A Look Back — and Forward

What is your memory of the “state of fundraising” in 2003/2004?

Ellen Church, president, Craver, Mathews, Smith & Co.
We were worried about retention and the cost of acquiring new donors. We wondered when digital would surpass the mail as the No. 1 channel in our fundraising programs. We were focused on how we could convert more “regular” donors into monthly donors. We wondered how we compared to other groups in our sector in benchmarking reports. We were concerned about how the economy and decisions made in Washington would impact fundraising because it was year-end and we had a lot of hope and income resting on the last quarter of the year. And how can we get more younger donors? Oh, I’m sorry — did you say 2003/2004 or 2013/2014?

On a more serious look back, in March 2003 CMS sent a thorough memo to our clients, authored by Roger Craver, about the state of fundraising. The subject line was “The Economy, War and Their Impact on Fundraising.” Consumers were, at the time, experiencing what was being called the worst confidence of crisis in the last 35 years — and consumer confidence equated donor confidence. Among other highlights: Unemployment was at 6 percent, retirement accounts were dwindling, oil and gas prices were increasing, stock prices had fallen for three straight years, war was on the horizon, and corporate scandals were on the rise. The economy was the No. 1 worry of most Americans, and a leading market research firm that advised the commercial world counseled its clients to prepare for war in what was dubbed, “The New Age of Anxiety.”

The good news was that even though consumer confidence had declined, consumer spending had not yet taken the same nosedive. We advised our clients about the importance of staying flexible and fluid. Big words to the wise were, “… having (less) mail out there raises more money than no mail at all” as we spoke of shrinking list universes as a result of decreased mail after 9/11/2001.

Geoff Peters, president, CDR Fundraising Group
We were focused more on single-channel fundraising and not multichannel. Enough charities were growing so that lists were more readily available and names more plentiful. There were strongly held views on whether premiums were bad for fundraising (since resolved in favor of them).

Dane Grams, director of direct response and monthly giving, Human Rights Campaign
It was a weird time in the world: We were still recovering from 9/11, the U.S. declared war on Iraq. Despite this, it was a relatively good time for fundraising — particularly at Human Rights Campaign. We had just completed a multimillion capital campaign and moved into our new headquarters. Maybe I should credit that to George W. Bush and his giant tax cut. Nah, I credit the hard work of a lot of great fundraisers.

Gail Perry, consultant, gailperry.com, and author of “Fired-Up Fundraising”
Ten years ago the digital arena was just emerging. People were tentatively doing their Christmas shopping online to see how it worked. Donors were nervous about keying in their credit card numbers. Now, I heard recently about a gift for $100,000 that came in online! Can you imagine!?

What hasn’t changed? The need to get in front of major donors, connect with them, listen to them, engage with them and find out how your project matches their passions.

It’s just as hard to get out of the office to make those major-donor calls as ever before. But they have got to be made. The need for “face time” will never go away. Now there are new tools for engaging with your major donors — don’t get me wrong. You can Facebook and tweet and e-mail with them all you like. But when it comes time for the important conversations, they’ve got to be face-to-face.

Steve MacLaughlin, director, Idea Lab at Blackbaud
That thing called the Internet started to have more mainstream use by nonprofit organizations to communicate and raise money.

Marc Pitman, consultant, fundraisingcoach.com
Fundraising seemed to be recovering from the dot-com bust and 9/11. Now it’s slowly recovering from the housing bust.

Pamela Barden, president, PJBarden Inc.
Digital was in its early stages, and we were still trying to figure out what this meant beyond a website. Some early adopters were making good use of e-appeals and online giving, but it seems most of us were running to catch up. There weren’t that many truly qualified companies that could help nonprofits navigate this newer space.

Karin Kirchoff, vice president, MINDset Direct
I feel like we were still recovering from 9/11 … anthrax and the war(s). Ten years later, struggling to come out of a depression has been tough for many nonprofits — “flat is the new up” is giving way to “slightly down is the new up” for some. This has been especially true for those who haven’t integrated (databases, messaging, donor experience, etc.) and for those not on the front page.

Pamela Grow, fundraising author and consultant at pamelagrow.com
When I began my career in 2000, there were relatively few resources available online for someone new to fundraising. The CharityChannel forums saved my life!

