Fundraising, Part 6: Religion focuses on fundamentals

By Todd Cohen

[This article was written for Blackbaud.]

For those religiously-affiliated charities that are increasing revenue, fundraising fundamentals continue to drive that increase, says Rick Dunham, president and CEO of Dunham & Company, a fundraising firm in Plano, Tex., with just over 50 clients, including 30 based in the U.S.

Those fundamentals include effective integration of communications using multiple channels. Among them are direct mail, online communications and the use of telephone communications to support those appeals. Other key fundamentals include attention to major-donor development and a focus on the cause and the people affected by the work of the charity.

That focus on fundamentals powered a strong year in 2013 for his clients, some of which saw fundraising revenue grow 25 percent to 30 percent, Dunham says.

Consistency in message across communications channels is critical, he says.

If a donor receives an appeal by email or direct-mail, for example, the message on the nonprofit’s website and in its e-communications should be consistent with the message in those appeals.

Major-donor development also should be integrated into a nonprofit’s overall fundraising strategy, Dunham says.

Rather than treating them separately from other donors, he says, organizations should make sure major donors receive the same types of communications and messages that other donors receive, while ensuring those messages are customized in the communications aimed at major donors.

Equally important, and where appropriate, Dunham says, nonprofits should challenge donors with the potential to make significant gifts, while integrating those challenges with other fundraising communications.

Major donors should “experience the same communications as other donors, but at a much higher level and customized to their significant relationship with the charity,” Dunham says.

Direct-mail appeals continue to be more effective at generating contributions than online appeals, Dunham says.

“A truly effective direct-mail strategy will always outperform an online appeal strategy,” he says.

But when both strategies are integrated, a growing number of donors prefer to fulfill their gift online using their credit card.

“That’s why you want to make sure the donor experiences the same messaging” online that they get through direct mail, Dunham says.

For year-end appeals in 2013, he says, some of his clients used a “takeover” strategy for their websites, with the messaging that donors were receiving through direct mail and email taking over the organization’s websites and becoming the main message donors were finding online.

“It’s not a driver to income,” he says. “Such a strategy helps ensure that when a person comes to the charity’s website, there’s not confusion with the message but consistency through all channels.”

Dunham says his clients also used a phone strategy to set up year-end appeals by thanking donors for previous support, and then reinforcing year-end gifts with follow-up calls after gifts were made — all with consistent messages across all platforms.

And whatever the particular focus of a multi-channel appeal, religious nonprofits should focus on the “‘why’ of the organization, the cause, the people affected, not the ‘what’,” Dunham says.

“The fact that we’re doing a specific project is not what motivates the most significant support,” he says, “but ‘why’ we’re doing that project — to transform lives and the way such a project helps people.”

Next: Arts and culture groups focus on donors

The series:

Part 1: Growth tied to capacity, cultivation, communication.

Part 2: Healthcare groups invest in capacity.

Part 3: Higher education cultivates major gifts.

Part 4: Data key for independent schools.

Part 5: International affairs groups refine message.

Part 6: Religion focuses on fundamentals.

Part 7: Arts and culture groups focus on donors.

Part 8: United Way diversifies.

Part 9: Conservation groups connect with donors.

Part 10: Communication, planning key for human services.

Part 11: Peer-to-peer strategy fuels medical research.

Nonprofits flunk online fundraising test

Nonprofits are creating online hurdles for donors, and as a result are missing the chance to raise millions of dollars, if not billions, a new report says.

While online giving accounts for only about 6 percent of total charitable gifts, “charities put up unnecessary roadblocks to donors giving online,” Rick Dunham, president and CEO of Dunham+Company, says in a statement.

The inaugural Online Fundraising Scorecard, a study by Dunham+Company and Next After, reviewed the websites of 151 organizations over nine months in 2013, signed up to receive emails, and made an initial $20 gift.

The study looked at 56 key indicators in four key aspects of online fundraising, including email registration, email communication, the donation experience, and the gift acknowledgement process.

Among the organizations in the study, 127 scored 75 or below.

Results of the study, combined with research showing that over two in three online transactions are abandoned, led to the conclusion that “there are millions — if not billions — of dollars being left on the table,” Dunham says. “Virtually every charity could improve the online giving experience for donors.”

In the area of email registration, 76 percent of charities make it easy to find their email signup form, although 66 percent of email signup provides little-to-no interest to potential donors, and 84 percent of charities present a non-exclusive signup offer, or one that is appealing because the donor cannot get it anywhere else, the study says.

