- Direct mail for small nonprofits

 Direct mail for small nonprofits

By Tom Ahern

Can direct mail be a cash cow for smaller nonprofits? Think “cash calves” instead.

Mass-market expectations yield disappointing results at local levels. Take heart, though: Direct mail is about far more than instant cash.

Everything you think you know for sure about direct mail is likely based on the ways and means of mass-market fundraisers.

One-half of one percent: that’s an acceptable response rate, mass-market professionals figure, for an untried direct mail appeal sent to an untried audience. You’re acquiring one new donor, in other words, for every 200 pieces you mail.

Well, okay, if you mail a million pieces, that math might work for you. It somehow does for sophisticated mega-charities.

But if you mail just 5,000 pieces, as a local nonprofit might, hoping to attract new donors, a return of one-half of one percent is bound to disappoint, at least in terms of an immediate financial windfall.

Acquiring 25 new donors (.005 x 5,000), even if they gave you an unusually generous $50 average gift, will only gross you $1,250. It could cost you twice that much just to print and post the mailing. How can you possibly cost-justify that kind of outlay when your fundraising budget is already dangerously frail?

And yet . . . direct mail can be a vital contributor to the fundraising efforts of smaller and niche charities. You just need a different sort of math.

Onesies-twosies math. Smaller nonprofits are not in the churn-and-burn direct mail business. They are in the business of adding a few friends at a time, accumulating a list of true believers, fellow travelers, concerned neighbors, and others.

New Haven, Connecticut, a typical enough small city, has one nonprofit for every 100 residents. The vast majority of these organizations will probably never muster more than a thousand supporters apiece. Even big organizations sometimes have relatively few supporters. A community foundation I know that in 2008 gave away $27 million in grants has accumulated just 1,100 permanent funds in its 93-year existence; that’s about 12 new donors who started funds each year.

Work the percentages, not the gross income. Direct mail for smaller nonprofits is as much about “friend-raising” as it is about fundraising.

Case study: A nonprofit serving immigrants and refugees took its first baby steps into direct mail, sending out 5,000 pieces of mail to strangers. The mailing did surprisingly well, reaping 100 new donors, a 2% response rate. Still, the average gift was just $25 (a typical “first date” gift), for total gross revenue of $2,500. Total net revenue after expenses? Less than zero.

Was their mailing a failure or a success? If you counted just the cash, a failure definitely. But let’s take a second, deeper look. This nonprofit was new to non-event fundraising. A mere 400 names comprised their entire annual donor list. Adding another 100 donors increased that supporter base by 25%, a significant improvement. Looked at that way, I would deem the mailing a howling success.

Why? Because, as a small nonprofit, an essential mission is to build your “tribe.” Tribe is a marketing term. You can define your tribe as those few people who believe in your mission, would like to see you prosper and grow, and will occasionally contribute money or time to that end.

If it works, mail it again. Embrace this stark reality: Most people ignore most of their mail most of the time. You do. I do. We all do.

Newbies to direct mail worry about the 99.5% who do not respond to an acquisition mailing. They worry, “Why don’t they like us?” It’s a pointless anxiety. Most people receiving your mail neither like you nor hate you. In fact, they’ve made no decision about your organization, except to ignore your mailing that particular day.

I learned a very interesting thing: If you keep mailing a good piece of direct mail to the same well-qualified group of people, you will pick up additional response each time you mail.

I wrote a direct mail “friend-raising” package for a community foundation. We sent it to a list of millionaires in the relevant geographic area. The first mailing went out to 3,340 names and garnered a 3% response. Hence, we judged it successful measured against industry standards.

So we mailed the very same package again to the very same list, minus anyone who had responded, a few months later. This time we attracted a 2.5% response. A few months later we sent the very same package to the very same list yet again, minus anyone who had responded. This time we received a 1.3% response.

Point? Had we stopped with the first mailing, we would have left more than half our eventual response on the table. (Care to read the letter? Go.) Again: Most people ignore your direct mail for no good reason. If they’re qualified recipients (for a local charity, anyone who lives in the same area is the broadest brush) and (important caveat) you have a direct mail package that works, keep mailing. It will pay off.

Retention is the real name of the game. It is expensive to acquire new donors. It is cheap—up to 10 times cheaper—to elicit a gift from a person who has been a donor before.

And yet retention is probably the least developed aspect of most fundraising programs. Donor loyalty programs are in their infancy. Welcome packages are virtually unknown. Most donor newsletters, a primary tool for donor cultivation, are unmercifully wrong-headed.

Takeaway: A local charity needs a way to attract new friends and build its tribe. Direct mail remains the tool of choice for that important task. Know, too: As the economy went sour, U.S. donors began redirecting their contributions to local charities such as food banks, research indicates. Local charities, this might be your best moment to reach out.

Reprinted with permission from the Ahern E-Newsletter: About Donor Communications. Copyright © 2008 by Tom Ahern.