Hispanic America: Cracking a Fundraising Market 55-Million Strong (and Growing)
According to the U.S. Census Bureau, 17 percent of the U.S. population is Hispanic. That’s 55.4 million people—the largest ethnic or racial minority in the country. And it’s growing.
Of the 2.36 million people added to the U.S. population between 2013 and 2014, almost half (1.15 million) were of Hispanic origin. Urban areas, like New York City, have seen larger increases. The San Francisco Chronicle reports that Hispanics are expected to be California’s majority by 2042. Likewise for Texas, according to the state’s Office of the State Demographer.
For nonprofits, these are astounding numbers—not just because of the enormous volume, but because, by and large, Hispanic donors are generous. Research by Russ Reid indicates Hispanic giving closely matches that of Caucasians, the nation’s largest donor group, especially among English-speaking Latinos. And while Spanish-speaking Latinos give smaller average gifts than Caucasians, they give a higher percentage of household income to charity (1.2 percent versus 1 percent). Other studies have found that 63 percent of Hispanic households give to charity, more or less in line with national averages.
But, of course, there’s a catch. The Hispanic market has been notoriously difficult for fundraisers to crack, for a number of reasons: cultural nuances, list issues, entrenched giving preferences, language barriers, etc. The laundry list of challenges has led many organizations to scale back or abandon their Hispanic fundraising efforts, and discouraged other organizations from attempting efforts of their own.
The upside? The market is wide open for cultivation. And it’s well worth the effort.
The List Problem
Of all the Hispanic market’s various barriers to entry, perhaps the most difficult is list acquisition. The 2008 recession took a massive toll on Hispanic direct marketing efforts, with many companies, nonprofit and for-profit alike, dialing back their mailings or eliminating them altogether. Casualties included some of the most prominent and reliable lists: Kraft/Gevalia, Readers Digest Selecionnes, Bookspan Mosaico Bookclub, Columbia House Latin Music Club and more. The market never rebounded.
That’s according to Chris Ragusa, CFRE, president of Estee Marketing Group, a direct marketing services company that deals in list brokerage and list management. The company specializes in the Hispanic market, having worked with March of Dimes, American Diabetes Association, UNICEF USA and a host of other nonprofit and for-profit organizations.
“Years ago there was a huge push in direct marketing to reach Hispanics in-language, and there were many files available,” said Ragusa. “We were easily able to mail a million Spanish names or more for any given mail date. Currently, there is only a thin selection of Spanish-language lists and geo-segments in Puerto Rico. There are lots of enhanced files, some better than others, but in general if you mail in-language you need a list that was developed from in-language media.”
The recession dried up those lists, and worse, contributed to a scarcity mindset among nonprofits mailing to the Hispanic market. With lists in short supply, many organizations simply refused to release Spanish-language names to other mailers. And while some nonprofits have softened their list-sharing stance post-recession, many more remain defensive.
“It’s probably not as prevalent as it used to be,” Ragusa said. “But I believe it’s the same old story—people feel that their donors are special, and they don’t want to give them up. And of course that causes issues with reciprocity, and they can’t get other people’s lists. It’s not a good cycle.”
Food for the Poor, the Florida-based Christian nonprofit that provides food, emergency relief and other services to the poor in Latin America and the Caribbean, introduced direct mail to its Hispanic outreach program in 2013. Operated entirely in-house on a limited budget, the program sends roughly one appeal per month, about 14 per year, and has been a modest success—32 percent of Food for the Poor’s Hispanic file responded to appeals in the last 12 months, compared to 10.9 percent for its English-speaking file.
It’s also done well with acquisition. Angel A. Aloma, executive director for Food for the Poor, noted that the nonprofit has acquired 70 percent of its Hispanic donors via direct mail. “At the start, a number of our acquisitions actually broke even or turned a profit, and although that has not been consistent, the response rate for our Hispanic acquisitions has remained at least 1 percent higher than the English counterparts,” said Aloma.
“For all ‘cold name’ acquisitions in 2013, it cost us $18.15 per English-speaking donor acquired, but we profited $1.64 per Spanish-speaking donor acquired,” he continued. “While not always profitable, Spanish-speaking donors acquired through direct mail acquisition mailings continue to have a much lower cost-to-acquire than English-speaking donors in 2014, 2015 and 2016.”
Yet, for all its successes, Food for the Poor has hit a wall in its Hispanic direct mail efforts. Aloma put the nonprofit’s 2015 Hispanic mailing response rate at 6.34 percent—a third higher than the 4.29 percent response rate for English-language mailings—but net revenue for Hispanic donors was about a third of the net revenue for English-speakers. Normally, with response rates that high, an organization could compensate by mailing to more names. But with lists in short supply, Food for the Poor’s Hispanic direct mail fundraising is effectively capped.
“Our program is quite small in comparison to our English program, so we have little leverage where co-ops are concerned,” said Aloma. “Because many of the charities have a similarly small program, it becomes difficult to rent or exchange lists of a material size.”
Speaking the language
Anecdotal evidence suggests a significant decline in Spanish-language direct mail packages overall. And many fundraisers trace the drop directly to the lack of lists. A “circular argument,” Ragusa called it.
“Larger mailers can’t find cost efficiencies in smaller mailings, and a fundraiser who has a commitment to this market has to maintain internal resources to serve the donors—in-language donor relations, etc.,” she said. “But some fundraisers have been successful in reaching Latinos in the English language, either with their traditional appeals or culturally relevant appeals.”
Fundraisers can’t do much about the list shortage, but they can control individual elements of their mailings to maximize response rates for the names they do have. Language is the obvious starting point—though there’s hardly an obvious solution.
