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ORI GIN AL PA PER
Factors Influencing the Break Even Probabilitiesof Agency Recruited Low Value Charity Donors
Roger Bennett
� International Society for Third-Sector Research and The Johns Hopkins University 2012
Abstract This study examined the considerations that may affect the likelihood of
a charity donor, who was recruited face-to-face by a paid external agency and who
gave through a low value monthly standing order, reaching the point of financial
break even within a certain period of time; taking into account the person’s addi-
tional ad hoc contributions to the organisation. Break even was defined as the
situation pertaining when a supporter’s total donations covered the external agen-
cy’s fee, induction costs, and annual donor maintenance expenses over an antici-
pated supporter lifetime of 5 years. A questionnaire was mailed or emailed to two
thousand agency recruited donors to a UK healthcare charity, resulting in 669
replies. Each of the participants had initially signed standing orders for between £2
and £5 a month, and had been with the charity for at least 4 years. The questionnaire
contained items concerning, inter alia, a donor’s sense of obligation, relationship
proneness, level of involvement with the charity’s cause, personal inertia, emotional
benefits obtained from giving, and satisfaction with the organisation’s work. A Cox
proportional hazards regression analysis was completed to determine the main
factors that influenced the probability that a person would break even within 4 years
following recruitment. In addition, logistic and least squares regression analyses
were undertaken to establish the variables that affected low value donors’ pro-
pensities to respond positively to requests to uplift the values of their standing
orders.
Resume Cette etude s’est attachee a examiner les considerations pouvant affecter
la rapidite selon laquelle un donateur caritatif recrute en personne par une agence
externe remuneree, et ayant effectue un don au moyen d’un ordre de virement
R. Bennett (&)
Centre for Research in Marketing, London Metropolitan Business School, London Metropolitan
University, 84 Moorgate, London EC2M 6SQ, UK
e-mail: [email protected]
URL: www.londonmet.ac.uk/cermark
123
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DOI 10.1007/s11266-012-9314-9
mensuel d’un montant minime, serait susceptible d’atteindre le point de rentabilite
financiere. Ceci prenant en compte les contributions ponctuelles supplementaires de
la personne en faveur de l’organisation. La rentabilite a ete definie comme la
situation survenant lorsque le total des dons d’un contributeur permettait de couvrir
la commission de l’agence externe, les frais d’introduction et les depenses annuelles
de maintien des donateurs sur une duree anticipee de cinq ans des contributeurs. Un
questionnaire a ete envoye par la poste ou par courriel a deux mille donateurs
recrutes par une agence au profit d’une organisation caritative de soins de sante du
RU, resultant en 669 reponses. Chacun des participants avait initialement signe des
ordres de virement pour un montant mensuel entre 2 £ et 5 £, et avait contribue a
l’organisation depuis au moins quatre ans. Le questionnaire contenait des rubriques
afferentes, entre autres, au sentiment d’obligation du donateur, a l’inclination
relationnelle, au niveau d’implication dans la cause de l’organisation caritative, a la
passivite personnelle, aux benefices emotionnels resultant du don et a la satisfaction
quant au travail de l’organisation. Une analyse de regression des risques propor-
tionnels de Cox a ete effectuee afin de definir les facteurs principaux ayant influe sur
la probabilite selon laquelle une personne atteindrait le point de rentabilite dans les
quatre ans suivant son recrutement. En outre, des analyses logistiques et de
regression des moindres carres ont ete entreprises afin d’etablir les variables ayant
affecte les propensions des donateurs de faible valeur a repondre positivement aux
demandes visant a augmenter les montants de leurs ordres de virement.
Zusammenfassung Die vorliegende Studie untersuchte die Einflussfaktoren zur
Erreichung der Gewinnschwelle in den Fallen, in denen ein wohltatiger Spender von
einer beauftragten externen Agentur gewonnen wurde und einen geringen monat-
lichen Betrag leistete; zusatzliche einmalige Spenden der Person an die Organisa-
tion wurden dabei auch berucksichtigt. Die Gewinnschwelle definierte sich in
diesem Zusammenhang als der Zeitpunkt, zu dem die gesamten Beitrage eines
Spenders die Gebuhren der externen Agentur, die Zufuhrungskosten und die jahr-
lichen Aufwendungen fur die Spenderpflege bei einer angenommenen Spenden-
laufzeit von funf Jahren deckten. Es wurden Fragebogen per Post oder E-Mail an
zweitausend Spender einer britischen im Gesundheitswesen tatigen gemeinnutzigen
Organisation gesandt, die von einer Agentur geworben worden waren, und 669
Personen nahmen an der Umfrage teil. Die Teilnehmer hatten sich ursprunglich zur
Leistung eines monatlichen Spendenbeitrags zwischen 2 und 5 Pfund Sterling bereit
erklart und unterstutzten die Organisation seit mindestens vier Jahren. Der
Fragebogen enthielt unter anderem Fragen zum Pflichtgefuhl der Spender, zu ihrer
Beziehungsneigung, ihrem Engagement fur den Organisationszweck, ihrer person-
lichen Tragheit, ihrem emotionalen Nutzen infolge ihrer Spendenleistung und ihrer
Zufriedenheit mit der Arbeit der Organisation. Man fuhrte eine Proportional Hazard
Regression Analyse nach Cox durch, um die wesentlichen Faktoren zu identifizi-
eren, die die Erreichung der Gewinnschwelle innerhalb von vier Jahren nach der
Werbung eines Spenders wahrscheinlich machten. Zudem wurden eine logistische
Regressionsanalyse und eine Kleinste-Quadrate-Regressionsanalyse angewandt, um
die Variablen zu bestimmen, die Spender geringer Beitrage dazu bewegten, positiv
auf Anfragen hinsichtlich einer Erhohung ihres Spendenbeitrags zu reagieren.
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Resumen El presente estudio examino las consideraciones que pueden afectar la
rapidez con la que es probable que el donante de una organizacion benefica que fue
reclutado cara a cara por una agencia externa pagada y que coopero mediante una
orden permanente de pago mensual de poco valor alcanzase el punto de equilibrio;
tomando en cuenta las aportaciones ad hoc adicionales de la persona a la organizacion.
El equilibrio fue definido como la situacion que se produjo cuando los donativos
totales de un colaborador cubrieron la tarifa de la agencia externa, los costes de
induccion y los gastos de mantenimiento anuales del donante a lo largo de una vida de
colaborador prevista de cinco anos. Se envio por correo o por correo electronico un
cuestionario a dos mil donantes reclutados por agencia a una organizacion benefica
sobre salud del Reino Unido, que dio lugar a 669 respuestas. Cada uno de los par-
ticipantes habıa firmado inicialmente ordenes permanentes de pago de 2 y 5 £ al mes, y
habıan estado con la organizacion benefica durante cuatro anos, como mınimo. El
cuestionario contenıa elementos relativos, inter alia, al sentido de obligacion de un
donante, a la propension a la relacion, al nivel de implicacion con la causa de la
organizacion benefica, a la inercia personal, a los beneficios emocionales obtenidos de
dar, y a la satisfaccion con el trabajo de la organizacion. Se completo un analisis de
regresion de peligro proporcional de Cox para determinar los principales factores que
influyeron en la probabilidad de que se lograse el equilibrio de una persona en cuatro
anos despues de su reclutamiento. Asimismo, se emprendieron analisis de regresion de
mınimos cuadrados y logısticos para establecer las variables que afectaron la pro-
pension de los donantes de poco valor a responder positivamente a las solicitudes de
elevar los valores de sus ordenes permanentes de pago.
