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Philanthropy and Government Funding

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Outline

• Fundraising facts• The beneficiaries of giving• Social enterprise marketing

basics

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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.

10

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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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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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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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Outline

• Fundraising facts• The beneficiaries of giving• Social enterprise marketing

basics

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Does Charity Lead to Higher Incomes?

• Statistical objectives– Look only at the part of the income-giving

relationship that goes from charity to income changes

– Control for other factors like education, age, and race

• Two people, identical in every way, except that one gives $100 and the other doesn’t

• First person enjoys—as a result of the gift—$375 dollars in higher income

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Philanthropy and Economic Growth

$-

$100

$200

$300

$400

$500

$600

$700

$800

1957 1962 1967 1972 1977 1982 1987 1992 1997 2002

An

nu

al g

ivin

g p

er c

apit

a

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

Per

cap

ita

per

son

al in

com

e

Giving

Income

• 1% increase in giving this year ($1.9b total) results in a GDP increase of $37b

• Philanthropy is an excellent investment

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Givers are much happier than nongivers

• Why?– Our brains are wired to serve– Approval of our peers– Improved control– Better health– Better citizenship

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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• The beneficiaries of giving• Social enterprise marketing

basics

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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