The Evolution of Year End Appeals: A Conversation With Charlie Whelan
By Laurence A. Pagnoni and Sean Jones
During his 30 years as President of The Whelan Group, a leading New York City consulting firm focused on strategic growth for nonprofits, Charlie Whelan has witnessed a revolution in year-end charitable giving. Technology has paved the way for more refined, targeted appeals that generate far superior results; at the same time, managing a successful appeal process today is often more complex and labor-intensive than it was a decade ago. As the pace of change in today's fundraising landscape continues to accelerate, LAPA talked to Mr. Whelan about how he has adapted and what core fundraising principals have withstood the test of time—especially those related to year-end giving.
You have said that year-end end giving means different things to different people. While a great many donors are motivated by the simple "warm and fuzzy" holiday desire to give, major givers are also motivated by tax deductions that may accrue to their benefit. How strict is this dividing line? Can you talk more about why people give at the year-end?.
I'm not sure that there is a hard dividing line there. I look at this in two ways. The first is that the whole "warm and fuzzy" idea of philanthropy—people's interest in charitable giving during the window of time from mid-November through the end of the year—is heightened because this time is, for many, across faiths and demographics, a moment of reflection on charity and generosity. The second principal is that Americans have been culturally conditioned over several decades to focus on year-end giving. It is not an accident that virtually every organization in the country focuses on year-end giving. In many circumstances the "case" for giving is framed in tax terms, but not always.
It seems to me that there are five motivations that drive people to give. In order of priority, they are:
Personal Generosity: A true philanthropic commitment to an organization.
Peer Pressure: A donor may wish to be associated with a group of people who support the organization in a significant way.
The Undeniable "Ask": They are approached by someone that requires an affirmative response.
The Good for Business Response: There is a commercial/business interest in making a specific gift.
The Tax Driven Response: The last point is less emotionally-driven, but still a very important one for a major donor who is motivated by tax incentives.
If emotion is the most important factor, do social service organizations serving the poorest men and women—as opposed to say, universities and arts organizations—have comparatively more pull?
Yes, I think there is more emotional power in appeals from social service organizations, especially programs that serve a disadvantaged population. However, the other organizations that succeed are those like schools that have a stronger and more enduring relationship with their audience. They have more regular communication over time and many have preconditioned their audience to give at the end of the year.
So you think of year-end giving not as a one-time strategy, but as an element of a broader fundraising strategy?
Many think of year-end giving as a one time event, but I look at it in the context of building a relationship. For example, [the Whelan Group] designs fundraising programs that emphasize the interrelationship between the message and the audience. For a school, you have touchpoints all the way through the year. In a July-June fiscal year, you have six months to build towards an end-of-year appeal. You have a newsletter, an annual report—all that builds towards that final 45 days, the window of time where we are naturally focused on attracting year-end support.
Do you recommend asking for support during that six month "build-up" period?
By all means, yes! You should be designing appeals during that period, but you will want to design them in a way that builds toward the year-end ask. But keep in mind there are other features to the appeal process that are possible today and unimagined 20 years ago. Many organizations used to broadcast "Dear Friend" mailings to thousands of people —a "one-size-fits-all" appeal to a broad audience. Today, with prospect identification software and market segmentation strategies in place, you can dice that audience into a great many sub-audiences. And you have the ability to custom-tailor the appeal to each of these distinct sub-audiences and to make those appeals in a highly personalized way.
We try to take an audience and say: "Who are $1,000+ donors?" The mail program to those people is more highly personalized and customized – you want to focus your energies on that part of the audience with the most affluence and the greatest affinity for your organization. In addition, this group is much more influenced by tax benefits associated with their gift. Then, as you move toward the audience segments with less affluence, you are more likely to move toward a broadcast approach to the appeal.
For lower-end donors, do you recommend the same amount of mailings?
No. They are on different tracks. Between September and December, you might do a newsletter, a program appeal, an annual report, and a year-end solicitation. Depending on the donor segment, the mailing sequence would work differently.
Do you have general rules about how many segments a non-profit should split its donor base into based on the size of the full donor list?
You have the ability today with prospect identification overlays and gift assessments to assign within your software a gift target for every person in your file. You couldn't imagine this 20 years ago. When you sent broadcast mailings 20 years ago, it was a "dear friends" blanket letter. Now, for all 22,000 constituents, you can write a personalized letter and insert into the letter the gift target for that person based on their demographics and gift potential. You blend their affinity based on their gift history with their gift capability and you can come to an "ask" number that is the perfect blend between their gift capacity and their affinity for your organization.
Let's say that your organization's annual fund program has eight gift categories ranging from a general gift to a gift of $10,000 or more. Today, you can segment your audience into these eight groups and design an appeal process for each group in a way that is tied to their specific gift capability.
