BIG’s Blog: Fundraisers' Future is in the Clouds

Working in the nonprofit fundraising industry, some days I want to laugh and some days I want to cry. No wonder so many fundraising professionals are so confused about the “moment” we are in. Just like in every industry, fundraisers read and follow thought leaders. These are people who think about fundraising and the future of fundraising and write books and articles. And today, most of them also post blogs.

In years gone by it was easy to know when a genuine breakthrough-idea came out. Typically it appeared in book form followed by articles about the book’s central thesis in trade publications. That was the normal pace. But today, weekly or daily blogs and information in general come out much faster. And even the best of the thought leaders can have trouble keeping up.

Where am I going with this?

This past Monday, The Agitator, a weekday blog by Tom Belford and Roger Craver, came out with a blog post entitled “Acquisition – Direct Mail: The Exquisite Corpse.” I like Tom and Roger and I generally like their blog. In their post they quoted a Mr. Chuck Pruitt, the co-managing director of A. B. Data Group, from a piece he wrote in June of 2009 entitled “Chuck Pruitt is Mad.” Apparently what Chuck is mad about is the “myth” that “direct mail is dying.” Chuck then throws out three purported “Facts” that are supposed to support his thesis that direct mail is not dying. Fact #1: The direct mail donor universe is alive and well and actually shows little signs of rapidly diminishing – at least in the next decade. Fact #2: The growth of online fundraising is happening but it is happening much more slowly than predicted. Fact #3: There are enormous multi-channel marketing opportunities out there for smart people with open minds.

Neither I nor anyone else has to spend two seconds responding to the above purported “Facts.” All you have to do is be a direct mail fundraising practitioner to see the cracks in Chuck’s arguments. Better yet, just read DMA, AFP, or Target Analytic’s benchmark reports on the trend lines of direct mail fundraising. Behind all of Chuck’s bluster is a guy who wants everybody to quit talking about direct mail being dead. So, okay Chuck, I’m on your side; direct mail is not dead. Now, can we discuss with fundraisers what is REALLY worth discussing? Outside of those in the nonprofit direct mail fundraising world, nobody in marketing is debating whether direct mail is viable or not.

Do you sense my frustration?

Here is what the rest of the marketing world is focused on because this REALLY matters. Tablets are taking over. In about a two week period, Apple announces the iPad mini, Microsoft is giving us Surface, and Google is expected to offer a new Nexus tablet. In 2011, 31.9 million tablets were sold. By the end of next year, annual tablet sales are projected to be nearly 120 million. All the while PCs, laptops, and notebook numbers are in decline. Just within the past year, the number of adults who own a tablet has doubled from 14% to 31%.
Tablets are not PCs. Tablets are about connecting. They have apps, not traditional software. Meanwhile, the whole software industry is going online.  Whether in business or in our personal lives, people are accessing their programs “in the cloud” to accomplish their tasks.
The world is looking at tablets and smartphones (as they are really in the same category) and trying to figure out if the personal computer in its different forms (PC, laptop, notebook) is dead or dying. Why?  Because THAT has real implications on how people communicate, market, and, ultimately, fundraise.

The direction of personal communication technology within the culture matters. For fundraisers who are seeing declining numbers of Depression and WWII era donors (and need to engage Baby Boomers, Generation X and Millennials), this REALLY matters.


-Mike

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BIG’s Blog: The Beginning of the Big Decline?

People in general are resistant to change.

Institutions are resistant to change.

This does not bode well for institutions that are made up of people when there is great change going on.

Last week the Chronicle of Philanthropy published a news item reporting that analysis of a joint project by the Association for Fundraising Professionals and the Urban Institute reported that in 2011, for every 100 new donors that nonprofits recruited, they lost 107. You will no doubt read and hear more about this very significant piece of news from every nonprofit analyst and blogger in the days to come.

So here is my take.

This should not come as a surprise to my readers since the results of this study fit exactly with the narrative I have been laying out in these blogs for over two years.

First of all, I do not believe this is the result of the economic downturn. In fact, the same report shows that for every new $100 gained, in 2011 $100 was lost. This is bad news but significantly better than the average of the previous three years (2008, 2009 and 2010), which more closely correspond in time to the economic downturn. In those three years, for every $100 gained they actually lost $110 on average. At least in 2011 they broke even!

