The NonProfit Times - October 1, 2008 - (Page 21)

DIRECT MAIL MARK HRYWNA Acquisition: Staying The Course Groups that can afford it are continuing to mail f there’s one thing that charities seemed to have learned from the post-Sept. 11 fundraising era, it would seem to be: Don’t cut back on acquisition mailings when times are tough. Anecdotally, many direct response fundraisers recall nonprofits scaling back on acquisition after Sept. 11, whether it was because of the economy, the perceived mood of the nation, or even the anthrax letter scares during the subsequent months. When nonprofit boards look at where to cut expenses, acquisition is usually first on the chopping block. “It’s like robbing Peter to pay Paul,”said Tabetha Leinweber, manager of direct marketing for Susan G. Komen for the Cure. “Rather than focusing strictly on direct mail for acquisition, we’re looking at other avenues to bring in new donors, and are retooling our strategies regarding donor retention and email communications, all the while spending dollars judiciously,” she said. “Cutting acquisition dollars now will most likely prove to be a major error and substantially limit growth and affect the ability to generate revenue over the long term,” Leinweber said. “Acquisition is your engine, it’s what keeps you running, generating long-term revenue,” said Brian Cowart, senior director of direct mail acquisition and donor retention at St. Jude Children’s Research Hospital in Memphis, Tenn. “The industry learned, and I have learned, through periods of economic decline, disasters, while you gain something in the short term in terms of cost savings, two or three years down the road you’re going to see a decline in value and revenue because you don’t have those donors coming into pipeline,” he said. Given the situation in the country after Sept. 11, it was the industry norm to reduce acquisition but nonprofits paid for it later, said Emily McManus, manager of new market channels for Catholic Relief Service (CRS) in Baltimore, Md.“Cuts in acquisition might help you now but it’s a Band-Aid. Two to three years from now, you’re not going to have that group that would’ve been coming in now,” she said. “Acquisition is the base of our pyramid, in that many areas of the development department migrate direct mail donors up into their programs,” said Kim Walker, director of direct marketing at Memorial Sloan-Kettering Cancer Center (MSKCC) in New York City. End-of-year fundraising and a presidential election still loom large as to what the future holds, which could change things in a hurry – for better or worse. Nonprofits that seem less affected, she said, are those that are in multiple channels, including telemarketing and direct response television. Dallas-based Komen has plans to be- I come the global leader in breast cancer awareness, and that costs money, which is why it’s aiming for 10- to 14-percent revenue growth in its direct marketing program.There have been significant increases in acquisition this year and last year, Leinweber said, but Komen does not release specific figures. Even in an economic downturn, it’s important for nonprofits to maintain what they do so trending is up and not taking a dip, Leinweber said, adding that a decline will take longer to come back from. She explained that they might re-evaluate the he’s never seen before, estimating the effort has grossed an additional $3 million. During the past two years ASPCA has focused on lifetime value of donors acquired, stopping almost entirely mailing front-end premiums, Froehlich said, and instead focusing on list selection with greater lifetime value. As a result, they’re not acquiring as many $12 to $15 frontend donors who ASPCA had a hard time renewing anyway. Froehlich attributes the success to the organization’s commitment to an aggres- budget or look for ways to better use acquisition dollars, such as finding new ways to garner new donors, but there won’t be any reducing of the acquisition budget. “It’s incumbent upon us to find new donors to bring into the nonprofit sector,” Leinweber said, which is why Komen is looking at nontraditional means. There are those nonprofits that have actually boosted their acquisition programs in recent years. A rising average gift has allowed the American Society for the Prevention of Cruelty to Animals (ASPCA) to invest more dollars in acquisition. The New York City-based nonprofit mailed an estimated 10 million acquisition pieces in 2006 and 2007, a number that will probably increase to about 15 million this year and possibly 18 million by 2009, said Steve Froehlich, senior director of direct response. ASPCA first began experimenting in late fall of 2006 and realized by 2007 that it had a new co-control, replacing the existing control package, according to Froehlich. By fall 2007, “we realized we had a winner that needed and deserved a bigger investment,” he said. The average gift increased from about $24 to more than $28 on the new package, an increase Froehlich attributes to finding the “sweet spots” in the ask string. The standard ask string was $20-$25-$30$40-other while the new one starts at $20 but then jumps to $35-$50-$100.The new package explains to prospective donors what those giving levels can purchase, such as feeding an abandoned dog or cat for three weeks or vaccinating a certain number of homeless dogs or cats. Donors are coming at the $35 and $50 levels like sive growth strategy several years ago – before the economic downturn -- that required increased investment in several channels, including direct mail. “If we were not as committed to it ahead of time, if we were living the normal way that other nonprofits have to live, hand to mouth, by not investing in acquisition and willing to take the hit of sacrificing revenue, we might not be in the fortunate position that we’re in now,” he said. Atlanta-based CARE has sought to in- vest more in donor acquisition, essentially doubling its investment in acquisition since 2000, according to Paul Leo, acting director of direct marketing.“We definitely invested the last several years into direct mail acquisition and acquisition across the board, knowing that that’s really the engine that feeds the organization, or the direct mail program at least,” he said. Leo expects to continue monitoring the economy during the next six months to see what 2009 might hold for fundraising. CARE’s June 2008 results were pretty solid, and while year-over-year they were down, he said the June results in isolation don’t look bad.“We’re a little bit too far away [from 2009] to start changing plans for 2009,” he said. CARE’s fiscal year closed in June and with the help of fundraising efforts for the Myanmmar cyclone and Chinese earthquake in May, it was able to meet its goal for the year. Myanmmar and China “definitely pushed us to our goal,” Leo said. “We were struggling to meet a revised goal and that really pushed us past that revised goal to our original goal,” he said. “Our sector in the nonprofit world is so heavily influenced by what happens on the ground,” Leo said, “a year without an emergency that’s not covered in the media is a struggle.” CRS hasn’t yet felt the effects of a declining economy, according to McManus. “Our numbers are up overall in every area of charitable giving.That doesn’t mean we think we’re safe. Right now our strategy is to stay the course, we’re not making any Direct Mail, page 22 OCTOBER 1, 2008 THE NONPROFIT TIMES www.nptimes.com 21 http://www.usmonitor.com/npt http://www.usmonitor.com http://www.nptimes.com

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The NonProfit Times - October 1, 2008 Near Miss & Direct Hit Donor Intent The Focus Of Suit North Dakota AG Investigating The Grant Institute Contents Who...When...Where...How...What? Calendar Kumbaya Tying The Knot Filing Changes Philanthropy Caucus Big Bucks For Capital Campaigns 5 Things NOT To Do In A Capital Campaign Acquisition: Staying The Course ServiceNation Summit Fundraising Guide NPT Jobs Resource Directory

The NonProfit Times - October 1, 2008

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