Describe some concrete impacts of targeted appeals.
There are two forces that drive the success of targeted appeals:
First, compared with a broadcast appeal, an appeal that is produced in the form of a personalized letter will stimulate a larger number of donors—the percentage of people who give at all will go up dramatically: "They know who I am, they are asking me personally."
Second, again compared with a broadcast appeal, an appeal that makes a request for a specific gift will stimulate a dramatic increase in the number of gifts at that level: "Ahh, this gift request gives me a specific suggestion for how this organization would like me to respond."
While this segmentation and personalization program can take a large initial investment, the return will be well worth the investment. You will end up mailing less and getting higher-percentage results. You can make your investment back in two mailings. We've done this for 20-plus years, and we've never had a client who didn't make their front-end investment back in 12 months.
Do you think the typical emotional appeal letter hook—"John is 12 years old, and his family cannot afford to feed him tonight"—still works, or is it played out?
I think the emotional hook strategy is evergreen. A cause-related hook will work well for a fairly large set of individuals. However, some people are more concerned with results and accountability—particularly people on the high end of the philanthropy equation. Impact metrics can now be an equivalent or greater influence to cause-related language.
"Direct mail in the classical sense is dying. It will most certainly be dead in 10 years."
How is the ascendance of the Internet affecting the efficacy of direct mail?
I see two things. Direct mail in the classical sense is dying. It will most certainly be dead in 10 years. You look around at most direct-mail-driven organizations and they are facing the same quandary: the generation of people who responded to those appeals is leaving us. Also, the proliferation of direct mail appeals has made people numb to them. The fresh new look is clearly moving toward the internet.
"So I've made a case, will you give?" one-to-one way. It will take us another five to ten years for the internet to catch up and fill the gap being created by the fall-off in direct mail. Charities need to understand how the internet will work differently. We use the expression "The Amazon Effect." Internet-based fundraising will be more effective if it functions as a product-driven medium. Buy a cow for a farmer in Zambia—that works. A general annual fund appeal will be less successful right now. I foresee mini-scholarships and other more tangible person-to-person philanthropic investments working effectively.
So clearly a comprehensive philosophy works in the context of annual giving, but is it worth it when we are talking about small-time, once-per-year donors?
For organizations that are in campaign mode, the focus of your attention will be on the people with real major gift potential -- the 200-500 people who will really drive your campaign. For this group, year-end giving and tax preparation are highly correlated, and the personal attention paid to matching their tax planning and philanthropic goals will be well worth the investment. The work with this top group of prospects wills he highly personalized. For the smaller donor, your outreach to them is more likely to be mail, email, or phone-a-thon driven.
Lots if institutions put planned giving into everything they do: it doesn't work. I'm a big believer in the integrity of the message…the more you make your appeal a multiple-message appeal, the less likely donors are to do anything.
Should you incorporate planned giving into year-end appeals?
Lots if institutions insert planned giving messages into everything they do; it doesn't work. I'm a big believer in the integrity of the message. Ask yourself: "What are you trying to do with each appeal? What do you want?" In our experience, multiple-message appeals produce confused constituents who are less likely to take any action at all.
Specifically, planned giving notes in annual appeals are based on a flawed understanding of how planned gifts really happen. Many institutions think that a planned giving program is a planned giving mailing program. This approach is, in most circumstances, a waste of paper. Planned Giving programs work because the organization isolates its very best 300-500 prospects—the people who are most likely to give you a planned gift -- and then sets out to meet with them individually to ask them for a planned gift!
For every mailing we design for our clients, we ask: "What is our goal? How do we communicate the cleanest most effective message possible?" Many organizations' instinct is to throw in the kitchen sink. You want to be tougher on yourself, cut away anything that distracts from the message, and focus on what you are trying to accomplish.
One of my early mentors was the former CEO of J. Walter Thompson. His advice to me was "90% of communication is graphics." Organizations spend all of this energy with multiple page letters in a day when no one reads. Brevity and quality graphics are what engages people.
About the Charles S. Whelan, Jr. and The Whelan Group
Founded in 1980, The Whelan Group has worked intensively with more than 200 organizations to attract more than $1 billion in direct philanthropic support while building their fundraising capacity to raise billions more. In addition, the firm has advised over 60 clients on how best to arrange capital financing for major building construction and renovation projects. Through the firm, Charlie Whelan has helped dozens of organizations shape a new or broader vision for their work, strengthen their Boards, and develop and implement creative strategies for growth. Mr. Whelan serves on the Board of several nonprofit organizations. He holds a Masters Degree in Urban Planning from Pratt Institute and a Bachelor's Degree from the College of the Holy Cross.
www.whelangroup.com
Money Making and Money Giving
By Martin E. Marty
Ungodly and godly money making and money giving are key topics while many Christian churches gear up for November as "stewardship month." As they and others face "budget-setting time," multiple items netted from the public press and the internet beckon for attention. Several focus on the more gross stories from some black church orbits. Even in the UK they drew notice, for example in a Financial Times story "Churches: Riches in This Life, Salvation in the Next," on "the huge success of Pentecostalism."
