“Rightsizing” Your Development Operation
2004 NCDC Annual ConferenceOrlando, FL
September 2004
Kevin Whorton, Director Direct Response FundraisingCatholic Relief ServicesBaltimore, Maryland
[email protected]: (410) 951-7491
Overview
Catholic Benchmarking
Other Charity Benchmarking
Our Market
A Self-Assessment
Operations: Catholic Charitable Organizations
Proportion of Total RevenueNCDC Comparative Giving Survey: 2003-05
58% 28% 14%
56% 28% 16%
56% 23% 21%
0% 20% 40% 60% 80% 100%
2005
2004
2003
Direct mail MG/PG Other
“Other” includes e-giving (1%), events (5-8%), and unsolicited.
Proportion of Total Revenue: Larger Organizations
60% 31% 9%
58% 32% 10%
64% 25% 11%
0% 20% 40% 60% 80% 100%
2005
2004
2003
Direct mail MG/PG Other
“Larger” indicates revenue of at least $2 million. “Other” includes e-giving, events, and unsolicited.
Proportion of Total Revenue: Medium-sized Organizations
39% 37% 24%
39% 38% 23%
46% 35% 19%
0% 20% 40% 60% 80% 100%
2005
2004
2003
Direct mail MG/PG Other
“Medium-sized” indicates revenue between $500k and $2 million. “Other” includes e-giving, events, and unsolicited.
Proportion of Total Revenue: Smaller Organizations
66% 16% 18%
63% 16% 21%
54% 14% 32%
0% 20% 40% 60% 80% 100%
2005
2004
2003
Direct mail MG/PG Other
“Smaller” indicates revenue of under $500,000. “Other” includes e-giving, events, and unsolicited.
Average Organization: Revenue Growing 14% Past 4 Years
4.57%
2.98%
1.64%
4.37%
0% 2% 4% 6%
Yr: 04-05
Yr: 03-04
Yr: 02-03
Yr: 01-02
Overall
Average Organization: Growth By Size Range
3.6%
1.0%
-1.4%
-0.2%
7.1%
8.0%
2.5%
2.9%
4.7%
1.4%
6.2%
10.9%
-4% -2% 0% 2% 4% 6% 8% 10% 12%
Yr: 04-05
Yr: 03-04
Yr: 02-03
Yr: 01-02
Small
Medium
Large
House File Activity: Number of Mailings to Active Donors
14.6
14.4
14.3
12.9
12.6
8.0
7.8
7.6
7.5
6.9
5.9
5.8
5.7
5.6
4.8
0 5 10 15 20
2005
2004
2003
2002
2001Small
Medium
Large
Total pieces mailed: average 4.4 million overall, 7.3 million among large (19% increase over 3 years).
Operations: Other Charities
Activities Reported by DM Programs
79%
21%
79%
58%
68%
11%
26%
32%
100%
38%
85%
54%
100%
31%
69%
8%
88%
28%
81%
56%
81%
19%
44%
22%
0% 25% 50% 75% 100%
Mail acquisition donors
TM, acquisition donors
Mail, house file
TM, house file
Website/microsites
TV/radio spots
Print ad campaigns
Other projectsOverallNationalOther
Activities within the Department
Overall National OtherMailings (internal) 31.2 39.5 25.8Mailings (external) 12.7 15.8 10.7Email projects 17.7 17.1 18.1Other mktg projects 4.5 1.5 6.4Total marketing projects 66 74 61
Online survey conducted among DMA Nonprofit Federation member and prospect organizations, July 2004. A total of 35 organizations completed the study.