No, the more ominous news is the actual increase in donors lost. Philanthropy in the United States has been on a roll for the last 60+ years. But the unheralded cohorts who are the real heroes and who have sustained the philanthropic giving have been the Depression and World War II generations; otherwise known as the Great Generations, the term coined by Tom Brokaw.

These two generational cohorts trust institutions and they give to institutions. But beginning with the Baby Boomers, institutional trust is gone. The post WWII generations lived through social upheaval starting with the Boomers in the 1960s. Most nonprofit organizations have been over weighted with Depression and WWII donors for the last 30+ years, and for faith-based organizations…that goes double.

My take is that the decline in real numbers of these two significant cohorts to philanthropy is starting to show up in the statistics. And, unfortunately, this relatively small decline portends the beginning of increasingly large fall-offs in the years to come.

What can be done about this?

The good news is that study after study shows that the Baby Boomer, Generation X, and the Millennial generational cohorts are philanthropic. But older nonprofit institutions need to undertake dramatic measures in how they portray themselves and how they think about fundraising with these younger generations. Just because they have been successful for the last 50+ years is no guarantee they will continue to be successful using the same approach and methods they have employed in the past. But, alas, institutions are resistant to change.

One of two outcomes will happen to established institutions over the next decade. Either they will change and adopt new fundraising methods or they will see accelerated decline in fundraising revenue. It will be either/or; very black and white.

On the wall in my office are the words of an ancient Chinese curse: May you live in interesting times. It is a constant reminder to me of the times we live in. There is no doubt fundraisers live in interesting times. The question is, will they be able to steer their institutions through the change before it is too late?


-Mike

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BIG’s Blog: Force Multipliers

Google “Force Multipliers” and go to the Wikipedia page for Force Multiplication…same thing. Their definition refers to an attribute or a combination of attributes which make a given force more effective than the same force would be without it.

For years, direct mail fundraisers have been sending out appeals while generally knowing what the response rate will be. Then someone gets the bright idea of sending an email…if they have the email address…to the mail recipient. Guess what? The combined mail and email get a higher response than the mail alone.

Force multiplier.

Now in the digital online fundraising world, if we have an appeal, we can send an email, text them, reach out to their Facebook page, tweet them, send them an automated phone call reminder, plus send them a piece of mail.

Multiple force multiplication.

It’s about cutting through the noise to make your message get through. You can’t do that with just mail. In fact, once you have all the other tools, try dropping off the mail and link every contact to your Web site.


-Mike

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BIG’s Blog: More from Newsweek

Last Monday’s post on the announcement that Newsweek magazine was ceasing print publication and going 100% digital generated a response from some of my readers.

“Newsweek is still there, but they had to change their model of distributing the news.”

Dave

“It’s the message, not the medium. Why are we in fundraising so hung up on print and ink? Our message is just as important, maybe more so, than 50 years ago. But if we don’t switch the medium, the message will never be heard.”

Shirley

“As the case of Newsweek points out, at some point you have to start down the path towards 100% digital. Thanks Mike for the challenge and keeping this in my face.”

Fr. Mark

“Newsweek had a choice, cease publication and die or go digital. I have to admit that I too am a lapse subscriber, but after it goes digital, I will be reading Newsweek again.”

Mary   


-Mike

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BIG’s Blog: Newsweek

Newsweek, the 79 year-old weekly news magazine icon is going 100% digital. Only Time remains as a general news weekly magazine in print.

It was Time magazine that got me hooked on reading in fourth grade. My folks subscribed to it and I was a loyal and avid reader. But it was funny, every time I went to a doctor or dentist’s office, it was the Washington Post’s Newsweek that was in every waiting room.

My college dorm had a reading area that had both Time and Newsweek and I started reading Newsweek regularly. Newsweek became my news magazine of choice and the Wall Street Journal became my newspaper of choice.

Somewhere over the last twenty years I dropped my subscription to Newsweek, as kids and work sap your time to read. The Wall Street Journal had it right; get the subscription to the workplace and they will be less likely apt to lapse.

