Leap of Faith

City of Hope realized it had a problem. In 2005, the now 95-year-old Los Angeles-based biomedical research, treatment and educational institution had been mailing an average of 11 annual appeals for about five years. But a changing of the guard that led to a fresh analysis of the development department’s overall effectiveness revealed no growth in net revenue from annual appeals since the program was first outsourced in 2000.

It was a major red flag for Diana Keim, senior director of development at City of Hope, who was among the new leadership staff to come aboard in 2005. She concluded that the annual-giving department wasn’t being a good steward of City of Hope’s money and needed to find a way to “right the ship.”

The department reviewed who its partners were, what its messaging was and, ultimately, what it wanted out of its direct-mail program. City of Hope had done its first direct-mail campaign in-house as part of its annual-giving program in 1983. It continued to do so for nearly two decades until 2000, when it decided to outsource the program.

For the next few years, it struggled to find the right fit with an agency and achieve the voice it wanted — one that intertwined the research City of Hope was doing with patient stories. It saw the need for three things: a solid partner agency, strong messaging and more net revenue going back to the hospital without increased costs to the program.

The organization sent out an RFP in search of a vendor that could make that happen. Lanham, Md.-based database-marketing agency Merkle answered the call with a surprising solution.

“When we took them on, one of the biggest things we realized through doing a deep-file analysis is that City of Hope was not optimizing their number of mailings to their donors,” Merkle Account Director Kristen Oaksmith says.

What the annual-giving department needed to do, Merkle advised, was mail even more. Keim says she thought the agency was crazy. Having spent 10 years as a development professional in higher education — where she mailed four, at most five, appeals a year — she was inclined to think the 11 mailings might already be exhausting donors.

But Merkle told her she wasn’t thinking about it correctly.

“They said, ‘You have such an opportunity for creating a real relationship with your donors, yet you’re only telling them about yourself once a month. You have so much to offer here that you could be talking to them a lot more, and they would not get tired of listening to you,’” Keim says.

Merkle proposed three more appeals a year and a quarterly, donor-focused newsletter that would give City of Hope the opportunity to talk about the facilities, research and programs that were getting overlooked in the regular appeal mailings. More mailings also would achieve another of City of Hope’s goals — to cultivate more long-term-value donors.

Keim says it was a leap of faith, but she agreed, figuring that if Merkle could do all that within the current budget, it would make rock stars of the annual-giving staff.

Shifting focus
A key element of the new game plan was an adjustment to City of Hope’s messaging.

A direct-mail test that Keim’s been doing since her days in development at her alma mater, University of Southern California, signaled some problems with messaging. She replaced the name of the institution in its appeals with the name of a competitor to see how it read.

“If it reads truthfully, then I feel it’s the wrong copy for my institution, because no other institution should be able to say exactly the same things that City of Hope is saying,” Keim says.

She saw that the message the organization was using in the annual-giving appeals overlooked the very things that had awed her about the hospital and made her want to work there in the first place.

“When I first took the tour of the hospital prior to deciding to come to work here, I was literally amazed. My jaw kept dropping every five minutes as we were driving through the campus — you know, a little golf-cart tour — and listening to my tour guide. [I kept thinking], ‘I’m from Los Angeles, this place is in Los Angeles. How come I haven’t heard all of this about this place?’” she says.

Past appeals had more of an organizational than donor focus, often talking about the urgent need for funds rather than what City of Hope really is about: positive patient experiences and breakthrough research.

Many City of Hope patients are referred there from other facilities, so it’s not their first stop on the road to treatment. But Keim says she often hears patients talk about the night-and-day difference they experienced coming from their local hospitals to City of Hope.

A lot of that has to do with the institution’s facility. Spread out on a 113-acre campus, City of Hope is much more than a hospital building. It has trees, a rose garden and a Japanese garden offering a holistic treatment experience for patients and their families, and the Center for Biomedicine & Genetics — a 20,000-square-foot, state-of-the-art building — where it manufactures its own FDA-approved drugs and treatments, to name a few of its features.

Merkle worked with City of Hope to create copy that goes full circle, telling patient stories tied back to the life-saving research that helped the patients and, ultimately, crediting donor dollars for funding the research.

