Investing in the Future
For years, there has been debate in the nonprofit sector about whether it’s possible to “sell brother-hood like soap,” to quote marketing professor Michael Rothschild, who wrote about the challenges of charitable and social marketing in the late 1970s. In 2006, the question is as timely as ever. Buzz continues to increase in the nonprofit world about traditionally corporate concepts—things like lifetime value and long-term return on investment. But, for many, doubts remain. Does a business mindset make sense for charities? And what can it contribute to the cause?
Representatives at Atlanta-based CARE, a leading humanitarian organization dedicated to fighting global poverty, say adopting a reactivation strategy based on net present value (NPV)—a metric commonly used in the corporate world—has resulted in a significant increase in donations from the charity’s inactive donor file. In fact, the organization estimates that NPV-based changes made to its inactive fundraising program will generate more than $3 million to support initiatives like providing emergency relief to communities in crisis and delivering medical and educational support to developing nations.
So how did CARE do it? To begin, the charity changed the way it assessed its donor segments and how it used direct marketing to target specific groups. “[Before], we pretty much treated everybody the same, whether you gave $10 a year or whether you gave $1,000 a year,” explains Paul Leo, CARE’s manager of acquisition and new markets. “It was getting us to our yearly goals, but it wasn’t considering what a donor means to CARE over the next 10 to 15 years. Now we’re taking a step back and saying, with limited resources, ‘Where can we most effectively spend?’”
The notion that inactive donor campaigns are an effective way to spend marketing dollars may seem counterintuitive. And, in fact, it took CARE some time to realize just how much potential its 2 million-plus name inactive donor file had. Five years ago, when CARE first signed on with direct response fundraising specialist Merkle|Domain, the organization’s first priority was establishing a new control package and prospecting through list rentals. But, according to Carter Wade, Merkle|Domain’s vice president and managing director, there was no way to account for the unthinkable in fundraising plans.