Donors need to move beyond The Overhead Myth

Three leading nonprofit sources launch campaign to correct misconception

OMI wanted to share with you an important letter directed to the donors of America from the country’s leading sources of information on nonprofits.  The Better Business Bureau Wise Giving Alliance, GuideStar and Charity Navigator have joined forces to denounce the myth that judging a nonprofit by their overhead ratio, usually an organization’s administrative and fundraising costs, is a valid indicator of their performance.  This letter is signed by all three of the companies’ CEOs and it kicks off The Overhead Myth Campaign which aims to correct this common misconception.

So many times donors are erroneously guided to give to organizations that have low ‘overhead’, as that is what the media tells us is the mark of a good charity.  As a fundraising partner to the Who’s Who of national nonprofits we hear this often at InfoCision.  However, in the nonprofit world overhead can encompass many crucial investments, such as administration and fundraising, that not only help an organization sustain itself and run efficiently, but also be successful in growing and carrying out their mission.

When we focus predominantly on overhead, we can create what the Stanford Social Innovation Review calls “The Nonprofit Starvation Cycle.” By underfunding ‘overhead’, charities starve themselves of the freedom they need to best serve the people and communities they are trying to help. 

The letter concludes with urging donors to consider the whole picture when deciding which charities to donate to citing those served by the organizations need high performance more than just low overhead.  We couldn’t agree more.

Partnering with the nation’s leading nonprofits

Here at InfoCision we work with the nation’s top nonprofit organizations, which consciously choose to be good stewards of the funds entrusted to them. We are proud of the work we do in helping charities carry out their important missions. We not only help them raise money to help sustain their programs, but we also help to increase the number of donors involved; a key to sustaining themselves in serving millions of people around the world. We are honored our clients entrust us with such an essential function and hope this letter and campaign will educate and empower donors everywhere to support charity based on the results an organization produces , and not just their ‘overhead’.

This subject seems to be gaining attention from the media.  Our Friend Dan Pallotta has been very vocal on the issue.  And, with the release of this letter from highly regarded organizations like the BBB; could there be a movement under foot?  We can only hope.

I encourage everyone to help spread the word to end The Overhead Myth!  www.overheadmyth.com

If you have found this information helpful, please leave a comment or question if you want to discuss further.

Fundraising Part 4: Using information to make an informed choice as a donor

In the first three posts in our series on fundraising, we’ve covered acquisition campaigns, long-term donor value enhancement and regulatory compliance; three highly important functions that professional fundraisers provide for nonprofits.  Each of these plays a part in a nonprofit’s ability to deliver their beneficial programs and services.

Even with all the new communication channels today, tele-fundraising is among the most effective – if not THE most effective – means of fundraising available to nonprofit organizations.

Despite that fact, periodically consumers are presented with reports that will list percentages of funds raised by professional fundraisers that seem alarmingly low.  But are they really?

What reports on professional telephone fundraising campaigns DON’T tell you

Government reports from the various states often fail to provide even a minimal description of the type of campaign that was being conducted. In our first post, we discussed acquisition campaigns where fundraising is the secondary goal to identifying new donors.  A nonprofit’s donor list is its greatest asset.  But it’s an asset the organization is not able to list on their balance sheet, so the general public may not associate a fixed dollar amount to its value.  But that list represents much of the future growth potential for the organization based on the impact of future donations from its valued members.

Similarly, these reports can’t measure the value of an interaction – even one that does not result in a donation – where the person contacted receives an update on all the great things the organization is doing, which further enhances the donor’s connection to the organization.

Where can a donor go for accurate information on an organization’s fundraising spending?

Anyone who is looking to determine the overall allocation of resources which a nonprofit organization commits to its core mission, can simply take a look at the nonprofit’s Form 990 filed each year with the IRS.  This form contains information on how much money the organization spends in total on fundraising and how much goes to programs and services.  This is the report which provides a much better view of the nonprofit organization’s good stewardship of the funds entrusted to them.

