What Your Organization
Needs to Know About
Direct Response
Fundraising
What Your Organization Needs to Know
About Direct Response Fundraising
What Is Direct Response Fundraising?
Is It For You?
Getting Started
What You Should Expect
Next Up: Cultivating Your Housefile
Developing Your Donors
Your Donor List: An Invaluable Asset
Protecting Donors’ Rights and Privacy
The Ultimate Reward
What Your Organization Needs
to Know About Direct Response
Fundraising
Every year, individual Americans donate close to
$500 billion to nonprot organizations.
Some donors write small checks for ten or
twenty dollars. Others make contributions for
many thousands. ese individuals make their
contributions in response to a request they’ve
received from an organization: a mailing, an email,
an online advertisement or social media post, a
phone call, a face-to-face request, or a televised
request for a gi. ese various ways of reaching
out to donors and potential donors are all forms of
direct response fundraising.
For organizations — even new ones which haven’t
yet established their reputations — this appeal for
support (no matter the channel) represents the
opportunity to begin developing a dependable
source of funding. And for donors, it oers a way to
belong ... and to help those in need.
ese communications transform total strangers
into the loyal friends whose generosity supports
your organization — that’s what direct response
fundraising is all about!
What Is Direct Response Fundraising?
Properly executed, direct response fundraising is
a means of providing your organization with loyal
supporters, a cost-eective means of communicating
your organization’s priorities, and a consistent source
of working capital.
Equally important, it can systematically identify the
people capable of making very large gis, monthly
donations, and bequests on which so much of your
group’s future success depends.
Direct response fundraising is a process of building
a donor base and a reliable source of funding, and
it requires an investment by an organization — it is
imperative to spend money to make money.
Is It For You?
Even though you may be ready and willing to begin
a full edged direct response fundraising program,
there is a critical question you must answer before
committing your organization’s time, eort and
money: Is my organization a good candidate for this
sort of fundraising?
is has nothing to do with the worthiness of your
cause. Some causes — no matter how important —
are not able to be promoted cost-eectively through
direct response fundraising. Others may only work
at particular times, when current events and the
public mood make the public most receptive to their
missions.
To learn whether direct response fundraising is likely
to be right for your organization, you should ask
a professional fundraising consultant. In fact, you
should seek guidance from at least three reputable
direct response fundraising rms.
If the consensus among the professionals is that
your organization can successfully raise money
through direct response (and there is sucient
evidence to support their belief), your chances of
success are strong. But, if professionals caution you
from this type of fundraising to achieve your stated
revenue goals, you should accede to their wisdom
and experience — even over pressure from a well
intended board of directors.
Many nonprots are surprised when a consulting
rm warns them away from making a sizable
investment in direct response fundraising. Aer
all, you may argue, if you are going to test the
donor marketplace anyhow and some professional
advisor is going to collect a fee, why not them? Well,
consulting rms like successes as much as clients
do. And most rms get their new clients by word of
mouth — from successful clients.
So if the professionals advise you away from direct
response as a means for fundraising, you may be
wasting your time — and even irting with making
a costly mistake.
Getting Started
Now that you have at least two professional
fundraising rms that believe you have a chance
for success, you should invite written proposals
from them.
When choosing, use caution not to simply pick
the rm projecting the largest return. And, be very
cautious of rms who promise money for no cost
beyond fees and expenses. Make sure you are getting
donors out of the deal and not just lending your
organization’s name to a company operating for its
benet rather than yours.
Until your test is complete, no one can really tell
what your response rate and market reach will
be. So take other factors into consideration, such
as the rm’s track record, fee structure, in-house
capabilities, experience in growing similar programs,
expertise with various channels of fundraising, and
your comfort level with the people in the rm you
choose.
Once a contract has been negotiated and signed,
your new consultant must do two things: (a)
translate your case for support into an eective
appeal, and (b) learn whether there are enough
potential donors to make a long term program
possible.
Let’s use a direct mail test as an example, since
direct mail typically drives the bulk of charitable
contributions for many organizations.
e only way to learn whether you have a viable
direct mail market is to test sucient numbers of
names (at least 30,000-50,000) from a diverse group
of lists (usually 5-10).
To obtain the names for your mailing, your
consultant will recommend renting or exchanging
the lists of other organizations whose donors or
members are likely to be interested in your specic
cause or mission. If you are just starting out and
do not have a donor list of your own with enough
names to exchange with other groups, then you’ll
have to rent lists by paying each organization a fee
for the right to test its list in one mailing.
By seeing how well your direct mail performs on
a cross section of these test lists, an experienced
professional can determine whether or not the
“universe” of direct mail donors likely to support
your organization is large enough to make further
mailings a cost-eective option. If so, you and your
consultant can develop a plan to “roll out” your
mailing to larger and larger segments of the original
mailing lists, while continuing to test your donor
recruitment letter on additional lists of the type that
worked in the rst test mailing.
