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FundClass Archives:

Marketing and Non-Profits

Edited Digest of FundClass Topic #09, January 1998

Facilitated by Marty Baird, CEO of Robinson & Associates, a marketing firm located in Phoenix, Arizona, USA.

Advertising Donated by a Bank

The first message posed a question about how to best use a local bank which had agreed to help the NPO with free advertising. . . it sparked a number of comments and ideas:

We pitched our land trust to a local bank last Summer and asked them to partner with us. They work with many non-profits, mostly offering advertising (eg. radio ads for botanical society or tv ads for the ice rink campaign.) They offered us free advertising for "future needs, but because we have a loose approach (or I should say a fly by the seat of our pants approach!) to marketing we have yet to determine how to take advantage of this offer. They are very flexible in their approach and we don't even need an event to promote we could just have them get our name out.

Clearly their marketing team is sharp. They are well known for their community support and yet they almost get more than the non-profits for their "donations". . . . I just need some direction as far as how we can best use this resource to market our product (open space conservation).

  • Is it best to use specific events to market?
  • What is the most effect advertising for non-profits?
  • What about creating an event like "conservation awareness day" where they do a radio ad on the 3rd of every month and give factoids? Is this worth while?

Answer:

If their marketing team is "clearly sharp" and yours so "seat of the pants" I would go to their marketing team and use the linkage to get some marketing support in the form of consultancy. Ask them how to better market your agency or how to develop a more comprehensive marketing plan. Perhaps their graphic designers can help develop flashy brochures or displays. Or see what else they've done for other agencies. They'll have lots of good ideas.

I run a small meals on wheels program and I've worked with many businesses in this way. It gets their employees more involved (rather than the one who writes the check) and lets them use their professional expertise for a good cause (and helps young employees develop their resume) and is more or less free for the company. It builds the relationship on more levels because it is not top-down involvement.

I've had marketing consultants, financial investment consultants, and management consultants come and share their wisdom with me. To pay for four hours of their time would not have been possible.

Another comment:

My best recommendation is to speak to someone at the bank. They can give you better direction than any of us can... Someone at the bank should be willing to discuss the limitations and the possibilities engendered by their involvement with you. Find out what they have done in the past, what they haven't done, what they will do and what they absolutely won't do.

Be inquisitive about their other relationships. For instance, do they have any relationships with sports teams or local celebrities? Do they have a block of commercial ad time (radio or TV) that is currently being scheduled? (Alternatively, is their ad time for the year already committed to other groups?) Do they support other environmental organizations like yours that you can collaborate with? Are they willing to distribute information about your organization in their bank statements, at their banks, or to their employees? The possibilities are immense. But, it's hard to figure out what request to make until you have a handle on what those possibilities are.

I would also recommend that you contact other organizations that they've helped. This should give you much better insights about their level of involvement--from concept to finished project--on advertisements and sponsorships that they've committed to in the past. For instance, do they provide just the ad time, but you have to come up with the concept, the actors, the producers, etc... Keep in mind, that unless you plan carefully, and unless they are helping you with the concept development, as well as the costs and distribution of whatever the finished product is, it could wind up costing your organization money in the long run.

Lastly, find out what they want out of this. Is it just the halo effect of being associated with your good name? Do they want your event to contain their name? Do they expect you to finance and produce a high quality commercial that they get to put their name on--just for a small slice of the block of advertising time they buy annually anyway? Do they just want the good karma? the tax break? Getting a feel for what they expect to get out of the relationship on their end will help you determine what kinds of projects YOU are willing to do instead of what they are doing for you.

An idea from the facilitator:

I agree you need to find out more about this amazing bank. This could be a great opportunity for you and your group.

One way to make the most of this is to develop a corporate angel. A person at the bank who loves your project. If you can get a person at the bank to buy into your programs it is a great way to build a solid relationship. Maybe this person would like to serve on one of your committees or even your board of directors.

To answer a few of your marketing questions: Talk with the bank, other NPOs that they have worked with and the station to see what they recommend. They could help to point you in the "right" direction.

You need to have a focused message to generate the maximum response for the $$$$ invested. You need to hit the listener in the head so that they will take action. I don't think that have a week is strong enough to make people donate, time, energy and money!

Defining Your Benefits

This participant went back to a quote from Marty's opening message: "Have you created a list of the top five or so benefits of your product to a potential donor or volunteer? How did you create the list?"

