Editors’ note: This article, first published in print during December-1998, has been republished for Nonprofit Quarterly with minor updates.
The following articles present two viewpoints on the efficiency of direct mail as a membership acquisition strategy. This dialogue was stimulated by the article, “Testing and Tracking Your Results,” by Pat Munoz and Amy O’Connor. Andy Robinson first presents the case against small nonprofits using direct mail to acquire new donors and Amy O’Connor, one of the authors of the original article, responds. These viewpoints are followed by Andy’s suggestions for ways to acquire new members without using large direct mail campaigns. The Journal is grateful to these two writers, both excellent fundraisers, for being willing to air their differences in this public forum.
BY ANDY ROBINSON
Over the years, the Grassroots Fundraising Journal has published a number of articles about mass mailing strategies for nonprofits. Topics have included composing the letter, designing the mail package, how to rent or borrow outside mailing lists, and so on. A recent story, “Testing and Tracking Your Results,” by Pat Munoz and Amy O’Connor, offered thoughtful and comprehensive guidelines for tracking direct mail responses and refining your mailing strategy based on these results.
I have raised money for social change since 1980 and, along the way, I filled a lot of mailboxes. The more I mailed, the more uncomfortable I felt. After years of trial and error, success and failure, I’ve come to the conclusion that sending mass mailings to strangers is a less and less effective way for grassroots organizations to find new donors.
I’m not alone in this opinion. Even Mal Warwick, one of the most respected direct mail consultants in the country, has his doubts. In the July 1998 issue of his newsletter, Successful Direct Mail and Telephone Fundraising, he wrote, “To put it plainly, larger organizations can better afford to use the techniques explored in these pages. A smaller or local nonprofit may lack the means, staff resources, or opportunity to do so.”
For the purpose of this article, “grassroots” refers to groups with fewer than 2,000 active donors, and especially those with fewer than 1,000 members. For larger organizations, the mechanics and economics of mass mailings are more manageable, although the environmental impact increases with the size of the mailing.
My primary concern involves using direct mail to acquire new donors; renewing current or lapsed donors through the mail remains quite effective, especially if you make the effort to personalize the package.
- Lousy odds. These days, a “successful” acquisition mailing — which we use to reach prospects and request their first gift — generates a 1–2% return. In other words, for every 100 pieces you send out, you get one or two new members. The other 98 or 99 pieces fail.
Consider this carefully. When was the last time you succeeded one time out of a hundred and felt good about it? To put this in a fundraising perspective, asking qualified prospects face-to-face has a success rate of 25–50%, while sending them personalized letters from people they know will generate at least a 10–15% return. (Follow-up phone calls increase this percentage dramatically.) Even grant proposals — a dubious way to raise money — have a better rate of success: Between 6% and 15% of all proposals receive funding.
Are we so hard up for cash, or so desperate for new ideas, that we fail 98% of the time and call it success?
- High cost. If you break even acquiring a new member through direct mail, you’re doing well. When you factor in the cost of design, printing, list rental, mailing preparation, and postage, the first gift typically costs more than it’s worth. (Don’t forget staff time to write the letter, organize the mailing, and track the results. Staff expenses are generally not included in direct mail cost calculations.)
Using this strategy, you don’t begin to net money until the third or fourth gift. Unfortunately, many grassroots groups are squeamish about resoliciting their membership three or four times annually, so it can take years to make back the initial investment.
- Competition. In addition to charitable solicitations, your mailbox is filled with catalogs, magazines, newsletters, insurance pitches, credit card offers, flyers, free samples, sweepstakes forms, and even an occasional letter from a friend. The average college graduate is on 300 mailing lists. Declining direct mail results are directly related to the sheer volume of competition. You can rent a better list or write a better letter, but you have no control over all the other materials moving through the post office.
- Cash flow. Because of the high costs associated with direct mail, you need money in the bank. In fact, to run a successful mass mailing program, you have to plow much of the income into additional mailings to eventually make money. For many cash-starved grassroots groups, this is unrealistic.
- Lack of self-discipline. As pointed out in the Journal’s June story, any effective mass mailing strategy requires scrupulous record keeping: how many pieces were mailed to each list, when the mailings were sent, which items were included in each package, how many donors responded, how the response rate changed when one variable was changed, etc. Without this level of detail, it’s difficult to know what’s working and what needs to be fixed.
Alas, I know very few grassroots organizations with sufficient discipline (not to mention staff or stamina) to track mass mailing returns adequately. When other crises— real or imagined — pop up, donor tracking is one of the first things to go. What remains is instinct and guesswork, which are poor tools to manage a direct mail program.
- Environmental impact. First there’s the paper, most of which still comes from trees; then, the energy used to design, print, and distribute the mailing; finally, the pollution associated with dumping all those unwanted letters (and plastic decals and mailing labels and heaven knows what) into the landfill or burning them in incinerators. Even folks who recycle their junk mail still create environmental impacts through recycling collection and reprocessing.