Keywords Charities � Fundraising agencies � Face-to-face recruitment � Time to
break even � Low value donors
Introduction
British charities increasingly employ paid agencies to approach potential donors
face-to-face for the purpose of soliciting regular monthly gifts that are automatically
deducted from a person’s bank account through a standing order. The practice first
appeared in the UK in 1997 and since then its use has grown enormously (Sargeant
and Jay 2004). Over 0.5 million donors are now recruited in this way annually:
750,000 in 2009 according to PFRA (2011). Third party fundraisers (sometimes
referred to as ‘chuggers’, i.e. ‘charity muggers’) operate door to door or approach
pedestrians in high street locations. The donors they recruit tend to be young
(between the ages of 20 and 40), and often to have little experience of charity
giving. Lapse rates are high, however, although agencies refund a proportion of
their fee if a donor cancels a standing order within a certain period, typically
12 months (Sargeant and Jay 2004; Sargeant and Hudson 2008). In many charities,
50 % of donors recruited face-to-face lapse within their first year. Some charities
lose 80 % of recruits within 24 months following acquisition. [Sargeant and Hudson
(2008) cited research which found that around 85 % of first year lapsers were under
40 years of age.] An analysis completed by Fleming and Tappin (2009) of the
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giving records of 377,000 donors to 30 UK charities who had been recruited face-to-
face in 2004 revealed 12-month lapse rates of between 34 and 64 % per charity.
Twenty-four-month lapse rates ranged from 49 to 81 %. For door to door
recruitment the figures were 14–62 % during year one and 34–79 % by the close of
year two. Similar patterns applied to donors recruited face-to-face in 2006.
Critically, the standing orders obtained via face-to-face approaches are frequently
for small amounts. Indeed, a number of leading UK charities actively seek low value
regular donors. For example, in 2011/2012 the British Heart Foundation, Oxfam,
Cancer Research UK and several other charities screened television advertisements
that asked viewers to give ‘just £2 a month’ through a bank standing order.
Unfortunately, from the point of view of the recruiting charity, a low value monthly
donor procured through an external agency will have been obtained at considerable
cost. In 2009 the average value of each standing order acquired through face-to-face
agency employee solicitation was £90 per annum (Quigley 2010), while the average
fee paid to external agencies varied between £80 and £160 per donor (Jones 2010). A
2009 BBC Newsnight investigation reported that the British Heart Foundation paid
£136 per signature to its external fundraising agency; Cancer Research UK paid £112
per signature and a total of £3 million per year to agency fundraisers (Quigley 2010).
Guide Dogs for the Blind stated that it paid its agencies £2 million annually.
As well as having to remunerate its external agency, the client charity also incurs the
costs of printing and mailing a welcome pack to the new donor, processing the standing
order, entering a person’s details in a database, telephoning the donor (through a
commercial telemarketing agency), printing and mailing periodic newsletters, and so
on. Maintenance activities of this nature (which have to be undertaken and paid for
irrespective of whether a recruit quickly lapses) add considerably to initial recruitment
cost meaning that, in the absence of supplementary donations, low value regular givers
will be unprofitable. Consider for instance a donor who signs a standing order for £4 a
month and who does not make any other gifts to the charity. At the end of 5 years [the
standard period used by charities to calculate total lifetime donor value—see Sargeant
(1998) and Aldrich (2000)], the person will have contributed £240. In 2011 the UK
Professional Fundraising Regulatory Association (PFRA) cited an average agency fee
of £100 per recruit (see also Jones 2010). PFRA (2011) suggested that collateral costs’
(i.e., the costs of the welcome pack, database entry processing and the mailing of
appeal literature) would be a minimum of £50 initially and that routine maintenance
(mailings of gift catalogues, raffle tickets, newsletters, etc.) would cost £25 a year.
These expenditures total £275, resulting in a £35 loss for the charity. A £4 a month
recruit who lapses within the first year will generate a loss of at least £102.
Notwithstanding the above, agency face-to-face fundraising is popular with
charities. According to the PFRA, donors recruited face-to-face by agencies
contribute around £120 million a year in aggregate and represent about 17.5 % of
all people who currently give to charities through standing orders (PFRA 2011). If a
new donor can be persuaded to give £10 a month, PFRA (2011) observed, the fee
paid to an external agency will be covered on average within 8–16 months.
Inclusion of collateral costs, the PFRA (2011) continued, results in a predicted break
even period of 26–28 months, creating an excellent return on a donor who gives for
4 or 5 years. PFRA (2011) estimated the average 5 year return from £1 of
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expenditure on agency face-to-face fundraising to be £2.50 for donors who give at
least £10 per month.
Ensuring that a regular giver who donates a low monthly amount will move into
profitability requires either that the individual increases the value of his or her
standing order or that the individual makes ad hoc additional contributions (e.g.
responses to routine direct mail and/or email appeals, revenues from raffle tickets,
one-off online donations) that bring the person’s total contributions to an acceptable
level. [It is interesting to note in this connection the finding of Fleming and Tappin
(2009) that the lower the values of donors’ monthly contributions the better the rate
of retention.] Clearly, the conversion of low value regular donors into higher value
supporters is a matter of substantial importance for charities that employ external
face-to-face fundraising agencies. Yet, to the best of the author’s knowledge, this
matter has not been the subject of serious academic investigation. Rather, prior
research into face-to-face fundraising (e.g. Jay 2001; Sargeant and Jay 2004;
Sargeant and Hudson 2008; Fleming and Tappin 2009; Lake 2009) has focused on
the characteristics of face-to-face recruits, their recruitment experiences and reasons
for giving, and the factors that differentiate between lapsed and active standing
order donors. The present study differed from these previous investigations in that it
sought to establish the considerations that cause low value standing order donors
who remain with a charity to exceed financial break even within a certain period.
Specifically, the research attempted to establish, among a sample of 669 low value
(i.e. £5 a month or less) standing order donors to a particular UK charity recruited
by an external agency, answers to the following questions.
(a) Assuming a donor lifetime of 5 years, what factors affected the probability of a
low value donor breaking even within 4 years of acquisition?
(b) What factors influenced whether a person did or did not respond positively to
appeals asking the individual to uplift the value of his or her standing order?
(c) If a person did respond positively to an uplift appeal, what factors affected the
value of the increase in the individual’s standing order?