Big factors in determining the success of  online fundraising, the study says, are the frequency and manner in which charities communicate with donors.

Yet over one in three organizations studied did not send a single email to new subscribers within the first 20 days of signing up, 79 percent of emails do not personalize the “to” line with a first and last name, and 56 percent of organizations did not make a single ask in the first 90 days.

In the area of online donation experience, 80 percent of organizations studied do present a clear call-to-action, and 85 percent have a landing page design that matches the email, yet 84 percent were not optimized for mobile viewing, the study says.

And in the area of gift acknowledgement, while 99 percent of organizations understand the importance of thanking a donor, the study says, 63 percent did not offer a donor “next steps” to take.

Todd Cohen

Giving grows overall and to religion

By Todd Cohen

[Note: This article was written for Blackbaud.]

Overall charitable giving grew 2.3 percent for the three months ended in October 2013, compared to the same period a year earlier, according to data from 3,828 charities that raised over $12 billion in the prior 12 months, The Blackbaud Index reports.

And among 3,097 charities that raised nearly $1.7 billion online in the prior 12 months, online giving grew 9.9 percent in the same three-month period, compared to the same period a year earlier.

“It’s a better year than we’ve had in a number of years,” says Chuck Longfield, chief scientist at Blackbaud and creator of the Index. “Giving is very dependent on the stock market, which is at an all-time high. With an improving economy, some of the uncertainty has been removed. People tend to give away more money when they feel wealthier, and the stock market helps with that.”

Revenue to faith-based groups grows overall and online

Overall fundraising revenue for 334 churches, synagogues and other faith-based organizations representing nearly $1.2 billion in annual revenue grew 3.5 percent in the three months ended in October 2013, compared to the same period a year earlier, according to a new Blackbaud Index that tracks giving to religion.

Online giving at 202 congregations and other faith-based groups that raised a total of over $110 million over 12 months grew 16.7 percent during the same period.

Faith-based giving grows but its share of overall giving dips

After flat years in 2011 and 2012, giving to religion has grown slightly in 2013, according to Giving USA. And while it receives the biggest share of giving of any charitable subsector, its share in 2012 fell to 32 percent from 33 percent in 2011.

“If faith-based giving doesn’t do well, that’s quite a drag on all philanthropy,” Longfield says.

Rick Dunham, president and CEO of Dunham+Company, a consultant to faith-based groups, says giving to his clients is up, with growth ranging from a few percentage points to 10 percent or more.

Who’s giving to religion?

While research consistently has shown a steady decline in attendance by younger people at religious services, especially for mainline denominations, that decline has had little impact on overall giving to religion, says Dunham, a member of the board of the Giving Institute, which publishes Giving USA.

“We’ve known for many years, and Giving USA has pointed out consistently, that there is a direct correlation of frequency in attendance at religious services and giving,” he says. Giving to religion fell during the recession mainly because, just as in any sector, people who give were hit by the economic downturn and had less to give.

And religion has struggled to rebound “because fewer people are attending religious services frequently and there is a smaller core of givers,” he says.

But with the rebound in the economy, that core group “continues to drive giving to religion because the core group who attend religious services frequently are giving,” he says. “Those are people who give the most.”

And the major source of giving to religion “continues to be the ‘classic 50-to-65-year-old’ who is at a stage in life with more money to give.”

Failure to communicate

Chris McLeod, a ministry strategist who advises churches on capital campaigns and planned giving for Horizons Stewardship Co., a national consulting firm in Cabot, Ark., says churches are losing market share of giving to faith-based groups overall.

“The failure of churches to effectively communicate the impact that their mission and outreach programs are having in the community has often left many of their members choosing to give directly to these community-based nonprofits,” she says. “So less of their charitable dollars are being channeled through the church.”

Churches, she says, “don’t know how to say thank you, they don’t know how to ask, and they don’t know how to communicate the impact that a member’s gift is having.”

Communications infrastructure

Churches in mainline denominations also tend to have “very weak communications infrastructure,” as well as young communications staff “who are more like newsletter producers, as opposed to communications strategists,” says McLeod, who also is president of Giving Matters, a fundraising consulting firm in Charlotte, N.C., that advises nonprofits and educational institutions.

In comparison, new “megachurches” and nondenominational independent churches “are investing more money and human resources in communications because they realize how critical it is,” she says. “If you look at giving at megachurches and independent churches, it’s significant, both in terms of giving by the church in the community, and inspiring their members to make significant gifts to the church.”