In one organization I worked with we really wrestled with this. We were a small foundation trying to raise money for research on a relatively common--but not well known--genetic disorder (hemochromatosis). I never felt that potential contributors understood us or our mission very well. We assumed our "product" was the money for the research. But other than "helping others with the disorder", a rather ambiguous and overused objective, we couldn't decide on a compelling message to reach donors.

How would we go about defining what our benefits were? Any suggestions on where we could start on creating such a list?

Marty's response:

let me see if I can give you a hand here... let's assume for the moment that thru diligent research on the Net I have discovered that in 1997, 250,000 people bought 1/4 inch drill bits. That's a lot of drill bits and we can probably safely state that there is a high desire out there for 1/4 inch drill bits... but we would be wrong (with a capital WRONG). What there really is, is a high desire for 1/4 inch HOLES... the drill bits are just a means to the end.

Think about that and how it applies to your fundraising... unless someone in their family has hemochromatosis (thank God for cut and paste) the average person doesn't really have a desire to see it cured... but most everyone likes to see happy people who are healthy and productive. If your organization gives them a way to provide a means to THAT end to people who otherwise would not have an opportunity... now you might be talking about the benefits they really want... which is not necessarily the benefits you have in selling the idea of curing hemochromatosis.

Marketing Audit

I received a worksheet for completing a "Marketing Audit" from one of our funders.

While working on this audit we defined some benefits of our program as:

  1. quality of life
  2. economic relief (tax benefits)
  3. maintain business (farm businesses)
  4. emotional component - preservation of rural/family values

We first defined who our "public" was and developed a list of benefits that affect the groups within this heading. Our public is:

  • Landowner
  • Nonlandowner
  • business/governement agencies.

I look forward to hearing how other people dealt with this and wonder how we can/should fine tune our audit.

Marty's reply:

The first area that you talked about was the marketing audit. This can be a wonderful exercise and can be very helpful. It is important that you take a hard look at your strength and weaknesses. This can be a great time to do a SWOT analysis. (SWOT - Strengths, Weaknesses, Opportunities & Threats)

You may also want to include some outsiders in your audit. Let them tell you what they see. This can be a great addition to the program.

BENEFITS

When you talk about benefits the more emotion that you can tie to them the better your response rates will be. Think about the ads that Kodak does. Think about babies, puppies and things that will tug at your heart strings. The more emotion you can add to your benefits the more reaction you will get from the public.

KEY PUBLIC

This is often called your target market. These are the people that are most likely to give...time, money, support, etc. The more focused you make this group the better your response rate will be. As you are more focused you can tailor your message to them.

The public that you specified was a little to big. i.e. land owners and people that don't own land.

Targeting will help to save you time and money! It will also make your message much stronger.

from another respondent:

Your benefits and public lists are good, but are too broad. I believe you can't really focus until you have defined specific targets. For example, a public of landowners & nonlandowners includes everyone. You need to say which landowners (those in Mesa County with environmentally sensitive land, land with endangered species populations, land threatened by development, etc.), which nonlandowners (Meas County citizens or a wider range, tenant farmers, outdoor recreation people, etc.) For business/government agencies, say which ones (factory farms, state Environmental agency, office of the mayor, governor, dept of agriculture, school, agribusiness companies, etc). When you know these you can pinpoint strategies for dealing with each.

As for benefits, define what you mean by quality of life. One measure the government uses for this is number of toilets (really!), which is not all that useful. Quality of life means very different things to various groups of people. What tax benefits are you talking about?

What farm businesses do you want to maintain - organic only, for example, or do you include big conventional farmers? And you need to define what values you are trying to preserve.

Getting this specific lets people really know what you are about so they can decide if they agree and want to support you. I'd recommend a couple of ways to get at these specifics. One is a brainstorm session with your board & selected members. Write every idea down, then prioritize and examine if you can meet the items. Then, if resources allow, go out to your public and do the same thing - find out what they want & need and figure out how you can work together to achieve common goals.

Marty again:

To take the drill bit analogy a little further, you want to market all of the great things the target audience can do with 1/4 holes.

This is the starting point for your marketing. It is not about the product. How the product works, what it is made out of or any other point.

It has to start with holes.

When you are marketing (ads, PR, direct mail, speaking, etc.) you need to lead with the "holes". That is what the audience is interested in. Some people will comment that not ALL people are interested in holes. That is very true. They should not be part of your target audience.

MORAL: Lead with your benefits. The benefits that your target is interested in.

One other way to develop your list of benefits is to have a small focus group with some of your strongest supporters. Ask why this is important to them. They may have ideas that you have never thought of or didn't know were important.