Unless you live in a city that has seen its daily newspaper shut down or cut back, the shift of Newsweek to an all digital edition is a real shocker. It jars the culture that this “digital thing” is finally hitting home, even if we personally have long-since dropped our subscription. It’s like hearing about a long-ago TV star who has died. It’s news-worthy to a part of the population but means nothing to younger generations.

Over the last decade, just like other magazines, Newsweek tried to stem the decline in readership of their print edition. They even brought in Tina Brown, who was editor of Vanity Fair. In fact, Tina essentially invented Vanity Fair as a phenomenon, but Newsweek was way bigger than re-jiggering the look or the format.

Newsweek was an icon and the fabric of many of our lives, but printed publications are all living on borrowed time. Very similar to a lot of fundraising organizations. Their donor bases are declining and revenue is falling off even as their missions are as relevant today as they were 50 years ago. Yet the fundraising leadership clings to the fiction that “when the economy turns our revenue will come back.”

The economy WILL come back, but not same-o, same-o fundraising.

The world is going digital and, as it does, less and less people will get their information from printed sources . . . hence Newsweek goes 100% digital.

For fundraisers, is Newsweek going digital enough to get your attention? How about the Postal Service entering bankruptcy? Are you going to wait for that before you move?

It should be obvious to nonprofit leaders that their fundraising groups must develop a plan to be successful in the digital world. Merely acquiring a Web site or Facebook page isn’t a plan…it’s just a start.

When is your fundraising organization going 100% digital?


-Mike

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BIG’s Blog: This Is Getting Very Serious

Something today is very different. No, fundraising revenue isn’t coming in the way it used to. Yes, fundraising has become tough. But for fundraisers who are dependent on direct mail for the majority of their revenue, they have way more to worry about than just declining response rates. Try the U.S. Postal Service entering bankruptcy.

If you understand bankruptcy, you know it doesn’t necessarily mean the Postal Service will go out of business. Does the memory of General Motors come to mind? It means the Postal Service will go to court and declare bankruptcy and attempt to define a plan that the court must accept to emerge from bankruptcy as a profitable operating entity. Good luck with that.

But once the Postal Service enters bankruptcy, it will never be the same.

Here is the really tough news for nonprofit direct mail fundraisers: your postage costs will go up substantially. You and your trade associations can meet with the Postmaster General himself to plead your case to keep the nonprofit postal discount rate . . . but you’re pleading with someone who just rang up a $5.2 billion loss for the last quarter and has maxed out his $15 billion line of credit with the U.S. Treasury.

And talk about bad timing. Have you heard of a thing called sequestration, or, as it’s more commonly called, the “fiscal cliff?” Back last summer Congress created a super-committee to figure out how to lower the fiscal budget because they keep hitting their own borrowing limits.
Yep, the super-committee was a super-flop. And since the super-committee couldn’t figure out how to bring down the expenses of the U.S. Government, automatic across-the-board cuts start to kick in January 1, 2013.

So you see, Congress is otherwise occupied with how to keep entitlements, non-defense discretionary and defense spending from being hit hard across the board. Do you really think they are going to pay attention to the Postal Service?

Not a chance.

Look for the Postal Service to file for bankruptcy right after the first of the year.

And look for the nonprofit postal discount to go away immediately upon entering bankruptcy.

Sorry to be such a “downer” on a Friday, but you need to know how serious this is.

You do, however, have other choices. You don’t have to be dependent on the Postal Service. We’ve been saying this for over six years, and our clients…though most still use direct mail…are positioning for the future without mail. You can, too. We have another free, no-obligation Webinar coming up in late October that details an alternative strategy to direct mail fundraising. Drop me a note and I’ll see that you get an invitation.


-Mike

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BIG’s Blog: The Social Media Problem That Nonprofits DON”T Have

Let’s discuss social media . . . specifically Facebook and creating an online relationship.

Commercial companies are way ahead of most fundraising organizations in figuring out how to effectively use social media. According to all the figures I read, they are increasing their marketing budgets in this category even despite the current nay-sayers of Facebook. So it must be working for them.