If a church in a mainline denomination supports a homeless shelter for an urban ministry, for example, but does not do a good job communicating that work to its members, McLeod says, their members in turn might give directly to the urban ministry rather than to the church.

Megachurches and nondenominational churches also are much more sophisticated than mainline churches in using digital communications and direct mail, she says, and at “saying thank you, communicating impact and asking,” and are particularly good at cultivating larger donors.

Donor cultivation

Mainline churches “don’t cultivate,” often because they lack the staff, and typically because “they have a lot of angst and discomfort around money,” McLeod says.

Research shows that in more than half of mainline churches, for example, the senior minister or CEO does not know how much church members give because “they feel it would unfairly impact the way they minister to members if they knew what they gave,” she says.

As a result, the people “who are accorded the most respect or deference in churches are the people who are wealthy,” whether or not they are donors, she says.

A key issue, she says, is that “how much people give to a church, not so much the dollar amount, but the percentage of giving, is a reflection of where they are on their spiritual journey. If people call themselves Christian, or Jewish, giving is integral to their spiritual journey.”

Sending the right message 

Dunham says houses of worship need to provide “cogent, clear teaching on the Biblical mandate around giving and why that’s important.”

While the Bible makes clear statements about debt and the handling of money, warning, for example, that “money will never provide the security you’re looking for,” he says, there still is a “tension between consumerism, which is primarily the cultural norm in America and drives our economy, and stewardship.”

So it is “incumbent on pastors and leaders to be speaking to the issue of how we view money and the role of money in our life as a faith-based person,” he says.

“Ultimately, people give out of a heart that’s moved to want to support something,” he says. “It’s not an insignificant issue. There has been a lack of teaching of this in the church.”

Church leaders also need to help people understand “what they’re investing in” when they give to the church, and that means “selling the vision and mission of that house of worship, why we exist,” and then “putting numbers to why that’s important.”

Shift to online giving

Religious congregations also need to recognize a shift that is “not driven by charitable institutions” but rather by “the consumer, the donors, to want to give more and more online,” Dunham says.

A study released this fall by Dunham+Company found, for example, that nearly one in two donors age 65 and older now give through charity websites, up from roughly one in three in 2010.

“As the trailing end of the Boomer generation moves to its best giving years, and also the leading edge of Generation X, more and more want to give via credit cards, and are very comfortable with online transactions,” Dunham says. “It’s providing a way for  congregations to give effectively online and not just by the plate being passed.”

So congregations need a “really good website that makes it very easy for that financial transaction that even could set up a recurring gift,” he says.

Value of direct mail

The study also found that direct mail appeals are over six times more likely than an online communication to drive an online gift, Dunham says.

“Offline communication becomes very critical to supporting donors, engaging donors, keeping them engaged,” he says, so congregations need to make sure their offline communications are integrated with their online communications, with their website in sync with those communications.

Relationships and significant giving

A growing number of religious organizations are investing more resources in planned giving and major giving, a trend that makes sense because the wealth that has grown the most, fueled by the booming stock market, is controlled by the wealthiest 3 percent of the population, Dunham says.

“Being able to tap that is critical,” he says.

Making a significant decision about a big gift ultimately is “very personal” and rooted in “relationship,” he says. “That is the apex of relationship fundraising, building a strong relationship with the donor so you can understand what their priorities are and so you can meet their priorities.”

Focus on donors

Rather than focusing on the vision of the organization, Dunham says, congregations and other faith-based groups should be “seeing the vision of the donor and seeing how you can help the donor fulfill their vision.”

McLeod agrees.

Churches “need to be communicating to their members about how their gifts and pledges are changing lives in the community,” she says. “They need to be talking about legacy giving or planned giving because churches are letting their members make their largest gift to colleges and universities because the church is not asking for it.”

Investing in communications

A key is for churches to invest in their communications infrastructure, McLeod says.

“Most people — senior pastors, lay leaders and church administrators — see communications as overhead, when it’s a pipeline to additional charitable revenue,” she says. “If you’re not communicating, you’re not connecting. People want to feel their gift matters.”

The “desire to make a difference is practically universal, regardless of faith tradition,” she says, “and when a church doesn’t communicate to a member that their gift makes a difference, they give to organizations that help them understand how their gift is making a difference.”

Cultivating donors

While churches may lack the resources to hire major gift officers, they still can invest in the critical work of cultivating donors, McLeod says.

