Don’t Toy With the Marine Corps

A U.S. Marine in his dress blues remains stone-faced as a young boy looks up and asks him if he’s Santa Claus.

“Heard you might be him,” the boy says. “If you are him, here’s my list.”

Finally, the serviceman acknowledges the boy, opening his white-gloved hand to take the list. Walking away, the boy says, “He is Santa Claus.”

That public service announcement for the U.S. Marine Corps Reserve Toys for Tots Program has been melting hearts and opening wallets for 10 years, continuing the tradition that has allowed the 60-year-old organization to bring more than 386 million shiny, new toys to more than 177 million children across the country.

In 1947, the year it was founded, Toys for Tots collected and distributed 5,000 toys. By 2007, that number had grown to 16.7 million.

The organization has thrived — despite a major setback 15 years ago following a public relations and fundraising debacle — with a good, old-fashioned fundraising strategy that includes conservative budgeting, a strong brand, corporate partnerships and a killer direct-marketing campaign.

Retired Marine Maj. Bill Grein, vice president of marketing and development for the Marine Toys for Tots Foundation, believes the “Are You Santa Claus?” public service announcement is what helped persuade Toys “R” Us to become one of the organization’s most valuable partners.

The organization met with the toy titan’s marketing people about four years ago, which led to Toys “R” Us instituting a checkout-swipe program that allows customers to add a $1, $5 or $10 donation to their bills that goes to Toys for Tots. The program has raised more than $3 million a year for the past four years, Grein says.

“We went up and talked to them and their marketing people and made a presentation,” he explains. “We played our PSA, and I think it melted some hearts at Toys ‘R’ Us.”

Toys for Tots has a similar relationship with retailer Best Buy. The electronics giant’s foundation approached the organization about 10 years ago.

Grein says the partnership started with a $250,000 grant for the purchase of gifts for preteens and teenagers. The partnership grew to include relationships with other companies such as studios that produce DVDs sold at Best Buy.

“Their foundation came to us because they like to do things for children,” Grein says. “Our brand is very strong and known as one of the No. 1 charities for getting gifts to families with children in need.”

The Best Buy relationship has raised at least $3 million for the organization since 1998 and helped it reach out to older kids through a Toys for Teens program in 2001.

“One problem we have is getting individual donations for preteens and early teens,” Grein says. “People always think about the little kids but can forget the older ones. [Best Buy] has been a leader in helping us reach those children at Christmas.”

Toys for Tots also has partnerships with UPS, Hasbro and Coca-Cola.

A (big) bump in the road
It’s hard to tell from its current success, but things haven’t always been all baby dolls and little red wagons for the organization, which found itself in the throes of a devastating financial scandal about 15 years ago.

In 1993, the founder of Toys for Tots’ national fundraising arm — the Marine Toys for Tots Foundation — was accused of stealing millions of dollars from the charity. It also was discovered that most of the money the foundation raised that year was used to cover expenses rather than to fund its actual mission. The scandal led donors to stop giving — both toys and dollars.

“Our biggest problem was that we entered into a very aggressive direct-marketing program where we raised $10 million — but it cost us $11 million to run the program,” Grein says. “We were unable to buy any toys with that much debt. It made us look very bad, very quickly.”

Other charities might not have been able to recover from such a financial and public relations disaster. But just like a good Marine, the organization kept its cool, regrouped and forged ahead.

“The key thing to getting back up was to find the right president and CEO,” says Lt. Gen. Pete Osman, a retired Marine and the organization’s current president and CEO. “The commandant picked [Lt.] Gen. [Matthew] Cooper, who was just about to retire. But he accepted the opportunity and put the organization back on its feet.

“Keeping with the tradition of the Marines, he opened the doors, turned on the lights and got everything back to normal, and made sure everything was transparent,” Osman says.

Cooper also cleaned house, reducing staff, bringing in a new board of directors and moving the organization’s headquarters from Buffalo, N.Y. to the Marine Corps Base in Quantico, Va. He also suspended the direct-mail campaign and appealed to corporations to renew their support.

“[Lt.] Gen. Cooper also got on TV and let the American public know that we had problems within the foundation and that we were going to resolve it,” Osman says. “It does take years to regain the public’s confidence, but persistence can prove to be fruitful. The key to an organization getting past something like this is transparency. Let your donors know that mistakes were made but that they’re being fixed.