Technology-wise, most nonprofits were far behind the times, and many of the smaller organizations didn’t even have websites. One of my primary goals with the first organization I worked with was getting a website up and running — one that accepted online donations. When I spoke with our board and volunteers about the importance of a website, I didn’t get anywhere. So I taught myself coding and had a website up and running within a week. Small shop fundraisers need to adopt my mantra: Everything is “figure-out-able” and to not fear technology.

Jill Murphy, membership manager, Association of Government Accountants
Fundraising was really rooted in direct mail. E-mail was still an unknown, and while Jo Sullivan and I tried to get the ball rolling on mobile, that was still a few years away. We won’t even broach social media because it wasn’t around for the most part — although I did have someone do an article in the DMANF Journal called “We’ll meet you at MySpace” in [2006], and that was way out there.

I think we were all worried about aging donors — probably still are.

What has changed since 2003/2004?

George Lizama, CEO and co-founder, Production Solutions
Over the past 10 years, we’ve seen three trends in fundraising, and specifically in direct mail:

1. The growth and complexity of postal processing logistics. Compared to 2003, it is much more technical (in terms of geography, density in location, type of package, etc.), therefore pushing fundraisers to be more strategic about their mailings in order to achieve the proper discounts their organizations are entitled to get.
2. Like gum on the bottom of your shoe, fundraisers can’t seem to shake premium mail! It’s still very effective for certain donor audiences and for certain giving levels. It’s the bittersweet pill we bicker about, but premiums are not going away anytime soon.
3. Last but not least, there has been an increase in major and mid-dollar donor spending. Organizations are finding that the investment is indeed worth the return.

Sandy Rees, consultant and coach, Get Fully Funded
I don’t think that much has changed really since 2003-04. We still need to pay more attention to our donors and building relationships with them. Of course, the “techno tools” have evolved and gotten amazingly better. We have more tools to work faster and smarter, but the basics still apply.

MacLaughlin: Almost everything. But the things that haven’t changed are probably still the most important things to pay attention to. Donors want to be engaged, not just asked for money. The right message at the right time to the right donor still works. Testing is still the best way to improve your direct- and digital-marketing results.

Church: On the process/execution side, the biggest change for me is the number of ways our message is communicated with our donors and potential donors. Social media has been a real game changer in not only how we talk about ourselves and the messaging we can manage, but also the ways other people talk about us — and the messaging we can’t control. Ten years ago, telemarketing firms had the most direct conversations with our donors. Today, we have direct digital conversations with them in multiple channels each day. Social media is not the way to raise a lot of money (at least not yet), but it definitely has changed the way we engage with our friends/followers/donors. We have to move so much faster now. I remember when we were overjoyed to get an “emergency mailing” or “urgent gram” written, approved, produced and in the mail within three to five days. Now we have to post messages or tweet within seconds of an event.

On the state of fundraising in 2013 vs. 2003 — things are definitely looking up! I do not believe we are still in the Age of Anxiety. Giving has risen from $248.52 billion in 2004 (Giving USA) to $316.23 billion in 2012 (Giving USA). Why? Because as an industry we have adjusted. I believe the state of fundraising is much more dependent upon the state of the fundraiser than the state of the donor or outside influences.

In the past 10 years, as a group, we have created new strategies, new channels, new models, new ways of thinking, and a whole new generation of donors and fundraisers. And at the same time we have continued to do what has always worked best — communicate honestly, clearly and with passion about what we do to the right people at the right time. Seems so simple — yet it is now much more complicated as we have so many different “best” ways to do that simple yet complex thing.

Sure, the competition is greater (there are more charities), the technology is more advanced, costs are up, the donors are less trusting, there are more experts telling us what we should be doing or that what we are doing is all wrong, and the work requires even greater thinking and creativity than it did 10 years ago. But the need is still very great — people are, unfortunately, still hurting, still hungry, still sick and still dying for ridiculous, solvable reasons. Wrongs still need to be righted. Injustices still need to made just. Civil and human rights still need to be protected and fought for, and the past few weeks have made it very clear that there is still a great deal of change that needs to happen in our government.