To lead with a digital strategy, a similar approach
of testing the market through advertising and
lead generation will be deployed. Responsiveness,
engagement and conversions among audiences
should be analyzed to determine if your test strategy
justies a larger investment to keep going. Mail and
digital were used as examples here, but you should
have similar approaches to testing and then rolling
out in whatever channel you choose: mail, phone,
email, web, direct response television (DRTV), etc.
What You Should Expect
Some organizations may have unrealistic
expectations when undertaking their rst direct
marketing eort.
ey send out one mailing, tally the donations, gure
in their costs and, if the eort doesn’t make a prot,
they conclude direct marketing just isn’t for them.
In many cases, that decision will cost their
organization all the growth, money, and public
education a properly managed campaign might
have given them.
e mistake is in looking at direct marketing as a
single campaign rather than as a process.
Remember, acquiring new donors is an investment,
not a means of producing immediate income. It’s
important to remember that these rst tests should
not be expected to earn net income. ese are
“prospect” or “acquisition” campaigns — designed to
acquire the most donors possible in the least amount
of time, at an acceptable net investment per new
donor. Your consultant can help you determine the
acceptable cost per new donor based on industry-
wide experience and the projected long-term value
of your donors.
As prospects respond to your mailings or digital
eorts and become donors, they are added to your
organization’s donor list — where they will become
an ongoing source of donations to subsequent
“housele” appeals.
On rare occasions, you may earn more money than
you spend on the test (which likely means you did
not test a large enough part of the market). It is far
more typical to lose money on this initial prospect
eort, while you try to determine which is your best
fundraising pitch and what lists or audiences will
produce the best results for you.
Experienced development ocers understand this
as an investment in the future, and experienced
direct response fundraisers understand it is not at all
unusual to lose $35-$60 to recruit each new donor.
ey would only do so, however, knowing they are
bringing on supporters who will make additional
donations to fully recover that investment and
produce a high rate of return — and net revenue to
fund the mission of the organization — in future
years.
Over time, development ocers determine what the
best investment level is for the donors they acquire.
ey know that the manageable short-term losses
they sustain (the “acquisition costs”) are more than
justied by the long-term support (the “lifetime
value”) they’ll earn from the donors they acquire.
e longer an organization engages in direct
response fundraising, as a rule, the more cost
ecient the process becomes. e increasing
amount of net money raised in the long run from
regular housele appeals to an ever-growing donor
le explains why organizations experienced in
raising funds through direct response continue to
invest in acquiring new donors, year aer year.
ose donors —if managed properly — can
become more than just the foundation of mail,
phone, online, and email eorts. ey can be the
base of your overall fundraising program. ese
donors will become important sources for volunteer
opportunities, events, major donor societies, and
bequests.
Next Up: Cultivating Your Housefile
Proper management of the donor base means
systematically identifying each donor’s giving
potential — and then moving each one to that point
as quickly as possible. Most donors can be upgraded
to higher giving levels. rough careful cultivation,
some donors can be persuaded to become “multi-
givers” — donors who give more than two or
three times a year. And some will even become
major donors, those who contribute hundreds or
thousands of dollars each year. ey can then be
graduated into a more personalized program, where
contacts are made by personal letters, phone calls or
face to face meetings.
It is vitally important to send prompt and personal
acknowledgements to your donors aer they give,
and occasionally update your donors on how you are
investing their contributions. is stewardship helps
improve the long-term value of your donors.
e larger your organization’s base of quality low-
dollar donors, the faster this process works to develop
the major givers you want. And because direct
response can nd and acquire that initial base of
donors faster than any other kind of solicitation, your
entire fundraising cycle will be as ecient as possible.
Developing Your Donors
A sophisticated prospect program will always
include testing new oers and creative against the
most successful campaign (called the “control”).
And when, aer a series of tests, a new acquisition
package consistently beats out the old one, it
becomes the new “control.” is ensures the
continuing addition of fresh, enthusiastic donors
to your house list.
But the donors already on that house list must
also be kept informed and engaged — because it
is from their continued donations that you will
begin to earn substantial net income and pay back
the original investment. e most successful direct
response programs use many dierent channels, and
approaches, to keep their donors educated.
Annual Renewals
If your donors are members, your consultant will
develop a series of membership renewal notices. But
you do not need to have “members” per se to run an
annual renewal campaign. You can also ask charitable
donors to “renew their support,” and these renewal
communications oen bring in the larger share, or
even the majority, of your annual direct marketing
income.
ere are two types of renewal campaigns. Larger
organizations oen run a monthly (or quarterly)
“expire campaign,” where donors are asked to make
a renewal donation based on the anniversary of
their rst gi. Typically, the rst renewal request is
sent three months before the anniversary of their
rst donation (or expire date). So if you joined in
September, you would receive your rst renewal
request the following June — nine months aer
you joined.
e more common renewal program for smaller
organizations is based on the calendar year, where
all donors are asked to give again for the upcoming
year. All members or supporters would receive their
rst renewal request at the same time — such as in
January, regardless of when their rst gis were made.