I hope this series has helped to give a better understanding of how professional fundraising through direct marketing – and specifically telemarketing – actually works.  As always thank you for joining us.

 

Click here for Fundraising Part 1: How Nonprofits and Professional Fundraisers Partner to make a Difference

Click here for Fundraising Part 2: The Professional Fundraiser and Nonprofit Relationship

Click here for Fundraising Part 3: Compliance and Nonprofit Fundraising

Fundraising Part 3: Compliance and Nonprofit Fundraising

So far in the first two posts in our fundraising series, I’ve covered some different ways professional fundraisers help nonprofits to raise funds, through acquisition campaigns and by enhancing long-term donor value.  These approaches require a great deal of strategy and creativity in getting the right message to the right donor at the right time through the right channel.

However, there is another service professional fundraisers provide for nonprofits, without which all those things I listed above would not matter; I’m talking about regulatory compliance.

Regulatory compliance in the direct marketing industry is complex, but highly important

A successful long-term direct marketing strategy is built on the foundation of adherence to the myriad of laws and regulations put in place by the applicable government entities.  All of us are familiar with Do Not Call laws and the emergency of teleservices guidelines over the last ten years, but it’s much more than that.  The federal government and each individual state has very specific regulations for every kind of direct marketing campaign, including traditional mail, phone calls, email, text messaging, etc.

Nonprofit organizations focus on raising funds with the best intentions to make a tremendously positive difference for our world.  However, the fundraising campaign must be implemented in tune with federal and state regulations.  There is no room for error and regulators are not sympathetic to misunderstandings of statutory requirements.  Given the tremendous scope of regulatory issues that must be managed, staying compliant can be a daunting task for any organization.

As a marketing partner to Nonprofit organizations, InfoCision has invested millions of dollars in technology aimed at preventing compliance failures, and dedicated practitioners whose only job is to stay updated with regulatory issues and keeping our clients protected.

This can be a huge burden off the shoulders of nonprofits, and it’s yet another part of the reason that so many choose to partner with dedicated professionals to contact their donors.

Another aspect of compliance that a professional marketing partner like InfoCision should handle is the filing of information with the government agencies – and this information becomes part of reports that are public record.  In my final post in this series, I will discuss how consumers can read this information to make good decisions with their fundraising dollars and avoid confusion over what the numbers mean.

 

Click here for Fundraising Part 1: How Nonprofits and Professional Fundraisers Partner to make a Difference

Click here for Fundraising Part 2: The Professional Fundraiser and Nonprofit Relationship

Click here for Fundraising Part 4: Using Information to Make an Informed Choice as a Donor

Fundraising Part 2: The Professional Fundraiser and Nonprofit Relationship

Last week I shared how certain teleservices campaigns are designed as new donor acquisition campaigns where the primary purpose is to identify and engage as many new donors as possible; and raising funds is a secondary goal.  This is why some campaigns may appear to be less successful in terms of the funds generated, but are actually very successful and vital to nonprofits, allowing them to build and supplement their donor base.  This week, I’d like to talk more about why it’s important to build relationships with donors, and how professional fundraisers help to cultivate those relationships.

Professional fundraisers help build and create long-term donor value; the lifeblood of nonprofit organizations

Donors are the lifeblood for Nonprofit organizations.  They provide the necessary funding for the organization to be able to further its mission.  But the goal when reaching out to donors should not be just to ask for funds, but also to create a real connection between the donor and the organization.  A donor who becomes engaged with the organization will likely give again and again because they not only believe in the organization, but become personally involved in its mission.

Once a new donor is brought on, the real work to build that relationship begins.  In fundraising it has been proven that donors who give a second gift within 90 days of their initial gift are more likely to become sustainers to the organization.  Involving them initially in a multifaceted communication and engagement cycle is key.  Typically, new donor conversion strategies include a thank you call, welcome kit, or email to convey the organization’s appreciation for their generosity and to show how their dollars will be put to work.  Even after the receipt of a second gift donation, the Nonprofit should continue fostering the relationship through retention campaigns which keep donors informed and active by providing opportunities for involvement, such as volunteering.

