Winning Back Lapsed Donors: When Breaking Even Pays

By HARVY LIPMAN

From 1995 to 1999, Harris O’Malley Marketing, in Woodland Hills, Calif., ran

10 fund-raising drives in which the charities for whom the company solicited gifts ended up without a penny of the money raised.

Yet, officials of every one of the charities were satisfied with the results.

That is because in those campaigns, Harris O’Malley was hired to solicit money from former donors who haven’t given any money to a charity for several years, in an effort to persuade them to contribute again.

Reaching those lapsed contributors is expensive. Many of the phone numbers and addresses are no longer current, and a fund raiser has to spend a lot of time to find those few who want to donate again.

If the charity tried to contact those former donors on its own using a direct-mail campaign or other types of solicitations, it would have to pay the expenses involved.

Company owner James Harris offered to do it at no charge to the charities, as long as the groups understood they would receive no revenue. He would use the money collected from the former donors to pay his expenses, but he wouldn’t make a profit.

His motive, he said, was to get his foot in the door of some large charities in the hope that they would give him more lucrative contracts in the future. Among the nonprofit organizations that hired Mr. Harris’s company were Amnesty International, the United States Fund for UNICEF, Common Cause, and Environmental Defense. His efforts at proving his company’s competency have succeeded in winning it full-fledged fund-raising contracts with a number of large nonprofit groups, including Doctors Without Borders and People for the Ethical Treatment of Animals.

His clients were satisfied with just breaking even on the effort to attract donors who gave a long time ago, Mr. Harris says, because winning back such donors by direct mail generally costs $20 to $40 per donor. “I’m the better value,” he says.

Not only does the charity get back contributors at no cost, says Vivianne Potter, director of direct response for Amnesty International, in New York City, but “we are also getting someone who has a higher value to us, because they have given before.” Once former donors are tracked down and agree to contribute again, she says, they are added to the charity’s list of current donors for future fund-raising campaigns. Because they are already familiar with and supportive of the organization, they usually are easier to persuade to give money again than people who have never previously supported the charity.

Low Ratings

Marlene Sloger, director of membership and fund raising at Common Cause, said that in 1999 Mr. Harris’s company contacted 9,800 people on a list of former Common Cause donors, of whom 1,061 sent in a contribution of at least $10.

When states issue their annual reports on commercial fund raisers, however, Mr. Harris and the charities he works for end up with black eyes.

The state reports don’t differentiate between major fund-raising campaigns and those conducted for other purposes, like winning back lapsed donors or educating the public. State regulators say they don’t have the capacity to gather such information, adding that their goal is merely to provide the public with basic information. But the state reports — and the news releases announcing them — often focus on companies that provide no money to charities as examples of how some commercial fund raisers take unfair advantage of nonprofit groups. And the charities get angry phone calls from donors upset because they want their money to be spent on providing services.

“People read these stories in the general press about the attorney general’s reports, and they call and say, ‘How could you do this? This is a rip-off,’” Ms. Potter says. “It’s hard to explain enough of the background so that people get it.”

Mr. Harris says that he’s never had a complaint filed against him by a state regulator, and enjoys good relationships with the nonprofit groups that hire him. “We’ve never had a fraud problem,” he says. “We never touch our clients’ money.”