In either type of renewal campaign, donors continue
to receive calls, emails and/or letters until they make
a donation. Once they renew their support, they are
then taken out of the renewal cycle.
When considering such a campaign, keep in mind
that the renewal process is the single easiest way to
increase your net income and retain your donors. For
example, it is not uncommon for the rst renewal
communication to generate a response rate that is
twice or three times the norm, compared to the next
category of mailings — called special appeals.
Special Appeals
Special appeals are most other requests made during
the course of the year asking for additional donations.
e thematic focus is generally narrower in scope.
While a renewal pitch makes a broader case for the
overall mission, these special appeals generally focus
on a hot topic, new development, special opportunity,
smaller programmatic area, or threat.
Donors oen feel they already made their “gi for
the year,” so special care needs to go into making the
case for additional giving — aer your donors have
been thanked in a separate, prior communication for
their renewal donations.
ose organizations that balk at the idea of asking
their donors to give more than once or twice a
year are not realizing their organization’s potential
income. ey are in fact leaving a lot of money
on the table — money that would further their
missions! And because their more sophisticated
competitors are asking, their donors are giving to
rival organizations (oen, several times a year).
Income from a series of special appeals — usually
between six and ten communications per year in a
variety of channels — can raise nearly as much as
renewal income. In some cases revenue from appeals
even exceeds income from renewals.
ese special appeals also provide opportunities
to tell your donors about new programs, update
them on existing programs, and report on how their
dollars are being used. A well craed re-solicitation
program should employ many dierent techniques
and package formats to keep your appeals fresh and
interesting. As you will see, dierent people will
respond to dierent program elements, creative
techniques, and thematic approaches, or choose the
time of the year they prefer to give.
In addition to appeals to members or donors, some
organizations oer donors other ways to participate.
Monthly Giving or Sustainer Programs
Some donors, for example, will commit to give a
specic amount each month. ey oen agree to
make a monthly donation with the convenience of
their credit card or by automatic debiting from a
bank account (an “electronic funds transfer”).
Summaries of donors’ past support and longevity
with the organization, special “insider information,”
and other reinforcement techniques, including
plaques, premiums and invitations to special events,
help create a powerful bond with sustaining donors.
is bond may lead them to contribute much larger
gis in the future.
e most successful sustainer programs usually take
the form of a “club” or some other specially named
program. is reinforces the member’s feeling that
he or she belongs to an elite and very special group.
You will nd these donors are also bonded to your
cause or mission. As such, they have very high
retention rates and long-term donor values, and the
cost to raise their dollars can be quite low. ese
“sustainer programs” also provide a reliable source
of monthly income that can help simplify your
budgeting process.
Because monthly donors are so invested in the
organization’s mission, they are excellent prospects
for increased giving and bequest opportunities.
Sustainer programs are highly successful in the
worlds of canvassing (face to face fundraising),
direct television advertisements, online
communications, and telephone fundraising.
Supporters are accustomed to using their credit
cards, and since average gis tend to be higher in
these channels, donors with giving histories in these
channels are that much more likely to respond well
to a sustainer invitation.
High-Dollar or Middle Donor Programs
As you know, some donors prefer to make larger
investments into the organizations they value,
and direct response fundraising is a wonderful
feeder track for identifying donors who may be
open to making large donations in the future.
Pay particular attention to those donors who join
your organization with an initial gi of $100 or
more. ey are demonstrating that they like your
organization (or cause) and have the means to make
similar, and perhaps larger, gis in the future.
rough “high-dollar” or “middle donor”
programs (oen organized as annual giving clubs),
organizations select, cultivate, and upgrade their
most generous donors. Typically, these mailings are
more costly and more personal than those sent to
other donors. As a result of this special treatment,
many higher value donors dramatically increase the
size or frequency of their gis.
Cultivation and Stewardship
Cultivation eorts are not intended to attract
immediate gis, but to increase future ones. Like
many of the techniques used in sustainer and high-
dollar packages, cultivation campaigns bond donors
to the organization. News clippings or newsletters
showing how donors’ gis have been put to use
are a typical technique, as are surveys and online
petitions, or “thank you” calls. Used properly,
cultivation and stewardship eorts greatly increase
donors’ feelings of involvement... as well as their
responses to future fundraising requests.