(d) Among donors who did break even within 4 years of recruitment, how long
did it take an average low value donor to break even?
Break even was defined for current purposes as the point where the external
agency’s fee, welcome pack costs and maintenance costs for a 5 year period (i.e. the
average donor’s expected lifetime) had been covered. These periods were selected
because, although a low value supporter who has been donating for 4 years should be
at least approaching break even, the charity sponsoring the research had observed that
relatively few of the standing orders of people who had been with the charity for
4 years survived for more than about 6 years. (More than 90 % of these commitments
were cancelled before year 10.) This corresponds to evidence from other sources (see
Sargeant 1998; Aldrich 2000) that regular donors to a charity rarely continue their
support for more than 5 or 6 years, possibly due in part to a person becoming
‘overfamiliar’ with the charity, bored with receiving a surfeit of repetitive
communications from the organisation, and general loss of interest (see Bennett,
(2009) for details of academic literature supporting this proposition). ‘Donor fatigue’
of this nature is likely to intensify as the years go by. Another reason for investigating
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the probability of a low value door attaining break even within just a few years is that,
even if break even is achieved before the donor cancels his or her support for the
charity, the organisation needs to consider carefully whether the extremely low returns
on the investments made in recruiting and nurturing donors of this type have been
worthwhile in relation to the alternative uses of funds that were available.
Literature Review
Although the issue of why large numbers of face-to-face recruits quickly terminate
their standing orders is different to the topic covered by the present investigation,
the literature on donor lapse does identify several variables with the potential to
influence the speed with which a recruit reaches break even, either through
increasing the value of a standing order or by giving in other ways. In addition to
these variables, the present study posits that two further constructs are relevant to
the research questions posed in the previous section; namely a person’s ‘sense of
obligation’, and the individual’s relationship proneness. These and the variables
derived from the donor lapse literature are briefly described below.
Sense of Involvement with the Charity’s Cause
Feelings of personal involvement with a charity’s work might lead a regular donor
to accept solicitations to give more to the organisation. A high level of
psychological involvement with a particular good cause will be associated with
the individual regarding his or her support for the cause to be personally relevant,
satisfying and necessary; as having a great deal of meaning for the donor; and as an
activity that constitutes a vital part of the person’s life (see Bennett and Gabriel
1999 for details of the academic literature supporting these propositions). Feelings
of this nature could arise from experience (e.g. of a relative succumbing to a
particular illness), from receiving a charity’s promotional materials, or from a
change in personal circumstances. Involvement can provide the ‘motivation to
process information’ (Celsi and Olson 1988, p. 217) and hence may cause a donor to
take a deep interest in a charity’s activities and communications.
Feelings of Emotional Benefit Obtained from Donating
Many studies have concluded that giving to charity has a hedonistic component and
proffers strong hedonistic rewards (see Sargeant and Woodliffe 2007 for details of
relevant literature). Donating to a charity can provide a person with a ‘psychological
lift’ (cf. Hausman 2000, p. 407), a sense of internal satisfaction (Harbaugh 1998),
feelings of being energised (cf. Rook 1987), and a general improvement in the
donor’s mood. It can bolster an individual’s self-image, and this may itself stimulate
a ‘warm glow’, i.e. a surge of self-gratifying positive emotion experienced
consequent to making a charitable donation (Sargeant and Woodliffe 2007, p. 292).
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Indeed, giving to charity has been characterised as ‘the monetary purchase of moral
satisfaction’ undertaken for the egoistic reason of wanting to feel better (Strahilevitz
and Myers 1998, p. 435). Warm glow can also arise because the very act of donating
can cause people inwardly to assert that they are altruistic and possess high ideals
and moral values. The gift conveys a symbolic statement about the person that fits in
with his or her self-identity (Williamson and Clark 1989).
It follows from the above that people who experience intense feelings of
emotional benefit as a result of giving to charity might be more responsive to uplift
appeals and to requests for additional ad hoc contributions than individuals who do
not experience substantial warm glow.
Personal Inertia
A problem connected with asking someone to give just a small monthly amount is that
it ‘makes it easy not to give a lot’ and can remove ‘any feelings of guilt a person might
have had about declining a tougher ask’ (MacQuillin 2011, p. 1). This could represent a
significant issue among people who are by nature inertial and, in consequence, might
simply not ‘get around’ to raising their donation levels when asked (cf. Inria et al.
1998). Inertia, in the present context, involves ‘a state of primary motivational
impairment’ that operates independently of cognition or emotional situation (Marin
et al. 1991, p. 146). It disinclines an individual to devote time and effort to ‘activities
of interest’ (p. 151). Hence, an inertial person might not respond to an uplift request as
doing so is ‘too much bother’ and because the individual ‘wishes to save the cost of
thinking’ (Yanamandram and White 2006, p. 169).
Post-Recruitment Satisfaction with the Charity
A priori it seems reasonable to posit that a regular donor’s post-recruitment
satisfaction with a charity will enhance his or her subsequent readiness to give more
to the organisation (see Sargeant and Hudson 2008). Two dimensions of satisfaction
need to be considered: satisfaction with the charity’s work and satisfaction with its
communications.
Satisfaction with a Charity’s Activities
A donor’s general satisfaction with a charity involves the person’s cumulative
satisfaction with the organisation: its work, achievements, reputation, values and
mission (Aldrich 2000). In principle, a donor who is generally satisfied with a charity
should want to have more to do with it (Bennett and Barkensjo 2005); should trust the
charity to a greater extent (implying a belief that the organisation will utilise a donor’s
gift wisely); and be more committed to the charity. Hence, a supporter who is satisfied
in overall terms with a charity may be expected to respond positively to requests to
increase the level of his or her donations. In particular, perceptions that an
organisation’s work is extremely important could significantly influence uplift
decisions (cf. Laurent and Kapferer 1985), because perceptions of this nature could
result in a person evaluating the charity’s requests more closely (Tokman et al. 2007).
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Satisfaction with a Charity’s Communications
Sargeant and Jay (2004) and Sargeant and Hudson (2008) noted the crucial
importance of post-recruitment communications with donors as a determinant of
whether subsequent gifts would be forthcoming. Communications can ‘confirm that
a satisfactory outcome has resulted from the donation’ (Hibbert 1995, p. 7), hence
reducing the perceived level of risk associated with future donation decisions.
Communications that instil in the donor a sense of personally having contributed to
solving a social, medical, humanitarian, etc., problem can be particularly effective
for encouraging donors to give again (Duncan 2004). Indeed, Duncan (2004)
identified a distinct philanthropic motivation (‘impact philanthropy’) that focused
on an individual’s desire to ‘personally make a difference’ (p. 2160). Feelings of
having made a real difference may satisfy a powerful cognitive need in certain
individuals (Harbaugh 1998). Such feelings might be inculcated directly by
exposing a recently recruited donor to a charity’s work via mailshots, newsletters
and emails.