These benefits can also help you to back into your target markets.

A participant differs:

I don't much like focus groups. All they seem to prove is that in any given group, one or two people will take over by virtue or volume.

To me a better tactic is to make individual appointments with your top donors and/or opinion shapers and talk to them one at a time, asking them what THEY think. Often the quiet ones in board meetings or gatherings will delight and amaze with their candor, passion, and intelligence. Also, you get back to what is still the best marketing of all: one-to-one.

Selling the Invisible

FWIW (for what it's worth), a fairly recent book, Selling the Invisible, is a short, pointed, thought-provoking piece that translates easily to the non-profit sector. It expands on the intriguing theories of Ries & Trout (Positioning) and provides a bit more in the way of guidelines and immediately useful suggestions and approaches to marketing.

The great paradox of marketing (to me anyway) is that you often must try to see the problem from a different or unique perspective, a tough task when one is immersed (marinated?) in the culture and life of the institution. Thinking outside the box is tough when the box is pretty tight. Also, most of us in fundraising have to use marketing tools and skills to advance our institutions but are rarely trained in those skills (or worse, have the aptitude for marketing -- an art, in my estimation)

Selling the Invisible (and Positioning, for that matter) are useful tools to make one see and think a bit differently about the task at hand and the institution's needs, wants, goals, etc.

Newsletter Ads

We have a good newsletter (articles and lay-out are done in-house -- that's part of my job) which highlights the activities of our 21 chapters throughout the State of Ohio. We've been kicking around the idea of selling ad space to area businesses as a source of income -- if anything, it would at least cover the cost of producing the newsletter, not to mention open some corporate eyes to what we do. Our raw circulation per edition of the newsletter is about 2,000. Police departments, governmental agencies, and our donors are among those who receive newsletters every 6 months.

Anybody have any suggestions regarding how we would set prices for ad space and notify area businesses about such an avenue of advertisement? And correct me if I'm wrong, but if someone were to purchase advertising space in our newsletter, that would not constitute a tax-deductible donation, right?

A response:

I believe the cost is not deductible as a charitable contribution, but it is deductible as a business expense. It would fall into the same category as an ad placed in the newspaper. Since that is the case, you have to either charge less than other advertisers, or give them a reason why your market segmentation will be of benefit to them.

And another:

As far as setting rates goes here are a couple of ideas: How much will this ad generate for the company? Can you quantify what they will be getting in hard facts?

Next, are there other publications that go to the same market and what do they charge?

Last, do similar organizations from any other states do this? You may try looking in the SRDS (Standard Rate and Data) at the library. Most libraries will have a copy and it has information about publications and their advertising rates.

Another opinion:

As for communicating the opportunity, maybe choose a small number of local businesses that seem an appropriate match and write them a personal letter saying "You were among my top ten picks to invite to be part of this." Show them a newsletter. Have a simple contract ready for them to sign, which is their receipt for the ad and serves as your paperwork for what size they want, in how many issues, etc. (they could check these things off on the contract)

Set the prices based on what you need to cover costs and how much space you want to be covered with ads. Usually, the big size ads are a certain price, and then the half size ads are half plus a little more. For example: Full page: 500.00, half page 300.00, 1/4 page 200. etc. You may want to charge a premium for the back cover or inside front cover. Decide how you want the piece to look, then strategize your ad positions and prices.

Another listener heard from:

One of our fellow land trust NPO's puts copies of business cards of those people who will work directly with our 'constituency' (i.e. attorneys, cpa's, etc). The professionals pay a set fee.

Newsletter Advertising and NonProfit Bulk Mail Eligibility

If you have advertisements in your newsletter you can't get the nonprofit bulk mailing rate.

A reply:

I am very interested in getting a clear understanding of the issues around "advertising" in newsletters of non-profit 501(c)(3)s. According to the bulk mail section of the post office, paid advertisements in such a newsletter would make the newsletter ineligible for the non-profit bulk mail rate. What if businesses made a donation and were "recognized" in the newsletter with something that looked like an ad? What constitutes an "ad"? Do copies of business cards constitute an "ad" when a fee is paid? Also, how does this affect the tax- deductibility of the "donation" or "fee"? It seems obvious that language plays a role in this. How so?

Response:

When a similar question came up for us on an invitation to an event, we showed the piece to our local postmaster for approval before printing. The piece was approved and we went forward. There may be some local leeway there.

