Drakes Bay Fundraising
A Next Generation Fundraising Company

Archive for March, 2011

A Dramatic Case of Lifetime Donor Value

Posted by Christopher Dann
Thursday March 24, 2011
Categories: Lifetime Value
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Most calculations of lifetime donor value make no sense. We wrote about this in a paper – Making Sense of Lifetime Donor Value – a short while ago, noting that when the term first entered the language of fundraising it was meant to define both aggregated annual support over an extended period of years and the probability of extraordinary giving when a capital campaign came along or when a donor made her estate plans.

One could count on the fingers of one’s hands the number of organizations keeping records long and accurate enough to support such measures and have enough free fingers for a reasonably lively riff on an eight-string guitar.

But most organizations aren’t the New York Public Library, where keeping track of things is science and passion.

Last year the Library recorded bequests from 94 donors who at one time, and for some time, had been members of the Friends of the New York Public Library. Those 94 donors gave $184,844 in annual support during the various lives of their support and their bequests amounted to $16.9 million. While they were surely acquired as donors in times of lesser fundraising expense, even if we apply today’s average acquisition cost of $30, the lifetime values and returns-on-investment are metaphorically Himalayan.

Is the New York Public Library’s donor base typical? Definitely not. There are more and less valuable donor bases, albeit undoubtedly many fewer more valuable than less valuable.

But this awesome case from the New York Public Library reminds us to ask at least two questions:

Am I measuring lifetime donor value properly? If you’re in doubt, do check out the paper.

Am I investing enough in acquiring new donors?

To request a copy of Making Sense of Lifetime Donor Value, leave a message in the comments section below.

Why don’t donors do what they say?

Posted by Christopher Dann
Tuesday March 22, 2011
Categories: Focus Groups, Fundraising
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A recent article in Philanthropy News Digest expressed consternation that a poll showed greater donor inclination to support education than is represented by actual giving data, while the converse was shown for religious giving.  It was speculated that perhaps the reasons are that places of worship have greater opportunity to speak to donors and education has recently been especially tarred by press coverage of poor performance.

What causes this shortfall between a donor’s good intentions and their actions? Well, there are more organizations worthy of their donation than they can afford to support. And while a donor may admire a nonprofit, its message may fail to resonate enough to prompt financial support.

There’s also a donor eligibility problem that happens whenever people don’t think that an organization needs their support. Public television has a donor eligibility problem every time an “underwriter” runs the same advertising that broadcasts on commercial television.

In the end, all giving is voluntary and perhaps voting tells us more about fickle donors than anything. Since pollsters got recent elections so wrong, they learned to ask voters what they had done instead of what they intended to do.

In our focus groups, we don’t just ask what’s important to donors. We also ask what’s important to their financial support, how they would best describe their giving, and for their impressions of an institution’s financial health.

The time it takes to monitor focus groups like these is the second-best investment of time a fundraiser ever makes. You know what the first is.

 

Reflections on the Revolution

Posted by Christopher Dann
Wednesday March 16, 2011
Categories: Politics
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The shallow substance of much legislator debate these days about the nonprofit sector carries strong echoes of Edmund Burke.  In Reflections on the Revolution in France, he warned of dire consequences if it brought down the country’s intelligentsia and the church, which it effectively did.

In America today, there are socio-economic forces at work strong enough to damage nonprofits, especially those in figuratively low-lying areas and those not well anchored to their foundations.

Let’s look at the two roles of nonprofit organizations in society. The first is that organizations are granted tax-exemption because they can do more efficiently what government would otherwise be obliged to do. The second is that nonprofits provide services or supplement the costs of services that consumers of those services can’t or can’t fully afford.  In either case, for legislators to classify all government funding of nonprofits as inappropriate use of taxpayer money is stupid and irresponsible.

Fortunately, only a few legislators are being that extreme. Less fortunately, all legislators will have to make distinctions between nonprofit sectors as they carve away the discretionary government spending. Their decisions will be based on conventional perspectives, but they will surely add varying interpretations of what government is obliged to do and what services are worthy of having their costs supplemented.

It seems the worst thing that could happen to sensible deliberations has happened, and that is that a political prism has been introduced by wiki attack on Planned Parenthood and now the NPR imbroglio. Such a political prism fractures the light of reason and tempts people to substitute an attractively colored element for the whole.

 

Buzzword du Jour: Integration

Posted by Christopher Dann
Wednesday March 2, 2011
Categories: Integrated Fundraising
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What can we learn from all this talk about integrating media in fundraising? Perhaps that most fundraising is driven by tactics, not strategy. Or that sellers of media are more influential than the experienced fundraisers who buy it.

Successful fundraising is built on clear strategic goals: keep as many donors as possible, encourage them to give more, and attract new donors above the rate of attrition.

When planning starts with strategy, integrated use of media follows as seamlessly as the batteries and gasoline engines inside a hybrid. If Toyota were a typical nonprofit organization, the Prius would come off the assembly line with its power sources not only unconnected but technologically incompatible.

What’s going wrong here is not so much lack of integration as lack of strategic direction. Witness this myopia in the board member’s declaration that all fundraising should be online. Hear it in territorial disputes over what fundraising program gets credit for what contributions. And see it in the moated castles – silo is too soft a term – where online specialists spend their workdays.

 

Things are Looking Up (We Think)

Posted by Christopher Dann
Wednesday March 2, 2011
Categories: Consumer Confidence Index
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The fiscal budget process is underway for most nonprofit organizations. Things certainly feel a lot better than they have since the fall of 2008. But we still have to hedge.

A sideways glance at the Consumer Confidence Index (CCI) brings some hope. This is an excellent indicator of what donors are going to do with money at their discretion. But dig deeper into the underlying research and you’ll see that the confidence of consumers 55 and older lags the overall index by a considerable margin. This age group has the second-most available discretionary money and represents most organizations’ core donors.

This sobering perspective continues in American Incomes – Demographics of Who Has Money (New Strategist Publications). They tracked changes in average household income by age ranges from 2000 to 2008. All age groups below 55 lost ground. But the biggest losers with a 10.7% decline were households headed by people 45 to 54. These individuals have the highest discretionary income, which makes them the greatest prospect for finding new donors.

 

What’s the Lifetime in Lifetime Value

Posted by Christopher Dann
Wednesday March 2, 2011
Categories: Lifetime Value
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We’ve had some really interesting discussions lately about measuring lifetime donor value. The partners at Drakes Bay Fundraising have 60 years of fundraising experience between them, and one of them is quite young. So while our view may predate Excel, it’s demonstrably not old-fashioned.

We believe that the lifetime of a donor is the same as the donor’s actual lifetime. So it follows that an assessment of average donor lifetime value includes the incidence of estate gifts.

Another perspective recently came to us from an agency we’ve been working with. It applies to organizations like medical and cultural institutions that have multiple opportunities to engage donors apart from their charity or philanthropy. In their view, lifetime value is the lifelong accumulation of the value of all that engagement.

We are reminded of something we have often said and written. We’d rather attract the person who gave $1,000 a year to the symphony for 25 years than the one who just gave $25,000.

 

Next Generation Fundraising and Drakes Bay Fundraising merged in the fall of 2013, bringing the longstanding professional acquaintances of their four principals – Tim Oleary, Carol Leister, Cindy Germain, and Christopher Dann – into a single company and combining the special resources and experiences of each to provide clients greater breadth and depth of service.

For more information about Next Generation Fundraising, click here.