Shyamantha Asokan, a Financial Times reporter, turned to Nigeria for stories as she visited Lagos's The Living Faith Church, "The Winners' Chapel," which seats 50,000 people in front of a wealth-flaunting pastor whose operation reaches 400 satellite churches. A Methodist teacher-trainer in Lagos speaks not out of envy but with realistic appraisal, "The economic life of the pastor is booming, while the economic life of the country is grinding to a halt." The members of such churches are "like fickle customers," says Asokan, always shopping for a church whose "Prosperity Gospel" may yield them a pastor-size fortune.
Meanwhile in the Wall Street Journal DeForest B. Soaries, Jr., a New Jersey Baptist pastor takes on the American expressions of the "Prosperity Gospel." Not despising the good counsel, indeed, praising that which Non-Prosperity-Gospel black churches offer, he sees the Prosperity version to be a perversion of the Gospel.
One could adduce comparable examples of grossness in practice met by criticism from prophetic pulpits also in non-black churches, but I turn next to a headline in the New York Times, "Onward Christian Moguls." There Maureen Dowd visits the semi-secular, semi-religious "Get Motivated!" seminar in Washington. It's being staged in several cities, super-advertised—how can one evade the full-page ads?—wherein titans who need no money are out to make money off people who pay well to learn nothing new. Mike Ditka, Steve Forbes, Rudy Giuliani, Terry Bradshaw, Dan Rather, and, alas! Colin Powell, offer bromides and bumper-sticker slogans, often with religious motifs to back them, or front for them. The story is written with irony and tinged in pathos.
Meanwhile, and you are allowed to cheer up, Forward is running an intelligent, fair, and revealing multiple-part story, in one case contrasting Jewish and Christian money-raising approaches. In the October 1 issue, Josh Nathan-Kazis headlines "Synagogues Rarely Mention God in Appeals, Unlike Churches." Synagogues, he writes, tend to rely on assessments and paying of annual dues, supplemented by appeals less to God and more to the responsibility of being in community. He contrasts this, while not judging either approach, with characteristic Christian appeals of the non-Prosperity Gospel style. This is the "stewardship" approach in mainstream and evangelical Protestantism. Nathan-Kazis quotes Lutheran Pastor Megan Torgerson: "Everything you have is God's to begin with." Believers are not to think of money as "mine, mine, mine," but to "celebrate that this is a gift from God already" and ask "What can I do with it?"
Lisa Miller in Newsweek lauds "Bread for the World," a largely church-based effort to feed the world, something this prosperous nation does not do well. The numbers of the poor and hungry also grow here. Pastor David Beckman, who heads BFTW, promotes stewardship, but does not shy away from connecting the cause with politics and cooperation with government. Get generous, he is saying, and get real.
References
Shyamantha Asokan, "Churches: Riches in This Life, Salvation in the Next," Financial Times, September 30, 2010.
Maureen Dowd, "Onward Christian Moguls," New York Times, October 6, 2010.
Lisa Miller, "Bread for the World," Newsweek, October 11, 2010.
Josh Nathan-Kaxis, "Synagogues Rarely Mention God in Appeals, Unlike Churches," Forward, September 22, 2010.
DeForest B. Soaries, Jr., "Black Churches and the Prosperity Gospel," Wall Street Journal, October 1, 2010.
Martin E. Marty's biography, current projects, publications, and contact information can be found at www.illuminos.com.
Research before you appeal!
by Jessica Faith, Grant Writer
Research indicates that donors want guidance on the type of support your organization is seeking. Donors always report that providing a giving range, say $250 to $350, for the size of the gift that you seek is helpful. But how do you know the giving range to ask for? Research before you appeal!.
Your year-end appeal should always factor in good donor research that reveals the donor's giving history and the donor's giving potential based on his/her gifts to other nonprofits and/or their net worth. Once the donor's giving history and potential is determined, then you will know what range of giving to request. So let's get started!
First consult your donor database. We hope that your organization's donor database will note discernable giving patterns (if you just laughed, and said, "yea right" keep on reading!).
Your year-end appeal should request a specific dollar amount based on that giving history as noted in the database. It should also request a "step-up" in the donor's engagement with your organization. Try requesting a 50% increase from the donor's most recent gift. For example, if the donor gave $150 last year, ask for a $225 renewal and use the range of $225 to $300.