Sound post-recruitment communications build lasting relationships with donors
(Bennett and Barkensjo 2005), keep the supporter fully informed of the charity’s
successes and how exactly a donor’s contributions have been utilised (Sargeant and
Jay 2004), and make the individual feel appreciated and that his or her opinions
matter (Tax et al. 1998).
Acceptance of Incentives
Many charities offer their donors material incentives intended to entice them to
remain with an organisation (Bennett 2007). For example, the Royal Society for the
Protection of Birds provides its supporters with free entry to its nature reserves and a
free birdwatching magazine. The Sue Ryder Care organisation gives its donors free
entry to charity sponsored events as a means of nudging supporters into making
higher donations (Samuel 2009). Other charities organise walks, fashion shows,
discounted entry to sporting events, supporter club membership with specific
benefits (Webber 2004) and/or provide donors with online games and/or music
downloads, free entry to prize draws and competitions, and tangible gifts such as
umbrellas, bags and wallets (Bennett 2007). Acceptance of these gifts and benefits
can provide a donor with pleasurable experiences and should increase his or her
trust in and commitment to the organisation (Seiders et al. 2005). This in turn may
cause a recently recruited donor to be willing to uplift the level of his or her annual
contribution and/or to give additional amounts in other ways.
Sense of Obligation
A sense of obligation (‘felt’ obligation) is a ‘prescriptive belief regarding whether
one should care about an organisation’s well-being and should help it reach its
goals’ (Eisenberger et al. 2001, p. 42). It involves a person’s feelings that he or she
ought to do certain things (Neblett 1976) simply because ‘it is right to do so’
(Simola 2011, p. 70). Some people experience felt obligation more easily and
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frequently than others (Simola 2011), depending on the significance of an issue to
the individual. Olsen et al. (2010) characterised felt obligation as ‘negative feelings
of guilt’ (p. 534) arising from the prospect of not fulfilling an obligation. Felt
obligation can arise, inter alia, from feelings of concern for a situation, from a sense
of commitment to an undertaking, or from a belief that an action ‘will promote some
further good in the future’ (Neblett 1976, p. 342). According to Olsen et al. (2010),
felt obligation derives from a person’s own internalised norms and values and his or
her acquired views about right and wrong. Violation of these norms, values and
views will damage a person’s self-concept. Conversely, ‘doing the right thing’ is a
source of personal satisfaction (Arvola et al. 2008). This may be especially salient
in situations where a person is aware that the well-being of others depends on the
individual’s actions (Manstead 2000; Arvola et al. 2008).
In the organisational context, felt obligation involves (i) a commitment to
remaining with an organisation ‘because one ought to’ (Meyer et al. 1993, p. 541)
and (ii) a strong belief in and acceptance of the organisation’s goals and values (see
Hom et al. 1979). Felt obligation has been found to exert powerful influences on
behavioural intention and willingness to act, including intended behaviour relating
to giving (Gorsuch and Ortberg 1983).
Relationship Proneness
Certain people are ‘psychologically predisposed to engage in relationships with
organisations’ (Christy et al. 1996, p. 177). Such individuals are said to be
‘relationship prone’. They want to participate in relationships with organisations
(Dick and Basu 1994) and view their relationships more favourably than do other
people (Odekerken-Schroder et al. 2003). Allegedly, relationship proneness is a
stable personality trait (Odekerken-Schroder et al. 2003) characterised by feelings
of trust, a preference for building collaborative relationships, and a willingness to
offer resources to a relationship partner (Ivens 2006). The relationship prone try to
be close to and to cooperate with the other party and to establish a long-term
relationship. They have been found to be more satisfied with and committed to the
organisations with which they have relationships (Bloemer et al. 2003). Thus, it
may be easier for a charity to persuade the relationship prone to develop and self-
validate their relationships with the organisation through increasing their levels of
financial support (cf. Odekerken-Schroder et al. 2003).
Control Variables
A person’s income (i.e. a proxy for financial capacity to give), age, education level
and gender were used as controls, but the full range of variables mentioned by the
lapse and associated literature was not considered. This was because constructs such
as the goodness-of-fit between a charity and an individual’s self-image, general
altruism, religiosity, past involvement with charities, etc. [see Sargeant and
Woodliffe (2007) for a general review of charity giving] should in principle affect
decisions to take out a standing order for a specific amount in the first instance,
rather than determining subsequent uplift behaviour.
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The Study
Data Collection
The research was conducted on behalf of a UK healthcare charity (annual income
around £70 million) that had employed a face-to-face agency intermittently for the
previous 10 years. Around 35 % of the standing orders obtained via this process had
been for £5 per month or less in the first instance. In 2011 agency fees and donor
induction costs (database entry, mailing of a welcome pack, etc.) were estimated to
average £175 per head with annual maintenance costs of around £30 per year. This
meant that (even after allowing for additional ad hoc gifts) the charity would barely
break even on the recruitment of many of its standing order donors. Twelve months
after recruitment, donors whose standing orders were for £5 a month or less were
mailed a pack asking them to increase their standing order donations. Each pack
cost £15 to produce and distribute (2011 prices) and contained pictures and textual
information on how the lives of the charity’s beneficiaries had been improved
consequent to the donor’s present level of contribution, plus (i) a form for increasing
the person’s standing order, (ii) suggestions for giving in alternative ways, and (iii)
the address of a website that carries messages from other supporters, doctors and
nurses, and beneficiaries. The pack described alternative scenarios regarding what
exactly a specified level of higher value standing orders would achieve, e.g. ‘£X per
month will provide A, but £X ? Y per month will provide B.’
Three months later, small value donors not responding to the pack mailing were
contacted (at a cost of about £3 per head) by an employee of a telemarketing agency
and asked to increase the values of their standing orders. Telephone communica-
tions were preferred on the grounds that they offered opportunities for personalising
the appeal, answering questions, dealing with objections, and efficiently negotiating
an upgrade value. All standing order donors (high or low value) were sent an uplift
request pack 30 months after recruitment, and all were mailed with gift catalogues,
ad hoc appeal materials, raffle tickets, etc., during each year of their connection with
the charity. Communications from the charity to all its supporters included
invitations to participate in events such as fetes, garden parties, walks and car boot
sales, and to join a supporters’ club the membership of which enabled people to
obtain discounts on purchases at certain retail outlets.
Overall the charity’s management was pleased with the results of its face-to-face
recruitment expenditures, but concerned about an ‘unprofitable donor’ problem that
appeared to be emerging. Hence, a review was initiated that included interrogating
the organisation’s database to obtain information on, inter alia, (i) uplift values
resulting from the mailing of the pack after 12 months or the follow up telephone
call after 15 months, and (ii) cumulative monthly donation totals per recruit
including standing order donations plus all other gifts. These other ad hoc gifts
comprised an individuals responses to routine direct mail and email appeals plus
receipts from the sale of raffle tickets and one-off online donations, and were
ascribed to the donor’s identification number in the database. Thus, by deducting
recruitment and maintenance costs from cumulative donations it was possible to
calculate how long on average it took each low value donor who had been recruited
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face-to-face to break even. Cumulative costs (in 2011 prices) were estimated at
£190 (i.e., £175 plus the £15 uplift ask) by the end of year one, £210 by the close of
the second year, and £300 after five full years. In line with sector practice, the
charity assumed an average donor’s total lifetime as 5 or 6 years.
