Thursday, 23 August 2012

Is your charity using 'churn and burn' fundraising techniques?

A recent LinkedIn post by Giles Pegram on the Institute of Fundraising discussion board about 'churn and burn' practices in fundraising got me thinking about the why and how this approach to fundraising is alive and well in so many charities today.

If you don't know what I am talking about - let me explain first what 'churn and burn' is. By definition, in a charity fundraising 'churn and burn' is about bringing in new donors/ or new contacts, bombarding them with irrelevant communications and fundraising appeals in order to get the most out of them in terms of donations and then letting them go.

Most charity fundraisers I talk to would never admit that their charity practices the 'churn and burn' approach. Here are some reasons why:

Firstly, many charity fundraisers are genuinely unaware of the 'churn and burn' practices under their roof. They just don't see it. Why? Because they might be doing very little new donor acquisition thinking that the times are hard and people will not give to new charities. Often 'churn and burn' approaches are fuelled by agressive new donor acquisition efforts. The problem is that these new supporters are bombarded with requests to give more money straightaway or included in the current communications cycle that is designed with long standing donors in mind. In other words, new donors feel little or no connection with the charity and they leave.

Secondly, because they are not measuring the effectiveness of their fundraising activities in terms of the how donors give and what kind of relationship they have with the charity. They are not measuring retention/ attrition rates of their donor file or contacts/ donor conversion rates and can not see how their charity might have the 'revolving doors' syndrome. Donors enter, stay a short while and leave.

Thirdly, fundraisers are under pressure from their line managers, CEO's and Boards to meet these year's targets often expressed in total amounts raised and numbers of new donors brought in. So, short- termism becomes the name of the game - let's get the most out of these donors now for meeting today's targets but not really focusing on growing relationships with donors naturally for the long term.

Fourthly, some direct marketing agency is practicing 'churn and burn' on behalf of the charity. Some charities outsource the new donor acquisition activities or even the whole fundraising function. So, a direct marketing agency finds new donors on their behalf or does their fundraising giving the charity the money. While at face value this looks like a good proposition and can work well on many occasions. There are times when the agency, working on behalf of many clients, engages in 'churn and burn' practices to meet the fundraising targets.

Finally, although many fundraisers talk about 'donor-centric' communications what they are sending out  is generic communications pieces that don't really speak to donors' concerns or motivations for getting involved with their work. If you disagree with me just pick up one of your charity's welcome letters, newsletters or fundraising appeals. Take a look, can you find more 'you' than 'we' in these materials? Do your newsletters contain any stories about donors, about what motivates them to participate in your work? Do your appeals contain three or four reasons - from the donors perspective - as to why they should give? If you answered 'No' to these questions that your charity's communications are not donor-centric.

Here are some action points to help you start identifying any 'churn and burn' practices in your charity's fundraising and uprooting them for good:

1. Run some fundraising reports to track donor behaviour, to identify the donors who are lapsing and ineffective fundraising activities;

2. Calculate lifetime value of your donors and start including the numbers of multi-year donors, new donors, reactivated donors etc in your fundraising reports for your CEO and other senior leaders.

3. Start educating your CEO and your Board about the importance of building long term relationships with supporters and the pace of such relationships, in that they do  not happen overnight.

4. Evaluate your communications standing in donors shoes. Show your appeals and newsletters to a group of friends and ask for their honest opinions. Do they understand what you are saying? Are they moved by your stories? Would they support this charity? Would they be impressed by your thank you/ welcome letters?

Please feel free to add any more points to this list...

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