“Rightsizing” Your Development Operation 2004 NCDC Annual Conference Orlando, FL September 2004

1. “Rightsizing” Your Development Operation 2004 NCDC Annual Conference Orlando, FL September 2004 Kevin Whorton, Director Direct Response Fundraising Catholic Relief Services Baltimore, Maryland kwhorton@catholicrelief.org phone: (410) 951-7491

2. Overview Catholic Benchmarking Other Charity Benchmarking Our Market A Self-Assessment

3. Operations: Catholic Charitable Organizations

4. Proportion of Total Revenue NCDC Comparative Giving Survey: 2003-05 “Other” includes e-giving (1%), events (5-8%), and unsolicited.

5. Proportion of Total Revenue: Larger Organizations “Larger” indicates revenue of at least $2 million. “Other” includes e-giving, events, and unsolicited.

6. Proportion of Total Revenue: Medium-sized Organizations “Medium-sized” indicates revenue between $500k and $2 million. “Other” includes e-giving, events, and unsolicited.

7. Proportion of Total Revenue: Smaller Organizations “Smaller” indicates revenue of under $500,000. “Other” includes e-giving, events, and unsolicited.

8. Average Organization: Revenue Growing 14% Past 4 Years

9. Average Organization: Growth By Size Range

10. House File Activity: Number of Mailings to Active Donors Total pieces mailed: average 4.4 million overall, 7.3 million among large (19% increase over 3 years).

11. Operations: Other Charities

12. Activities Reported by DM Programs

13. Activities within the Department Online survey conducted among DMA Nonprofit Federation member and prospect organizations, July 2004. A total of 35 organizations completed the study.

14. Charity Benchmarking: Staffing, Vendors, Revenue, Gifts

15. Results: Charitable Org. Study:Revenue, Efficiency, Size, Effort

16. Satisfaction with own DM Program

17. Key to Benchmarking: Every Organization is Unique…

18. Characteristics of “Our Market”

19. We Have a Massive Audience More people, larger congregations: • 63.3 million members, 19,356 congregations • Southern Baptist (40,000) & Methodist (35,100) more congregations • Southern Baptist (15.6m), Methodist (8.3m), Lutheran (5.0m), Presbyterian (3.4m) all much smaller • Catholic members per congregation very high (3,270) • Compares to Lutheran (470), Baptist (390), Methodist (235), Presbyterian (310) • But do they attend? 715 on average for Catholic, compared to just over 120 among Protestants Source: Bryan Froehle, PhD: presentation at 2004 NCDC Fundraising Summit; United States Congregational Life Survey, 2001

20. Market Penetration Total US - 273 Million Total Catholic - 65 Million Typically Attend Mass - 20 Million CRS Aware –14 Million Donors - 400,000

21. Market Concentration • Where is the bulk of your support coming from • Geographically • Generationally • By source • And, does it make sense? • Can you do things to change it: • Improve the top • Rectify the bottom

22. Issues Among Young, Diverse Constituencies 60+: I pray daily (90%) or seldom (3%) 20-39: I pray daily (53%) or seldom (15%) 60+: I attend weekly (63%) or once a month or less (27%) 20-39: I attend weekly (24%) or once a month or less (58%) “Church is important”: 59% say yes 60+; 29% yes 20-39 “I would never leave the Church”: 83% 60+; 50% 20-39 Source: Bryan Froehle, PhD citing Search for Common Ground, by James Davidson et al.

23. Message Challenge and Opportunity: Increasing Ethnic Diversity • Pre-Vatican II: 88% white, 9% Latino, 3% other • Vatican II: 83% white, 13% Latino, 4% other • Post-Vatican II: 70% white, 23% Latino, 7% other • Today’s Teens (Jubilee Generation): 56% white, 35% Latino, 9% other • Latinos more likely born outside U.S.:15% pre-Vatican II, 23% Vatican II, 32% post-Vatican II Findings reported in CARA Special Report, Fall 2002

24. The Congregational Life ofCatholic Mass Attenders Percent of Mass Attenders involved in: • 10.2% prayer, discussion, Bible study • 18.9% clubs or social groups • 6.6% evangelization or outreach • 13.3% community service/social justice groups Does this parish have clear vision, goals, or direction? • 25% unaware; 11% “ideas but no clear vision” • Yes, but 23% strongly, 26% somewhat, 15% not committed Source: Bryan Froehle, PhD: presentation at 2004 NCDC Fundraising Summit

