Direct-Marketing Appeals Produce Poor Results for Charities, Study Finds

Charities’ direct-marketing appeals are not raising as much money as they have in years past, and charities are losing more donors and attracting fewer new supporters, according to a new survey.

The quarterly survey, conducted by Target Analysis Group, a Boston consulting company, is based on more than 70 million donations of less than $5,000 apiece made by 39 million donors, mostly in response to the direct-mail solicitations of large nonprofit organizations. Those gifts totaled more than $1.9-billion.

The 72 organizations in the survey represent a range of causes and missions, including animal welfare, the environment, health, social services, international relief, and advocacy.

In the first three quarters of last year, direct-marketing donations to charities in the survey failed to keep pace with inflation and grew by a median of 1.4 percent, meaning that half the groups achieved greater increases and half fared worse.

The number of people who made gifts declined by a median of 1.4 percent after 2006.

Meanwhile, the organizations recruited a median 6.2 percent fewer new donors, on top of a 10-percent decline in new contributors for the first three quarters of 2006.

Target officials said the groups did not suffer a bigger fund-raising loss because they were able to raise more money from each donor than they had in the past.

The amount of money that each recipient of a solicitation contributed grew by a median of 3.9 percent, following a 2-percent median increase in 2006.

Animal-Welfare Groups

Some types of organizations did better than others.

From January through September last year, animal-welfare organizations had the greatest median increase in donations, which grew by 7.4 percent, and a median 63.5-percent increase in new donors.

All other types of charities in the survey reported a decline in new donors.

Environmental groups also did better than other types of organizations. While their number of new donors declined by a median of 5.9 percent, total contributions increased by 3.5 percent and their total number of donors held steady.

Nonprofit groups with the biggest fund-raising challenges were health organizations, which have lost more donors than any other type of organization in the past five years of the survey, and international relief organizations, which have recruited a median of more than 12-percent fewer donors in the first three quarters of both 2006 and 2007.

Advocacy groups, however, reported the worst results of any type of charity in the survey. They recruited a median 21.8-percent fewer new donors in the first three quarters of last year, on top of a 14.2-percent decline during the same period in 2006, while the total number of donors also dropped by a median of 12 percent.

Big Changes

The overall decline is a result of several big changes, Target officials said. Among them:

• Many charities now focus their energy on attracting big donations from wealthy individuals, instead of people who give $5,000 or less.
• The number of people who grew up before and during World War II is dwindling — and those people have typically been more responsive to direct mail than younger people.
• Some charities are unable to meet a growing demand among donors for information on how their money is being used.

Particularly problematic is the declining ability of most charities to win new donors, said Carol Rhine, a senior fund-raising analyst at Target.

She said that baby boomers, who have not responded as well to direct mail as older donors, are likely to start giving in coming years. But to reach them, charities will have to change their direct-mail approach in recruiting supporters.

“I do not think direct mail is dying, but it is changing,” she said. “The catalog industry has learned this: They still send the catalog, but customers no longer order through the mail. They get the information in the mail, but they buy over the phone or online.

“Direct mail has to change so it can accommodate that trend.”

A complete summary of the survey is available on Target’s Web site.