According to AOL Advertising’s “2010 Hispanic Cyber-Study,” marketers traditionally divide the Hispanic market into three categories: Hispanic Dominant, Bicultural and U.S. Dominant. The former speaks mostly Spanish at home and consumes most media in Spanish, while the latter two speak some or mostly English and consume most media in English. Offline, the Hispanic Dominant segment comprises 52 percent of the market. Together with the Bicultural segment, that’s 71 percent of the offline market that speaks some or mostly Spanish.
The splits seem to indicate that direct mail would best work in Spanish. But those are 2010 numbers. In the six years since the study’s release, digital adoption has skyrocketed across all markets. A study by Specific Media, a digital solutions provider, found that Hispanics top all other demographics in smartphone and tablet ownership, while a Google study found that 79 percent of Hispanic consumers use search engines on a daily basis. The numbers show that the Hispanic market is moving increasingly online, where just about everything is in English. And as it does, its language preferences are bound to shift in kind. Recent U.S. Census Bureau data backs that assumption—68 percent of U.S. Hispanics now speak English “proficiently” or “well,” compared to 59 percent in 2000.
If the numbers tell us anything, it’s that there’s little consensus on Hispanics’ marketing preferences. And accounting for ethnic and cultural nuances, preferences from segment to segment within the market are likely to vary wildly—perhaps more than in any other top-level demographic. There’s no rule for reaching Hispanic donors. It’s best to throw out any preconceived notions about the market, language or otherwise, and start from scratch. Writes Randall Anderson, chief operations officer for ListenTrust (formerly Listen Up Espanol), in a blog post: “One of the mistakes that I’ve seen in nonprofit outreach campaigns is assuming all Hispanics have the same religious affiliation or assuming all Hispanics read Spanish.”
Solutions and questions
Research indicates that while Hispanics give at about the same rate as other demographics, much of that giving goes to local churches and informal donations to family and friends. More still goes to remittances to relatives in their countries of origin—to the tune of $45 billion a year, according to The New York Times.
That’s a staggering amount, especially in the context provided by Consulting Within Reach, a consulting firm that works with nonprofits, in a 2014 blog post: “To put this huge amount in perspective, the U.S. government in 2005 only gave $1.8 billion to Latin America. Looked at from this angle, Hispanics don’t give very much to local nonprofits because they are propping up U.S. aid to an entire part of the world.”
For nonprofits, it’s an uphill battle, and identifying the target audience’s language preferences is only step one. It might get your mailings and marketing materials read, but it doesn’t guarantee response. If the audience prefers Spanish-language materials, it’s not as simple as plugging existing copy into Google Translate. And if the audience prefers English, it almost assuredly will not respond strongly to mailings—even the most successful ones—designed for non-Hispanic donors.
Success, here, mostly comes down to direct marketing fundamentals—testing, strong grasp of audience, powerful copy, etc. But there are strategies specific to the Hispanic market worth considering.
“One of the things we stress with our fundraisers (and for-profits, alike) is to broaden the offerings to the Latino market—having one or two successful Spanish mailings is not enough to sustain a program,” said Ragusa. “We have worked with a large Catholic mailer to help develop additional offerings to its Latino donors very successfully. In acquisition, it is not enough to develop one successful control package. Multiple relevant in-language control packages is the best strategy to maximize the limited list universe that is available.”
Ragusa also advised looking beyond general demographics and instead examining giving habits—how Hispanic donors give compared to general-market donors. “Our nonprofit clients look at long-term donor giving, as well as demographics,” she explained. “What they often find is that their Latino donors are younger, whereas their general-market givers are more mature. Some of them have also found that the demographics of their Latino givers might show that they are lower income individuals, but long-term donor values can exceed their English counterparts.”
It may also pay to think beyond direct mail. As mentioned, digital adoption among Hispanics has skyrocketed, making online- giving options even more viable in the market. According to Russ Reid, Hispanics typically use multiple channels to give, and are five times more likely than non-Hispanics to list DRTV and radio as primary channels. Aloma noted that Food for the Poor is considering DRTV (the cost is an issue) and has done well in limited Hispanic radio campaigns. The nonprofit has also had success with face-to-face fundraising efforts, especially its speakers bureau, and with its donor services department, which is 30 percent Hispanic.
“We have many Hispanics and Spanish-speakers in our donor relations phone center who call our Hispanic donors for prayer, gratitude and on the department’s three major yearly campaigns,” said Aloma. “Donors in our organization, both English- and Spanish-speaking, who are touched by phone (particularly for prayer) have been shown to become more generous, more committed and more loyal to the organization.”
Perhaps the most intriguing approach, though, is one put forth in a 2015 study titled “Crossing the Cultural Divide Through Bilingual Advertising: The Moderating Role of Brand Cultural Symbolism.” The study, published in International Journal of Research in Marketing, is geared toward brand marketers rather than fundraisers, but its findings don’t appear limited to for-profits.
Matt Palmquist, writing for Strategy+Business, neatly summed up the study’s findings: “To appeal to a bicultural audience, the researchers argue, managers of iconic U.S. brands should consider sticking to English in advertising campaigns. In these efforts, they should stress universal values that don’t refer to a particular cultural identity while simultaneously nodding at the way of life in the U.S. and how the brand reflects it.”
The central idea here is that focusing too much on one language or the other misses the bigger picture. Language is not the same as identity, the study argues, and to reach a market whose identity is firmly multicultural, marketers should position their organization as a bridge. It’s a big idea—one that might not be easy to implement—but it’s worth considering.
“Rather than engaging in bilingual advertising, marketers could focus on how their brands help people cross the chasm that separates their two cultural identities,” the study concluded. “In doing so, marketers could help different ethnic groups resolve the identity conflict they may face, while improving the appeal of their brands to those with varying levels of acculturation.”