I also believe there may be something to the ratio of "ad" space to non-profit copy. I recently received a NPO newsletter that was 8 pages in length, and one page was an ad for the underwriter. There were no other ads. It obviously went through on NPO rates (although maybe the post office didn't look at it?).

More ideas and info:

In my former agency, the printing of the newsletter was donated by a local art supply store (which also did printing, so they did our newsletter inhouse). We put one line in the newsletter that the printing was donated by the store - in bold & with a border so that it was noticeable - & that was acceptable to the post office. We also learned to get bulk mailings preapproved by the post office because they were very picky about what they would accept.

Another writer with help:

For two years I published a monthly magazine for a 16,000 member nonprofit association. Prior to my arrival, the organization had experienced terrible problems with the post office for mailing the magazine at the non-profit rate . . . refusal to deliver, extra charges . . . it was a mess.

My advice is: never get on the wrong side of your local postmaster. If he/she tells you that you don't qualify for a non-profit rate, then you don't/won't.

I don't recall the exact wording of the postal regulations, but if your postmaster starts seeing ads on the back cover, you're in trouble. You simply don't qualify for the NPO rate.

Here's what we did: we applied for (and it took several months to receive) a 2nd class postal permit for the magazine. You mail at less cost than 1st class, but get equal delivery. The other alternative is 3rd class bulk. Not a lot cheaper and much slower.

From another writer:

A few points of clarification. The USPS rules are for organization for whom THEY have issued non-profit (special rate) permits. Being a 501(c) organization helps to get the permit, but it doesn't mean the same thing.

For special rate standard bulk mail (used to be called 3rd class), there can be NO advertisements. The most basic one would make the entire mailing ineligible for non-profit rates. What is an ad? A mention of a business along with a way of contacting them is an ad. Listing donors isn't an ad, but if you put their phone number in there, it's an ad.

The rules for non-profit PERIODICALS (regular issued magazines) are different, and may be based on % of space in each issued devoted to ads vs editorial. This used to be called 2nd class mail. These rules are extremely confusing and I've never bothered to learn them well. You'd need a separate permit for this, and you need to qualify a piece as a periodical -- regular issues, etc. This may be the way out for you, but don't count on it being worth it.

From a Chamber of Commerce:

I used to be the President of a Chamber of Commerce, and we used paid advertising all the time. I can not remember the answer to bulk rate usage, but you should be able to ask your local Chamber. In terms of deductablility, an ad is usually not deductable as a charitable contribution, because they are getting something for it, but it is usually deductable as a business expense.

But a Chamber is not a nonprofit...

The writer's experience helps underscore the important distinction between IRS "non-profit" status and USPS eligibility for "special" rates. A Chamber of Commerce is a 501(c)(?) organization, but it is NOT eligible for reduced (non-profit) standard bulk mailing rates because the USPS has tighter eligibility requirements. I forget the exact wording, but they limit these rates to "charitable, educational, religious, humane... organizations" and a business trade group does not qualify. Hence, a chamber can sell all the advertising it wants, since it's already paying the same rate those advertisers would be paying if they were mailing it themselves. And that's the key concern of the USPS, i.e. if they're giving a special rate to some non-profits, it's for those non-profits to further their OWN cause, and not to be an advertising vehicle for ineligible firms to communicate with the public. To further clarify (or muddy, perhaps?) a chamber of commerce, though IRS non-profit, cannot put an ad in a church or museum's special rate mailing, since the chamber itself is not eligible for those rates.

Another writer's response:

Someone said, "paid advertisements in such a newsletter would make the newsletter ineligible for the non-profit bulk mail rate."

Essentially, this is the method by which the USPS cooperates with the IRS to uphold the rights and responsibilities of nonprofit status. (Collaboration among government offices now that's a scary thought!) Providing a nonprofit bulk rate discount for a "commercial message" sorta flies in the face of the purpose of a charity. Several organizations got into much hot water about advertising affinity credit cards which were viewed by the IRS and USPS as product endorsements.

There are a number of ways to recognize a business in a newsletter without incurring the wrath of the USPS or IRS. You can publicly recognize a corporation for making a gift on your donor honor roll. Or perhaps a mention in a newsletter article such as "many thanks to the Widget Company who's generous gift allowed us to now offer our ESL programs in the Starbucks neighborhood."

The IRS interpretation of an "ad" is a communication which provides a corporation with a competitive advantage over other corporations. You can distinguish it in two ways. A recognition publicly heralds the relationship which your nonprofit has with a specific corporation. An ad provides an explanation of the corporation's product, an endorsement, or pricing information. For example, a recognition could state: "The Widget Company is a proud sponsor of The St. James ESL Program." An ad would claim: "The Widget Company is here for all your widget needs. See Honest Bob for our 2 for 1 special during the month of February."

