1 Philanthropy and Government Funding. 2 Outline Fundraising facts Nonprofit marketing basics The special problem of young people.

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Philanthropy and Government Funding

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Outline

• Fundraising facts• Nonprofit marketing basics• The special problem of young

people

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• Potential donors: prospects who have not given yet

• New donors: given for the first time.• Transition donors: given three or more

years in a row• Core donors: given three or more years

in a row.• Lapsed donors. After two years: “deeply

lapsed.”• Lapsed but reactivated donors

Not All Donors Are Alike

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Strategies for different donors

WINKEEPLIFT

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Donor Ecosystem

New donors Lapsed donors

Transition donors

Core donors

Win Win

Keep

KeepLift

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The dimensions of a typical list

Percentage of active donors Percentage of revenues

Core30%

Transition18%Lapsed but

reactivated19%

New33%

Core50%

Transition17%

Lapsed but reactivated

14%

New19%

Percentage of active donors Percentage of revenues

Core30%

Transition18%Lapsed but

reactivated19%

New33%

Core50%

Transition17%

Lapsed but reactivated

14%

New19%

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Gift sizes

$128

$81

$60

$51$46

$42 $43

$37

$0

$20

$40

$60

$80

$100

$120

$140

Core Transition Lapsed butreactivated

New

Average annual dollars given

Average gift

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Donor retention

69%

38%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Core Transition Lapsed but reactivated

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Average number of donations

2.8

1.9

1.4 1.4

0

0.5

1

1.5

2

2.5

3

Core Transition Lapsed butreactivated

New

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Long Term Value Index

The LTV of donors can be accurately predicted by the amount of their first gifts.

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Maslow’s Pyramid

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Maslow’s Fundraising Pyramid

Upper donors

Middle donors

Godlike Superdonors

Low-end donors

Upper donors

Middle donors

Different donors require different messages

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Why Do Donors Defect?Survey of British Donors who Stopped Giving

• Other NPOs more deserving: 27%• Can’t afford: 22%• Don’t remember supporting: 11%• Didn’t like fundraising: 7%• Not re-asked to give: 3%• Bad service: 2%• Not enough information on uses: 2%• No thank-you: 2%• Felt not needed: 1%

Ref.: Sargeant 2001

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Do Donors Care About Efficiency?

• Reporting low operating and fundraising expenses is a common fundraising tool

• Does it make a difference?– Greater efficiency– Less outreach to new donors

• Model

• Result: no effect in a sample of different NPO types

• True also for individual subsectors?

Ref.: Frumkin & Kim 2001

Ops

OpsTC D

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The Big Myth: Donor Fatigue

• Data show that complainers are rarely donors in the first place

• People who give to you love you• …and people who love you like

hearing from you• People who give once are

waiting to give again

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The Best Donor Pool

• Volunteering and giving are complements, not substitutes

• Volunteering predicts money giving more strongly than income, age, religion, or education

• Don’t forget that donor fatigue doesn’t exist

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Two secret weapons

• Asking• Public giving

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Important Lessons

• Enterprises leave money on the table…– …if they don’t track donors– …if they treat all donors as the

same

• Focus on the core…– …but don’t neglect the others—they

are the future core

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How to Fundraise

• Build a donor file• Organize it by type of donor• Design appeals appropriate to

donor type• Focus time and money on the

high-yield donors

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Getting beyond the myths

• Myth #1: Giving makes us poorer• Myth #2: People are naturally

selfish• Myth #3: Giving is a luxury• Myth #4: An entrepreneurial

nation can afford to forgo service• Myth #5: Fundraising is a

necessary evil

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Outline

• Fundraising facts• Nonprofit marketing basics• The special problem of young

people

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Social Enterprise Marketing

• Marketing: Plan, price, promote, and distribute an NPO’s programs and products

• Marketing tasks– Define target markets

• Who should our clients (or donors) be?

– Link to these clients• How do we reach them?• What “price” attracts them?• How do we communicate with them?

Ref.: Rodos

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Why Is Social Marketing Difficult?

• Nonprofit “culture” (i.e. attitudes about efficiency, bottom line, commercialization, etc.)

• Unrealistic goals• Unreliability of resources (i.e.

volatile donations)• HR issues (staff vs. volunteers)

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Steps in Building aMarketing Strategy

• External analysis– Who are my

constituents?– Who are my

competitors?– What is my industry?

• Internal analysis– What do constituents

think we do?– What do constituents

think we ought to do?

• Firm development– Market growth– Product growth

• Strategy selection and evaluation

• Communication

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Competition

• Competition for what?– Members/clients– Donors/volunteers/

donations– Inventory (e.g. books,

art works, etc.)

