Monday, March 2, 2009

Thrown Out Money

Our mailbox is overflowing with fundraising letters this time of year. They come like lemmings to the sea, each envelope thicker than the other. I've posted before about the inefficiencies in many/most tzedaka organizations and almost nothing has changed. We read and hear about how charitable giving is down this year and how charitable organizations are hurting. A few have shut down operations; others are coming close. And yet, their methods and mailings remain the same.

Professional fundraisers know that a 5% response to a fundraising mailing is an excellent response; many get far less, today especially. Yes, 5 people out of 100 is an excellent response; 2-3 is more like it for most organizations. But in far too many cases costs exceed incoming donations, and the net monies to the organization are zero or minus zero. If we are talking absolutely rock bottom in expenses for preparation, supplies and sending for an envelope containing nothing but a single sheet letter and a small response envelope, we are still talking about 22-25 cents cost per letter. So mailing out 100 letters costs $25. An excellent response of 5 people contributing could bring you in $50 with minimum donations of $10. That means a 50% overhead for the mailing. But what if you get only 3 responses per hundred, the likely scenario today? That results in $25 spent to make a profit of $5. Are your donors more generous, sending in $18? Those three expected donations result in $54 sent in and expenses of $25 for a net of about half.

What happens to most of those fundraising letters?--honesty required here. Those letters from organizations/institutions you have given to in the past may be put away to be sent to. Those to whom you have in the past decided not to send to are going to end up in the trash. New organizations? Maybe you'll open the letters and more likely you won't. Letters from outside your geographic area? Less likely to be sent to than those that come from your "neighborhood" or extended neighborhood, especially in these tight economic times when many people are restricting their tzedaka giving to local organizations.

Here's another flash: the thicker the envelope, the less likely that a donation will be sent. Picture yourself when you open those fundraising letters--do you sit down and read every word? Maybe, if the letter is one page and short. More likely you skim the letter, look at whose signature is on it and decide yes or no based on whether you've sent them before and on how much money you have available right now. If a letter is more than two pages and/or there are brochures or other materials in the envelope, most people don't take the time to really read anything in the envelope. It takes too much time and there are 20 more envelopes waiting for the contents to be read. And here's some news: the thicker the envelope, the more that is in it, the more it costs to mail that envelope out. That $25 above spent on sending out 100 envelopes doubles, triples, quadruples and quintuples. Yup, it now costs from $50 to $125 to send out those 100 envelopes: what doesn't double, triple, quadruple or quintuple is the response. The same $50-54 dollars is being sent in, resulting in zero money raised or a loss.

Some organizations annoy those to whom they send letters by sending a barrage of the same fundraising letter every two weeks or so. Some send the letter every month. Others send out their letters before every major major yom tov and some of the minor ones as well. At a minimum I hear from most organizations 3-4 times a year.

Some organizations are still working with 19th Century methodologies. I asked to be removed from one organization's mailing list, hoping to save them the money spent on mailing to me. The person I spoke to said it couldn't be done; the cost of getting my name off the list would be more than the cost of just sending me the mailings. Mail merge anyone? Just what computers are they using and who is it that handles the mailing list? How long do you have to be on a mailing list without ever having responded before someone notices and maybe says "enough"? And speaking of computers, just why isn't a lot of this fundraising being done via email today?

Not enough bad news for you yet? The costs I mention above are for rock bottom costs for mailing. Those costs assume volunteers who are running the organization and no other overhead costs. That isn't the actual case, however. Most of these organizations have paid people manning their have-to-be-paid-for offices. There are expenses for utilities and phone lines. There is the cost for supplies. There may be transportation and transport costs. Those costs have to be paid before the organization can begin to donate the collected funds to those who are going to get them. And those costs reduce the amount of money available for the actual work of the organization.

Just picture this: someone standing outside and pitching quarters into the sewer, lots of quarters. Now picture them ripping up dollar bills and also throwing them into the sewer. That scenario happens every day in many organizations. It is more than past time for organizations to rethink their fundraising activities and fundraising methodologies.

And while they are at it, could they also get someone to write those appeal letters who can actually write English? Using correct grammar and vocabulary, spelling words correctly, is not against Halacha. And could they pleeeeease figure out that a one-size-fits-all letter with the same letter going to thousands of people just might not fit anyone? Could someone please tell them that a solicitation letter is NOT about what they want but about what the reader needs? And could someone tell them that using fear and shame tactics don't work when the garbage can is just a step away? When I was young, mothers routinely told their children to eat everything on their plates because "Children are starving in_________!" That didn't work too well on us back then, and it works even less well when it's part of a fundraising appeal, especially when every organization is using the same methodology.

13 comments:

Lion of Zion said...

"just why isn't a lot of this fundraising being done via email today?"

i agree with your entire post, but the answer to this question is that it is even easier to delete/ignore/forget about an email than a hard copy letter

Anonymous said...

had to laugh when I saw this post. Since I'm working from home today because of the weather I decided to look through all the accumulated mail from the past few days. It's mostly appeal letters and mostly they all end up in the trash unopened. Only ones I kept are from places I've given to before and even there a few got tossed. The local mikveh has major plumbing problems and I'll be supporting locally over outside.

Anonymous said...