Contact details of 2000 agency recruited low value donors who had remained
with the charity for a period of at least 4 years were made available for the present
study. (All the participants had given permission for their details to be passed to
third parties.) As the study was completed in 2011 it covered donors recruited face-
to-face between 2001 (whose 4 year time to maturity expired in 2005) and 2006 (i.e.
donors maturing in 2010). The 2000-strong sampling frame represented 79 % of all
the charity’s donors recruited face-to-face over the 6 year period who satisfied the
criteria of having continued to donate for 4 years and whose initial standing order
was for £5 a month or less (measured in 2011 prices). The other 21 % of these
donors had either declined to allow their email addressed to be passed on to third
parties or were individuals whose email addresses were no longer valid. There are
no a priori reasons for supposing that the people in this 21 % would differ
substantially from those in the 79 %. A questionnaire covering the constructs
discussed in the literature review was mailed or emailed (in Survey Monkey form) to
the 2000 contacts, resulting in 669 responses. A majority (68 %) of the participants
were female and more than a third of the sample had relatively high incomes (of
more than £50,000 per annum), reflecting the affluent housing districts and areas
frequented by high income employees (e.g. the financial centre of the City of
London) that are targeted by agencies. The respondents had an average age of
40 years and on average had left full time education (a proxy for education level) at
age 19.5 years. These characteristics provide a reasonable match of the sample to
members of the public known to be amenable to face-to-face recruitment [female,
affluent, relatively young, etc.—see Sargeant and Jay (2004) and Sargeant and
Hudson (2008)].
The charity sponsoring the research was a large national organisation concerned
with one of the UK’s most common diseases (cancer) and which advertises
regularly in newspapers and on television. As such the charity is likely to attract
donors who are representative of UK donors in general. There was no statistical
evidence of early or late response bias. The test for bias followed the procedure
suggested by Armstrong and Overton (1977), whereby the responses in the first third
of the returned questionnaires were compared with the responses in the last third of
the returned documents. Armstrong and Overton (1977) showed that the absence of
differences between early and late respondents indicated that late respondents
shared characteristics with non-respondents. Mean values and standard deviations of
the main constructs measured in the present investigation did not differ substantially
between the first and last sets of responses, and correlations among key variables
were similar within each group. As the value of £1 revenue or expenditure relating
to a person recruited in 2006 and continuing to 2010 is higher than the value of £1 of
revenue or expenditure arising in 2001, all cash amounts used in the statistical
estimations were discounted back to 2001 values at an average discount rate of
2.5 % to allow for inflation.
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123
Measurement of Variables
A person’s sense of involvement with the charity’s cause during the years he or she
was donating was measured using five items adapted from Bennett and Gabriel
(1999), e.g. ‘Giving to this cause has been a vitally important part of my life’.
Feelings of emotional benefit obtained from donating were assessed via five items
based on Laurent and Kapferer (1985), e.g. ‘I felt uplifted after making a donation to
charity’. Personal inertia was evaluated through five items modified from Marin
et al. (1991), e.g. ‘Getting things done on time is not very important to me’.
Satisfaction with a charity’s communications was measured using five items
adapted from Sargeant and Jay (2004), e.g. ‘Communications from the charity were
interesting and informative’. Satisfaction with a charity’s activities was assessed via
five items previously employed by Bennett and Ali-Choudhury (2009), e.g.,
‘Overall I was very satisfied with the charity’s work during the period I was
donating’. A single item questioned whether a person had accepted incentives such
as participation in any of the charity’s events or membership of a supporters’ club.
An individual’s degree of felt obligation was evaluated through six items adapted
from Eisenberger et al. (2001), e.g. ‘I felt a personal obligation to do whatever I
could to help this charity achieve its goals’. Relationship proneness was measured
through five items proposed by Odekerken-Schroder et al. (2003), e.g. ‘I am
someone who is willing to ‘‘go the extra mile’’ to purchase at the same store that I
normally go to’. Items adapted from pre-existing inventories were modified using
the standard procedures conventionally applied to this matter (see Engelland et al.
2001). Thus, two independent adjudicators ensured that candidate items fell within
the domain of the relevant construct, fully expressed its meaning, and were worded
using vocabulary compatible with that of the target respondents. Apart from the
purely factual queries concerning age, gender and income, all items were measured
using five point scales: 5 = strongly agree; 1 = strongly disagree.
Estimation Method
Responses to the items relating to each of the above constructs were factor analysed,
unidimensional solutions occurring in all cases (as anticipated a priori for these
measures; all of which have been validated by prior studies). Each leading
eigenvalue explained at least 70 % of total variation, all Cronbach’s a values
exceeded .86 and all variance extracted figures were greater than .52. Hence, the
items pertaining to each of the constructs were combined (by averaging) into single
scales reflecting each of the constructs. The correlation matrix pertaining to the
composites is given in Table 1. A Cox proportional hazards regression analysis was
then completed to identify significant influences on the probability that a donor
whose initial standing order had been for £5 a month (in 2011 prices) or less had
reached break even within 48 months of recruitment. Break even resulted when
revenues totalled £300 (in 2011 prices), i.e. the level of total cost incurred over a
5 year average donor lifetime. This could be achieved either through a person
increasing the value of a standing order or by making additional ad hoc gifts. The
period of 48 months was chosen as it gave one further year within which a donor
Voluntas
123
could generate a profit before the expiry of the person’s expected donation lifetime.
Also, if any individual does not attain break even within 4 years it seems reasonable
to question whether the person will ever achieve substantial profitability, implying
that donor deselection procedures might need to be considered (see Bennett and
Kottasz 2011 for information on donor deselection methods). The Cox model is a
technique for exploring the relationship between (i) the likelihood of the occurrence
of an event before the expiry of a given time period, and (ii) a set of explanatory
variables. It allows the estimation of the ‘hazard’ (or risk) of the event happening for
an individual, given that it has not already occurred, on the basis of the person’s
predictive characteristics. The method was selected because it makes no assump-
tions regarding the distribution of time periods prior to the occurrence of an event
(i.e. reaching break even in the present context); allows the inclusion of several
explanatory variables; and enables the independent variables themselves to be
linked to time.
A restriction of the Cox approach is its assumption that the underlying hazard
(risk) is ‘proportional’, i.e. that it is a function of the independent variables and is
consistent over the total time period in question (4 years in the present case).