Consulting your donor database to target lapsed donors is also a good idea. To reach lapsed donors you may want to use a different style appeal letter. The donor database is an essential tool in tracking all kinds of relevant information, from addresses to amount of contact and level of mobility.
The following free resources may help your organization gauge a donor's giving potential:
The following fee-based resources will also help:
These resources are extremely useful and most of them provide actual charitable giving history rather than just giving potential. By researching, you will gain understanding of a donor's giving history based on their giving to other nonprofits and whether or not the donor contributes to similar causes within your region.
Whenever your organization is purchasing charitable giving records, be sure to research the particular services provided by the company. Many of these venues offer packages that allow you to bundle services according to your organization's specific need and capacity to spend. Tailored outputs means tailored prices. For example, Blackbaud not only offers services to research charitable giving records and giving potential, but also has a comprehensive donor database system (Raiser's Edge).
Always be sure to take advantage of customer support and staff training.
Jessica Faith has spent six years working in program development, grant writing, and fundraising for the non-profit sector in the fields of education and community development. She has worked at the Institute of International Humanitarian Affairs at Fordham University, EastWest Institute, Harlem Children's Zone, and Friends of the Children. She received a BA in English Literature from Vanderbilt University and MA in International Development from the New School University. She lived in Managua, Nicaragua before moving to New York City in 2005. She can be reached at jessicafaith36@hotmail.com.
Ask LAPA: We Answer Your Questions
Q. I have heard that Thank-a-thons planned around year-end giving really work. Is that true?
A. Yes, it is true that thank-a-thons really work. When I call a donor to chat (a 5 to 10 minute call on average) and hear them talk about how much it means to be able to give, I remember why I am a fundraiser. You will discover that a donor who loves what you do is actually not bothered by giving! It is our job, of course, to explain the impact of their gifts—that 110 more homeless were served or that 20 more teens were enrolled in a college prep program, for example. Showing the connection between their gift and the impact it makes seems obvious, but very few nonprofits link the two together in a compelling way. Just today Emily's List (see www.emilyslist.org) called me asking for a matching gift. While I usually do not give over the phone, preferring instead to receive appeals by mail (something that I told the caller right off) the pressure of the upcoming elections and the personal way the caller talked to me (he had internalized the script and remembered that I was a real person) hooked me and I donated a significant gift. It was the right time and the right approach given the urgency that an anonymous donor was matching my gift two for one! That call started with a "Thank you" for my past support. And there was an infectious tone of success about the caller; he was not asking because he needed money, rather he was asking because he had an opportunity to offer me. Now that's fundraising, and it all started with a "Thank You" call.
The steps to organizing your own Thank-a-thon are straightforward:
1. Prepare list of names and numbers
2. Prepare a response form to note the results of your call
3. Prepare questions to ask the donors
4. Prepare a phone script incorporating the questions + a speech for answering machines
Now go ahead and dial away ASAP. Even if you don't secure a gift, start expressing the deep gratitude toward those who make your good work possible.
If you want your question answered in a future newsletter, e-mail us at nfo@lp-associates.com
Essential Information
From Giving USA 2009
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Charitable contributions by individuals, foundations and corporations reached $284.99 billion in 2008, a decrease of 5.6% from 2007 after adjusting for inflation. Of these charitable contributions:
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Religious organizations received the largest share, with 34.7% of total estimated contributions.
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Educational institutions received the second largest percentage, with 13.3% of total estimated contributions.
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Human service organizations accounted for 8.4% of total estimated contributions in 2008, the fourth largest share.
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Individuals gave $229.28 billion in 2008, an inflation-adjusted annual decrease of 6.3%.
LAPA Welcomes The Bronx Community Health Network!
LAPA welcomes BCHN—The Bronx Community Health Network—to its roster of clients. Residents of the Bronx, no matter what their income, can get high-quality primary care, dental care, prescription drug services, and mental health assistance at a price they can afford all thanks to BCHN. Health centers like BCHN are a crucial resource, but there are not enough of them. By focusing intently on primary care and preventive services, they save tremendous amounts of money. Given the toxic tone of the current health care debate, it's interesting to note that the centers actually have significant bipartisan support, and the Office of Management and Budget has rated them as among the most efficient and effective users of taxpayer money. LAPA competed in a competitive bid process and was chosen to assist BCHN with preparation of a New Access Point application to The Federal Health Resources and Services Administration (HRSA). Thomas Mehnert, LAPA's Healthcare Division Director will lead the proposal creation. Healthcare consulting is a core expertise of LAPA and BCHN so it's a good marriage. To learn more about BCHN go to www.bchn.org.
Did You Know . . .
Did you know that the resource page of the LAPA Web site provides over two dozen links to practical information about everything from board development to cash flow loan programs, and from
risk management to legal assistance?
Please see www.lp-associates.com/resources.php
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