Whether copies of business cards constitute an "ad" can be a delicate area. My own personal opinion is that it just doesn't pass the sniff test. Many companies are now producing very slick business cards with mottos, slogans, etc. that could be construed by the IRS as an advertisement. Another arguement is that stewarding corporations is becoming more and more challenging as contributions dwindle and other nonprofits develop formal corporate solicitation programs. I need my organization to stand above the rest. What better way to further a relationship with local business than to customize a recognition with a professional looking and sincere thank you in newsletters or special event publications. When's the last time you purused the Yellow Pages looking for a company? Graphically speaking, business card ads are boring and pretty ugly.

You must take into account the IRS quid pro quo disclosure requirements for ANY contribution both before and after the gift is made. If "recognition" in the newsletter is contingent upon a gift, you have created a quid pro quo situation. The current guideline is 2% or $7.10 (whichever is less) of the total contribution may be earmarked for the cost of a benefit without incurring quid pro quo rules. If the amount of providing a benefit is higher than that, you then must estimate your cost of providing the benefit and subtract it from the gift amount to determine the tax deductibility. Say for instance, you will provide a half page "recognition" to a donor for a $100 contribution. The cost of typesetting, logo scanning, and secretarial time amounts to $20.00. You have then exceeded the 2%/$7.10 rule and must inform the donor that the tax deductibility of her gift is $80 ($100 gift minus $20 benefit cost). Often, you may not know the exact cost of the benefit, do your best to logically estimate but be prepared to defend your estimation to the IRS (read: keep good notes on your math).

Not to belabor this but another issue to consider is giving the corporation the choice to accept or decline a benefit. This option MUST be offered prior to the gift transaction. It may be as simple as a laundry list of benefits via a sponsorship fact sheet or check off boxes on the gift card which states "yes, I want to support St. James ESL; this $100 contribution includes a full page recognition in the agency newsletter (Fair Market Value $20) limiting tax deductibility to $80" or "no, I decline all goods and benefits in exchange for this gift." If the answer is no, you have no quid pro quo but the corporate name will also not be plastered all over your nifty newsletter. The key here is clearly spell out donor intent and donor expectation of benefit. Then, let the donor decide.

If you're merely mentioning the company name in the donor honor roll then the cost is virtually zip and you need not be concerned about the quid pro quo.

If you are "selling" advertising space at a fixed rate and thus competing with the hometown news ad department, you have created an Unrelated Business Income Tax (UBIT) situation. And that's a whole other can of worms.

This can be very confusing. Please take a look at IRS Pub 1391 for more information on quid pro quo at John Taylor's excellent site ftp://ftp.giftrecords.duke.edu in the IRS pubs section. Hope this helps.

Some research from the original poster of the question:

In some of the responses, the question arose of whether we would be able to maintain our non-profit bulk mailing rate if we sold advertising space to for profit companies and organizations. I've done some research about that, and here are my findings for any of you who might be interested.

Basically, Federal law prohibits advertising for credit cards, travel arrangements (I assume this includes travel agencies), or insurance policies at the non-profit bulk rate. Period.

Outside of that, a non-profit can sell advertising space to anyone else and still maintain their non-profit rate if their publication:

  • Is not considered a product of the NPO, i.e., it is distributed free of charge and simply notifies members, interested parties, and/or the general public of the NPO's activities. As I understand it, if the newsletter is distributed exclusively to members of your NPO, and the subscription cost is included in their dues, your newsletter is considered a product.
  • Meets the U.S. Postal Service's content standards for a periodical, which include:
    • Title. The title must be printed on the front cover page in a style and size of type that clearly distinguishes the title from other information on the front cover page.
    • Formed of printed sheets. The publication may not be reproduced by stencil, mimeograph, or hectograph processes; however, re- production by any other process is permitted. Any style of type may be used.
    • An identification statement on one of the first five pages of the publication that includes these elements:
      • Publication title.
      • Issue date, which can be omitted if it appears on the cover page.
      • Statement of frequency showing when issues are to be published (e.g., daily, weekly, monthly, quarterly, semi-annually, annually, etc.)
      • Name and address of organization, including ZIP code.
      • Issue number. Each issue has to be numbered consecutively. If you miss an issue, you can't skip numbers. If the issue number appears on the front cover, you don't have to worry about putting it in the identification statement.
      • International Standard Serial Number (ISSN), if applicable.
      • Subscription price, if applicable.
    • The newsletter must consist of at least 25% non-advertising matter in each issue.

