Trends in Fundraising

Thanks to Alan for recommending this Chronicle of Philanthropy article - "New Rules of Attraction." Some good stuff there:

Traditional approaches to seeking new donors by mail or telephone are
growing less effective and more expensive every year, yet online appeals are not
raising enough to replace them.

"Direct mail is on life support," says Michael Hoffman, chief executive of
See3, a Chicago consulting firm that specializes in nonprofit fund raising and
communications. "Charities that have relied on direct mail to get new donors
have to start thinking about what's next, or they will wake up one day and find
that an aggressive start-up has taken their place."

This is why I've gained a conviction, over the last year, of the need to Step Quickly & Lightly. By which I mean that we need to test new fundraising methods more quickly than in the past. I see this as being highly related to the increasingly fast commoditization cycles for consumer electronics (CE).

When the VHS player was released, it took 17 years to reach commodity pricing. When the DVD player was released, it took just 18 months. This CE cycle is important to understand, because the internet's ubiquity in communications tools - consumer electronics - mean that, I believe, communications methods will follow the CE commoditization cycle. Thus, things like Facebook and MySpace will arrive, be widely adopted in a very short amount of time, and then become passe or outmoded relatively quickly. Napster anyone?

That's just how I see communication methods and - thus - engagement opportunities going. Therefore, we need to be ready to step quickly into these methodologies, only investing as much as we need to, and then pull back or out quickly when their utility fade.

It's a higher risk approach than is preferred, but, if that's how people are communicating, we don't have a choice. At least not if we want to be relevant.

That said, this is still a portfolio approach. The risky side of the portfolio has to be very well balanced by the reliable, consistent side. At least if we want to stay in business.

[P]ersuading donors to give online for the first time is not easy, says
Ettore Rossetti, associate director of Internet marketing at Save the Children.
The charity has solicited donations from people who signed an online petition to
help needy children, but that approach has achieved only "mixed success," he
says.
"Advocacy people tend to be engaged in lending their voice, not
necessarily opening their wallet."

To figure out what approaches will attract first-time donors, many
charities are hiring extra staff members to devise and test new ideas, and are
upgrading software to analyze the results. Until such solicitations become more
lucrative, however, most charities are still spending about as much as they did
on direct mail, telemarketing, and other traditional ways of finding new
donors.

"I get executive directors all the time who want to abandon direct-mail
acquisition completely," says Jeff Patrick, president of Common Knowledge, a San
Francisco company that advises charities on online fund raising and marketing.
"Online fund raising will continue to grow, but it will not replace direct mail
in five years," Mr. Patrick predicts. The movement from offline to online
giving, he adds, "is an evolution, not a revolution."
Other fund-raising
experts agree that online fund raising has a long way to go before it becomes a
successful way to attract new donors.
"This is an extremely confusing
period," says Mark Rovner, president of Sea Change Strategies, a Takoma Park,
Md., fund-raising consulting company. "The old ways aren't working, and the new
ways are not clear."

An interesting idea, which seems kind of like our Friend To Friend on steroids:

World Vision, the international relief group, asks people who make monthly gifts
to "sponsor" a needy child overseas to volunteer to seek donations from other
people.
Two and a half years ago, the charity started recruiting people to
give presentations about monthly giving to their colleagues at work or church.
People who give at least eight presentations a year are named "Child
Ambassadors." Members of the ambassador group, which has grown to 255 people,
must apply for the volunteer position and agree to a background check.
Last
year, volunteers recruited more than 4,000 new monthly donors.

And THIS is really cool:

Amnesty International is using new software to randomly send online visitors to
slightly different versions of a single Web page so it can see which online
elements do the most to persuade people to make a donation or visit other parts
of the organization's site.
After two months, Amnesty found a version of its
donation page that increased the number of people who made a gift from 35 to 55
percent, says Steve Daigneault, managing director of Internet communications. In
the month of December alone, he says, Amnesty raised $128,000 more with the improved
donation page; than it would have otherwise. Those returns, he adds, are
many times greater than the cost of the software.

And there's lots more of value in this article, including the use of social networks and microsites. Great stuff.