In order to run programs that benefit society, nonprofits obviously need to raise money. But many groups still don’t grasp whether they’re going about it in the right way.
As it turns out, the easiest answer may be the most obvious: Use email. A recent Blackbaud survey of over groups 700 groups on its cloud-based Luminate platform for donor engagement and fundraising shows that those nonprofits combined to raise more than $1.7 billion in contributions online last year through email-referred online solicitations.
For Blackbaud, the entire point of this research is to show the power of their service and convince other charities to sign up. Of course, that’s another fundraising cost, but one that has a measurable benefit: Groups on the Luminate platform expanded their email subscriber lists by 10% and saw online donations rise at roughly the same rate.
Email-based fundraising obviously isn’t a new tactic, but its full potential has arguably not ever been embraced. That’s more important than ever now that the basic metric for fundraising success has been deemed pretty incomplete: According to a recent report from BoardSource, a nonprofit leadership and governance organization, just auditing your fundraising cost (that’s dollar spent per dollar raised) isn’t enough. Nonprofits need to lower that cost as much as possible to ensure that what they’re netting is enough to sustain the operation. And relying on just a few wealthy donors to do so is too risky: When one bankroller disappears, that can be tough to replace.
Basically, charity groups need a cheap way to reach more donors and generate consistent returns. Two classic methods of fundraising–telephone calls and direct mailings–can be costly, take up valuable time for aid workers, and have been decreasing in their overall effectiveness, according to a recent study by the Nonprofit Research Collaborative. It’s a problem the industry has been grappling with for a while now. “Although nonprofits generally have a good understanding of their revenues, knowledge about costs can sometimes be less robust,” notes a 2009 report from Bridgespan, a nonprofit consultancy. In a cost analysis toolkit, Bridgespan includes direct paper mailings as a significant cost for nonprofits; sending out blast emails, in contrast, is relatively inexpensive.
For nonprofits, the creation of a healthy email list can happen through in-person events, social media campaigns that collect donor information, or even by purchasing mission-aligned accounts from a third party to contact blindly. Not everyone will be receptive, of course, but the average donation rate is about 15% of all recipients, up 2% from a year ago. When the contribution rates are averaged across all groups, that makes each email added to a group database worth just over $13 in potential donations.
Among Blackbaud’s clients, the biggest revenue generators by field were health services and research groups, which secured 42% of their revenue through the tactic, followed by food banks and public broadcasting, both of which secured 27%. Of course, there’s a spam factor to consider, too, depending on how often the group sends notes. “Did people get tired of hearing from you? Some might say yes, as open and click rates went down, often by double digits, depending on the type of email sent,” notes the report, which is directed toward nonprofits.
But odds are that while some emails got ignored, the nonprofit accounts sending them were not blocked–which would be a real blow to fundraising. As it turns out, even people not reading each incoming message respect the mission. Over 60% of contributions came from existing donors, who were eventually spurred to contribute again; nearly 12% of the overall revenue was generated by so-called “sustainer” gifts, which is a great way for groups to stay cost-effective: These people sign up to contribute automatically on a subscription-like basis at various times throughout the year.
Blackbaud didn’t track how message frequency or type-of-solicitation pitch–these can be soft sells for awareness, say, or emergency hard sells based on some disaster or the political climate–impacted total fundraising. That’s because a lot depends on the nonprofit doing the fundraising, and how much awareness around their organization or cause already exists. “[Organizations] would have to have controlled groups who receive these additional emails and groups who do not and measure the impact in fundraising response,” says report co-author Bryan Snyder in an email to Fast Company.
That might be the next step, especially given that many businesses use similar methods in A/B message testing. But crafting messages with enough goodwill to avoid the junk filer is a good start.