If the U.S. Postal Service does consider your newsletter to be one of your NPO's products, then you can still sell advertising space to organizations or companies whose products or services are substantially related to the purposes of your NPO.

Sound confusing? I think so. Any of you can check this stuff out for yourselves by calling the U.S. Postal Service and requesting a booklet entitled "Nonprofit Standard Mail Eligibility".

Using Marketing Students

Our organization is an all volunteer organization. We provide support and recreational activities for children with cancer and their families. We are relatively small, with about a $70,000 annual budget, and don't want to get too big.

We have recently developed a relationship with the Marketing Association at a local university. How can we best utilize the talents of these students? At this point they are helping us develop a new brochure. They say they will help in whatever we need, but we're not sure what to ask for.

Response:

I would see if this person can help with any PR for your group. Many times they have a good understanding of PR and can help get your name and your cause some good press.

You may also want to have them draft some letters for mailers that you can use over the next few years. Developing a good direct response letter is an art form.

The last area that I would look at would be developing a NPO identity. This could include your logo as well as letterhead and business cards. These are a very important part of your marketing puzzle.

Direct Mail

Before this year, we had never done a "formal" direct mail funding piece, but had asked our members to contact their friends for donations and support. Last year's informal request raised $3100. This year's "formal" (designed by a graphic artist, professionally printed, sent to the entire 3500 name list) has brought in over $5000, and it cost about $1500 to produce and mail, so we have done a little better. I consider it both fundraising and marketing as the piece was about an upcoming program. We did use our own mailing list, not a rented one, so it consists mostly of folks who are already familiar with our program.

Response:

Our organization just did our second annual direct mail appeal over the holidays. We started last year with a list of just 375 people and gradually built a list of service users and supporters over the year. This year we were able to mail to approximately 4,500 people. We did everything in house to save money, although it was difficult to deal with a list of that size. Our response rate was in the 3% range. And, we actually made money (more than re-couped our costs) from the mailing. However, I do have a few questions:

I have heard that it is bad relationship building to communicate with donors ONLY once a year when asking for money. So far, that is all that we've been able to manage. I'd like to rectify this, but we don't have the kind of funds in our coffer to produce a newsletter. What kinds of mailings or "briefings" could be successfully used to communicate with donors (how we're doing, what we're doing and the benefits that their donations have bestowed upon our clients)?

from Marty:

A cost effective way to contact donors and friends on a regular basis is to use post cards. they are cheaper to mail and can be very easy to do. These are a great way to keep in touch when you want to say hello and give a brief state of the union.

I would not do a newsletter. If you are doing one it needs to be done at LEAST 6 times per year. I would rather have 12. You need to have that level of repetition for people to start looking forward to getting it.

from another writer:

Of course, the more you communicate, the better the relationship is. Of course, communication is best when it flows in two directions, so give people the chance to check off response devices (send me more info on this or that) or a # to call (or call them and ask for their input). Gather data on people as you build the relationship.

A simple mail-merge letter would work well, esp. for such a small group. Just type the news this month and send it out. Put a reply envelope in EVERYTHING you mail. Since your mailings to date have broken even, have faith that these will, too.

Direct Mail - multiple mailings

The first year, I mailed two letters--an initial request letter and a "reminder/2nd request" to those who did not respond to the first letter. Our response rate was much higher, but that might be distorted by the small sample size. What are your thoughts about mailing one request letter vs. multiple letters during a campaign?

from Marty:

Multiple letters generate a much higher response rate. We use the rule of 8. It takes 8 impressions before people remember what you told them.

I would not limit the second letter to only the non-donors. I would send them to all people. Some people will give again.

another answer:

As you go from a very small core to a wider audience, the response rates and other ratios will change. But keep testing.

One very good campaign I worked on was for my local volunteer fire department. The Chief wrote the letter. In the second letter, he included the following, "Many of your neighbors responded to the letter we sent out last month. You didn't." I thought it was pretty cold, but he got responses! Personally, I'd mail to last names until they either give or tell me to get lost -- better that, than a "no response."

