The fundraising mix in the 21st century

by Indira Sam-Sin

Fundraising instruments have changed over the last twenty years. But donors have changed as well. Donors aren’t as loyal to their favorite charities as they were some years ago. If charities don’t approach the donors in the way donors want to be approached, they are likely to cancel their support.

While donors have changed, technology has advanced. Do charities need to communicate differently with their donors? And do charities need to make use of new media to communicate with their donors? This article addresses both these questions.

The fundraising mix in the 1990’s

Fundraising tools typical of the 1990s could be characterized as being traditional. It was then, however, that these traditional instruments such as direct mail and telemarketing became very popular and much more professionalized. New instruments were introduced as well. Combining two instruments such as direct mail and telemarketing (mail – call – mail) also had a positive impact on donating behavior. Here is a summary of these tools:

Direct Mail became professionalized during the 1990s. DM is a form of mass media communication but by personalizing it and using creativity and smart segmentation, traditional direct mail could become a more personalized means of communication.

Door-to-door collecting, including church offerings, is one of the oldest ways of raising funds from individual persons. Dedicated volunteers collect donations for their charity in their own neighborhood. The main reason why door-to-door collecting is a powerful instrument is that volunteers are the best solicitors charities can wish for. Besides, who can deny making a donation to a friendly neighbor?

Telemarketing became more popular in the 1990s. It’s flexible, allows one to one communication and makes it possible to test and implement various strategies simultaneously.

Advertisements and radio and TV spots were also common in the 1990s. These instruments, however, were more PR tools than moneymaking instruments.

Direct dialogue. During the 1990s, a new fundraising instrument was introduced: direct dialogue. Direct dialogue is merely a way of attracting a younger audience, ages 18-30 years, and committing them to being monthly direct debit donors. Since direct dialogue is a costly instrument, it will only become cost-efficient if donors make their donations on a monthly basis.

Direct dialogue doesn’t replace any traditional instruments! It’s merely a new way of attracting a younger target group and adding younger direct debit donors to the house file.

External developments

Before jumping to conclusions about appropriate fundraising instruments for the 21st century, it’s important to look at certain external developments that might have an effect on the future of fundraising. Here is a brief summary of each development and its possible impact on the fundraising mix.

Liberalization of the postal market. Many governments have decided to liberalize their postal markets. A good example of this is the Netherlands where various vendors have offered their services. The European Union has also taken several steps to harmonize the postal market with objective of complete liberalization by 2009. As a result, postage costs have generally decreased enough so that organizations using DM now have more money available for premiums and the personalizing of their direct mail communications.

Privacy regulations and codes of conduct will affect all fundraising instruments and are rules with which fundraisers simply have to comply. Moreover, charities are also required to operate similar to businesses when it comes to transparency and accountability. The public wants to know how their money is being spent and whether the charity’s activities are actually contributing to reducing a certain problem.

Internet usage will increase rapidly in the next 10 years, thus making the Internet and e-mail important instruments for communications with donors.

The aging of the population will increase rapidly after 2010 when the baby boom generation turns 65. This group offers charity many potential donors, especially when they are approached in the right way.

The fundraising mix in the 21st century

After looking at these external developments and their impact on the current fundraising instruments, it then becomes possible to formulate a fundraising mix for the 21st century.

Direct mail will still be alive and well! There will still be enough prospects who will respond to a piece of direct mail. But a mailing sent to the entire population without the use of segmentation or targeted strategies would not be advisable. The 21st-century donor has different information needs than the donor of the 1990s. Information should meet the needs of the donor.

Telemarketing will still be in use together with direct mail or direct dialogue. However, telemarketing regulations will become stricter and it is expected that telemarketing will move towards opt-in systems.

Direct dialogue was a great success in the 1990s but its success has stabilized due to “street solicitation fatigue” among prospects as well as due to stricter local government regulations. Direct dialogue, however, has taught us to approach donors as they communicate themselves. For direct dialogue donors, direct mail is not the appropriate way to communicate. This younger donor group is more responsive to modern communication channels such as e-mail and SMS.

Internet and e-marketing have been touted as “the new fundraising instrument” for the charity sector. Although e-marketing has not proven as successful as fundraisers had hoped it would be, the number of Internet donations is growing each year and Internet payments can now be processed more easily. E-marketing hasn’t been “the very thing” we’ve hoped it would be, but looking at demographic trends, it’s just a matter of time.

SMS marketing won’t be a stand-alone fundraising instrument; it will merely be an addition to the program, e.g. for emergency appeals.

Integrated fundraising. One particular trend turning up throughout the fundraising mix of the 1990s and in the external developments is the integration of various fundraising instruments. Direct mail alone, for example, is not enough, but direct mail together with the use of one-off telemarketing is not enough either. However, this is not what integrated fundraising is about. Integrated fundraising demands a comprehensive communication plan that indicates which instrument and communication strategy will be used for each group of donors.

Tailor-made information. Donors have different information needs. Although what donors need is available to charities, charities first have to pick up on these signals, store them in their database and adapt their communications to the needs of donors. All information should be tailor-made and sent through the channel preferred by donors themselves.

The information needs of donors can be met only if the charity’s database can store all offline and online indications provided by donors. This element, the integration of offline and online data, is a prerequisite for making integrated fundraising successful. Unfortunately, not many charities are able to store offline and online data in one database, let alone tailor the communication to the needs of their donors. This is a major challenge ahead, but charities will have to get aboard soon or miss the boat.

This study was conducted within SAZ Marketing Amsterdam BV by Indira Sam-Sin.