Consider for instance a person who possesses certain characteristics and who, in the
early part of the 4 year period, has a risk of not breaking even that is (say) double
the risk of an individual without these characteristics. The Cox method assumes that
this person’s risk of not breaking even will remain twice as high as that of the other
individual at all later times during the 4 year period. Individuals who did not attain
break even within 4 years were coded as such (‘censored’ in Cox regression
technology) and the model was estimated given that the maximum 4 year duration
allowed was cut off before these donors achieved break even.
Table 1 Correlation matrix
Mean SD a
1. Sense of involvement
with the cause
3.5 1.0 .88 1
2. Feelings of emotional
benefit
3.4 1.1 .90 .20 1
3. Personal inertia 2.8 1.1 .86 .08 -.09 1
4. Satisfaction with the
charity’s activities
3.7 0.9 .89 .32 .26 -.10 1
5. Satisfaction with the
charity’s
communications
2.6 0.9 .86 .20 .26 -.05 .32 1
6. Acceptance of
incentives
2.9 1.2 N/
A
.29 .22 .05 .20 .25 1
7. Sense of obligation 2.8 1.0 .88 .12 .08 -.04 -.11 .07 .26 1
8. Relationship
proneness
2.8 1.0 .86 .09 .17 .13 .04 .10 .29 .22 1
1 2 3 4 5 6 7 8
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123
Findings
The average initial value of the monthly standing orders of these low value
supporters (i.e. people whose opening standing orders ranged from £2 to £5) was
£3.90 in 2011 prices. Sixteen percent of the participants had responded to the first
written request or to the telephone call asking for an uplift in a person’s monthly
contributions; raising their standing orders by an average of 50 % of base value
(68 % for people giving £3 a month; 40 % for those donating £5 a month). (The
uplift request only asked for an increase in the value of the monthly standing order,
not for additional ad hoc gifts.) Fifteen percent of the sample had agreed to increase
the amounts of their standing orders consequent to the uplift request mailed
30 months after recruitment. Again the average uplift value was 50 %. It can be
seen from the above that the additional revenues obtained from the uplift appeals
was modest, meaning that the charity relied heavily on procuring supplementary ad
hoc gifts from these low value supporters to move them into profitability. (It is not
possible to compare these figures with those for other charities as a search of both
the practitioner and academic literature failed to unearth any data on the subject.)
Nine percent of the sample had participated in one or more of a charity’s events or
had joined its supporters’ club.
Regression analyses were completed to explain various aspects of break even
behaviour (see Table 2). Composites formed from the items relating to the personal
tendencies used in the analysis (sense of obligation, etc.) satisfied standard tests for
normality and were distributed around the central values of the relevant scales.
Three variables consistently failed to attain significance (p \ .01) in any of the
analyses irrespective of the configurations of other independent variables, i.e. age,
education level and satisfaction with communications. Studies have established that
younger face-to-face recruits lapse sooner and more frequently than others (see
Sargeant and Jay 2004; Fleming and Tappin 2009). However, the younger people in
the present study were no more or less likely to uplift (or to uplift by greater or
lesser amounts) than older individuals. Education level was insignificant in all the
regressions, due probably to lack of variation in the data. Most of the participants
were well-educated relative to the rest of the population; an unsurprising outcome
given the locations in which the sample members were likely to have been recruited.
Although satisfaction with a charity’s work affected all the dependent variables, this
was not the case vis-a-vis satisfaction with the charity’s communications. Thus, the
perceived calibre of the organisation’s newsletters, brochures, appeals materials,
etc. did not appear to have triggered positive responses to requests to increase the
value of a standing order. Rather, consent to uplift donation levels arose more from
donors’ prior perceptions of the quality and value of the charity’s operational
activities.
The three persistently insignificant variables were removed from the analysis and
the regressions recomputed, generating the outcomes shown in Table 2. Column A
of the table presents the results of a binary logistic regression conducted across the
whole sample with a dependent variable coded at zero if a person had not responded
positively to the first uplift appeal (written or by telephone) or unity if the individual
had uplifted his or her standing order. Column B of the table gives the outcome of
Voluntas
123
Ta
ble
2R
egre
ssio
nan
alysi
s
AB
CD
EF
G
Ex
pb
Ex
pb
Ex
pb
Ex
pb
bb
Ex
pb
Init
ial
val
ue
of
stan
din
go
rder
0.0
9(2
.69
)1
.01
(2.6
6)
0.0
9(2
.19
)1
.03
(2.8
1)
-0
.23
(2.1
1)*
-0
.23
(2.0
4)*
2.9
3(9
.91
)*
Sen
seo
fin
vo
lvem
ent
wit
hth
eca
use
1.5
0(4
.66
)*1
.35
(4.7
7)*
1.6
0(5
.97
)*0
.80
(4.2
7)*
0.3
0(3
.31
)*0
.33
(3.3
9)*
2.0
1(9
.02
)*
Fee
lin
gs
of
emo
tio
nal
ben
efit
ob
tain
ed
fro
md
on
atin
g
1.3
8(4
.27
)*1
.39
(4.1
0)*
1.7
0(6
.02
)*0
.94
(4.1
7)*
0.2
5(3
.36
)*0
.28
(3.0
8)*
1.4
1(4
.27
)*
Per
son
alin
erti
a0
.82
(4.2
9)*
0.9
2(4
.58
)*1
.71
(4.9
9)*
1.3
1(5
.22
)*0
.06
(1.1
5)
0.0
6(1
.09
)0
.80
(4.0
9)*
Sat
isfa
ctio
nw
ith
the
char
ity
2.0
1(4
.50
)*2
.01
(4.5
5)*
1.3
5(4
.11
)*0
.90
(4.9
2)*
0.2
5(2
.22
)*0
.25
(2.2
4)*
1.6
8(3
.90
)*
Acc
epta
nce
of
ince
nti
ves
1.5
5(5
.24
)*1
.40
(5.0
0)*
1.2
6(4
.23
)*0
.91
(4.9
2)*
0.2
9(2
.41
)*0
.23
(2.1
8)*
1.7
0(4
.55
)*
Sen
seo
fo
bli
gat
ion
1.4
6(5
.12
)*1
.44
(5.0
3)*
1.6
6(6
.06
)*0
.84
(6.1
6)*
0.2
6(2
.61
)*0
.25
(2.6
6)*
1.5
0(4
.20
)*
Rel
atio
nsh
ippro
nen
ess
1.7
7(4
.48)*
1.6
6(4
.01)*
1.3
3(5
.09)*
0.9
4(4
.25)*
0.2
3(2
.04)*
0.2
3(2
.12)*
1.8
8(6
.06)*
Inco
me
lev
el1
.40
(5.0
0)*
1.3
6(4
.12
)*1
.55
(6.1
8)*
0.9
0(5
.55
)*0
.36
(4.0
5)*
0.3
4(4
.55
)*1
.50
(4.2
7)*
-2
LL
(df
inp
aren
thes
es)
70
5.6
1(6
60
)7
01
.31
(66
0)
50
.46
(46
)5
25
.02
(49
8)
27
.62
(9)
Nag
elker
ke
pse
udo
R2
.52
.54
.56
.49
%o
fco
rrec
tly
clas
sifi
edca
ses
80
81
86
76
Reg
ress
ion
R2
.56
.55
Colu
mns
Aan
dB
:B
inar
ylo
gis
tic
regre
ssio
ns
topre
dic
tw
het
her
ap
erso
ndid
or
did
not
resp
ond
posi
tivel
yto
the
firs
tupli
ftap
pea
l(r
egre
ssio
nA