Direct Mail - using a mailing house

At what point (list size) does it become economically justified to pay a mail house to help with the mailing?

from Marty:

There is no set answer. This all depends on your staff and the number of times you will be doing the mailings. I know people that have people volunteer just to help with the mailings during the year. This can be a great use of young and old volunteers.

from another writer

Keep bidding every job. Try to include the true costs of doing it in-house, including the pizzas for the stuffers (hopefully you got them to stuff the envelopes BEFORE they handled the pizza) and the opportunity costs of you NOT writing that follow-up letter to donors, or working on the grant application, or calling a big donor... you'll find it pays to out-source it fast. Include postage in your quote, they probably know how to save you postage.

Another voice heard from:

Our mail house guy told us that the breakeven point of the list size is around 3000. At that point, he says the mail house can add ZIP+4, bar-coding and any other money-saving sorting that start to save more than it costs to have the mailhouse handle the list. Also, if you use the exact same list several times, you save processing fees and such.

a related thought from Marty: How do you decide which ones to give to? Direct marketing is part art and part science. They want to link their organization to your emotions. You may also find that the more you mail to your list the better your response will be. You need to have a level of repetition to generate the highest possible response rates.

Direct Mail - using email

One thing that has not yet been brought up that is extremely inexpensive and allows you to contact your members/friends often and easily. Do an opt-in email list. It is best if you have a web site with which to solicit addresses, but can be done by including email address as one of the pieces of information you collect from people. You can also do an email newsletter, but this takes more time to do right. I do a periodic mailing of things of interest to subscribers, as well as news about what we are doing. Of course, each message subtly encourages nonmembers to join. And it keeps the members aware of what their money is doing. It also allows for two-way communication between us and them. Obviously, this tactic excludes many people, but is an essential way to hit those with email & Internet access. I do not recommend sending out unsolicited email (spam). This will hurt you.

Direct Mail - bulk mail vs first class

When talking about direct mail people often tell me that it is "cheaper" to send it bulk with all of the zip sort information.

The question is, is it more cost effective?

Research shows that using bulk mail and all of the sort information reduces response rates. This happens because it is not personal. It look like junk mail. Do people that want to support your organization read all of the junk mail they get? Do they have time to?

Do you think they will open and read something that looks like an invitation that is hand addressed with a real stamp on it?

When you are looking at doing a mailer you need to look not only at your costs, but also your response rates. Is it better to spend a few cents more per mailer and generate thousands of dollars more in donations?

A response:

Marty, you're 100% right. It's not about reducing costs, but about increasing net revenue. However, saving postage doesn't necessarily mean reducing response. You can make a personally addressed invitation piece with a live stamp qualify for the lowest postage rates with proper planning and list presorting. If you don't bar-code your outgoing mail, the post office will anyway, and it won't look as nice when they do it. So don't reduce the quality of your mail, but DON'T think you have to pay more in postage as a consequence! And, I'd be remiss if I didn't add my standard litany, "test, test, test"

Another thought about how a mailing looks:

I have been hit with a lot of magazine adds recently. At this time, I am not ready to subscribe to another magazine. The ads go directly to the trash can.

Last week I received a parchment envelope 4"x6". My name and address were printed with a calligraphy style script. It had a stamp on it. When I opened it I discovered it was an add for a magazine about creative ways to get people to open solicitations.

It does make a difference.

And another:

I am new to the world of NPO's and fund-raising. I was in retail for 20 years and had some exposure to retail direct mail. A friend and customer of mine, who was once the Vice President of LL Bean, gave me some insight into how he managed LL Beans direct mail and produced dramatic increases in sales for the company. He told me that he built a customer ranking system based on three variables:

  1. recency of purchase,
  2. frequency of purchase, and
  3. total monetary value of purchases.

He created a numeric indicator based on these variables and ranked LL Bean's customers. The highest ranking customers recieved more catalogs. I am trying to apply the same principles to our NPO's donors. I am contacting the highest ranking donors more often with letters, information, press releases, phone calls, etc..

Direct Mail - USPS bulk mail and envelopes

Computerized addressing

The US Postal Service wants to help you minimize your postage cost and maximize your delivery ratio. However, it's their game. When you play by their rules, you will realize the benefits.

Their reasons are simple "$"

1- They have machines that process a bazillion (postal reg compliant) letters a second.

2- They have people that must "decipher" your hand "scribbled" addressed letters and enter the Zip+4 which another machine sprays on your letter and is finally sent to the high speed processor.

The machines are far more cost efficient than the people. That's why a postal reg compliant letter can travel across the country faster than a hand addressed one can travel across town.

USPS incentives:

They review your initial address file and make corrections for FREE and give substantial discounts on postage. In addition, they have booklets providing all the information you need to design your envelopes, response cards, format addresses, etc. If you don't want to do it yourself, they have a "Business Partners Directory" of companies that will do it for you for a fee.

