Casting Their Nets Wider

Every year, Disabled American Veterans sends out millions of envelopes containing address labels and memo pads in an effort to nudge would-be supporters into sending in small checks. For years such appeals have raised about 85 percent of the organization’s $107-million yearly revenue. But like many nonprofit groups, Disabled American Veterans is getting thousands fewer checks than it used to in response to mailings.

For the past few years — and well before the recession — most charities have seen diminishing returns on their efforts to increase the ranks of new donors. But the economic slide has made things worse. Last year, the number of new donors recruited by organizations dropped by a median of 6.9 percent, meaning that half the charities saw declines that were greater than that and half saw smaller decreases.

That came on top of a median 4.4-percent decline in 2007, according to a study of 75 large nonprofit organizations by Target Analytics, a Cambridge, Mass., direct-marketing research and consulting firm.

An Array of Challenges

With the increasing cost of postage and the slide in donations, many charities are cutting back the number of appeals they send to people who have never previously given.

In the past, reducing the number of appeals to potential donors and concentrating fund-raising efforts on an organization’s best donors have increased the size of the average gift per donor, says Greg Fox, senior vice president of Merkle, a Columbia, Md., direct-marketing company that assists charities.

But now, the size of the average gift is slipping — a sign, says Mr. Fox, not only that organizations are losing low-dollar donors, who are typically the first to stop giving in a recession, but also that fewer people who give medium-size sums are donating, or they are giving less.

Compounding these problems, fund raisers say, is a dwindling pool of names of potential donors for rent or exchange. As fewer people subscribe to magazines and fewer people give to charities, it is harder to amass large numbers of donor names.

All those elements, say experts, could be signs of long-lasting trouble for charities, since it could take many years to expand the pool of donors to the size it was before the recession.

Some charities are hoping online fund raising will attract new donors in a cost-effective way, However, donations raised by the Internet are still dwarfed by direct mail, according to The Chronicle‘s annual survey of online fund raising. The 203 big charities in the survey last year raised less than 1 percent of their contributions online (The Chronicle, May 7).

Nonprofit groups that rely heavily on direct mail always fine-tune their efforts, but reduced budgets are now forcing many to take more serious action. This year, Paralyzed Veterans of America decided to reduce by 10 percent the number of appeals seeking gifts of $10 or $15 a year in return for the address labels, calendars, or other small gifts it sends in the mail, says Mark Dowis, the group’s executive director of development.

The decision came after such appeals drew 10 percent fewer gifts than in the past.

Now the group is trying to spur more donors to respond to less-expensive solicitations. While fewer people respond to the cheaper mailings, those who do give make donations that are 50 percent bigger than gifts from donors who receive labels or calendars.

Among the other ways charitiess are trying to trim the expense of finding new donors:

Holding low-cost events. The New York branch of the Simon Wiesenthal Center, a Los Angeles group that fights anti-Semitism worldwide, is focusing on bringing new supporters with events like lectures and film screenings. These moreintimate events are inexpensive to hold, says Rhonda Barad, director of the organization’s East Coast operations.

The group charges small sums for admission to the events. “You have to get people to buy in, even in bad times,” she says, adding that the $10 to $20 tickets to the events are priced low enough to attract those on tight budgets.

In March, the center held a reception that drew 120 people — all of whom provided contact information that the center can use to build relationships with them, says Ms. Barad. In addition to the $18 admission fee, some people at the events signed up on the spot to sponsor a child’s participation in a program to teach tolerance to young people, pledging a total of $2,700.

Personalizing mail appeals. Massachusetts General Hospital made small changes in efforts to seek gifts to its annual fund from former patients and was able to raise more money as a result, says Hilary Marshall, the fund’s director.

In the past, the hospital sent mailings to former patients seeking support for the annual fund, but never sent anything more to patients who didn’t respond.

Now, says Ms. Marshall, fund raisers mail two or three appeals to the same individual. Although a smaller share of recipients respond to the second appeal than the first, says Ms. Marshall, each repeat mailing still yields about 100 new donors to the annual fund.

At the same time the hospital adopted a more personal approach to its communications with former patients. Instead of the traditional “generic” appeal explaining how the hospital uses donations, says Ms. Marshall, it began sending letters that highlighted the stories of individuals who had been treated at Massachusetts General and the medical research taking place there. Those two changes produced a 14-percent increase in the number of annual-fund donors over the past year, says Ms. Marshall.

