September 2002 - Issue 15

9/11 One Year Later:  Lasting Impact or Moment in Time?
By Phyllis Freedman
Senior Vice President, Client Services, Epsilon
and Mary Beth McIntyre
Vice President, Innovation Services, Target Analysis Group

The anniversary of September 11th provides a milestone for looking back on the preceding 12 months to understand what, if anything, direct marketers and fundraisers can learn from the terrorist tragedies and anthrax scares.  Based on anecdotal and empiric research, it appears that the principles of direct marketing and fundraising hold as true as ever.   In hindsight, it also looks now like the events of September 2001, rather than being the defining moment for charities, was a "wake up call" signaling a fundamental transformation of our industry that was well underway before last September.

Survey Findings 
 
Epsilon (http://www.epsilon.com/ ) and Bid to Print (http://www.bidtoprint.com/) conducted a survey to determine how nonprofit organizations changed their mail strategies to respond to Fall 2001 events. The survey polled nonprofit fundraising executives and the agencies that serve them.  The sample group consisted of: 1)  members of the list-serve of the Direct Marketing Association of Washington (http://www.dmaw.org/); 2) Epsilon's clients; and 3) clients of Bid to Print, an online print buying marketplace for nonprofit direct marketers.  A majority of respondents indicated they made significant but temporary adjustments:

• 85 percent maintained volumes
• 75 percent changed copy
• 99 percent added inserts
• 75 percent changed blind outer to identify themselves
• 25 percent changed handwriting to typewritten fonts
• Only two organizations back-tested changes
• 25 percent added another mailing
• 75 percent eliminated test panels
• 0 percent have made permanent change

Interestingly, however, at least one organization that back-tested these changes found that the changes actually hurt revenue!  In other words, maintaining tried-and-true techniques, in spite of unique circumstances, may be the best approach.

In addition to the anecdotal results noted above, Target Analysis Group (http://www.targetanalysis.com/) compared actual results data from a group of 24 national nonprofits and 15 bellwether Public Broadcasting Service (PBS) stations.  The data show that most organizations' results were softening prior to September, most likely due to the economic slowdown.  When comparing the periods July-March 2001 to March-July 2002 and broken down by various sectors, the data show that only PBS stations and health charities held their own and grew from a revenue perspective.  Higher giving by smaller numbers of supporters accounts for this increase in revenue. Membership, donor and aggregated national organizations showed declines in both revenue and numbers of supporters.  The biggest impact seems to have been in acquisition, with all categories of organization, excepting PBS, showing declines in numbers of new donors. The declines ranged from just over 5 percent to more than 20 percent.  Other key findings include:

• Most fundraising performance trends from 2000 to 2001 were not significantly worse after 9/11 than before.
• Revenue stability came from the most loyal donor groups. 
• Membership-oriented organizations suffered more than donor-based organizations.
• New donor acquisition remains below the high-water mark set in 1999 for most organizations.

Looking Ahead

Clearly, in these findings, there are important lessons learned about direct marketing and fundraising in the wake of Sept. 11.  Additionally, it is important to look more broadly at what has worked in the past, the impacts of a national tragedy and the changing landscape ahead.  From this vantage point, the events of a year ago appear to be a "wake-up call" to begin addressing the fundamental shifts taking place in our society and that undoubtedly will affect fundraising.  These transformations include:

• Distrust of big business, government, scandal in the Church
• Governments running out of money 45 of 50 states with deficits
• Economy declining stock values, plummeting consumer confidence, accountability
• Boomers as donors seeking involvement, participation, control
• Women as donors and guardians of huge wealth
• Opportunities presented by the Internet
• Fixed costs rising for direct marketing

Development professionals would be wise to take this opportunity to work with their leadership and the Boards of their organizations to invest now in strategies that will address some of the changes that are on the horizon.  Most of these ideas are not new, but clearly the direct marketing and fundraising profession now is at a crossroads.  These trends which once seemed far in the future are now closer at hand, and the events of a year ago have opened a door to organizational change that might not have otherwise opened.   Now is the time to move forward in new and different directions. 

Are there new media that should be explored in conjunction with or in lieu of mail?  Are there new audiences, such as Hispanics, women and Gen X'ers who warrant special strategies?  Are there things we can say to or do with our supporters to assure them that their trust in us is not misplaced?

In short, the key is figuring out how we must change if we want to continue to be successful in the future.

Mary Beth McIntyre is Vice President, Innovation Services, Target Analysis Group.  Target Analysis Group provides innovative data analysis, market research, donor relationship management and database marketing services to nonprofit organizations, helping them to build successful direct response fundraising programs.  McIntyre also is a member of the Board of Directors of the Direct Marketing Association Nonprofit Federation.