)an
dto
the
seco
nd
up
lift
appea
l(r
egre
ssio
nB
)[W
ald
v2v
alu
es(1
df)
inp
aren
thes
es]
Co
lum
nC
:B
inar
ylo
gis
tic
reg
ress
ion
top
red
ict
wh
eth
era
per
son
had
or
had
no
tre
spo
nded
tob
oth
up
lift
app
eals
[Wal
dv2
val
ues
(1d
f)in
par
enth
eses
]
Co
lum
nD
:B
inar
ylo
gis
tic
reg
ress
ion
top
red
ict
wh
eth
era
per
son
had
or
had
no
td
ecli
ned
tore
spo
nd
tob
oth
of
the
up
lift
app
eals
[Wal
dv2
val
ues
(1d
f)in
par
enth
eses
]
Co
lum
ns
Ean
dF
:L
east
squ
ares
reg
ress
ion
sto
pre
dic
tth
em
on
etar
yv
alues
of
incr
ease
sin
stan
din
go
rder
sam
on
gp
eop
lere
spo
ndin
gto
the
firs
tu
pli
ftap
pea
l(r
egre
ssio
nE
)
and
toth
ese
cond
upli
ftap
pea
l(r
egre
ssio
nF
)(T
-val
ues
inpar
enth
eses
)
Co
lum
nG
:C
ox
tim
ere
gre
ssio
nto
pre
dic
tw
het
her
ap
erso
nac
hie
ved
bre
akev
enw
ith
ina
per
iod
of
4y
ears
foll
ow
ing
recr
uit
men
t[W
ald
v2v
alues
(1d
f)in
par
enth
eses
]
*D
enote
sst
atis
tica
lsi
gnifi
cant
atth
e.0
5le
vel
or
bel
ow
Voluntas
123
the corresponding logistic regression relating to the second appeal. The next two
columns show the results of regressions relating to people who had responded to
both the appeals (regression C, N = 55) and to individuals who has responded to
neither (regression D, N = 507). Table 2 columns E and F give the results of least
squares regressions with dependent variables comprising the monetary uplift values
arising for each person who did in fact increase his or her standing order consequent
to each of the appeals (N = 107 and N = 100). (Values of ad hoc donations
received in addition to uplifts of standing orders were not included as dependent
variables in the present study because these amounts would depend on factors not
covered by the present research.) The results in columns E and F relate specifically
and only to people who had taken conscious decisions to increase their standing
orders. (The determinants of decisions not to uplift would need to be modelled
separately.) It can be seen from Table 2 A and B that the initial value of a person’s
standing order (within the range £2–£5) had no influence on whether the individual
would uplift his or her standing order when asked. People did not appear to have
thought that the amount of, say, £2 a month was ‘too low’ and hence did not seem to
be more responsive to uplift appeals than others. This might be explained, perhaps,
by the fact that the charity had actively solicited these low value standing orders,
possibly causing the individuals who had accepted the invitation to give just a small
monthly amount to have felt that they had already fulfilled their obligations.
Regressions C and D confirm the pattern of results emerging from regressions A and
B. Among people who did uplift, however, (Table 2 E and F) the monetary values
of uplifts were greater for individuals whose initial standing order values were very
low. Each of the Exp b values (i.e. the exponentials of the regression coefficients)
for the significant variables in columns A and B is an odds ratio which shows the
change in the odds (i.e. the probability of responding to an uplift relative to the
probability of not responding) that ensues from a unit increase in the relevant
independent variable. An exponentiated coefficient with a value greater than one
corresponds to a positive effect; while an exponentiated coefficient with a value less
than one indicates a negative effect. Comparing the beta coefficients in columns C
and D it can be seen that sense of involvement, income level and feelings of
emotional benefit and of felt obligation exerted the most powerful effects. The
coefficients on the remaining variables other than personal inertia had lower
magnitudes but nevertheless were significant in the statistical sense.
Column G of Table 2 gives the outcome to a Cox proportional hazards regression
completed to identify significant influences on the likelihood that a person would
break even within 4 years of recruitment (in the sense of donating a total of at least
the £300 [discounted to account for inflation] needed to cover the cost of
recruitment and induction plus maintenance costs for an expected 5 year donor
lifetime). The Exp b figures listed in column G show how the odds of a person
breaking even by the end of the 4 year period rise if the value of the relevant
independent variable increases by one unit after adjusting for the influences of the
other variables in the model. It can be seen that high relationship proneness, a deep
sense of involvement with the charity’s cause, acceptance of incentives and
satisfaction with the organisation’s work were important determinants of whether a
person would break even within the specified period. (It is obvious that an
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123
individual whose monthly standing order was initially of a relatively high value [e.g.
£5 compared to £2] is likely, ceteris paribus, to reach break even faster than a person
who started out with a low value standing order.) Donors high on personal inertia
were less likely to break even within 4 years than people who were low on this
tendency. Personal inertia affected whether a person actually responded to an uplift
appeal but, for the personally inert who did respond, it did not influence the level of
the additional donation.
The SPSS Cox regression procedure used for the analysis allows the testing of the
hypothesis that the coefficient on an explanatory variable is itself time dependent,
i.e. that its value rises or falls systematically at the various points during the period
of interest. This possibility was tested (via linear, logarithmic and product
transformations) for ‘sense of obligation’, ‘involvement with the cause’ and
‘satisfaction with the charity’s work’. There was no evidence of time dependency
(p \ .05) in any of the cases, suggesting that the effects on the likelihood of an
uplift occurring of felt obligation towards the charity, involvement with the cause
and satisfaction with its work did not increase or decrease over time in consequence
of exposure to the charity’s appeals and communications. This implies that the uplift
packages sent to face-to-face recruits after 12 and 30 months had not significantly
increased the influences of the recipients’ feelings of obligation, involvement or
satisfaction. The relatively modest responses to the uplift appeals (16 and 15 %)
might be partially explained by this possibility.