Charity Benchmarking: Staffing, Vendors, Revenue, Gifts
Overall National OtherTotal FTE DM/FR staff 7 9.1 4.7Total other staff 15 22.8 6.5Total vendors 32 54.1 9.9Revenue per staff $665,500 $768,800 $503,000
Overall National OtherRevenue per name $39.70 $42.50 $35.20
Gifts per name 1.4 1.3 1.5
Average gift $90.47 $93.04 $85.34
Results: Charitable Org. Study:Revenue, Efficiency, Size, Effort
Overall National OtherMarketing/DR expenses $4,825,800 $7,684,546 $1,331,778
DR revenue $13.487,019 $17,932,216 $7,374,875
Net DR revenue $8,661,000 $10,248,000 $6,043,000
Cost/raise dollar $0.34 $0.41 $0.23
Size of Program Overall National OtherSize of active file 327,263 495,636 95,750
Total gifts per year 494,306 612,955 233,280
Pieces to typical donor 13.4 14.4 12.1
Acquisition campaigns 8.3 11.3 4.8
Satisfaction with own DM Program
3.97
3.53
3.45
3.66
3.19
4.17
3.38
3.31
3.62
3.23
3.83
3.65
3.56
3.68
3.16
1 2 3 4 5
Making mail dates
Ease of makingdates
Lead time built intoschedule
Time spent trackingprogress
Monitoring progress
OtherNationalOverall
Key to Benchmarking: Every Organization is Unique…
Internal projects 50 15 35 35
External projects 10 - - 20
Email - 10 - 100
Other projects 15 - - 25
Marketing/DR budget 5,000,000$ 450,000$ 300,000$ 1,000,000$
Gross revenue 12,000,000$ 2,300,000$ 1,204,368$ 20,000,000$
House file 400,000 46,000 150,000
Mail active donor receives 25 12 12 25
Acq campaigns 15 3.5 3 2
FT staff 4.5 6 3 9
Other depts 1 1 8 5
Vendors 10 3 4 20
Characteristics of “Our Market”
We Have a Massive Audience
More people, larger congregations: 63.3 million members, 19,356 congregations Southern Baptist (40,000) & Methodist (35,100) more
congregations Southern Baptist (15.6m), Methodist (8.3m), Lutheran
(5.0m), Presbyterian (3.4m) all much smaller Catholic members per congregation very high (3,270) Compares to Lutheran (470), Baptist (390), Methodist
(235), Presbyterian (310) But do they attend? 715 on average for Catholic,
compared to just over 120 among Protestants
Source: Bryan Froehle, PhD: presentation at 2004 NCDC Fundraising Summit; United States Congregational Life Survey, 2001
Total US - 273 Million
Total Catholic - 65 Million
Typically Attend Mass - 20 Million
Donors - 400,000
CRS Aware –14 Million
Market Penetration
Market Concentration
Donations by Diocese
1 Washington, DC 5.6%
2 Boston, MA 3.9%
3 Arlington, VA 3.7%
4 New York, NY 3.0%
5 Fort Wayne, IN 2.7%
6 Chicago, IL 2.3%
7 Baltimore, MD 2.3%
8 St. Paul & Minneapolis, MN 2.1%
9 Philadelphia, PA 2.0%
10 Seattle, WA 2.0%
Next 10 16.0%
Next next 10 10.3%
All other diocese 43.9%
Where is the bulk of your support coming from Geographically Generationally By source
And, does it make sense? Can you do things
to change it: Improve the top Rectify the bottom
Issues Among Young, Diverse Constituencies
60+: I pray daily (90%) or seldom (3%)20-39: I pray daily (53%) or seldom (15%)
60+: I attend weekly (63%) or once a month or less (27%)20-39: I attend weekly (24%) or once a month or less
(58%)
“Church is important”: 59% say yes 60+; 29% yes 20-39“I would never leave the Church”: 83% 60+; 50% 20-39
Source: Bryan Froehle, PhD citing Search for Common Ground, by James Davidson et al.
Message Challenge and Opportunity: Increasing Ethnic Diversity
Pre-Vatican II: 88% white, 9% Latino, 3% other Vatican II: 83% white, 13% Latino, 4% other Post-Vatican II: 70% white, 23% Latino, 7% other Today’s Teens (Jubilee Generation):
56% white, 35% Latino, 9% other Latinos more likely born outside U.S.:
15% pre-Vatican II, 23% Vatican II, 32% post-Vatican II
Findings reported in CARA Special Report, Fall 2002
The Congregational Life ofCatholic Mass Attenders
Percent of Mass Attenders involved in: 10.2% prayer, discussion, Bible study 18.9% clubs or social groups 6.6% evangelization or outreach 13.3% community service/social justice groupsDoes this parish have clear vision, goals, or direction? 25% unaware; 11% “ideas but no clear vision” Yes, but 23% strongly, 26% somewhat, 15% not
committed
Source: Bryan Froehle, PhD: presentation at 2004 NCDC Fundraising Summit
Good News: Potential Generational Transfers of Wealth
$41b generational transfer by 2052 (Paul Schervish, Boston College Social Welfare Research Institute)
2/3 of this total comes from 7% of estates (collaborator John Havens, Boston College)
Boomers more benefactors than beneficiaries (only $7b directly to boomers as heirs)
Golden Age of (Catholic) Philanthropy
Source: Bryan Froehle, PhD presentation at 2004 NCDC Fundraising Summit
Self Assesment: Analyzing Challenges
What Common Obstacles Do We Face:
Awareness How well recognized with your target audience? How clearly do donors understand you and your
mission? Perception
How legitimate is your mission, relative to other causes one can support?