Handling and processing:

The printer drop ships your materials at the bulk mail processor. They fold the paper, stuff the envelopes, affix the labels, fill in the forms and deliver it all to the post office. Other than delivery to the post office, it's all done by machines. It's such an efficient system that people receive their mail three days after it's printed. Every client I've converted to computerized addressing, machine handling and preprinted postage saved money on postage, increased their delivery ratio and utilized their volunteers for more meaningful projects. The only regret my client's have is that they didn't do it sooner. People listen, speak, think, reason, solve problems and create. Don't waste this valuable resource.

Bulk Mail doesn't reduce response ratio

The envelope has two functions:

1 - Deliver the enclosed message

2 - "Motivate" the recipient to open it!

#1 is self explanatory.

#2 is where most organizations waste a valuable resource.

Mail becomes "junk" when it doesn't interest the recipient. A simple graphic and phrase can capture the readers attention, get the envelope opened and continue your sell message.

Give your envelope stuffers and lickers a real challenge. Have them create the image that opens the envelope!

If you would like more information on Direct Marketing a book that I have found to be very helpful is Direct Marketing Rules of Thumb. Chapter 5 is even on fundraising and charity appeals. The author is Nat Bodian, published by McGraw Hill.

Direct Mail - Does bulk mail reduce response rate?

A college and a seminary (not related to each other) that I am familiar with both did such a study and testing with their mailing lists. They found no difference in response rates. Part of their thinking was that their mailing list was already familiar with the institution, so they were more concerned with the return address than with the stamp/barcode/whatever.

A response

I might let a study convince me to try something, but I would test any theory on my own constituency before trusting it totally.

The Development Director of a large non profit organization in the Seattle area once told me that they always use bulk rate now because they have tested it repeatedly and found that they do not receive a substantially different response rate by using one over the other.

She stressed that this was the response THEY received. It didn't make a difference for THEM. (Your constituency may respond differently.) And, she said (as have others in this discussion) the important thing is to TEST, TEST, TEST.

Direct Mail - The message vs the delivery

The message is more important than the delivery:

Before I start to worry about the mechanics of mail delivery, I want to make sure my message going out is the right one to make money for the organization. I'm going to contrast two very different organizations only to make a point, I'm not making a judgment of them or their method. Earth First! is an environmental support group that uses very strong activist methods to draw attention to their cause, literally chaining themselves to trees, etc. The Alzheimer's Foundation has a very subdued message, with little attention-seeking outside of text-only ads in magazines and TV. (I've probably oversimplified for my question, no offense intended to either party.)

In the long run, which approach is more effective in raising funds? As donor burn-out increases, don't I need a lot of attention to compete? Or is the "quiet" method somehow more likely to provide sustainable income long-term? Is there any research to back up either approach?

A repsonse:

I don't believe there is a right or wrong answer to that question. It has to do with the total image that the agency wants to portray. I think you also have to know who your customers are. As a general rule, I can not imagine using an in-your-face approach to senior citizens, but that could be a very good tactic for the X generation.

I think the real answer is market segmentation, and target marketing. One approach will not appeal to everyone, but if you do not have the money to do multiple mailings, you are almost forced to do a more generic mailing. I think each agency should spend a little money doing market research, and find out what kind of message appeals to its supporters. We may find out that it is totally different from our perceptions.

another response

In order to respond properly, I think it would help us to know more about who the organization is and who the audience is.

As a former communications instructor, I always advised my students to be audience centered when planning their messages (in whatever form).

One exercise that you might consider doing with other staff and or volunteers is to draw a picture of your "average" constituent. First make a list of characteristics. Determine whether this average person is to be a woman or man, age, ethnicity, income, other demographics. Be as specific as possible. Then, also determine his or her psychographics. Why is he or she a client or donor? How much does he or she give and why? What motivations might encourage him/her to continue giving? (Or, to give more?)

The point of the exercise is not to exclude those who don't exactly fit the picture, but to give your donor(s) a face. It's someone you can picture and think of when you work on your next fundraising piece.

from Marty:

It is important, as many people have said, to look at your market.

How much do they have to give? Are they young or old? Will they give one huge gift or will they give $10 per month for years? Each of these means a different approach for your marketing.

We often tell people that they need to contact a prospect 8 times before they remember seeing it. In fund raising you need to hit them with the same message a number of times to get the maximum response.

It is not about right vs. wrong it is about what works best for your target market!

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