminating the inevitable donor loss that comes from the normal cycle of annual appeals and gifts and instead stressing sustaining support through a monthly giving program. I'll discuss that more in my next post.Labels: donor retention, fundraising basics, Fundraising Efficiency Measures, LTV
Wednesday, May 21, 2008
Email is far and away the quickest, cheapest and easiest way to communicate with donors, volunteers and other constituents, but most non-profits have current email addresses for only a small percentage of their mailing list. Here are 10 simple things you can do to increase the size and accuracy of your email list:
1) Include a space for email address on every type of reply tool you use. That not only includes solicitation response forms, but also event registrations, volunteer forms, sponsorship forms, etc. It seems basic but I often see ones without it.
2) Give them a reason to provide the email address. Indicate that you can and will email them a receipt or confirmation more promptly with their email address.
3) Use online forms not just to collect donations but for volunteer sign-up, petitions, information requests. etc. Such forms can not only make it easier for constituents to take desired actions, but can also ensure you collect email addresses from everyone who completes the form. This is because website visitors consider it natural for you to request their email for an online interaction. Additionally you can easily make email address a required field on your form.
4) If you don't currently send constituents an e-newsletter or e-alerts on important issues -- start. It doesn't need to be very frequent -- a couple of times a year is fine. Its a nice benefit for those who want to stay informed of your activities and is another reason for them to provide you their email address. With appropriate software (here is a great tool www.donorperfect.com/emarket we offer our clients, but any nonprofit can sign up for a 60-day free trial and special discounted non-profit rate) you can also monitor if your email is being received and opened. Make sure you offer constituents the option to opt out of receiving this type of mailing if they want -- so they never feel they are being spammed by you.
5) Make sure a Join Our Mailing List option is prominently displayed on many (if not all) of the pages of your website. 6) Verify the email address you have on file every time you receive an email from a constituent. An effective Constituent Relationship Management (CRM) System can make this simple by allowing you to quickly link emails to donor records using the email address. If the email address isn't found you can then search for and update the appropriate constituent record. 7) Send constituents a simple postcard (or call them) whenever you find you have a bad email address. They'll be impressed that you care that your communications are reaching them and will usually provide their new email address. Particularly if you make it easy for them -- just give them an email address to send it to and remind them to include their name and phone #. A simple contact information update on your website can also work well. 8) Do an online survey. Use a simple and cost-effective online survey tool like Constant Contact to collect constituent opinions on issues related to your cause. It's not only a great way to learn about what your constituents are thinking, but can generate email addresses from them. To make this most effective you should mail constituents a card or letter requesting that they complete the survey by going to the appropriate web address (URL). 9) Consider using an email appending service. Such services can provide you the email addresses for many of your constituents based on their name and address. The service can be fairly expensive and is certainly not going to be perfect, but can be one of the quickest ways to add email information for constituents. 10) Most people have more than one email address so ask for and keep track of multiple email addresses for constituents. By collecting home and work emails you increase your chances of being able to reach donors by email. If you do keep more than one email address it is important to ask and record which email address they prefer you send to. The additional email might only be used if email to the other address becomes undeliverable. Not all of these ideas are going to make sense for your organization, but pick the few that you think are appropriate and set a goal for expanding your email list this year. Its an investment for the future that will really pay off.
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