25. Good News: Potential Generational Transfers of Wealth • $41b generational transfer by 2052 (Paul Schervish, Boston College Social Welfare Research Institute) • 2/3 of this total comes from 7% of estates (collaborator John Havens, Boston College) • Boomers more benefactors than beneficiaries (only $7b directly to boomers as heirs) • Golden Age of (Catholic) Philanthropy Source: Bryan Froehle, PhD presentation at 2004 NCDC Fundraising Summit

26. Self Assesment: Analyzing Challenges

27. What Common Obstacles Do We Face: • Awareness • How well recognized with your target audience? • How clearly do donors understand you and your mission? • Perception • How legitimate is your mission, relative to other causes one can support? • Affinity • For how many individual donors are you sole charity, primary charity, or just “among the top 5” • What is your trend (slipping lower, rising, stagnant)?

28. Common Obstacles: Competition, Atittudes • Competitive Environment • Claim to the affinity of best donors • Successful positioning in niche • Layers of review, autonomy, and priority • Diseconomies of scale • Current attitudes • Greater public skepticism/antipathy toward charities • Scandals and negative press • Need • What if you’re already the right size relative to your program?

29. Internal Challenges: Where Are Your Limits? • Internal Culture • Speed of decision-making and market response • Layers of review, autonomy, and priority • Diseconomies of scale • Flexibility • Ability to be aggressive • Acceptance of varied media • Willingness to invest--lose money to make money later • Latitude • Relative positioning: “negative campaigning” • How aggressively can you follow: a license to boast • Tendency to homogeneity, inoffensive/indistinct messages

30. Internal Challenges: Knowledge, Structure • Structure • How restrictive are budgets, vendor relationships? • Do they inhibit experimentation--diversification into potentially more successful techniques and tactics? • Are you able to incorporate successful new ideas over the year as they occur to you? • Able to discontinue things that simply aren’t working • Knowledge • Surveys, focus groups, and learning conversations • What do you know about your donors--their candid perceptions, their history

31. Making Changes: Rightsizing the Operation

32. Tactical Improvements • Evaluate, implement changes at key leverage points: • Improve synergies between DM and MG, PG • Improve frequency, timing of renewal efforts • New vehicles: creative use of radio/TV/e-/events • Acknowledgement program: speed, second asks • Improve timing, appeal of new donor conversions • Increase acquisition programs: long-term benefit

33. Strategic Choices • With benchmarking/self-assessment of program metrics: • Understand your ‘business model’ • Effective fundraising and alignment with mission • Determine if operation needs to be ‘new and improved’ • If so, identify resources to make ‘new and improved’ possible • Implement key points of improvement

34. More Tactical Improvements • Mid-level programs: improved upgrading, more personal service and special treatment • Other segments: low dollar, Hispanic, etc. • Better segmentation • Monthly giving/sustainer programs • Improved creative: more personal, new inserts • Parish programs, brochures, lead • Other viral, peer-to-peer marketing • Personalization: use of variable copy and personal data

35. Resources: Staff and Vendors • Evaluate your internal/external operations • Senior management positions • Production management • Special projects • Web marketing • Events management • Advertising/marketing • Technical staff • Data management, marketing analysts • Creative • Editor/Copywriter, design • Administrative • Financial, budgeting, general admin assistance

36. Creative Human Resources • Position and changes in management • Adding, eliminating external suppliers • Working creatively with part-time positions • Shared resources • Retainer arrangements with freelancers • Interns from colleges • Collaboration with other parts of organization • Cross-training, career ladders/lateral movement • Flexible work teams, building bridges with other depts • Working with suppliers • Maintaining self control over strategic direction

37. Supplier Relationships • Evaluating balance between internal/external: • Mailing list brokers • Arranging exchanges, new list recommendations, techniques (multiple use agreements, omit priors) • Creative • Freelancers and agencies who can bring strategic vision • Striking a balance consistent with organizational needs and your image • Data processing • In house systems • Periodic analysis of file: hidden patterns

38. Improving Donor Acquisition • Avoid bias toward control packages in test evaluation • Changing rules to allow “ties” to be remodified • Re-tests, multiple iterations may yield differing results • Often results are not statistically significant: confidence intervals suggest equal performance • Understanding second-gift performance • Resting and rotating controls • Modifying the next step • Creating new buckets/segments/tracks • Adding media: e-, phone

39. More Changes to Acquisition • Variations with testing, sometimes without • Logo, color scheme, attention-getters (token) • Anything that gets it opened • The price of rigidly following testing “rules” • Seeking Kaizen—non-incremental change • “Local optimum,” not the overall best

40. Thank You!