I'm guessing no one would argue that tzedaka organizations have to raise money somehow to do the work they do. The letters annoy lots of people and the response isn't all that great. I can't stand the phone calls that come in either--lots of those callers are really hard sell and I don't recognize the organization names. I don't want the collectors coming to my house at night either. So how are the organizations supposed to raise money? There's a limit to how many chinese auctions there can be. Any suggestions?

Anonymous said...

There does seem to be horrible waste, but how are these organizations supposed to raise money? I once offered an organization that sends very frequent mailings that I would agree to donate once a year, but only if they reduced the mailings to me to one a year. They said they couldn't do that, so I haven't donated. It didn't work with this place, but maybe some others could use this model, and thereby save on mailings and hopefully increase the % response. They could make a deal with donors - explain that they are trying to save money on fundraising and if the donor so requests with their return check to be placed on the annual or biannual list, the organization will do so.

Anonymous said...

Forgot to mention, another model that can save money on fundraising is the federation model, like the CJP or United Way. This does, however, require lots of cooperation and all the member organizations giving up some power. As a donor, I like it because I can still direct where my contributions go. The downside is some of these organizations seem to pay a lot to their executive directors and top administrators, but at least you can review their financial statements on line.

ProfK said...

I've been thinking about Tzippy's question and I do have a suggestion. In brief, let shul members come together and decide which organizations they wish to support. Then, all donations will go to the shul. The shul will then disburse checks to the decided upon organizations at what is deemed an appropriate time(s) during the year. This isn't all that different from when we give a Rav money for matanos l'evyonim which he then distributes. Obviously anyone desiring to give money to an organization not on the shul list could do so privately. The shul would have to agree not to "donate" its membership list to any organizations. The idea's not quite fully percolated yet, but I think it could work.

Troubled And Frum said...

I've got to wonder why they bother to continue to mailing if they're losing money. My guess would be that they aren't... if they were, they'd stop, no?

ProfK said...

Troubled,
Yes, some of the organizations make money through their mailings, but the question is how much are they making. What are their overhead to net money ratios? If I have a list of 10,000 names that I am sending to and from that list 8000 have never responded to my appeals, or have responded once in a blue moon, then why am I still sending mail to these people? Somebody with some solid computer knowledge should be able to track that list and cull out those who cost the organization money without every sending money in return.

Lion of Zion said...

i think it's been propsed here before, but how about eliminating all those mailings and other flyer from our schools?

http://agmk.blogspot.com/2008/12/yeshiva-saves-money-with-emails.html

ProfK said...

Lion,
I can give you two reasons why the schools aren't eliminating the flyers/mailings. 1)they could be a school where not all parents have the Internet, so some mailings are going to have to go snail mail anyway and it's too much trouble to have to figure out who gets what (I've been told this one) and 2)some people have the Internet only at work and may forget about any emails that came from the school by the time they get home.

I'll go you one even better. I teach in a college which just happens to have multiple computer centers and which offers a few different types of computer majors. The problem is not just with students whose only Internet access is at school, but also with older faculty who aren't computer savvy. Not only does the school send out important messages to the faculty via email, but a day later the same message arrives via snail mail, to everyone. Many of us have tried to have the duplicate notification stop but we still have a few diehards who don't trust or can't use the Internet and email.

Lion of Zion said...

PROFK:

i think it's fair to say that at least in the MO schools the vast majority of homes have internet. (and Leora of HP said that her school does send snail mail only to those families that need it.)

Bas~Melech said...

1. I have been getting tons of email from tzedakah organizations. TONS. To the point that I want to email them back and say "I love hearing what's doing at your organization and will be happy to give you a cut of my maaser... but if I get one more dinner reminder, I will probably mark your name as spam and never see another campaign."

2. I can rationalize doing a mailing. However, what I have a problem with is the quantity and quality.
Quantity: Even after calling the organization to tell them that it's redundant, every member of my family receives their own personal copy of each mailing. Plus one addressed to "Family 'Melech'" and one addressed to the side door.
Plus, we get multiple different mailings from the same organization and even the same campaign (think a chinese auction teaser, followed by a catalog, followed by a reminder, followed by a last chance reminder, followed by a REALLY last chance reminder... and now we can start pitching the dinner. Here's the dinner teaser, the please-place-an-ad letter, the please-come letter, the reminder, the last-chance reminder...)
I think this is a self-perpetuating pattern. If we knew that we would receive one mailing from each organization/campaign, then we wouldn't be quite so quick to throw them out - and they wouldn't have to send more to replace them.
Quality: Now, I understand that glossy, full-color productions are more attention-grabbing, albeit pricey. Maybe the cost is justified by getting more bang for your buck. BUT a glossy, full-color book in an irregular shape with cutouts on the cover and a zillion glossy, full-color pages is just unjustifiable. (having migrated from the field of graphic design, I sort of know whereof I speak.) It also gives the other organizations a harder time competing. Multiply that by the quantity discussed above and frankly I think it's clear why they're so desperate for more money.

Anonymous said...

I once complained about those expensive color printed brochures that were being enclosed in a tzedaka mailing. The person who runs the organization told me that I shouldn't worry because someone donated the money specially for the brochures. When I said that the donated money would have been better used for the tzedaka itself I sort of got patted on the head and told that I don't understand fundraising.