New elements
This approach to copy shines through in the annual-giving newsletter, HopeCONNECTION. City of Hope has sent out a quarterly magazine called City News to most of its donors since 1990. It’s a stunning, glossy publication, also revamped in 2005, with in-depth articles on City of Hope’s research work and other announcements. But it averages 30-some pages and has an in-depth, organizational focus. Keim wondered if its messaging was resonating with all donors.

“It’s a great magazine, but is our donor who gave $20, who maybe made that gift three times a year, going to sit down and read that? Maybe not,” she says.

She wanted to create a newsletter with a different voice — one that didn’t just talk about City of Hope’s projects, but rather used language that puts donors first, as the agents enabling it to accomplish those projects.

HopeCONNECTION is composed of four glossy pages and always leads with a patient story on the front because, as Keim says, “that is actually what drives our donors’ gifts — the feel-good, heartwarming story of how we helped a family, a patient, a person, whoever.”

It also announces things like recent partnerships between City of Hope and other charities or corporations and notable research findings, profiles pioneering doctors, has a message from the institution’s president, and includes a cutout reply device on the back page. The newsletter strives to make the science and research behind City of Hope’s work more accessible and “cool” to donors by balancing it with the human-interest stories that it makes possible.

City of Hope Director of Development Noel de Leon, who serves as the internal liaison with patients and physicians when it comes to the newsletter’s patient stories, says the success of HopeCONNECTION has, in turn, made it easier for the development team to find the most compelling stories to feature in the newsletter.

“Our success over the last couple of years has made it very easy for us to obtain the compelling patient stories that have been the focal point for HopeCONNECTION and our direct-mail impacts,” de Leon says. “In fact, HopeCONNECTION has become so popular at City of Hope that doctors call our department to see if their patients’ stories can be featured in this newsletter, and this greatly validates the day-to-day work we do and makes it really easy for us to share how great this place really is.”

The annual-giving department also implemented new strategies to improve donor stewardship and retention. One is a monthly stop-lapse program that segments all of the institution’s current donors who haven’t given a gift in nine months and who are on the verge of lapsing. Rather than sending them the regular appeal other donors get, City of Hope sends them a high-touch, personalized, closed-face mailing with a handwritten message reminding them that they haven’t given in a while and urging them to renew their support.

“The percent response for that package is much higher than the response rate we would see from those donors if they had just gotten the normal appeal,” Oaksmith says.

It also revamped its gift-acknowledgment program, which, up until then, was a generic tax receipt that basically just included the amount of the donor’s gift for tax purposes.

Oaksmith says it was lacking two components inherent in a good gift-acknowledgment: personalization and an ask — something she says a lot of organizations are hesitant to include for fear that it will be received negatively by donors.

But City of Hope found the opposite was true. The team overhauled the package, adding to it a reply device asking for another gift and a letter with personalized copy that not only includes the donor’s gift amount, but also mentions the particular appeal she gave to. For example, if a donor gave to the spring newsletter, it would include copy thanking her for her spring newsletter donation.

Thanks to these changes, a mailing that had historically cost the organization money and provided no revenue now not only breaks even, but also makes net revenue.

“People give again, right away,” Oaksmith says. “The most likely time that they’re going to give is right after they give their initial gift. And what we also find is if we get that second gift quickly, it boosts overall donor retention across the board.”

Sum of its parts
City of Hope’s direct-mail makeover results speak for themselves. In 2005, prior to implementing the changes, the annual-giving program mailed 11 appeals, grossed $3.5 million and netted $1.6 million. In 2006, it increased its appeals to 14 and added four newsletters, grossing $4.1 million and netting $2.2 million, with continued success in 2007, as it netted $2.5 million. Despite the cost of adding more mailings to its program (about $13,000 a year more), it’s brought in 18 percent more gross revenue for two consecutive fiscal years.

As for the big picture, City of Hope’s revenue grew from $641 million in 2006 to $667 million in 2007.

Oaksmith says the key to making these improvements with minimal additional costs was revising City of Hope’s segmentation strategy to focus on investing more money where it would get the highest ROI. Lower-performing donors, who in the past had been receiving just as many appeals as the higher performers, were downgraded to maybe three or four appeals and one or two newsletters a year. The organization took the cost that was saved there and reinvested it in high-value donors, adding high-touch prospectus packages — mailings that have a much higher ROI and net revenue than normal appeals — and special package treatments like closed-face envelopes and postage on the return envelope.

The strategy increased gift frequency among higher-performing donors, setting them on the path to become better long-term-value donors.