Commercial companies are about getting people to buy their product. While commercial companies want to get lots of “likes,” unless that ultimately translates into sales, it is worthless. Everyone who likes a product or, in the case of Apple, may actually love the product, doesn’t actually want a relationship online.

Now consider your organization. You are actually hoping to create an online relationship. That is the goal. And it is certainly a goal that Facebook can directly facilitate.

The poor commercial products-people have goals too. But they have to figure out how to achieve their goals in roundabout ways. For instance, maybe it is getting people to talk about their product by sharing a story, or maybe offering a free trial.

Is what I said at the top of this post true? Are commercial companies really way ahead of most fundraising organizations? I think I could make a good argument that they are, and as I have just shown, they are doing it with severe handicaps compared to nonprofits.

So then, what is the take-away? Study how commercial companies use Facebook and incorporate their ideas into your approaches.


-Mike

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BIG’s Blog: You Need “Enough” Information

Are you a person (or do you work with a person) who just can’t move until they have all the information?

Here’s an insight: you will never know ALL the information. It just is not possible.

So then the question comes down to this: Do you have enough information to make an informed decision?

No matter what problem you are facing (such as falling donations year-over-year), your question is “What key facts or information do I need to make a move to fix this problem?”

Defining the key facts or pieces of information that you need keeps you moving down the path to a decision . . . but if you don’t know what those key facts or pieces of information are, then you’re just waiting for all the information.


-Mike

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BIG’s Blog: Where Are You Reading My Blog?

Do you use email?

Me too.

So where am I going with a question with such an obvious answer?

Here is where:

What If I told you that the iPhone has become the number one email client?

What’s an email client? The email client, also known as the “email reader” or “email agent” is the computer program used to access and manage your email.

Litmus is an email testing and analytics company that examined one billion “opens” of emails sent by its customers this past June, then compiled the information.

Here is a surprise:

The iPhone was number one beating out Outlook, Yahoo, Apple Mail, Hotmail and Gmail.

Here is a list of the Top Ten:
1. iPhone   20%  
2. Outlook   18%  
3. Yahoo     13%  
4. Apple Mail  9%  
5. Hotmail     8%  
6. Apple iPad  8%  
7. Android     7%  
8. Gmail     5%  
9. Web Version  5%  
10. Windows Live Mail  3%  

According to the Litmus data, this “shift” to Mobile has been extremely sudden. As recently as June of 2011, Desktop dominated by over 50%. Then Desktop began to drop and Mobile began to rise. This past February 2012, Desktop and Mobile converged and since then, Mobile has been rapidly rising and Desktop has been declining.

This is a significant behavior change.

But is this really a surprise to you? How many of you have smartphones? How many have iPhones? How many of you are reading my blog on your smartphone as you check your emails first thing in the morning?
What are the implications?

The mail implication is that your organization continues to fall behind the communications curve with younger generation media habits (beginning with the Baby Boomers) which will sustain your organization in the years to come.

Click here for the infographic.


-Mike

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BIG’s Blog: Kill Your Fundraising Model Before It Kills You

Ron Ashkenas is a business consultant in strategy, but also writes articles for the Harvard Business Review. I modified his title, Kill Your Business Model Before It Kills You, to make the point that the same issues that apply to commercial businesses also apply to nonprofit fundraising.

“No business model lasts forever. The most dangerous trap that a manager can fall into is complacency.”

Ashkenas states that Peter Drucker (another famous professor and strategic consultant) reportedly once said that the biggest curse for any business was twenty years of success. Markets, environments, and technology can change so quickly that no amount of profit today guarantees success tomorrow.

Is there any leader today of a fundraising group who wouldn’t shout a big “Amen” to that statement?

In his article, Ashkenas uses three examples of organizations that were either slow or didn’t change their strategy: AOL, Kodak, and the U.S. Postal Service.

“AOL knew that dial-up subscriptions were fading years before it took action. Kodak realized that film was being replaced by digital media long before it changed its investment strategy.”

But Ashkenas saves his harshest comments for Postmaster Patrick Donahoe and the U.S. Postal Service.

