My Principles for Online Fundraising
I have been raising money online for conservative campaigns, causes, and organizations, and national and international non-profits for over a decade. I can remember a time when thinking raising $1,000 a day online was good. Today, that would most certainly be a bad day.
In the last decade I have had the opportunity to work with great operatives and worked for some of the best candidates in politics. In having the opportunity to work with so many great individuals and organizations I have learned countless lessons — many the hard way! I still have the bruises from losing more money on lead generation than most people have raised. With virtually all Republican campaigns and organizations now engaging in online fundraising, I wanted to share my current principles for online fundraising. These should not be viewed as absolute and will certainly change as online fundraising and technology changes but are what I view as the most important things I’ve learned while raising $1.5 billion.
One of the biggest myths when starting an online fundraising program is that raising money and building a relationship with donors are the same thing. Focusing attention solely on the former will likely result in more short terms gains but emphasizing the later will yield greater long-term returns. The reason for this is relatively simple: what raises the most money is often the most extreme messaging, the most aggressive tactics, and a willingness to guilt individuals into donating. This tactic is effective at getting an immediate initial donation, but over time, the donor is either desensitized to or begins to resent this “strategy.”
Conversely, being honest about the need for funds, giving the value proposition of donating, and taking steps post donation to build a relationship with the donor, will likely cause the program to grow slower and cost more money at the start, but will produce a strong and reliable donor base. These donors are less likely to be impacted by external forces, have a higher propensity to pledge more contributions over a longer period, and are less likely to unsubscribes from messages and request refunds and chargebacks.
Too often in online fundraising donors are viewed as an unlimited resource when they are very scarce. Every organization should choose which approach to take wisely; soured donors are nearly impossible to win back once they’ve been lost.
Donors Give You Money, Leads Cost You Money
Lead generation, the practice of acquiring email addresses and phone numbers using petitions and surveys, has been one of the foremost digital tactics for years — while also being the quickest way to spend money. For over a decade, many in the small dollar fundraising space have prioritized and tracked the lifetime value of email addresses and phone numbers collected through lead generation efforts. However, as time, tactics, and the landscape have progressed, we have seen that for most organizations, these efforts produce little to no lift in revenue, and many times cost campaigns and organizations much more money than they realize. There are certainly outliers — a high profile topical petition can resonate and drive a higher proportion of donors than your average survey, but for most organizations, profiting at a high level is not the norm, nor should it be expected.
Many will argue at length about the value of every email address and phone number added to an organization’s house file and then pat themselves on the back for delivering emails with an exceptionally low CPA from a highly charged online ad. The premise behind lead generation is sound, however, the factors that are out of practitioners’ control are what make this tactic problematic. Take, for example, just a few of the challenges that we face every day: inboxing, deliverability and bypassing spam filters in an increasingly preference-oriented ecosystem; signers providing of home phones versus cell phones; the reliability and activity associated with a single email address — is this an account he or she checks religiously or the old email account from a decade ago that she or her uses to collect his or her Shutterfly promo code; and the use of spam trap emails and bad cell phone numbers from bad actors in the space. These factors and many more diminish the lifetime value of email addresses and phone numbers collected from promoted surveys and petitions.
A second consideration that further distinguishes the face value from lifetime value of a lead is the additional marketing costs that come with large scale email and phone number collection programs. Every email and phone number added to a house file increases the organization’s house marketing costs. Most organizations benchmark the success of their lead generation efforts against the return on advertising spend (ROAS), which means the additional cost of sending emails and texts to the leads are not factored into overall return. Especially if leads are not converting and the house files are not being segmented strategically, the costs incurred from sending to essentially inactive leads to convert them to donors can unknowingly put a campaign in the red.
That said, email and phone collection may be required to scale a program quickly. In circumstances where an organization does not have the benefit of time to focus primarily on direct donation efforts, lead generation may play a larger role. Tracking the channel, topic, and audience that each lead was acquired becomes paramount: reporting the activity and donor rates of the leads is necessary to make educated spending decisions on what channels funds should be dedicated to, what topics to message on, and what audiences to target. Lead generation is not an inherently bad idea, it is just not a strategy that most campaigns and organizations should engage at the onset of a fundraising program unless necessary.
Vanity Metrics Will Kill a Program
While I don’t recommend unbridled phone and email address collection as a strategy for a sustainable and long-term fundraising program, direct donor prospecting can be very profitable. The best strategy for most organizations is to ignore the vanity metric of file size and focus on adding donors:
- The average online donor is worth $215 to an organization over the two-year election cycle.
- If an organization were to spend $100 acquiring this new donor, they would see $97.48 in net revenue by Election Day, including the house file marketing costs for a year.