Even though both new and repeat donors are making smaller gifts, on average, the approximately 1,200 new donors have helped the hospital’s annual fund grow by 6 percent.

Most important, says Ms. Marshall, even a small contribution from a new donor is an opportunity to start building a relationship.

“The idea is to get more donors through the door on a lower dollar amount in this kind of an economy, and then let’s show them that every dollar counts,” says Ms. Marshall. “If we do it the right way, we’ll keep those donors,” she says.

Making face-to-face pitches. The Field Museum, in Chicago, has begun to deploy old-fashioned salesmanship to recruit new supporters.

Teams of museum staff members and outside consultants greet visitors to the museum and tout the economic benefits of museum membership as an affordable entertainment option in a rough economy, and calculate for each group of visitors how much they could save on admission by joining.

The museum has also lowered the cost of some membership options and added extra perks like a free coat-check service.

In a December drive that coincided with a popular exhibit, the welcome committee recruited 1,500 new members to the museum in 12 days, says Dana Hines, president of Membership Consultants, a St. Louis consulting firm that has advised the museum.

“A personal solicitation is so much better than an impersonal ask through the mail,” Ms. Hines says. “People find it hard to resist.”

That principle is also behind Save the Children’s decision to expand its street fund-raising program. Though the organization has long deployed sidewalk fund raisers to recruit new supporters in person, Save the Children has increased their numbers this year and now gives passers-by a choice of three giving options: $28 a month, $18 a month, or a one-time gift.

Although the charity is receiving fewer one-time gifts than in past years, says Robin Van Etten, marketing manager of sponsorship acquisition, the size of the average gift received on the street has increased, and the additional fund raisers have helped the charity keep the number of monthly donors steady at a time when many other groups are losing support from people who make small gifts.

Capitalizing on controversy. Despite its 39-year history, the Association of Community Organizations for Reform Now, or Acorn, had never had the kind of national profile that was thrust upon it last fall when the advocacy organization was accused by Republicans of voter fraud, says Nathan Henderson-James, Acorn’s director of online communications.

Until recently, the group was supported largely by foundation grants and membership dues paid by participants in its homeownership and loan-counseling programs. But the controversy surrounding Acorn opened up a new source of money: private donations.

In October, at the height of the publicity over the voter-fraud allegations, the organization raised more money in online donations than it had in the previous nine months combined, says Mr. Henderson-James.

Of the more than $75,000 raised in October, about two-thirds, he says, was unsolicited and the remaining third was donated in response to three e-mail appeals the group sent out at the end of the month.

The organization has now amassed a database of potential supporters through petitions placed on its Web site and by collecting the e-mail addresses of members from local Acorn offices.

The group also recently started its first national online advocacy and fund-raising campaign to seek money for efforts to prevent home foreclosures. Two campaign e-mail appeals have each raised between $4,000 and $6,000.

Defenders of Wildlife was also able to capitalize on controversy in a provocative online video campaign that featured the actress Ashley Judd attacking Gov. Sarah Palin, Republican of Alaska, for allowing aerial hunting of wolves.

The video, promoted in e-mail messages, mailings, television spots, and on a dedicated Web site, eyeonpalin.com, generated $200,000 in its first 10 days from 5,000 donors, about 3,000 of whom were first-time supporters, says Jeff Regen, the organization’s vice president for online marketing.

Taking advantage of discounts on broadcasting fees. Declining ad sales and the bad economy have led many radio and television stations to reduce airtime rates sharply, opening new opportunities for nonprofit groups. Although still more expensive than other ways to reach new donors, broadcast has become a way for many charities to recruit monthly givers.

Declining broadcast fees prompted Save the Children to return to television advertising after abandoning it eight years ago, says Gail Arcamone, the charity’s assistant director of direct-response marketing.

In October, the charity began airing 30- and 60-minute infomercials featuring the actress Joely Fisher on local television stations, says Ms. Arcamone.

Among the most successful organizations to use television advertising is the American Society for the Prevention of Cruelty to Animals, which has raised $30-million since 2007 with a popular infomercial featuring the singer Sarah McLachlan.

With broadcasters charging almost 50 percent less in some cities for advertising, says Steve Froehlich, the charity’s senior director of direct response, the group has been able to give the ad twice as much exposure.

This year ASPCA expects to spend about $2-million more on television advertising, increasing the sum to about $12million, says Mr. Froehlich.

But, he says, “what we are getting for that money is a lot more exposure, a lot more frequency, and airings that have a lot bigger audiences.”