by Stephen Tall on August 27, 2010
Shock! Horror! BBC2’s Newsnight has uncovered a shocking fact about charities: apparently it can cost quite a bit to attract new donors. I know – whodhavethunk?
Here’s the story which headlined the show last night:
Last year, 750,000 people signed on the dotted line, giving an average contribution of £90 a year. But a Newsnight investigation has found the charities are often paying the companies, in effect, £100 or more for each signature they collect, meaning in many cases the company is paid more than the charity will raise from that donor in the first year.
It is surely not a shock to anyone that the upfront costs of attracting new donors to give to charity are proportionately higher than retaining the loyalty of existing donors? After all, it’s exactly the same for those marketing to attract new customers in business.
But the reasons charities place such a premium on attracting new donors are clear enough:
1. Many of those new donors will turn into loyal donors who give year after year at a much lower marginal cost;
2. Many of those new donors, if properly engaged, will increase their contributions over the years;
3. And some of those most loyal donors will leave a gift to their chosen charity in their will – and legacies are the most cost-effective form of fundraising.
Of course all charities should keep a close eye on their return on investment, and constantly evaluate if they’re getting good value for money for their cause by forking out to private companies to recruit new donors.
Doubtless there are some charities who get it wrong (just as there are some businesses who spend to little effect on their marketing) – and maybe there’s a role for Newsnight in identifying those charities which are failing. Unfortunately last night, Newsnight simply bundled all charities – including the most successful – into one lumpen mass, and accused all of them of squandering the public’s donations.
Thankfully, Betty McBride of the British Heart Foundation put across the charitable argument very well on the programme, helping to expose what a hue and cry about nothing Newsnight had indulged in. Fingers crossed that Newsnight’s sensationalist and ignorant reporting won’t put folk off giving to charity.