“About a year ago the U.S. Postal Service ran an ad campaign warning about the dangers of email and proposed paper-mail as a safer and more reliable alternative. When I saw this ad, I thought I had accidentally switched to a comedy station. But it wasn’t a joke. This was a serious (and misguided) attempt by the U.S. Postal Service to stay in business.”

Ashkenas ends his article with a sobering warning that applies to fundraising leadership today.

“Nobody wants to be in a position of the U.S. Postal Service, trying to defend a business model that has little runway left.”

Take a hard and critical look at your fundraising business model and your results for the last five years. If it is not what your organization needs, then start looking for alternative strategic fundraising business models.


-Mike

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BIG’s Blog: Blowback

Well…my blog last Friday touched a few nerves.

Although I did get some positive and funny responses (including the guy who informs me he drinks Champagne from a paper cup), most of the “negative” responses could be summed up by this one…

“Are you saying my fundraising group is an old coffee mug? I take exception to that!”

Come on people, it’s called “poetic license.” I am making the same point that a young Jewish man made some time ago as it is chronicled in Matthew 9: 16-17.

“And no one puts a piece of unshrunk cloth on an old garment, for the patch tears away from the garment, and a worse tear is made. Neither is new wine put into old wineskins, if it is, the skins burst, and the wine is spilled, and the skins are destroyed; but new wine is put into fresh wineskins, and so both are preserved.”

I obviously can’t compete with the Master. Therefore my old coffee mug analogy for your current fundraising operation was meant to convey a “comfortable,” and “safe,” not to mention “totally understood” world.

And of course that comfortable, safe, and totally understood (but no longer predictable) fundraising world stands in stark contrast to figuring out, for instance, how mobile and mobile apps fit into your fundraising practice today.  

The iPhone and the iPad screens are bright and shiny with unbelievable crystalline quality…just like bubbly French Champagne. But how does using them drive fundraising?

What I am saying is, they don’t within the context of the way you practice fundraising today. Oh sure, you can have an app created for your fundraising group and you can feel like you’re hip and modern, but the base of your donors are still writing you checks. For many of your organizations 90% or more of your revenues come in through checks. And who is still writing checks? Right – your WWII and Depression era supporters whose youngest members are 67 years old!

Does that sound like the iPhone app set? Apps are a tactic to reach younger audiences. And until you are ready to develop a strategy to attract younger supporters and donors…don’t waste your money on apps.

Think new cloth on an old garment or new wine in old wineskins or pouring sparkling French Champagne into an old coffee mug.


-Mike

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BIG’s Blog: She Was So Genuinely Excited

Maria Pippi-Layne, Development Director for the Dominican Sisters of Hope, called me back the other day following our meeting together at the NCDC conference in Nashville. She was genuinely excited to tell me about a session she had attended where she learned about the process of creating apps for iPhones. Nothing much gets past Maria as she is one of the most astute fundraisers in Catholic fundraising.

Maria understands how the world is moving to digital, but she is aware that iPhone apps don’t neatly fit into her current fundraising methodology.

Here’s an analogy. Would you pour French Champagne into an old coffee mug? No way! French Champagne was made for crystal flutes to show off its sparkling quality.

So, too, using iPhone apps is a different way of fundraising, and frankly requires a completely different approach than the way it is practiced in most organizations today.

Maria gets it. That’s why she is joining our Transformational Strategic Plan program beginning in January 2013. When Maria brings in iPhone apps…and she will…it will be new Champagne into a fluted crystal glass, not an old coffee mug.


-Mike

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BIG’s Blog: Is This You?

“To see what is in front of one’s nose needs a constant struggle.” – George Orwell

What are you thinking?

Your donor file declines precipitously as your year-over-year revenues fall off to the point that any unbiased observer would conclude your program is in collapse. Yet you march along reducing overhead expenses where you can in the hope that bequests will bail you out for one more year and make what you know to be a dire situation somewhat less so.  

But where is the growth plan?

Growth? The word is a foreign concept in an organization that has come to believe that “managing the decline” until things pick up is the only strategy.

That most certainly is not a strategy; that is hope.

And hope is not a strategy.

Last word…it doesn’t have to be that way. There are people and firms that can help.


-Mike

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