Recipe for success
City of Hope will mail a total of 21 impacts this year — the newsletter will be sent out six times, and it will mail 15 annual appeals — and expects to best last year’s numbers.

Keim says she believes the key to the program’s newfound success is that it’s providing donors a return on their investments. As long as it’s always talking about something new and fresh in its mailings, donors are happy to be communicated with more often. Of course, there are those people who tell the organization to save its postage and just mail them a reminder once a year, and City of Hope is happy to accommodate them, as well.

Another key is the working relationship between Merkle and City of Hope, which yields a few useful best practices. Both Oaksmith and Merkle Account Supervisor Bret Campbell note City of Hope’s annual-giving department’s consistency at providing Merkle the tools it needs to make the most of each mailing.

“They make our job so much easier by providing us relevant patient stories that are emotional, tied back to research, and really tied back to the offer and the message that they want to portray. And they’re able to give us this with every single appeal, way ahead of time, so we can work with that resource and interview patients and doctors,” Oaksmith says.

One example is City of Hope’s efforts with the matching-grant appeal, a mailing that Oaksmith says typically brings in the most net revenue of any appeal, but that most organizations she works with don’t use as often because they fail to get matching-grant commitments.

City of Hope has had no such problem, and as a result, it’s been able to make use of this big-time revenue generator. It’s at the point now where corporations and individual donors are lining up to be a part of the program.

“It helps our planning process and our bottom line every year, the fact that we can count on these really, really strong appeals because we know we’re going to be able to secure the match,” Oaksmith says.

She also credits the department with being able to break down barriers better than many annual-giving departments.

“A lot of organizations work in silos, and so a program will get shut down because it affects another department,” Oaksmith adds. “But we haven’t found that to be the case at all with City of Hope. [The annual-giving department has] been able to get things approved within the organization, whether they affect another department or not. They really work well with other departments for the common good of the whole organization.”

A great example of this is the gift-acknowledgment package, a device that the annual-giving department shared with other departments in the organization. The package was such a hit that it was rolled out across the entire organization right away and now is used to acknowledge gifts of all kinds, organization-wide, ultimately benefiting the organization as a whole.

Campbell says City of Hope extends that partner attitude to its relationship with the agencies it works with, encouraging a holistic, sharing approach among Merkle and its telemarketing partners, and other partner agencies.

“Diana’s been instrumental in bringing us all together at the same table and talking about what makes the most sense for City of Hope,” Campbell says. “Same thing with the internal partners: communications, branding … We’ve knocked down those walls, and the end result has been very pleasant, fun to work on, as well as very effective for City of Hope.

“It is not that common in our industry that we have that kind of silo breaking down and that kind of partnership among everyone,” he adds.

Keim notes that Merkle’s approach from the start helped grease the wheels between the two parties.

“Right from the beginning, they seemed like people who were actually interested in City of Hope itself and not in a client,” she says, adding that this is due in large part to the organization’s mission.

“Cancer is something that touches everyone, potentially,” she adds. “You either know of someone or you have a family member who has been touched by cancer. So I think that a lot of people in that room felt a personal connection already, and they were really just invested right from the start.” FS

City of Hope Distinctions:

● Designated as one of only 39 Comprehensive Cancer Centers in the country by the National Cancer Institute.
● Has performed more than 8,000 bone-marrow and stem-cell transplants.
● Ranked as one of “America’s Best Hospitals” in cancer and urology by U.S. News & World Report.
● Featured in Forbes magazine for its fundraising efficiency score of 85 percent (meaning 85 cents of each dollar raised goes to research, treatment and education).
● Featured by The Chronicle of Philanthropy in its annual survey of the nation’s top nonprofit organizations in 2006 (ranked No. 200) and 2007 (ranked No. 127).
● Approximately 20 percent of City of Hope’s funding comes from private support (e.g., individuals, corporations, foundations and other nongovernmental institutions) through charitable gifts.
● Its research has helped boost survival rates of children with cancer to 80 percent today and led to the development of some of the leading anticancer drugs.

City of Hope
1500 E. Duarte Road
Duarte, CA 91010-3000

Operating budget (2007): $641 million
Founded: 1913
About: (from City of Hope literature)
“City of Hope is a leading biomedical research and treatment center dedicated to the prevention, treatment and cure of cancer, diabetes and other life-threatening diseases. Our mission is to shorten the time from initial research idea to new treatment, quickly bringing cures to patients who need them.”