The fastest way to run a fundraising program into the ground is to get distracted by metrics that don’t directly correlate to the goal laid out in the finance plan. Every program will have slightly different definitions of what a vanity metric is in fundraising, but I would broadly identify them for fundraising as email list size, phone list size, social network following, and gross fundraising numbers. The metrics that I closely pay attention to are recurring donor file size, donors added, cost per donor, and revenue generated per email and text sent.
Technology is Not a Silver Bullet
No organization raises money because they use a certain email service provider, customer relationship management software, or ad network. Technology should be leveraged to increase the efficiency and the accuracy of your efforts, not as a replacement for sound strategy or the sweat equity that online fundraising requires. The benefit of utilizing good technology includes better delivery of emails and texts, the ability to track efforts more accurately, and task automation. The use of technology does not guarantee more revenue but refusing technology can cost a program efficiency and result in a higher cost of fundraising. Adding extra technological layers and enhancements to a program can also lead to less efficiency and higher costs. When evaluating technology, every organization should be able to answer in the affirmative to the following questions before starting use and weigh the potential against the unknown:
- Will this lower my costs?
- Will this lower the amount of time it takes for our team to do what we do today?
- Will this improve the donor experience?
- Will this increase our conversion rates?
Be fast, not perfect.
Too often, organizations will spend too much time and resources on crafting the perfect message or will have approval processes that are unable to keep pace with the always-on news cycle. In almost all cases, being first to market with a good message is better than being late to market with a perfect message. Here is a quick case study in how different speeds can yield wildly different results:
Over the July 4th holiday in 2019, a big-name brand decided to pull shoes with the Betsy Ross flag on them from the market in response to comments from a former NFL quarterback. Two similar clients I was working with at the time saw this as an opportunity to offer merchandise with the Betsy Ross flag to donors. One of the clients got approval on the item the day that the story broke, which resulted in over $500,000 generated over the typically very slow holiday weekend. The other client didn’t get approval until the Monday after the holiday, 4 days later. They raised just $30,000 off their merchandise.
The only substantial difference between these two clients is that the first was able to get their creative out into the ecosystem first and was able to take advantage of the conservative news cycle being focused on the issue — essentially giving them a larger bite at the apple. The second missed the zenith of the news cycle and lost out to the first client (and many others who followed suit). Being fast is one of the few things every organization can control and is the easiest way to improve results.
Demand Transparency in Reporting
It may sound like a no-brainer that organizations should track how their emails, texts, and online ads are performing through reporting, but the reports that most organizations receive give an incomplete picture. Too often in online fundraising, reports are created to highlight the metrics or narratives that the creator wants to draw attention to. Usually this isn’t done maliciously, but rather, because of poorly defined attribution modeling, bad data infrastructure, or a misunderstanding of the variables at play. Before any marketing begins, defining marketing effort responsibilities amongst different agencies or actors (if there are multiple) should be discussed and agreed upon. This conversation should cover all scenarios of attribution and could include how revenue from existing house lists, search, or website contributions, or even how a previous donor who had unsubscribed then resubscribes through a new touchpoint and then donates from a house text message. This may seem like a small detail, but not determining how to attribute revenue from the start can and will result in incorrect reporting that could cost the organization net revenue and inadvertently cause bad spending decisions. Once these definitions are agreed upon, the organization should ensure that their technology stack allows for the agreed upon attribution modeling. Finally, a reporting cadence should be agreed upon and then executed on consistently. Organizations with active programs should, at the minimum, receive a comprehensive report each week in addition to monthly overviews.
Set Goals and Track Performance Against the Goals
Like reporting, setting goals may seem like a given, but is often overlooked. The only way that performance can be properly gauged is if there is a set goal to measure against. Goals should be established for every relevant and trackable metric on a monthly or smaller basis. Goals should not be limited to overall revenue; they should be considerate of email addresses added, phone numbers added, donors added, revenue by category, recurring growth, amongst other metrics that may vary in priority depending on the objectives of the organization. Goals should also not be viewed with a “set it and forget it” mentality; they are directional and should be adjusted according to progress made (or lack thereof) and tied to performance. For example, in 2020, we had a large client that started falling behind their overall revenue goal. By having specific goals set for every fundraising channel and growth metric, we were able to pinpoint where we were falling short of expectations and adjusted our strategy for the channels that were underperforming. The following month, we were back on pace and, by Election Day, exceeded our net goal by 12%. This wouldn’t have been possible if we hadn’t set specific goals from the onset and track our performance against those goals week over week.
One of the biggest mistakes that organizations make is hiring firms or individuals that have a financial interest in one product. When you are incentivized to solve every problem with the product you sell, you tend to advise buying more of your product. Successful programs monitor closely where money is being raised, how much it costs, then focus on the areas that have the greatest returns. The goal of most organizations is to raise money that can be spent on political activities. Successful programs aren’t afraid to pivot to the channel that is resulting in the greatest net. This typically can only be done if every stakeholder is indifferent to where money is coming from.