Time Required to Break Even
Figure 1 plots the Cox survival function (in the present context the probability of a
person not breaking even by a certain time) calculated at the mean values of the
independent variables listed in Table 2. It shows how the probability of ‘survival’ of
1.0
Time (months)
0.8
0.6
0.4
0.2
0.0
0 6 12 18 24 30 36 42 48
Cum
ulat
ive
prob
abili
ty o
f not
hav
ing
brok
en e
ven Values of the function at mean of covariates
Fig. 1 Survival function (shows the likelihood of a person ‘surviving’ as an individual who has notbroken even after a certain period of time)
Voluntas
123
an individual as someone who does not break even, and who exhibits the mean
values of the Table 2 variables, decreases over time. It can be seen that the
probability of this hypothetical donor not breaking even remains above 90 % until
18 months after recruitment, and does not decline to less than 80 % until 30 months
have elapsed. Significant falls occur after 36 months and 42 months. [A supporter
who, for instance, gives £4.50 a month (in 2011 prices) by standing order and
around £30 a year through ad hoc extra donations will have just broken even by
43 months.] At the expiry of the full 4 years there remains a 40 % chance that the
‘typical’ donor, as described, will still not have broken even.
Conclusion and Discussion
To date, academic and practitioner literature in the donor development field has
focused on how charity managements can efficaciously identify high value donors
and then induce them to give more generously (see Polonsky and Sargeant 2007).
Thus, criteria for segmenting donors into groups and for devising fundraising
campaigns have concentrated primarily on the ‘top end’ of the donor market. The
deliberate recruitment of substantial numbers of low value standing order monthly
givers creates new challenges, however, and careful attention needs to be devoted to
how these issues can be addressed. Only one in six of the members of the present
sample responded to each of the uplift appeals, and the average uplift values of the
people who did respond were modest. It appears therefore that either the contents of
the uplift appeals were ineffective or that the periods of 12 and 30 months for
making the appeals were inappropriate, or both. Hence, the charity needed to rely on
its low value standing order supporters making additional ad hoc donations to bring
their total contribution levels up to break even. Yet, at the end of 4 years, the
probability of an average low value donor having broken even (measured at the
mean values of the covariates) was only 60 %. Although some of the remaining
40 % would attain break even within the following 12 months or so, this is a
discouraging situation from the charity’s point of view given that the expected
lifetime of a typical donor is just 5 or 6 years. [Most UK charities use a 5 year time
horizon when computing donor lifetime values (Aldrich 2000).] The position would
be even more disturbing if the losses incurred on lapsed face-to-face recruits were to
be ascribed to those that remained. [It was not the charity’s practice to do this in
view of the complexity of the cost allocation methods that would have to be applied.
Sargeant (1998) noted how the donor lifetimes of UK givers rarely extend beyond
5–7 years.]
The findings suggest that the charity hosting the investigation needs to do more to
segment its donor relationship management policies to target and better serve its
low value donors. This may well be equally true of other charities that use the
services of external face-to-face fundraising agencies. The present study demon-
strated that many of the low value supporters most likely to break even within
4 years and/or to uplift their standing orders shared certain characteristics; notably a
strong sense of obligation, relationship proneness, involvement with the charity’s
cause, low personal inertia, satisfaction with the charity, willingness to accept
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123
incentives, and a tendency to experience ‘warm glow’ when making donations.
Charity managements can implement measures to nurture these tendencies among
their low value donors. Thus, for example, felt obligation might be stimulated by
including obligation related themes (duty and commitment, moral responsibility to
help others, reciprocation, repaying society for personal benefits received, etc.) in a
charity’s promotional materials. Relationship prone low value donors can be
encouraged via additional relationship management activities, although these
obviously carry a financial cost. Donors high on personal inertia might be developed
in manners comparable to those employed by commercial firms when dealing with
inert customers, e.g. through frequent reminders and by ‘hammering home’ a single
highly salient value proposition. The insignificance of satisfaction with communi-
cations’ in the regression analysis might be associated with the recipients’ failure to
perceive the relevance of the charity’s communications in relation to the above-
mentioned themes. The communications may have covered the correct themes but
the content of the messages might have been incorrect, or the wrong themes may
have been addressed. Another way of accommodating personal inertia might be to
offer recruits the option of contributing through a variable direct debit arrangement
(rather than a fixed value standing order) that contains an escalator clause whereby
the level of monthly contributions is automatically increased at the end of each year.
People with a proclivity to feel a warm glow as a result of giving to charity might
be incited to donate more through the organisation making it as easy as possible for
the donor to experience warm glow, e.g. via the transmission of profuse
congratulatory messages when issuing thanks for gifts. [Hudson (2011) reported
US research which found that thanking donors for being ‘caring’, ‘kind’ or
‘compassionate’ when asking for extra money could increase gifts by as much as
10 %, especially among female donors.] A low value donor’s satisfaction with a
charity and his or her sense of involvement with the cause it supports may be
enhanced if the organisation repeatedly and conspicuously emphasises the charity’s
successes in ameliorating the health, social or other problems afflicting its
beneficiaries. Within the present sample, incentives such as invitations to garden
parties, fetes, etc., and store discounts available from membership of a supporters’
club appear to have been effective devices for increasing donation levels.
Investments in the provision of donor incentives (see Bennett 2007 for details of
the available options) may therefore be worthwhile.
It must be recognised nevertheless that the operationalisation of the above
mentioned measures can be expensive, and that a substantial amount of effort may
be required. Outcomes have to be sufficiently profitable to make investments of this
nature worthwhile. Therefore, it is essential that a charity monitors carefully the
potential break even situations of individual donors, and if necessary deselects
supporters who are unlikely ever to break even. Deselection methods include
reducing the volume of or cancelling entirely mailouts and other communications to
certain individuals, deliberately sending cheaper and lower quality materials to
unprofitable supporters, communicating only via pro forma emails, or openly
demanding that the value of a standing order be raised (see Bennett and Kottasz
2011).
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Limitations and Suggestions for Future Research
A number of limitations apply to the investigation. The study covered donors to a
single charity in a single sector (healthcare) in a single country and only covered
people who continued to give for 4 years. However, the charity in question was a
large national organisation the supporters of which can reasonably be expected to be
similar to UK charity donors as a whole. It would be worthwhile however to
replicate the study among donors to charities in several different sectors. Only a
minority of the total sampling frame participated in the study, although there was no
evidence of early or late response or other forms of bias in the replies. It was not
possible within the confines of an already crowded questionnaire to include items
relating to all the donor behaviour variables (psychological, situational and
economic) that could affect time to break even. A comprehensive model embracing
all possible influences would be so large that it could not be estimated using
conventional techniques. Therefore, a parsimonious selection of potential influences
had to be made. It would be instructive to incorporate additional donor behaviour
variables (innate altruism for instance) in future investigations. The study was
restricted to supporters who remained with a charity for at least 4 years, so lapse
costs accruing to people who cancelled their standing orders before the end of the
fourth year were not considered. The break even situations of individuals who lapse
after 12 months (at which point no agency refund is payable) but before the expiry
of 4 or 5 years, are worthy of investigation. More generally, research is needed into
how best to dovetail standing order monthly giving with appeals to these regular
donors to make additional ad hoc donations. What kinds of new donor products are
required? What are the best techniques for nudging low value supporters towards
increasing their overall levels of donations?
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