Bequest Fundraising – Still gazing into the crystal ball?

Every fundraiser will tell you the same story: “Gladys Smith  left us a fortune.  We couldn’t figure it out.  She wasn’t on the database.”  Any decent bequest officer will give you the real story: “Actually, Gladys was a donor.  Every year she bought Christmas cards from us.”

No one gets bequests out of nowhere; someone has triggered the gift.  Many charities in Australia try to recreate that trigger with a tick box wedged into their direct mail reply forms or a question embedded in a donor survey.

But how much is a tick box or a question worth?  How much time and effort is it going to take you to establish if it’s worth anything, and, if so, how much and when will you receive the monies?

Imagine a 42-year old mother of two signing up at a shopping centre for $20 a month.  She then ticks a box in her welcome kit stating her intention to leave you a gift in her Will.  At her age, she isn’t going to die for another 40 years.  And she’s hardly likely to run off to her solicitor to have her Will written.  She might add you in a Codicil years down the line – if she’s still considering you as her charity of choice, if she’s got anything left to leave, and if her children don’t take the lot. That’s three big “ifs” in a row.

So, if tick boxes and survey responses are only worth the effort the donor put into them, then what kind of communication works better? And who should it be targeted to?

At Ask², we love to ask. And the clients who do best with bequest fundraising send communications that are clearly and only asking for a gift in a Will.  The entire discussion is not bashful at all.  On the contrary: the charity offers up lots of information, and the donors provide lots of details in return. If you are serious about acquiring bequest donors, the key is to ask. Ask to be put in the Will. Ask about what you’re going to get. And don’t pretend to be doing something else.

A bequest appeal we recently produced for one of our clients resulted in 2% of the mailfile telling us: “I’ve done the deed and here’s what I’ve left you.”  All very nice but why were we statistically confident that these responses were worth x amount of dollars and would ‘convert’ in x amount of time?  Targeting.

Targeting is where you set aside recency, frequency and total value of donation – and bring in the following big guns:-
Age: An 85 year-old who is not recorded on your database is a more valuable prospect than a 42 year-old monthly donor.

Gender: Women generally outlive men and they make the greatest proportion of charitable donors.

Marital Status: ‘Ms’ or ‘Miss’ fare even better than ‘Mrs’.

Children the less children a donor has and the older they are, the more will be left over for your charity.

Factors such as income, home ownership, and postal code are also predictive of higher or lower bequest values. Postal codes, combined with other variables, can also be used as a “proxy” for age when that key data element is not available.

Those key insights are changing the landscape of bequests marketing in Australia. My 80-year old neighbour recently received a charity letter asking her for a bequest. She had never previously communicated with that charity.  It was a cold mail ask. Brilliant.

Targeting a bequest letter to a very high age demographic can generate responses that will produce income within a shorter space of time, and subsequent bequests can then be tracked over a 5 year timeframe.

Assume the response rate to a letter like that to be in the region of 0.20% and sent to 50,000 prospects.  Over 5 years, let’s say that 10% of the respondents die and ‘convert’ into actual income, with an average bequest value of $50,000. If the cost per piece is about $2, you net $400,000 in the first 5 years. That’s the topline.

If you want to get a more detailed picture, factor in the kind of bequest that’s been left to you,  and how long it will take for full distribution to occur.  That’s why asking what type of bequest has been left to your charity is important.  Information about distribution and timing can be garnered from your Finance Director.

And bear in mind that Wills are a goldmine of information.  They tell you about the types of gifts that are left to charities, but also which other organisations you’re sharing the cake with.  They also tell you a lot about the people who leave you a gift.

Lastly, take a look at the world around you.  Bequests are subject to interest rates and other global economic factors.  Why not ask your donors to make their gifts index linked?

Bequest fundraising, when communicated the right way and targeted the right way, can be a measured and predictable fundraising channel. You can control what is happening. You can tell the story of Gladys Smith because you wrote it.

Premium Direct Mail is Donor-Centric

There’s a widely held belief that premium direct mail is somehow bad for you. It’s not “donor-centric”, it hurts your “relationship” with your donors, I’ve even heard people claim it “reduces lifetime value”.

Nothing could be further from the truth.

This so-called “donor-centric critique” is nothing new, it’s been around for over 30 years. After three decades, if premium direct mail really did reduce lifetime value and if it really did wreck financial ruin on any charity that tried it, then, these designs would have died out a long time ago. In reality, there is more premium direct mail being mailed now than ever before. And for a very good reason – it works, and it continues to work year after year after year.

The reason for that is simple. Premium direct mail is the most donor-centric form of direct mail design possible. The best performing premiums often have little to no relevance to a charity’s mission – but they are very useful, desirable, and therefore more relevant to the donor themselves.

Greeting cards, for example, work best when the charity’s logo is removed. They work even better if they are designed for any occasion and completely blank on the inside. And greeting cards work the best when several are sent at once, with a mix of themes and designs. Greeting cards that “match” get much lower response.

Also, remember that lifetime value is a financial calculation. It is an actual number. Lifetime value is not a merit badge you get for adhering to some vaguely defined notion that you are somehow being “donor-centric”.
By rejecting premiums, by tossing out namelables, by focusing solely on “storytelling” and earnestly reporting to your donors all the compelling examples of your “transformative work”, you do not by definition increase your lifetime value.

Lifetime value is driven by 1) the response rate to each appeal, both cold and warm, 2) the frequency in which you ask, and 3) the average gift.

If you yank premiums out of your program and the response rates drop dramatically, which they usually do, then that will make your lifetime value go down, not up. If you “rest” your donors and ask them less frequently, your lifetime value will also go down, not up. If you replace a house appeal with “donor care” or a “soft ask”, your lifetime value goes down, not up.

And likewise, if you add premiums to your direct mail, response almost always rises. If you use really good, really well tested and really effective premiums your response rates rise dramatically, and that also makes lifetime value go up, not down.

If you use premiums for both cold mail and warm appeals, the response rates will rise for both. And when that happens, your second and third gift rates rise, and your donor retention improves.

In other words, using premiums to increase your lifetime value is donor-centric. You are mailing things to donors that they value, they appreciate, and that they can use. In return, they reward you by donating at a higher response rate each time, and more frequently. That is what donor-centric fundraising is really all about, and premium direct mail is what actually delivers it.