April 07, 2008
Direct-Marketing Appeals Produced Sluggish Results Last Year, Study Finds
By Elizabeth Schwinn
The signs of an economic downturn continue as a new study shows that donations made in response to direct-marketing appeals are growing at a considerably slower rate than in past years, according to a new study of many of the nation’s biggest charities.
Direct-marketing donations to 70 charities grew by a median of 1.5 percent, meaning that half the groups achieved greater increases and half fared worse. Organizations did not keep up with the 4-percent rise in inflation or the 2006 increase of 2.8 percent. In the past, groups could expect growth of 4 percent a year in their direct-mail returns, according to Target Analytics, the group that conducted the survey.
What’s more, charities are facing more trouble getting repeat gifts from donors and attracting new supporters. But in one spot of bright news, many groups successfully raised more money from individual donors than they have in the past.
Those new statistics were included in the latest release of a study that is conducted four times a year by Target, a Boston consulting company. The 70 large organizations that provided data for the survey collected 64 million donations of $4,999 or less from 35 million donors, mostly in response to direct-mail solicitations. Those gifts totaled more than $1.8-billion.
The 70 organizations in the survey represent a range of causes and missions, including animal welfare, the environment, health, social services, international relief, and advocacy.
Decline in New Donors
The number of people who made gifts declined by a median of 1 percent in 2007; that follows a decline of 1.4 percent in the total number of contributors in 2006.
Perhaps more worrisome, however, is the slippage in the number of new donors. The organizations recruited a median 5.1 percent fewer new donors, on top of a 10-percent decline in new contributors in 2006. Only 41 percent of the groups in the survey increased the number of people supporting them last year.
The amount of money that each recipient of a solicitation contributed grew by a median of 4.1 percent, following an 3-percent median increase in 2006.
Some types of organizations did better than others last year. Animal-welfare organizations won a 7.2- median increase in the number of donors who supported their causes, more than any other type of group, and a median 30.5-percent increase in new donors.
All other types of charities in the survey reported a decline in new donors.
Environmental groups also fared better than other types of organizations. While their number of new donors declined by a median of 3.7 percent, they reported the highest increase in total contributions of 5.2 percent, and their total number of donors held steady.
Social-Services Groups Suffer
Nonprofit groups with the biggest fund-raising challenges included human-services organizations, the only type of charity where the average size of each gift declined, by a median 1.4 percent, and international relief organizations, which recruited a median of 20.3 percent fewer donors in 2007 than in 2006.
Advocacy groups, however, reported the worst results of any type of charity in the survey. They recruited a median 20.5 percent fewer new donors last year, on top of a 12.8-percent decline in 2006, while the total number of donors also dropped by a median of 10 percent. They were also the only type of charity that suffered a drop in total contributions last year, falling by a median of 0.9 percent.
While the sluggish economy is a key reason for the slowdown, other trends also continue to reduce the returns that charities receive from direct-mail appeal. For example, 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. And some charities are unable to meet a growing demand among donors for information on how their money is being used.
A complete summary of the survey is available on Target’s Web site.
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