American donors know that nonprofits make change happen — and they will continue to give to the ones that communicate with them at the right time with the right offer that is clear and honest, and that in a heartfelt, impassioned way causes a reaction that turns into the action of giving. I would not give up what I do for any other job in the world — would you?

Pitman: There seems to be a new “normal” now — a reality that fundraising is going to take work and institutional focus, which is something tangibly different than 10 and 20 years ago. I’m thrilled with the emphasis on donor retention, in addition to donor acquisition. It used to be “all acquisition all the time.”

Perry: In 2003-04, fundraising sort of followed a formula: events, mailings, grant proposals, government sources and major donors. Now, even these basic strategies are far more complex with many more tools to enhance their success.

Fundraisers today have to be much, much better copywriters. They have to know the etiquette of smart e-mail communications: how to write a subject line so their e-mail will be opened, even. Fundraisers now have to have serious marketing skills.

Fundraising has changed so much that it is almost “fund marketing.” (I’m really serious about this!) The marketing and communication of what we are doing is becoming just as important as the ask. How we frame the message has everything to do with whether the message lands or not!

Peters: Multichannel, lists are smaller, 70-plus percent of charities use premiums in direct mail, marketing is more sophisticated, and marketing and fundraising professionals have had to learn many new “tricks.”

Barden: There is a lot of help in terms of digital, but now nonprofits have to focus on separating the wheat from the chaff. It is challenging to know what’s worth investing in and what is just a quickly passing fad. There is also a lot of excitement about some digital tools that haven’t really proven financially stable. Fundraisers have more to distract them from their real job of raising money. Some of the methods that still are core are not “sexy,” and that continues to create friction in terms of where to invest time and money.

Kirchoff: More tools, proliferation of online as a channel (beyond websites and e-mail, which were still new for many in 2003), use of DRTV for fundraising outside of child sponsorship. But despite the naysayers, mail is still here!

Grow: Now there’s a wealth of information available online for fundraising professionals! The problem is weeding through the muck and getting to the best — that’s what I try to do with my weekly e-newsletter and why I regularly rely on FundRaising Success, The Agitator and SOFII.

We’re definitely seeing nonprofits wake up to technology, although in terms of small shops, I’m still seeing too many organizations operating without so much as a basic database. I’d love to see greater innovation in terms of technology, particularly in regards to the use of permission-based e-mail (the original “social media”).

I’m also seeing fundraising as being viewed as a vital part of a healthy nonprofit — hooray! NPOs are starting to wake up to the fact that if they’re not committed to funding their missions, they’re not really committed to their missions. Can higher donor retention rates be far behind?

Grams: Digital. Technology. Mobile.

Murphy: The big change/surprise I see is that Gen Y is big time into volunteerism, which is a good thing! They are really feeling the way to make a difference is through volunteering and getting involved with charities/nonprofits that speak directly to them — animal welfare, environmental, social change. Good stuff!

What major trends/philosophies have you seen over the past 10 years? What has stuck? What has disappeared?

MacLaughlin: The most hyped trend was the generational transfer of wealth that was supposed to happen. Fortunately, advances in science and better living mean people are living longer. Unfortunately, this means people are using up more of their assets, and the recession impacted the short-term giving potential of many families. Instead we’ve had several years of relatively flat fundraising with no miraculous windfall on the horizon for most organizations. Gimmicks and fads are unlikely to reverse this trend.

Barden: The move to greater transparency has really taken off in the last decade. It’s no longer enough to say, “Trust us!” Now nonprofits have to prove they deserve that trust. This is a positive change, but it does open the door to some people focusing exclusively on one or two metrics, or misinterpreting information. It’s also opened the door to some “creative” practices that can skew reality. For example, I was looking at one nonprofit’s 990, and they apparently lease their employees from an outside company to avoid (I assume) having to disclose salaries on the 990. Yes, that’s legal — but is it ethical?

Grams: Integrated direct marketing has been all the buzz for most of the decade. And monthly giving (although HRC has had its monthly giving for nearly two decades). I think the telemarketing landscape is very different today than it was. Goodbye Myspace; hello Facebook.

Kirchoff: Focus on data has gotten much better. The notion that we are targeting the right audiences with the right message has proven critical in the tougher environment where you can no longer mail a paper bag and make money. Disappeared — mostly large-format and dimensional mail because of postal rate changes. And also fax machines.