Affinity For how many individual donors are you sole charity,
primary charity, or just “among the top 5” What is your trend (slipping lower, rising, stagnant)?
Common Obstacles: Competition, Atittudes
Competitive Environment Claim to the affinity of best donors Successful positioning in niche Layers of review, autonomy, and priority Diseconomies of scale
Current attitudes Greater public skepticism/antipathy toward charities Scandals and negative press
Need What if you’re already the right size relative to your
program?
Internal Challenges: Where Are Your Limits?
Internal Culture Speed of decision-making and market response Layers of review, autonomy, and priority Diseconomies of scale
Flexibility Ability to be aggressive Acceptance of varied media Willingness to invest--lose money to make money later
Latitude Relative positioning: “negative campaigning” How aggressively can you follow: a license to boast Tendency to homogeneity, inoffensive/indistinct messages
Internal Challenges: Knowledge, Structure
Structure How restrictive are budgets, vendor relationships?
Do they inhibit experimentation--diversification into potentially more successful techniques and tactics?
Are you able to incorporate successful new ideas over the year as they occur to you?
Able to discontinue things that simply aren’t working Knowledge
Surveys, focus groups, and learning conversations What do you know about your donors--their candid
perceptions, their history
Making Changes: Rightsizing the Operation
Tactical Improvements
Evaluate, implement changes at key leverage points: Improve synergies between DM and MG, PG Improve frequency, timing of renewal efforts New vehicles: creative use of radio/TV/e-/events Acknowledgement program: speed, second asks Improve timing, appeal of new donor conversions Increase acquisition programs: long-term benefit
Strategic Choices
With benchmarking/self-assessment of program metrics:
Understand your ‘business model’ Effective fundraising and alignment with mission
Determine if operation needs to be ‘new and improved’ If so, identify resources to make ‘new and
improved’ possible Implement key points of improvement
More Tactical Improvements
Mid-level programs: improved upgrading, more personal service and special treatment
Other segments: low dollar, Hispanic, etc. Better segmentation Monthly giving/sustainer programs Improved creative: more personal, new inserts Parish programs, brochures, lead Other viral, peer-to-peer marketing Personalization: use of variable copy and personal
data
Resources: Staff and Vendors
Evaluate your internal/external operations Senior management positions Production management
Special projects Web marketing Events management Advertising/marketing
Technical staff Data management, marketing analysts
Creative Editor/Copywriter, design
Administrative Financial, budgeting, general admin assistance
Creative Human Resources
Position and changes in management Adding, eliminating external suppliers Working creatively with part-time positions
Shared resources Retainer arrangements with freelancers Interns from colleges
Collaboration with other parts of organization Cross-training, career ladders/lateral movement Flexible work teams, building bridges with other depts
Working with suppliers Maintaining self control over strategic direction
Supplier Relationships
Evaluating balance between internal/external: Mailing list brokers
Arranging exchanges, new list recommendations, techniques (multiple use agreements, omit priors)
Creative Freelancers and agencies who can bring strategic
vision Striking a balance consistent with organizational
needs and your image Data processing
In house systems Periodic analysis of file: hidden patterns
Improving Donor Acquisition
Avoid bias toward control packages in test evaluation Changing rules to allow “ties” to be remodified
Re-tests, multiple iterations may yield differing results Often results are not statistically significant: confidence
intervals suggest equal performance Understanding second-gift performance Resting and rotating controls Modifying the next step Creating new buckets/segments/tracks Adding media: e-, phone
More Changes to Acquisition
Variations with testing, sometimes without Logo, color scheme, attention-getters (token) Anything that gets it opened The price of rigidly following testing “rules”
Seeking Kaizen—non-incremental change “Local optimum,” not the overall best
Thank You!