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Direct-Mail Donors Still Dwindling

(Jan. 14, 2008) The number of donors responding to direct mail has continued to dwindle, even as overall revenue growth has increased slightly, according to the Third Quarter 2007 Index of National Fundraising Performance by Target Analysis Group.

The index examined direct-mail charitable transactions from 72 charities involving more than 39 million donors and 70 million gifts totaling more than $1.9 billion in revenue for the 12 months ending in the third quarter (Q3) of 2007.

Donor numbers decreased by a median of 1.4 percent (meaning half the respondents reported greater success and half fared worse), and just 46 percent of organizations experienced positive donor growth over the first nine months of 2007. Even then, the only subsector to have positive media donor growth was animal welfare; all other subsectors saw donor numbers flat or decline.

New Donors Hard to Find

Declines in acquisition rates were a primary factor in the drop in overall donors. Comparing Q3 year-to-date (YTD) 2007 figures with Q3 YTD 2006 figures, more than two-thirds of organizations saw acquisition rates fall (the median decrease was 6.2 percent). This decrease comes on the heels of a 10 percent median drop that occurred in previous indexes when comparing Q3 YTD 2006 figures with Q3 YTD 2005 numbers.

In addition, reactivation rates declined a median 3.1 percent (again comparing Q3 YTD 2007 and 2006 data), while retention rates increased only by a median 0.9 percent.

The index has not measured a median increase in donor numbers since the fall of 2005, which was primarily a result of Hurricane Katrina relief giving.

Reasons for Declines

The index offers several reasons for the decline in donors:

  • A changing generational profile in the United States
  • Changing attitudes of donors about giving
  • A change in focus by fundraisers towards higher-dollar donors

Target officials offered a more detailed explanation in a recent article in The Chronicle of Philanthropy (“Direct-Mail Appeals Suffer, New Survey Finds,” Jan. 8, 2008), noting that baby boomers and newer generations do not respond to direct-mail solicitations as favorably as older generations.

“I do not think direct mail is dying, but it is changing,” said Carol Rhine, senior fundraising analyst at The Target Group, in the article. “The catalog industry has learned this: They still send the catalog, but customers no longer order through the mail. They get the information in the mail, but they buy over the phone or online. Direct mail has to change so it can accommodate that trend.”

In some cases, organizations are not able to meet the growing informational and accountability demands of donors who want to know how their money is being used.

Revenue Still Increasing

Despite the drop in numbers of donors, overall revenue from Q3 YTD 2006 to Q3 YTD 2007 still increased by a median 1.4 percent. However, this figure is lower than both historical averages and the rate of inflation.

Revenue per donor grew by a median 3.9 percent from Q3 YTD 2006 to Q3 YTD 2007. With acquisition and reactivation rates down and retention rates fairly flat, increases in revenue per donor have been the key driver in increasing overall direct-mail revenue. This dependence on increasing revenue from a small base of donors may be cause for concern, especially with the economic situation in the United States fairly gloomy.

The index report also noted that the upcoming political campaign is expected to have no impact on charitable fundraising. A previous study by the Center on Philanthropy at Indiana University had found no evidence that political campaigns affect charitable fundraising in any significant way.

About the Index Report

A report about the Third Quarter 2007 Index of National Fundraising Performance is available free of charge on the Target Analysis Group website. Individuals must provide their names and email addresses, and a link to the report will then be emailed to them.

The report breaks down direct-mail revenue and donor growth via different subsectors, including animal welfare, environment, health, human services, international relief and societal benefit.

Target Analysis Group, headquartered in Cambridge, Mass., provides fundraising data and analytical services to help nonprofits improve their direct-response fundraising programs.