Grow: One of the first books that I read was “Relationship Fundraising” by Ken Burnett. It made a huge impact on me, and I think that the whole concept of relationship fundraising — focusing on your donor and what they’re accomplishing through you — is vital to an organization’s overall health.

We’re seeing less of the traditional galas and golf outing fundraisers, more of a focus on the donor as an individual. With all that’s been written in the past few years, nonprofits are finally giving more thought to their back-end stewardship systems.

But what I’m really excited about is how nonprofits are beginning to embrace an organizationwide culture of
philanthropy.

Peters: More and more charities are getting fed up with “cost of fundraising,” particularly when measured not as the cost to raise money but rather as the ratio of fundraising costs vs. program costs, and are ignoring those who criticize them when they are investing in their own growth, particularly after the recession.

Is there anything going on in fundraising today that you never would have imagined 10 years ago?

Jeff Jowdy, president, Lighthouse Counsel
The discussion on effectiveness versus efficiency — a welcome dialogue!

MacLaughlin: I would not have imagined there’s still such raucous debate over what constitutes best practices vs. tribal knowledge. To thank or not to thank? To quickly thank or to take your time? To use First Class postage or not? To rely on RFM [recency, frequency, monetary] or not? To e-mail and send physical mail or not? Many of these things are known knows and are fundamental practices for just about every nonprofit organization.

Church: That we would still be saying that direct mail is on the way out as a reliable source of income.

Barden: The declining retention rates surprise me a bit because that was something I was always laser-focused on. It seems that too many nonprofits have been wowed by the shiny new things and forgot to pay attention to the basics for survival.

Peters: Cookie matching.

Grams: The race to fundraise on Facebook. Reaching people and getting donations on mobile phones.

What, in your wildest dreams, will be going on in fundraising in the next 10 years?

Jeff Schreifels, senior partner, Veritus Group
We believe that in 10 years there will be a renewed emphasis on personal, one-to-one fundraising with nonprofits embracing building strong mid- and major-gifts programs. Additionally, nonprofits will finally invest and see the value in reporting impact of donor’s giving.

We’ve been talking about this for the last 10 years with very little movement in nonprofits actually adopting this practice. But 10 years from now, we believe, it will be implemented because donors will continue to demand that nonprofits report back on the effectiveness of their gifts.

As technology expands and becomes cheaper, nonprofits will be able to use it to not only report back on giving, but to cultivate and steward donors. However, this will not replace building solid, one-to-one strategies that include deepening human relationships with donors and the representatives of the causes they support. In fact, we believe we will see a renewed emphasis on training major-gifts officers, and nonprofits will see the value and start implementing major-gifts programs as direct-response programs continue to increase in cost.

MacLaughlin: I predict a significant performance gap between organizations that have embraced donor-centric fundraising using multichannel engagement and those that have continued along with how they have always done things. We are now living in the age where outcomes trump outputs. The organizations most likely to thrive in the next 10 years will have invested in this way of thinking.

Church: People under the age of 50 will be great donors, and USPS will still be here.

Barden: I suspect there will be fewer nonprofits due to mergers and an inability to raise enough money as large-scale programs to acquire donors are too costly (i.e., DRTV, direct mail) and lower-cost options do not generate enough new donors to cover losses due to attrition and weaker acquisition. The ones that are growing in 10 years will be focusing on multichannel (both “old-fashioned” and newer tools) and donor cultivation methodologies.

Kirchoff: Can we get to a place where we truly are where the donor is when they want to give? What does the “Jetsons” world look like for fundraising?

Peters: More one-to-one, live with more donors, even smaller-gift donors — telephone, Skype, personal chats and e-mails.

Grow: Recently I got an e-mail from Publishers Clearing House that had my address in the subject header and contained detailed directions, including a map, to the florist closest to my home! While I found that level of personalization more than a little intrusive, I’d love to see fundraisers use data, personalization and technology to connect with donors on a deeper level. What brings our donors joy? We all want to change the world. How can we satisfy our donors’ need to make a difference?

Grams: Asking Siri to make your donation for you.

Jowdy: That in the U.S. and beyond we will make real inroads in increasing the number of donors and funds raised, and that we will elevate our profession in performance and perception.