‘In the past I have always advised that thank-you letters should thank, maybe ask for feedback, and leave it at that. My fear was that by asking immediately I might sacrifice a potential long-term relationship. This fear is instinctive and not based on actual data.’ Sean Triner

‘Sure, donors reply to your thank-and-ask letter, but if they feel manipulated that second gift is all you’ll receive. How much are you losing over the long haul? If what’s happening here in the US is any indication, plenty.’ Lisa Sargent

See the full debate below. 

Thank, but don’t ask.

Why your donor thank-you letters shouldn’t ask for additional gifts or upgrades

I’ll say it straight out. Asking for a repeat gift in your thank-you letters to donors is like day trading in the stock market: it’s a short-term, grab-and-go mentality that focuses on fast money vs. keeping donors for a lifetime.

Plenty of fundraisers favour the thank-and-ask approach, too, defending their case with three ‘stock’ arguments:

1. If you don’t ask, you don’t get.
2. Donors don’t always do what they say they do.
3. To engage new donors, you must ask for a repeat gift soon after the first

And ‘pro-askers’ are as passionate about the view from their side of the fence as ‘no-askers’ (like me).

But passion aside, what you really want to know is: if I include an ask in my thank-you letters will it help me keep more donors, while maximising current and future donations – culminating in an increasing amount of legacy gifts?

Isn’t that about right? Good.

Then let’s have a look at the stock pro-ask arguments one by one, to see how they measure up.

If you don’t ask, you don’t get

Well, of course you have to ask to get. That’s what fundraisers do. But the thank-you letter? Not the place to do it.

Pro-ask fundraisers tell us that by including asks and upgrades in their thank-you letters, they can increase donations by X number of dollars, or some hundredth of a percentile. And they may indeed get the gift… but only at the expense of the most critical piece of the puzzle: donor retention.

Sure, donors reply to your thank-and-ask letter, but if they feel manipulated, that second gift is all you’ll receive. How much are you losing over the long haul?

If what’s happening here in the US is any indication, plenty. For more on this, let’s look at pro-ask argument number two.

Donors don’t always do what they say they do.

Pro-askers say that even though donors claim to be irritated by thank-and-ask letters, response rates show they actually give, which raises more money.

And ‘day trades’ in donor loyalty.

To see a possible effect it’s having in the US, let’s look at the Target Analytics’ Index of National Fundraising Performance for 2008. Reactivation rates of lapsed donors are down 6.0 per cent from 2007 to 2008. And only about four out of 10 of the US nonprofits analysed in the Index had positive retention rates; in fact, median retention rates dipped by 1.7 per cent.

And those first-time donors? This from the Target Index: ‘The greatest decreases in retention were in first-year donor retention rates, which declined -3.7 per cent from 2007 to 2008… Only 32 per cent of the organisations in the Index had positive first-year retention rate growth in 2008.’

No one doubts that donors don’t always do what they say they do. Do you? It is, after all, the reason we test, in spite of the focus groups.

But when it comes to asking for more money in your thank yous, the Target Index statistics tell us that, just maybe, donors are increasingly – and often permanently – put off by grab-and-go acknowledgment strategies.

Time for a look at pro-ask argument number 3.

To engage new donors, you must ask for a repeat gift soon after the first.

North American fundraising agency Merkle|Domain notes that, ‘new donors who give a second gift relatively soon after their first gift will continue their support at a rate two or more times greater than those who do not give again right away.’ (Thanks to Keep Your Donors by Tom Ahern and Simone Joyaux.)

Pro-askers say: A-ha! Hard evidence! If you’re looking to solicit a donor as soon as possible, you can’t get much faster than the thank you.

True. But if asking in a thank you damages donor loyalty, then you’ll likely begin to experience a decline in donor retention and trouble in reactivating your lapsed donors. (And the Fundraising Performance Index sure seems to reflect that.)

Instead, why not find a creative way to follow-up your thank you quckly? Here’s one of the best I’ve seen – it’s actually a two-part thank you – which came to my attention through Mal Warwick’s newsletter, from The Smile Train: a thank-you letter telling donors that photos are forthcoming of the kids who’ve been helped, and the second letter with the photos. Perfect.