Your Donor List: An Invaluable Asset
One tangible asset your organization will gain from
direct response fundraising is the list of donors or
members you recruit and cultivate. Yes, it requires
an upfront investment into recruiting a large base
of supporters. But it is not unusual for each of these
donors to be worth $100, $250 or even $500 each
over the next ve years, aer subtracting the initial
investment spent on recruiting these donors and
accounting for the normal attrition to be expected
with newly acquired donors. It should be self-
evident that you should treat your donor list with
care, and treat each donor with respect.
In addition, the list itself has intrinsic value. Just
as you will rent (pay money for a one-time use)
the lists of donors to other organizations for your
prospect program, other commercial, political,
or charitable mailers will be interested in your
supporters as potential sources of new donors to
their organization. ey may be willing to pay well
for the privilege of “renting” your list. In a rental
situation, you would ordinarily provide a list of your
lower-dollar donors (only) to the other organization
to solicit once in return for payment to you.
Your organization may also realize additional, and
perhaps equivalent, value if you opt to exchange
your donor list for the right to solicit an equal
number of another organization’s donor names
on a one-time basis. Exchanging names will also
signicantly reduce the cost of your acquisition
program.
Protecting Donors’ Rights and Privacy
If you elect to oer your list for rental or exchange,
be sure to give your donors the option to exclude
themselves from the list you furnish to other
organizations. It’s a simple matter of privacy that
is greatly appreciated by most donors, and most of
them will not opt out. In fact, the oer may boost
your donors’ condence in you. It’s as simple as
adding a check-o box one or more times a year that
lets donors tell you “please do not share my name
with other organizations.”
In addition, you should add “seed” names to your list
— ctitious names at a variety of real addresses — to
allow you to track the usage of your list and insure
it is used only in a manner you authorize. Your
seed names are an important means of monitoring
the use of your donor le and guarding against
improper, or even illegal, uses.
To maintain donor privacy, you should never
send names directly to another organization.
A third party “merge-purge” company receives
your list when you rent it or exchange it with
another organization. You can also stipulate that a
formal “list usage” agreement be signed with the
organization to protect against the improper use of
your list.
To protect the value of your donor list to your own
organization and to other mailers, you should update
and clean your list regularly to correct bad addresses
and ag the names of deceased donors. Service
bureaus (or “merge-purge” vendors) oer this
type of processing. e most common types of list
hygiene processing are National Change of Address
(NCOA), Coding Accuracy Support System (CASS),
and deceased record removal. CASS processing will
correct and standardize addresses according to Post
Oce rules, NCOA processing will update records
to match the current USPS national change of address
le for recent movers, and deceased processing will
identify donors that have passed. Each time the list is
updated, a clean copy should be stored in an o-site
location protected from re or other hazards.
Note: in order to mail at nonprot rates, USPS requires
your donor le to be updated with NCOA processing
within 90 days of your mail date.
The Ultimate Reward
e payo of a well managed direct response
campaign is more than just a healthy cash ow.
rough cultivation of your donors, you identify
those who will become actively involved, those
who may become volunteers and even board
members, and those who will make major nancial
commitments to your organization.
Too many nonprots believe such active or major
donors are “out there” and they just haven’t found
them yet. ey are wrong. Your major donors are
already in your own donor le. ey’re the people
who’ve already proven their commitment to you by
giving an initial contribution and, perhaps, several
subsequent donations.
But to maximize their worth to your cause, they
must be nurtured through a well managed program
from the day they make their rst gi.
Best of all (and this is what a development director
should always bear in mind), your donor base will
enable you to institute a healthy bequest program.
e return from individual legacies alone may
well exceed the net revenue you realize from direct
response fundraising campaigns — and it oen comes
from your direct response donors.
It is not unusual to see a large bequest come in from
a donor who never gave a gi of more than $10 at
a time, or from someone who gave $50 ve years
ago. Your letters, emails, and calls over the years
updated them on your priorities, needs, and good
stewardship. You, in essence, formed a relationship
and identied a nancial need that they are now
wishing to support even aer they are gone. e
donor may have been on xed income, used to
sending in small donations, too ill to write any more
checks, or not very liquid, but their estate planning
made sure their charitable legacy is now helping the
people and causes that were most important to them
in life. And it all began with a mail piece, an email, a
TV ad, or telephone call that touched their heart and
motivated them to support your organization.
is is why many organizations invest in direct
response fundraising. at broad base of support —
acquired, cultivated, and upgraded by mail, digital
communications and telephone conversations — will
even help you raise more money from foundations
and corporations, because these leaders are also
individual donors to organizations like yours.
A broad base of support says to the world that
there is a real, and widely endorsed, need for your
organization and what it does. ere is virtually
nothing more compelling to a potential major donor.
We hope that this overview of the direct response
fundraising process serves you well as you
consider your funding options.
ADRFCO COUNCIL
The Association of Direct Response Fundraising Counsel
1319 F St NW | Ste 800 | Washington, DC | 20004
tnpa.org/adrfco
For additional information,
please contact:
