In late 2015, we gathered leaders from top nonprofits to talk about the future of fundraising, sharing our point of view on donor-centric fundraising, and hear about the great work at National MS Society, Arthritis Foundation, Save the Children, Habitat for Humanity, Feeding America, National Wildlife Federation, Disabled American Vets, and many others. In this first installment from the Exchange, I had an opportunity to set the stage with an industry overview.
Watch the on-demand version of the presentation now, or if you prefer, read a quick overview of the presentation below.
Looking across the nonprofit sector, there are three main challenges commonly faced by organizations, as follows:
1. Decline in Direct Mail Performance
Nonprofits are (direct) mailing less, and consumers are reading and responding less to direct mail.
Consequently, many nonprofits are experiencing reduced performance (lower acquisition conversion rates, falling average gifts, and shrinking gross revenue) for their direct mail programs. In many cases, in response I’m seeing a flight to value – searching and stewarding a smaller number of higher value donors via direct mail with an eye toward allocating a flat direct mail spend but increasing net revenue.
In addition, I’m seeing a re-allocation of budget from direct mail into other programs and channels, notably digital (in response to #2 below).
The challenges for nonprofits with this trend are balancing revenue needs with a spin-up (investment) in new organization capability in digital fundraising, combined with management of increased complexity.
My recommendation is for nonprofits to focus in on the donor – leveraging new best practices such as persona development and donor journey mapping to craft the right marketing program providing the best donor experience that maximizes value to the organization across all channels – offline and online.
2. Consumer Flight to Digital
Consumers are increasingly turning to digital media more so than traditional print for their daily media use. Digital use is increasingly via mobile and, more generally, via multiple devices.
Similarly, nonprofits are seeing increased engagement via digital (mobile), with 53% of consumers opening nonprofit emails on a mobile device, and online giving picking up. And yet online represents just 6.7% of overall fundraising revenue for the sector. The big trend for 2016 – we’re looking to see that gap reconciled between massive consumer flight to digital opposite a very low fundraising revenue conversion online.
The big recommendations here are a focus on digital advertising – paid search, paid social and paid display/video advertising – that nicely complement existing email and website programs, and that collectively offer the route to a scalable digital donor acquisition and renewal program. Paired with advanced analytics (think attribution), nonprofits can measure, report, and optimize the digital fundraising performance.
3. Reliance on Complex Fundraising Portfolio
In response to organizational demands for continued fundraising revenue growth, nonprofits roll out more programs. In fact, the largest organizations have an average of 9.1 direct marketing fundraising programs.
In many cases, there is expansion through adjacent audiences or programs. For example, adding a walk event to an existing bike and run event portfolio.
Unfortunately, siloed programs are common, with only minor audience overlap across programs. This leaves a lot of (relatively cheap) revenue uncaptured from audience cross-pollination across programs.
The recommendation in this case – assemble the integrated (360°) donor data view (think CRM or integrated marketing database) and leverage it to evaluate historical cross-program success, and selectively cross-market at scale across programs. Test into the right media mix (online and offline marketing) that works for each program combination, and start with your biggest programs that offer the greatest opportunity for incremental growth when cross-marketing.
More broadly, as I look at these three trends and the increasing complexity of large nonprofit fundraising program, I see a move to a more donor-centric approach where the nonprofit successfully grows their organizational capabilities across these areas:
- Organization-wide Customer Strategy: Think enterprise segmentation – a donor definition that uses a common value-based definition (along with demographic descriptors) to consistently target consumers across channels and programs. Leverage the segments to craft a lifecycle-based donor journey that prescribes the best experience for the consumer while maximizing value to the nonprofit.
- Attribution & Measurement for Budgeting: Measure and attribute value of fundraising marketing touches across offline and online channels, and structure media mix allocation (e.g., direct mail, email, DRTV, paid search, display, social) and budgets from the value assessment.
- Experience Delivery: Target and personalize the donor experience in real-time across channels.
- Infrastructure: Assemble the 360° view of the donor, leveraging all the necessary data infrastructure and processing for integration, along with the right marketing automation software layer to really deliver on the targeted and personalized donor experience at scale.
- Organization: Assemble and structure your organization, internal capabilities, and process to support the new donor-centric approach.
Watch the full presentation and hear more details about each of the topic highlighted above.