We live in a world of paper, at least for the time being, and I’m realistic enough to accept that we need paper (and electricity and gasoline) to raise money. Nonetheless, we should minimize our use of paper and energy whenever and wherever we can. It’s hard to justify a 98–99% failure rate when our failures diminish the natural world and affect human health.
Direct mail membership acquisition is just one important tool in any fundraiser’s toolkit. I believe that every nonprofit group should use alternatives to direct mail to the degree possible and appropriate. Such alternatives, as Andy Robinson describes them in the article above, include personalized mailings, hand-addressed envelopes, face-to-face solicitation by existing members, events, tabling, and soliciting friends, relatives, and acquaintances by the board and staff. However, I would recommend that such alternative tools be used in addition to, rather than as a replacement for, direct mail as a membership acquisition strategy.
While direct mail may not be appropriate for every nonprofit, most can benefit from the significant infusion of new members that it can bring. It is vital that those who use the alternatives to the exclusion of direct mail understand the consequences. When we look at membership acquisition, the alternative approaches will only allow you to reach a relatively limited prospect pool and may severely limit the size of the organization — something that may not be in the group’s best interest. By contrast, direct mail reaches far beyond this “inner circle” of prospects. While one eventually runs into limits here as well, direct mail helps groups reach far more prospects, gain far more donors/activists/volunteers, and spread their message to a much larger population than any of the alternatives alone or taken together.
It is critical that any organization determine its membership goals before it spends a lot of energy or money on any kind of recruitment. A group should begin by determining what kinds of members it needs (taking into account such factors as ethnicity, gender, geography, political clout, etc.) and the number of members in each category necessary to achieve its program goals.
Some organizations, such as those that primarily serve other nonprofits and are able to sustain themselves on existing funding, don’t need a lot of members. They may be content with a few hundred. Others may need thousands to achieve their political goals.
A good example of an organization that benefited from significant growth is the Southern Utah Wilderness Alliance. In 1988 the group had about 1,000 core members. Through a strong direct mail campaign, which involved sending as many as 300,000 pieces of mail each year for five years, the membership grew to 10,000. The average renewal rate remained high at 70–75%. A second, three-year recruitment effort involving door-to-door canvassing brought the membership to 20,000.
The membership success of the alliance would not have been possible without the help of direct mail. And the significant progress that has been made toward protecting Utah’s magnificent canyon country may well have been far more limited had there not been a sizeable membership to back up the organization’s goals with letters, phone calls, attendance at public hearings, funding, letters to the editor, and general political clout.
Below are some questions that correspond to the six specific issues Robinson raises in “The Case against Direct Mail,” along with some responses. These questions are typical of those that cross many board and staff members’ minds when they consider using direct mail to acquire new donors.
While it is true that the return rate for nonprofits is usually around 1% or 2%, once you’ve captured the people who are interested in what you do you have the potential of realizing a great deal of income from this group of people over their “membership lifetime.”
It generally does cost more to acquire new members through direct mail than they pay in dues and contributions in the first year. However, it is far less expensive to get subsequent gifts, upgrades, and renewals from these members than it was to acquire them in the first place, making each successive gift more and more profitable. The key is that the organization must do the work required to renew and upgrade members. That’s where personalization, hand-addressed envelopes, personal contact, volunteer programs, major donor programs, house parties, and the like play a critical role. (Keep in mind that these strategies, too, cost money.)
If an organization makes no effort to upgrade members and average gifts remain at $25, then the organization should definitely not pursue direct mail, since its cost will be prohibitive. If the organization is willing to treat its members as part of the team and to upgrade their giving, direct mail is a viable option even for small groups.
3. IS THE FACT THAT MANY NONPROFITS TODAY FIND MEMBERS THROUGH DIRECT MAIL DETRIMENTAL TO EACH GROUP’S SUCCESS?
Given the proliferation of nonprofits (there are well over a million in the United States), competition is often brought up as a reason not to do direct mail membership acquisition. There are a lot of nonprofits and an awful lot of other mailers fill our mailboxes. No doubt this has resulted in overall decreased returns for everyone. Direct mail is not as profitable as it used to be. But as long as the returns are still bringing in new members who remain donors and, on average, increase their giving over time, then it would be unwise to leave this useful tool out of our repertoire.
Furthermore, while more nonprofits are using direct mail membership acquisition each year, giving by individuals also continues to increase. Last year, according to Giving USA, individual donations surpassed $144 billion. In addition, there is evidence that overall giving increases when people are given more choices of groups to give to. The best examples can be found in the arena of workplace giving. When companies increase their workplace giving options from United Way only to United Way plus other federations of nonprofits, charitable giving has been shown to increase.