“The public can be very forgiving if you are honest with them,” he adds.

The road back
Since then, Toys for Tots’ situation has improved steadily. The organization did its research and restarted a direct-marketing campaign with the help of Maryland-based consultancy CDR Fundraising Group.

When Toys for Tots turned to CDRFG in 1997, it let the agency know that it wanted to crawl before it walked back into a direct-marketing program. CDRFG President Geoff Peters says the agency told the organization it needed to start mailing its housefile, building its donor base and acquiring new donors.

“They wanted to break even on acquisition — and that was unheard of,” Peters says. “But they had such a strong brand that they were able to break even and still grow the program.

“They were so sensitive to their history; they were willing to break even in exchange for slower growth,” he adds. “Not everyone can do that, but they had the brand strength. The public still thought Toys for Tots was worthy of their donations.”

Watching its pennies is another part of the Toys for Tots strategy; it takes a conservative approach to planning and budgeting.

“They only try one or two things per year,” Peters says. “They are very conservative in their accounting and the way they do business. The money they raise in ’08 becomes the budget for 2009. They have to earn it before it can be spent.”

Osman says that type of thinking goes hand in hand with the Marine background: “We bring that cultural background to the way we operate and those tough years — we have lived and learned. It’s a very responsible way to operate, and it is something that more organizations should probably do.”

Grein, who was there when the organization was struggling to get back on its feet, says he is most proud of how far it’s come.

“We were really struggling to make ends meet,” Grein says. “But our brand was so strong. We’ve always had our brand, which is something to be proud of.”

Toys for Tots whittled its expenses down to 3 percent of contributions. At the height of the scandal, expenses accounted for about 75 percent.

“To go from very insecure and struggling to the 66th largest nonprofit (in the country), according to The Chronicle of Philanthropy [2005 Philanthropy 400], is pretty amazing,” Grein adds.

To keep its costs down, Toys for Tots maintains a staff of just 13, with only one position dedicated to development.

“We make it work because we have thousands of volunteers,” Osman says.

A winning strategy
The Direct Marketing Association Nonprofit Federation named Toys for Tots its Nonprofit Organization of the Year in 2003 for developing a successful direct-marketing campaign that provided significant returns, including a direct-mail campaign that increased contributions approximately 75 percent in the previous five years.

Though direct mail always will be the organization’s “bread and butter,” Osman knows that continued success hinges on bringing online marketing into the mix — and that means more than just the “Click to Donate” button it currently has on its Web site.

“We have been accepting donations online for about seven or eight years, but the system has been pretty passive,” Grein says.

Peters says CDRFG is working with Toys for Tots to revamp its Web site and start an e-mail acquisition effort. The first outgoing e-mails were sent in late October, in time for the holiday season. They also are working to put videos on the Web site.

This year the organization is testing its first text-messaging (SMS) campaign. Posters requesting people donate $5 to the organization by texting the word “toy” already are being distributed in certain communities.

Specific challenges
Grein admits Toys for Tots’ approach to fundraising is a bit different than other organizations, mostly due to seasonality.

The organization doesn’t do any direct-marketing fundraising in most of the first half of the year. The most communication a contributor can expect to receive from the organization during that time of the year is a thank-you message, Grein says.

“We do some fundraising, corporate-wise, year-round because many companies work one and two Christmases in advance,” he explains. “But once Christmas comes and goes, we [don’t mail asks]. Many [people] are still paying off their Christmas bills.

“We don’t do any direct mail during the first part of the year, and we never do any telemarketing,” he says. “And then we get back to things after that.”

The organization typically begins sending out asks again in late spring or early summer, Grein says.

Osman adds: “The fact [that] the public sees ‘donation time’ as the holidays is just a fact we have to deal with. We do benefit from this ‘spirit of giving’ time.

“We’re not asking for lots — just a little from a whole lot of people, and we’re just as happy if you drop a toy in the barrel,” he says. “I think it appeals to a large number of people because for $10, $15 you can make one heck of a difference in one child’s Christmas; $10 doesn’t go very far in a lot of other organizations.” FS

Melissa Busch is the associate senior editor at FundRaising Success. Reach her at mbusch@napco.com