Watchdogs, Ratios And The Ongoing Search For A Meaningful Way To Measure Non-Profit Efficiency
To determine if their contributions are being used effectively, many donors look to "charity watchdog" groups. Unfortunately, these watchdogs (groups like Charity Navigator, the Better Business Bureau Wise Giving Alliance (BBB) and the American Institute of Philanthropy (AIP)) rely on ratios regarding the cost of fundraising that do not give donors the whole picture.
For those of us who work with non-profits every day, we know there are many legitimate reasons that an effective non-profit may have a fundraising ratio that leads to a low rating by the watchdog groups.
Why? New non-profits, small non-profits, non-profits who focus on advocacy efforts and non-profits who are trying to increase the number of donors they have (or undertake new funding initiatives) may have higher overhead (more administration and fundraising expenses relative to income). Nevertheless, they may still be achieving their mission in a very cost-effective way. Many fundraising ratios do not take these factors into consideration and organizations can be "penalized" with poor ratings.
So, what can be done about it? How can non-profits reframe the discussion so that the public, and donors, begin to focus on true effectiveness?
The biggest of the watchdog groups — Charity Navigator — has started a new way for non-profits to "talk back." Starting this week, visitors to the Charity Navigator website have the option to write a review of their favorite charity.
As part of Charity Navigator's new partnership with GreatNonprofits, donors, volunteers, former staff members, clients served, community partners or other stakeholders can inform others about the charity's impact by relating their own experiences and observations. This will help as Charity Navigator works to add new measures of effectiveness to their criteria.
In addition to encouraging stakeholders to write reviews as part of this initiative, non-profits can educate the public about better ways to evaluate non-profits. A study by Syracuse University and the University of Colorado Denver about the charity watchdog organizations concluded that the current rating systems have several flaws (click here to read the Executive Summary of the study) and identifies ways for non-profits to reframe the debate.
There are areas in which we can all better educate donors, volunteers and the general public, for example:
Contextualize the ratings: George Mitchell, from Syracuse University writes: "Watchdog ratings measure very specific aspects of an organization's situation and can be disproportionately influenced by criteria that some may consider trivial or controversial, such as the appropriate number of board meetings per year or whether non-profits should maximize current spending or pursue financial sustainability. Other factors may be largely beyond the control of non-profits, like the cost to raise one dollar, which is not determined solely by non-profit demand but depends also upon the supply of charitable contributions." Make sure your donors know that these factors do not indicate whether a non-profit is achieving meaningful results at a low cost.
Use available resources to educate: Jessica E. Sowa from the University of Colorado Denver writes that non-profits can use Guidestar and other giving websites like JustGiving and Network for Good to "provide multiple program descriptions, including what the programs do, program long-term and short-term success measures, how program success is monitored, and examples of program success." In this way, non-profits can highlight how they are truly accomplishing the goals the donors support.
Finally, know your ratings and work with the agencies if they are holding you to an inaccurate benchmark. And whenever possible, participate in pilot programs that are designed to improve the ratings systems.
By taking an active role in the discussions and reframing the conversation, non-profits can begin to educate the public about cost-effective organizations that deliver excellent services and accomplish world-changing missions for very low cost. Donors will then know their contributions are meaningful!
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Taming The Frankenletter!
It happens unexpectedly. You have a control letter that's worked for years. Over time, small changes are made … a new executive director comes and "fixes" the tone … the marketing department "tweaks" the messaging … a board member comments that it needs more statistics.
But, you wake up one day to the realization that your formerly excellent control has become a monster — with your case for support its first victim — and mailing results soon to follow.
How do you keep excellent direct mail packages from falling victim to the Frankenletter? Here are a few key suggestions:
An educated reviewer is a good reviewer.
Before anyone has a chance to take a red pen to your control copy, make sure they understand that they are looking at a package that was developed to stand the test of time — and that it is working. Reiterate the sensitivity of making changes to a successful control (fear is a great motivator!). Remind them that that they are reviewing the package for the purpose of updating facts and figures — not the case for support.
Fight the good fight.
Even with the best preparation, there will be occasions when you will get pressure to make unnecessary and potentially harmful changes to a control package. Don't look at the changes in a vacuum. Reread the entire letter with the changes to determine how those impact the letter as a whole. If the edits make the letter confusing or less readable, if they bury the ask or weaken it, then go to the mat to maintain the quality of your package. Remember — there is a lot riding on these words. If in the end you are forced to make the changes, insist that it be tested first!
Get a little help from your friends.
Let's face it, after looking at a letter for the 5th — or 50th — time you start to lose perspective. Once a year (or more if results are starting to dip), schedule a package review with people who are knowledgeable about the mail but who have not worked intimately on your program. Offer them free food if necessary! Then let them share their "fresh-eyed" thoughts with you on the package. Their observations may help open your eyes to ways that your message may have strayed. They can tell you if your letter has lost its urgency, become too long and rambling, or if you've lapsed into the technical and away from the emotional. Then use their comments to get back to the letter you should be mailing!
