Go to content Go to navigation Go to search

December 18, 2008

Is It Dangerous to Cut Back on Fund-Raising Costs?

Many fund raisers are facing pressure to cut costs as donations drop. But Jeff Malloch, a direct-mail consultant, warns that cost-cutting mania can lead to really bad decisions.

Writing in a letter posted on The Agitator blog, he tells nonprofit officials to remember that reducing expenses only makes sense if it contributes over the longer term to higher (or more stable) revenues.

Mr. Malloch takes on several fund-raising ideas in a recent Chronicle article, saying they focus too much on cutbacks and not enough on innovation. For example, he says that the Mint Museum of Art’s decision to combine three solicitations into one year-end mailing, which saved $5,000.

Writes Mr. Malloch: “This is a dangerous move without any testing to back it up. She may have saved $5,000, but she needs to consider how much revenue she potentially loses by combining three entirely different messages and appeals into one, likely now a disjointed and confusing mailing?”

He also takes issue with Catholic Charities USA’s decision to replace its traditional year-end letter to donors with a postcard bearing photographs of people in need.

The postcard idea may have been cheaper to produce, says Mr. Malloch, but it ignores research that longer letters do work and, by not including a return envelope, doesn’t provide donors with an easy way to give.

In another post on The Agitator blog, Roger Craver writes about a friend’s “contrarian approach” to fund raising during the recession.

The friend, Jerry Huntsinger, a freelance writer, tells fund raisers not to “go silent” with donors simply to save some money. He also urges charities to be aggressive in their fund raising during the recession, so they don’t miss the recovery; to mention the word recession frequently, so donors are aware of the difficulties they’re facing; and to “reduce your staff instead of reducing your mailings.”

Perhaps his boldest advice is to “launch a new program,” which he says will energize donors.

What do you think of the advice?

— Caroline Preston

Thursday December 18, 2008 | Permalink

Comments

1. The decision to communicate with donors through a postcard was not based on cost alone, but rather centered in a strategic plan to reach out to more people with a message clearly connected to our work to reduce poverty in America. Results show that total contributions during the first 18 days of December increased 49.2% over the same time period in 2007. Additionally the average gift size increased 68%. The postcard directed donors to the web. The results demonstrate the ease of web based giving. We are deeply appreciative of our donors who are personally experiencing the impact of this recession and reach out so that we may continue work on behalf of those who are hungry, homeless, in ill health, working, but not getting by.

   — Patricia Hvidston    Dec 19, 10:06 AM    #

2. I agree with Patricia’s move to post cards instead of the standard envelope appeal. I tested this method in year-end 1997 and received a comparable total of gifts to previous years — but at far less cost! The great thing about post cards is that people read them. Post cards don’t tend to get as lost in piles of junk mail, and donors don’t have to tear open an envelope to get the content.

   My advice is communicate more often, but simplify your appeals to make them less expensive to produce and mail. The more positive touch points the better.

   — Kevin Feldman    Dec 22, 03:39 PM    #

3. Quite frankly, I think the “long letter” approach is old and tired. As a donor and busy foundation executive, I don’t have the luxury of time to read through a long request letter. And I frequently become irritated when I think of the expense (monetary and environmental) that went into crafting and sending such a letter. Bravo! to the folks who go the postcard route, or even better, the electronic route.

   — Emily Kessler    Dec 24, 12:48 PM    #

Commenting is closed for this article.

Previous: Wall Street Donors Continue to Give Millions of Dollars, Despite Downturn
Next: Newspaper Web Sites Offer New Tools for Donors

---

Copyright © 2009 The Chronicle of Philanthropy