What is truly most important to successful retention campaigns is the value of the customer experience.  High quality call centers are uniquely positioned to provide a wide array of services to help better manage donor relationships.  Business Intelligence, real-time analytics and reporting, variable script-on-screen, targeted call routing, online fundraising services all work together to increase the level of personalization and thus provide an exceptional donor experience.  When a donor walks away, after making a donation, feeling good about their gift and recognizing they are a critical component of the organization’s mission, they are more likely to give again the next time the organization calls, sends a letter or email request.

As with a business customer, it’s more cost effective to maintain a current donor than it is to find a new one.  However donor attrition requires constant vigilance toward replenishing your active donor base as an ongoing part of raising funds.  But you can positively impact your attrition rate by building solid relationships with donors by making every interaction with the organization a positive experience.  This is why it is so vitally important to work with a fundraising partner that is a true extension of your organization and has fundraising experts on the phones who work hard to make each and every phone call count.

The one thing I didn’t mention is how the professional fundraiser also manages the myriad of state and federal fundraising regulations.  I’ll discuss this in my next post as well as shed some light on the government reports professional fundraisers are required to submit, and how consumers can make good decisions on spending their fundraising dollars.  Be sure check back next week to read more.

Click here for Fundraising Part 1: How Nonprofits and Professional Fundraisers Partner to make a Difference

Click here for Fundraising Part 3: Compliance and Nonprofit Fundraising

Click here for Fundraising Part 4: Using Information to Make an Informed Choice as a Donor

How nonprofits and professional fundraisers partner to make a difference

I’ve been working in the call center industry for nearly 30 years.  Oftentimes when I meet someone – either socially or professionally – and tell them that what I do involves fundraising for nonprofits, I inevitably get asked questions about how it all works.  Several questions come up routinely, and after having one such conversation last week, I decided that I should use The Right Call as a forum to provide much needed information on how professional fundraising works.  Fundraising is multifaceted and over the next few weeks I hope to impart additional knowledge and answer some common questions.

Do professional fundraisers keep a percentage of the money that is raised?

One of the most common questions I get is people wondering if professional fundraisers keep a percentage of money they raise before it goes to the nonprofit organization.  The answer is generally no.  Reputable teleservices  companies like InfoCision are not actually paid in terms of the percentage of funds they raise.  InfoCision is paid per completed call based on a set rate as detailed in our contract with the nonprofit client.  The client pays InfoCision according to their fundraising budget.

Many times, folks will say they’ve read about a nonprofit organization generating just a small net gain from a specific tele-fundraising program.  Some campaigns are designed as “acquisition campaigns.”  In these campaigns, finding and engaging new donors is the primary goal.  It is common and expected for an acquisition campaign – when looked at in a nutshell – to breakeven or be only slightly profitable.  But when you look at the big picture, these acquisition campaigns identify new donors who are likely to begin a strong, life-long relationship with the nonprofit. The long-term opportunities these new relationships provide the organization are incredibly valuable.

Here’s a similar example: A national health-based nonprofit, through direct mail acquisition programs, recently was able to increase its donor base by more than ten times over a five year period.  It’s likely that when you consider the cost of creating, printing and mailing the direct mail piece, the campaign may not have generated enough funds to cover those initial costs.  But what it did do was bring in many new donors to the organization, who will give again and again over a period of time. This is what is called Long-term Donor Value. It works the same way with tele-fundraising.

Check back next week for when I will break down the importance of long-term donors for nonprofits, and how tele-fundraisers help to build and cultivate these long-lasting relationships.  I hope you have found this information helpful.

Click here for Fundraising Part 2: The Professional Fundraiser and Nonprofit Relationship

Click here for Fundraising Part 3: Compliance and Nonprofit Fundraising

Click here for Fundraising Part 4: Using Information to Make an Informed Choice as a Donor