Most importantly, remember the basics of good direct mail writing (for a reminder, see our 3-Minute Copy Tune-Up) and make sure that all of your creative decisions are based on results!
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Appeals That Inspire Donors To Thank You
Imagine a donor writing in response to your year-end appeal, "Your letter touched me deeply." It can happen — when you have a great story and a well-integrated strategy!
The Actors Fund received just such a letter from a donor in response to their November 2010 year-end appeal. The genesis of this campaign was a wonderful story about an elderly singer (Joan) who is a resident at the Fund's Lillian Booth Nursing Home for retired performers. The letter described Joan's early years as a singer, and how she turned to The Actors Fund later in life when she was no longer able to care for herself.
The letter also described how Joan loves the nightly sing-alongs she holds at the Home. To include the donor, we created an involvement device asking the donor to "request" a song from Joan. The song request was a simple card attached to the reply form. Accompanying the mailing was a two-part email campaign. The first email invited the donor to request a song, and the second asked for a gift.
This integrated campaign was a runaway success! The mailing grossed 37% more than the goal, with the response rate and average gift exceeding projections by more than 40%. The e-appeal garnered an impressive $283 average gift! The cost recovery for the entire campaign was an excellent 808%.
This campaign was effective for two reasons: First, because it was genuine. Joan's story was real, and the myriad of details about Joan helped donors "see" her and how much their gifts help. Second, the song request involvement device truly engaged donors, connecting them to Joan and the mission of The Actors Fund.
Beyond raising money, this campaign established a dialog with donors. Hundreds of donors requested songs from Joan in addition to sending a gift. And Joan received dozens of calls at the Home from donors wishing her well.
Perhaps most amazing of all was the letter The Actors Fund received from a donor. It said: "The fact that you spent so much time concentrating on her narrative … helped me understand how much The Actors Fund does for each person … Thank you very much for your beautiful letter."
Click here to read the recent NonProfit Times article "Stories And Premiums Ruled During the Holidays" featuring this package!
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Ask The LMN"X"pert!
From "Acquisition" to "ZIP selects," and everything in between, the LMN"X"pert is dedicated to answering YOUR direct marketing, membership and fundraising questions.
How do I account for the impact of factors I can't control — like the recent earthquake and tsunami in Japan — on my fundraising efforts? Is there a way I can tell what kind of decrease in revenue to expect when donors' attention is focused on a disaster or other overwhelming news?
On Shaky Ground
Results can definitely be affected by current events — especially big ones. But, it really depends on the specifics. We can offer some general guidelines, however, on tempering expectations on results for when the unthinkable happens. Here are some questions you should ask:
1) Is the news happening here in the United States, internationally, or both?
Domestic events usually have a bigger impact on audiences domestically — and the more your audience overlaps with what's occurred (both geographically and emotionally), the bigger the impact is likely to be. For example, if you were a New York City-based charity when the September 11 attacks happened, your audience was likely to be less responsive (unless, of course, you were a local relief charity, like the Red Cross of Greater New York).
2) Does my organization's mission overlap with what's occurred?
It has been observed that "disaster giving" (or donations to other large tragedies like 9/11) is not in lieu of other giving, but in addition to other giving. If you have done a good job bonding with your members or donors, they may give you less if times are tough or they are pulled in multiple directions, but many of them will still give.
3) How will my ask be perceived in relation to what's happened?
Regardless of what is happening in the world, your cause is still important — especially to your donors. If your organization's cause has nothing to do with the event, don't try to change your case to address it. Stay true to your message and your mission, and your donors will keep responding.
Have a question for the LMN"X"pert? Email us today at firstname.lastname@example.org — and get the expert answers and advice you need from the Lautman team!
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Client Profile: ACCION International
Lautman Maska Neill & Company congratulates ACCION International as they celebrate their 50th anniversary of helping the world's hardworking poor.
ACCION began in 1961 as a student-run volunteer group dedicated to addressing the desperate poverty in Latin America. Early on they noticed that many of the local poor, unable to find work elsewhere, would start their own small businesses — selling everything from embroidered fabrics to spices — in an effort to make ends meet. However, without banks willing to lend them money, they often had to resort to borrowing from loan sharks in order to buy the supplies they needed. As a result, most of their profits went to interest payments, leaving them with little money to reinvest in their businesses or their families.
In an effort to break this vicious cycle, ACCION began working with local partners to issue modest "microloans" at commercial rates to small-scale entrepreneurs. From day one, ACCION proved the success of its model with an astounding repayment rate — a feature of microfinance that still holds true today!
Since then, ACCION has continued to be a pioneer in microfinance, expanding its reach to 22 countries around the world and exploring new products and processes with its partners. Through these life-changing microloans and other financial services, millions of families now have brighter futures. Parents can now provide their families with the food and shelter they deserve, their children can remain in school instead of having to work to help make ends meet, and they can even employ their neighbors and expand their businesses.
Lautman Maska Neill & Company has proudly partnered with ACCION International since 2001, helping them build and cultivate a core group of loyal donors who generously support their important mission — to help millions help themselves.
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