4. DOES THE FACT THAT MOST NONPROFITS ARE STARVED FOR CASH MEAN THAT THEY CAN’T ENGAGE IN DIRECT MAIL MEMBERSHIP ACQUISITION?
It is true that smaller nonprofits may find it hard to come up with the cash to do direct-mail membership acquisition on a significant scale. If you only need a few hundred members, you don’t have to send hundreds of thousands of pieces of mail to find them. If you do need to get thousands of members, however, then consider what it would take to do some large-scale mailings. Some foundations are willing to provide funds for raising membership. The more compelling a case you can make by linking the need for members to your program objectives, the more likely your grant proposals will succeed.
I strongly encourage nonprofit leaders to take advantage of the Revolving Loan Fund offered by the Washington, D.C.–based Environmental Support Center or similar programs in other fields. While many nonprofits are skittish about borrowing any money, this kind of loan fund provides an incredible opportunity for nonprofits. Just as small businesses need venture capital, small nonprofits need capital to invest in their future financial stability. Direct mail is the most efficient way to acquire large numbers of new donors who readily renew their membership through the mail; no other strategy allows you to do that.
Direct mail does take staff time and is usually just one of numerous responsibilities. My own experience at the Southern Utah Wilderness Alliance convinced me that it is possible to juggle numerous tasks in addition to doing direct mail and tracking the results accurately. In any case, as an organization grows, it will need additional support staff to serve and upgrade the memberships. Staffing levels should be evaluated periodically if a successful direct mail program is implemented.
Small organizations can do direct mail and deal with tracking lists and maintaining simple statistics if they are committed to the program. They will be greatly helped by acquiring a database program that allows for accurate coding and by availing themselves of a small amount of consulting help or training to get them started.
6. DO THE BENEFITS OF ENGAGING IN DIRECT-MAIL MEMBERSHIP ACQUISITION JUSTIFY THE ENVIRONMENTAL IMPACTS OF USING THIS TOOL?
While I consider myself a die-hard environmentalist, I don’t agree that the environmental impact argument justifies ending direct-mail membership acquisition. It is true that we all contribute to waste and pollution. While one might argue that this does not justify knowingly wasting resources such as paper (i.e., trees), we must also look at the benefits of our nonprofit activities. In my mind, the benefits of saving southern Utah’s irreplaceable canyon country, protecting the last 5% of our remaining old-growth forests, promoting responsible family planning, and advancing a million or so other causes justify using some of our precious resources to find the members who make it all happen.
You have many other options for recruiting (and, over time, upgrading) new contributors, including using the mail for more targeted, major donor fundraising. Consider the following:
In the June 1997 issue of the Journal, my article, “Finding Major Donors by Mail,” (see page 80) outlines my experience with The Wildlands Project, a grassroots conservation group. During 1996 —the first year of our major-donors-by-mail program — we raised $65,000 from a pool of only 700 donors and prospects, nearly all of whom were solicited by mail. The main components of this program included:
- Personalizing letters to all previous $50+ donors (about 250 people) by mail-merging their names, addresses, and salutations, then having a board member add a real signature.
- Passing these letters around at a board meeting and asking all board and staff present to write personal notes to any donors they knew.
- Hand-addressing all envelopes; affixing a big, colorful first-class stamp; and enclosing a response card with check-off amounts beginning at $100 and going up.
- Asking board and staff to identify additional prospects from their own personal mailing lists, Rolodexes, etc.
- Asking board and staff to review published donor lists photocopied from the annual reports and newsletters of other conservation groups, to see if they personally knew any of the donors. We reasoned these folks would make excellent prospects for The Wildlands Project because they 1) had a relationship with the solicitor, 2) had proven their concern about environmental issues, and 3) had demonstrated the ability and inclination to make a charitable gift.
- Repeating steps a, b, and c with the 400+ new names gathered during steps d and e.
This process produced a 33% renewal rate for previous donors and a 15% acquisition rate for new donors, far outperforming any kind of mass mailing. Even better, the average gift from both prospects and donors was well over$100. In 1997, using the same approach, we raised$116,500 from a pool of 800 donors and prospects.
I have shared this strategy with several small nonprofits, all of whom report acquisition rates of at least 10%. Remember, “acquisition” means new members and new money. Let’s do the math: You can mass mail 5,000 “Dear friend” letters to strangers and get a 1% response rate, bringing in 50 new members. Or, you can send personalized mail to 500 people who have a relationship with someone in your circle — board, staff, volunteers, members, former board and staff — and get a 10% response rate, acquiring 50 new contributors.
Either way, you add the same number of supporters. With the first approach, you lose money, you waste resources, and you’re still dealing with strangers even after you receive their gifts. With the second approach, you make money, you use less paper and energy, and you begin with some personal knowledge of your donors, which makes it much easier to identify their interests, increase their loyalty, and upgrade their gifts.