Thank-you-only letters work for the long haul because they build donor loyalty, plain and simple. Once you start sending thank-you-only letters, prepare to be amazed. I’ve had clients who have received letters back from delighted donors, saying thank-you for the thank-you!

Which is, of course, how donor loyalty starts. Loyalty that, when strengthened by a solid donor communications and planned giving programme, has all the makings of a legacy gift. (Average US bequest? About $35,000 – Mal Warwick again.)

Ask for gifts in your thank yous and you may get the fast money, but lose a friend. Say thank-you the right way – without an ask or upgrade – and win donors for life.

When you get right down to it, the choice couldn’t be clearer.

© Lisa Sargent, May 2009

Can you ask too much?

Reluctance to ask is instinctive, not based on data. Asking is more likely to build loyalty, not less.

Looking at our retention data, which shows the percentage of donors who continue to give year after year, I wondered if there was any evidence which proves that the more you ask, the more you push donors away?

The answer is no. In fact, the more communications – including asks – the better the ongoing retention. According to a presentation she gave at a recent fundraising conference, President Obama’s fundraising campaign director Meaghan Burdick reckoned on asking for action from Candidate Obama’s supporters pretty much every week.

Working agency-side puts me into an often difficult balance; every piece of advice that Pareto Fundraising or Pareto Phone give to charities has to be in the long-term interest of the clients’ beneficiaries, yet we are most likely to be judged on the immediate return on a project. So you might expect me to always advise asking wherever possible. But it is so much more complex than that.

In the past I have always advised that thank-you letters should thank, maybe ask for feedback and leave it at that. Wishing to ensure that the donor feels valued, my fear was that by asking immediately I might sacrifice a potential long-term relationship. This fear is instinctive and not based on actual data.

Also, I have found a great way to turn a donor into a regular giver is to:

1. Thank them very quickly. Email is great, but mail is still important.
2. Call the donor about six weeks later and ask for a regular gift.

We can get more than ten per cent of the people that we speak to onto regular giving this way; a fantastic return on investment that should be an essential element of all donor programmes. But it is not cheap and, for various reasons, we can only ever speak with about half of all the donors.

So then we send a ‘regular giving conversion’ mailing. This may get between two to five per cent response rate, usually with a lower average donation.

A challenge to my views
But last year, I attended a great workshop at the Bridge conference (DMA Washington) that challenged my view. Many US charities are mailing thank-you letters to new direct mail donors that also ask the donor, there and then, to become a regular giver (this is an important distinction – there’s a world of difference between asking a donor to become a regular, committed supporter and merely asking for more money). They are getting similar responses to our regular giving mailings – but obviously for less money since they would be sending a thank-you letter to these donors anyway.

The smart charities then call those who haven’t become regular givers through the combined thank-you /regular giving upgrade. I asked about refusals at this point and Steve Froehlich from the American Society for the Prevention of Cruelty to Animals said it wasn’t a problem – any potential increase in new donors dropping out is well out-weighed by the number of new regular givers recruited.

A bit of crude maths. Assume that you get 10,000 new donors each giving $50. We know that less than half of these will give again. With five appeals per annum and a great appeals programme you could expect those donors to give you about $300,000. A combined thank-you/regular giving letter could convert perhaps 2.5 per cent of them, or 250 new regular givers, at say, $20 per month. That amounts to $60,000 per annum.

How many people can you cheese off at one go?

So the argument would have to be that sending a combined RG/thank you instead of a pure thank you would have to cause an additional attrition of 20 per cent to make the charity worse off ($60k/$300k). You could split test this for 18 months – but I expect you would be unlikely to cheese off anything like 20 per cent more people just by asking for a regular gift, particularly if you put it nicely. OK I accept that second gift rates may be a lot lower in some countries, particularly the USA. But still the numbers just don’t add up; if anyone (like I used to) tells you to not ask in a thank you, get them to sketch out the numbers.

And, on top of that, we know that these new regular givers are more likely to give to subsequent special appeals, because regular givers invariably do give more than their non-committed counterparts .

So this year Pareto Fundraising is testing combined regular giving thank-you letters in Australia.
Hey, I am willing to U-turn when presented with evidence, or a logical argument.

© Sean Triner, May 2009