“The invitation to give, and communicating that their gift makes a difference, is really at the heart of what makes people give more,” she says. “How are they invited to give, and how do they know their gift makes a difference?”

Older Baby Boomers and the even older Greatest Generation “are making legacy gifts, they’re just not making them to the church,” she says.

One reason churches may not be getting donations from young people is that they may not be equipped to accept gifts electronically, which is the way young people like to give, McLeod says.

“The most dangerous thing about that,” she says, “is that they don’t get into the habit of giving to the church.”

Importance of online giving

A study on online giving and the donor experience online that Dunham+Company is scheduled release in January finds that “generally everybody’s looking pretty bad,” Dunham says, with “Christian ministries ranked lower in the main indicators.”

The reason was a “fundamental lack of understanding of the importance of online giving,” he says.

The study finds, for example, that a donor who wants to make a gift often must make seven or eight clicks at a charity website to complete a gift transaction.

As part of the study, which looks at the actual behavior of 151 organizations, Dunham+Company made an online donation to every charity surveyed, and watched what they did.

One-third of the charities never even responded, he says.

“There’s a fundamental lack of understanding of best practices around the online giving experience,” he says. “Giving to religion, especially to houses of worship, is way behind, and Christian ministries lag as well. They don’t understand or implement best practices about how to motivate online support and how to make it easy for people to actually give online.”

Fundraising, Part 8: Faith-based groups count on direct mail

By Todd Cohen

[Note: This article is from a report written for Blackbaud, which asked me to look at fundraising strategies that nonprofits have found to be effective.]

In the faith-based market, direct mail, online strategies and Christian radio have proven effective in acquiring donors, says Rick Dunham, president and CEO of Dunham+Company, a Dallas-based consulting firm that works with 50 faith-based organizations in six countries.

Effective direct mail strategies are focused on acquisition, conversion and personalization, he says.

Acquisition includes renting targeted lists that are “populated with people we know through profiles that show the kinds of donors that would support the organization,” he says.

Those lists need to be tested through “packages” that may tweak the wording on the envelope or reply card, or try different pieces of packaging “to see what will motivate the donors to actually give,” Dunham says.

Conversions also are important and represent a strategy “where most organizations fall or don’t do well at all,” he says.

“They think that because a new supporter has given them a gift, they’re actually a donor to the organization,” he says. “All it means is they gave a gift. It doesn’t mean they’re a supporter.”

But studies show “you don’t really have a bona fide donor until the third gift,” he says.

His firm’s strategy is for its clients to “have a specific communication pathway we take a new donor on to encourage that second gift,” he says.

Those communications are personalized and include a combination of direct mail and telephone, as well as online communications if a donor’s email address is available.

Finally, effective direct mail requires “ongoing cultivation and retention, using direct mail and newsletters to keep a donor engaged, inspired and supporting the organization.”

His firm’s clients typically send out a mailing every month, with some clients also distributing a print newsletter each month.

Many of those clients also generate “online touch points,” providing online news and information about the organization’s impact, for example, or testimonials of people whose lives the organization has affected.

To develop major donors, nonprofits should use a combination of offline and online contact, and direct mail letters, with the “messaging really geared for a major donor relationship,” Dunham says.

“You assume the individual will continue to support you because they are a major donor and heavily invested,” he says. “So the character of the letter is not to convince them to give but to demonstrate the impact of their giving.”

In their fundraising, nonprofits should recognize that “people don’t care about your organization,” Dunham says. “What they care about is what your organization does and the impact it makes.”

So rather than focusing its communication with donors “around the needs of the organization,” nonprofits should focus on “the potential impact in the life of the individual, and emphasizing and demonstrating that,” he says.

“At the end of the day, we’re all relational beings, and donors have emotional relationships to organizations and causes they represent,” he says. “As with any good relationship, the frequency and regularity of communication has everything to do with building a good relationship, along with the content of the communication.”

Next: Independent school partners with parent volunteers

The series:

Fundraising, Part 1: Basics key as economy starts to recover

Fundraising, Part 2: Health care groups invest in development capacity

Fundraising, Part 3: Human services groups focus on direct response marketing

Fundraising, Part 4: Museums aim to diversify donor base

Fundraising, Part 5: Major gifts a focus of environmental group

Fundraising, Part 6: Direct marketing a key for public society benefit group

Fundraising, Part 7: International affairs group aims to show

Fundraising, Part 8: Faith-based groups count on direct mail

Fundraising, Part 9: Independent school partners with parent volunteers