The dream donor who slashed a revenue stream

He’s the kind of donor everyone loves. Every year’s end, he makes a donation of around $1,000. He gives a couple of other smaller gifts at other times of year. But it’s not just his money they love.

He’s friends with many people at the org. He volunteers regularly, taking the jobs it’s hard to get others to do. He has served a couple of terms on the board through the years. He talks up the org with his social circle and has brought in several major donors.

A Dream Donor, really.

A couple years ago, the org did something that’s fairly common, and very smart: They put first class stamps on the return envelopes in a direct mail pack.

It’s smart, because it works. It dependably increases revenue by boosting response rate. There’s just one trick: the investment works with donors who give $100 and up. Below that level, the increased cost is not worth the increased revenue. But above that level, it is one of the most dependable and easy ways to raise more money.

That’s why the org did it.

But when Dream Donor got the piece, he was concerned. He figured there was no way adding 60¢ to the cost of every pack could be a smart expense. He called the executive director to point out what he was sure was an error.

And that’s where things went wrong.

The executive director either didn’t know or didn’t have the wherewithal to explain the truth about those stamps. He apologized to the dream donor and sent out the order: No postage on return envelopes ever again! Dream Donor caught our money-wasting mistake.

And that was that. They now never use that easy, cost-effective revenue-enhancing tactic. The estimated loss in net revenue is about $4,000 every year. Much more than Dream Donor gives.

Following Dream Donor’s advice is expensive. It’s exactly the type of harmful “donor dominance” that we should never let happen. But this was from a nice person — not a mean-spirited jerk like we might be watching out for.

I think if Dream Donor knew the cost of his advice, he’d be horrified. But he has no access to that information, and nobody wants to tell him. It would have been so easy for his friend the executive director to simply tell him the truth up front. I’m pretty sure he would have understood.

Letting donors dictate your strategy is a mistake.

If someone doesn’t like or doesn’t understand something you do, just tell them the truth.

And always make your decisions on knowledge, not the opinions of amateurs. And the includes the opinions of the nice ones.


Comments

4 responses to “The dream donor who slashed a revenue stream”

  1. I would think the solution here would be to insert Business Reply indicia-printed return envelopes. Unless there is a study somewhere that said potential donors “value” actual stamps more and therefore have a higher return rate. While the cost per individual returned envelope is higher (somewhere around 70 cents last time I did it?), I would think that there would be a lower net cost. UNLESS the organization is controversial, and the mailing list isn’t targeted well. As then people could return the envelopes with “NOPE” kinds of messages (yes, I have done this myself, particularly with political glurge).
    Not to mention that the Director could just call up said donor and explain what the staff told him, and the benefits. In addition to obtusely supporting the US Postal System, which needs all the help we can give them.

  2. I would think the solution here would be to insert Business Reply indicia-printed return envelopes. Unless there is a study somewhere that said potential donors “value” actual stamps more and therefore have a higher return rate. While the cost per individual returned envelope is higher (somewhere around 70 cents last time I did it?), I would think that there would be a lower net cost. UNLESS the organization is controversial, and the mailing list isn’t targeted well. As then people could return the envelopes with “NOPE” kinds of messages (yes, I have done this myself, particularly with political glurge).
    Not to mention that the Director could just call up said donor and explain what the staff told him, and the benefits. In addition to obtusely supporting the US Postal System, which needs all the help we can give them.

  3. Your guess that donors respond more to real stamps is correct. The response rate when there are live stamps is considerably higher than when you use either an unstamped envelope or a BRE.
    Yes, the Director could have called the donor and told him the truth, and that would almost for sure have mollified him, but the Director chose not to.

  4. Your guess that donors respond more to real stamps is correct. The response rate when there are live stamps is considerably higher than when you use either an unstamped envelope or a BRE.
    Yes, the Director could have called the donor and told him the truth, and that would almost for sure have mollified him, but the Director chose not to.

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The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

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Jeff BrooksJeff Brooks has been serving the nonprofit community for more than 35 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com. More.


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The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

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Jeff Brooks has been serving the nonprofit community for more than 30 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com.

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