• Competition with whom?– Other social

enterprises– For-profits– Governments

• Identifying competition– Similarity of prizes

(management perspective)

– Similarity of services (client/donor perspective)

– Common competitor: inaction (e.g. no medical care)

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Firm Development

Existing markets

New markets

Existing products

Market penetration

Market expansion

New products

Product development

Diversification

Nonprofit example:University

Existing markets

New markets

Existing products

Recruit college-bound seniors

Recruit career-changers

New products

Create a new program for

undergraduates

Create an executive

education program

Ref.: Rodos

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Communication Tools

• Explicit communications– Annual reports– Newsletters– Press releases– Brochures– Direct mail– Media advertising– Telemarketing– Special events

• Implicit communications– Pricing– Products– Distribution

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Targeting Messages to Demographic Groups

Ref.: Van Slyke 2002

DEMOGRAPHICS TO TARGET

FUNDRAISING FOCUS

SENSE OF COM-MUNITY

CHARITIES ARE MORE EFFECTIVE THAN GOV’T

SENSE OF DUTY

HELPED YOU IN TIMES OF NEED

TAX BENEFITS

RELIGIOUS REASONS

LOW INCOME

X X

YOUNGER

X

PRACTICING FAITH

X X

MARRIED

X

SINGLE

NONWHITE

X X

WOMEN

X X X X

CONSERVATIVES

X

VOLUNTEER

X X X X X

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Messages Types

Promote Refute

Abstract “Giving is vital for society”

“Y our gift might be small, but you’re doing your part”*

Concrete

“Giving makes you feel good”*

“Y our gift can achieve X, even if it’s as small as Y ”

*Found to be most effective

Ref.: Clary

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Outline

• Fundraising facts• Nonprofit marketing basics• The special problem of young

people

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What Everybody Knows

Nonprofits face a generational crisis

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Generations

• GI Elders (born before 1925)• Silent Generation (1925-1945)

– Retired– Still working

• Baby Boomers (1946-1964)• Gen-X (1965-1975)• Gen-Y (1976- )

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Why are young people a problem?

• There aren’t that many of them• They are “disloyal”• They are less charity-oriented

than older people

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The baby bust

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This job doesn’t thrill me……Goodbye

13%

21%

34%

45%

54%

73%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pre-Gen-X Gen-X only Gen-Y or later

All

Not satisfied with job

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Significantly lower average annual giving

$680

$312

$1,418

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Gen-x Gen-y Pre-Gen-X

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But are we looking at the right things?

• Immigration has helped to backfill younger cohorts

• “Workforce loyalty” is an old concept

• Younger generations may not have matured into philanthropy yet

• New generations may give in new ways

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New generations face a changing workplace

Industry Job Growth (millions)Employment services 1.58Local government schools, colleges, and other educational services 0.78Local government, excluding education and hospitals 0.76Offices of physicians 0.76Full-service restaurants 0.70General medical and surgical hospitals, private 0.65Limited-service eating places 0.59Home healthcare services 0.54Colleges, universities, and professional schools, private 0.47Management, scientific, and technical consulting services 0.47Computer systems design and related services 0.45State government schools, colleges, and other educational services 0.44Community care facilities for the elderly 0.32Child daycare services 0.30Accounting, tax preparation, bookkeeping, and payroll services 0.28Hotel (except casino), motels, and all other traveler accommodation 0.24Offices of dentists 0.24Elementary and secondary schools, private 0.22Religious organizations 0.20Janitorial and other building services, except landscaping & pest control 0.19

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High-end idea professions are ascendant…

• Higher education• Financial & legal

services• IT

• Consulting• Design• Medicine

Prized characteristics in idea professions

• Entrepreneurship• Creativity

• Individuality

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Mobile young professionals

• May appear disloyal by job-hopping……but are really just responding to

the job market

• What do they need?– Social and professional networks– Community– Ideas and education

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Voluntary professional associations make young people more competitive

26%

33%

24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Pre-Gen-X Gen-X Gen-y

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High-tech vs. high-touch

• High tech: the cutting edge. Innovative newness

• High-touch: filled with human meaning

• Young people are comfortable with high-tech, but still require high-touch experiences

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Why do people give?

• To discharge personal duty• To have an impact

“A younger donor wants to know and feel that her giving makes a difference.”

Merkle-Domain

• Impact is most evident in high-touch giving

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Membership only by way of a fee: very low-touch

Per

cent

age

that

bel

ong

to a

fee

-bas

ed o

rgan

izat

ion

48%

24%

0%

10%

20%

30%

40%

50%

Pre-Gen-X Gen-X or later

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Traditional money giving: low-touch

83%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pre-Gen-X Gen-X or later

Per

cent

age

that

giv

e m

oney

eac

h ye

ar

46

Giving time: higher touch

44% 46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pre-Gen-X Gen-X or later

Per

cent

age

that

vol

unte

er e

ach

year

47

Giving blood: hyper-touchP

erce

ntag

e th

at g

ive

bloo

d ea

ch y

ear

19%

14%

0%

5%

10%

15%

20%

25%

Gen-X or later Pre-Gen-X

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Find ways to provide and demonstrate these benefits

• Social and career networks• Ideas and education• Community• Opportunities to serve, with

tangible impact

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Use this message: Giving is good for you and your career

• Money giving pushes up money earning

• Volunteering has a huge impact on happiness and health

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Be high-touch with donors

• Create tangible experiences for donors

• Show people the impact of their gifts