Of course, this personalized approach requires a lot more time from a lot more people, and you can only squeeze so many names out of your board and staff. Try casting a wider net: Ask volunteers, former board and staff, and your most loyal donors to also contribute leads. Some will allow you to use their names, will sign letters and/or add personal notes, and even visit the best prospects. We call this “peer-to-peer” fundraising.
All effective fundraisers look for opportunities to involve more people in “the ask.” This major-donors-by-mail strategy is a great way to begin.
Several years ago, when I was working for Native Seeds/SEARCH, a nonprofit seed-conservation group in Tucson, I conducted an experiment. We mailed out a batch of regular membership renewal notices to 200 donors. After waiting a week or so, we randomly split the list. Half the recipients received reminder telephone calls from me or a board volunteer; the other half did not.
Not surprisingly, these phone calls doubled our response rate. Members reached by telephone also gave larger average gifts than those who were not called. While this experiment was conducted during a renewal drive, you should get similar results when soliciting prospective new donors.
While I would never, ever encourage you to call strangers — “cold calling” is a complete waste of time —the phone works wonderfully when you have a relationship with the donor or prospect. These relationships come in three flavors:
a. You’re calling a current or lapsed member, so what connects you is your shared commitment to the organization and its mission.
b. You know the prospect personally.
c. You’re referred by a mutual friend: “Hi Sally, I’m Andy Robinson with That Cool Group. Juanita Sanchez asked me to call and tell you about our work. Do you have a minute?”
Personalized letters and personal phone calls are both effective. When you combine these strategies, however, they work even better.
House parties are one of the most widely used and effective fundraising strategies. Many, many political campaigns have been funded with contributions solicited at coffees, brunches, cocktail parties, and private dinners. Independent film and video makers often use house parties to show excerpts from their works-in-progress and request gifts to complete the projects. Affiliates of the National Abortion Rights Action League (NARAL) have successfully adapted this strategy to recruit both donors and activists at the same time.
At Native Seeds/SEARCH, we organized a series of recruitment dinners in private homes. These events featured a unique menu based on traditional Southwestern foods— tepary bean paté, posole stew, mesquite meal cookies, prickly pear punch — a slide show, and lots of hands-on show-and-tell, including multicolored ears of corn, gourds, and baskets of beans. (This kind of educational component is essential for any successful house party. It provides the “hook” that draws people in.)
Fifteen or twenty people attended each event, paying$50 per person in advance. The host or hostess provided half the invitation list; we pulled the remaining names from our prospect pool.
Our fundraising dinners netted only $400 each, but were easy to organize, requiring 20 hours of staff time per dinner. However, the real financial benefits were realized later on: After spending an evening with these folks, it was easy to identify the most enthusiastic prospects. We later approached several for major gifts, receiving donations of$500 to $1,000. One dinner guest recommended us to a corporate donor, who has made annual $5,000 contributions for six years (and counting).
Any time you hold a public event — rally, news conference, educational workshop, auction, dance, field trip, etc.— capture the names and addresses of everyone present.
Pass around a sign-up sheet. Even better, give people an incentive to provide their names. Organize a drawing for a free door prize — perhaps a T-shirt or a gift membership— and ask participants to write their names, addresses, and phone numbers on the ticket. Then add these new prospects to your database and solicit them by mail, by phone, or in person.
The most effective way to recruit new donors and raise money is face-to-face. While it isn’t cost effective to set up meetings for $25 gifts, at higher levels —perhaps $250 and up for local prospects — it’s an efficient use of both volunteer and staff time. (Remember, a $250 annual pledge works out to about $20 per month, which is affordable for a wide range of people.)
The Grassroots Fundraising Journal has published many articles describing how to set up, rehearse, and conduct donor visits. The reprint collection, Getting Major Gifts, is a good place to start.
Like direct mail, Web-based fundraising still costs more than it earns. The expense of designing and “hosting” your Web site, including handling secure credit card transactions, is likely to exceed your initial income.
Unlike direct mail, where response rates are declining, the Web shows great promise for the future. Mal Warwick believes that, by 2000, any organization without a Web presence will miss out on a huge pool of potential donors.
While the Web is unlikely to replace other, more personal strategies, it offers a whole range of new options. You can solicit gifts from a dedicated page within your Web site. Donors make payment at least three ways: by submitting credit card information electronically, by phoning in a pledge, or by printing out your membership form, filling it in, and sending a check through the mail. An increasing number of prospective contributors have accounts with online banks, such as FirstVirtual, which provide another avenue for electronic giving.
The best way to learn about Web-based fundraising —how to reach prospective donors, get their attention, and involve them in your work — is to go online and see for yourself. In the June 1998 issue of ReSources, the newsletter of the Nonprofit Resou