Charities Are Having to Give More in Order to Receive

Feeding the hungry and housing the homeless are year-round tasks, but for charitable organizations that help society’s neediest, next year’s operating budgets are dependent upon a fourth-quarter marketing blizzard.

“It’s all tied to Thanksgiving, Hanukkah and Christmas,” said Ron Gonzales, chief executive of the Los Angeles Mission. “After the holiday season is over, we’ll have an idea of what money we have to budget for the coming year.”

As nonprofit hospitals, schools and other institutions scramble to reach funding goals during a season marred by soaring energy prices and fears of an economic slowdown, they’re relying upon advertising and marketing tools honed in the for-profit world. “The fund-raising has gotten much more sophisticated and aggressive in recent years because there’s a huge amount of competition,” said Wesley K. Willmer, vice president for university advancement at Biola University.

Individuals donated a record $143.7 billion to religious groups, hospitals, schools, museums and other nonprofit groups in 1999, according to the annual Giving USA report issued by the American Assn. of Fund-Raising Counsel.

Successful donor appeals increasingly are driven by direct marketing and related branding campaigns. Direct marketing campaigns conducted by the nonprofit sector raised $80.8 billion in donations during 1999, according to the New York-based Direct Marketing Assn.

“Branding is important, and nonprofits need to be constantly in front of people,” said Direct Marketing Assn. Vice President Michael Faulkner. “Consumers are three times more likely to open your envelope if it’s a brand they’re familiar with.”

The increased reliance on sophisticated databases and appeals penned by paid professionals leaves some in the nonprofit world unsettled.

“A lot of rescue missions are mom-and-pop operations run by highly committed individuals with a real sense of ministry,” said Seattle-based fund-raising consultant Norman Edwards. “Some of them say we’re selling our souls with the big mass marketing and advertising campaigns.”

Executives at nonprofits, however, say they’re simply following the lead of for-profit companies. “We recognize that all of the advertising, marketing, communications and fund-raising we do are supporting the Goodwill brand,” said Dave Barringer, director of brand management for Bethesda, Md.-based Goodwill Industries International Inc.

“The reality is that, because of the level of expertise out there, consumers are more sophisticated about marketing and have higher expectations about how they want to be treated,” said Marnie Maxwell, a consultant who teaches nonprofit marketing courses at Indiana University’s Center on Philanthropy.

Direct marketing can help nonprofits more accurately target consumers who are likely to give to their cause--as well as identify those who are likely to be repeat donors. “It’s always more cost-effective to go back to old donors instead of constantly finding new ones,” Barringer said.

Nonprofits also are turning to direct marketing professionals to identify and court potential donors to replace aging supporters. “The average rescue mission donor is likely to be a widow, a grandmother, between 65 and 70 years of age,” said Randy Brewer, a Pasadena-based vice president with the Grizzard Agency, a firm that crafts marketing programs for rescue missions and the Salvation Army.

“You’re going to have to see a younger donor,” Brewer said. “And the way you get there in this MTV, ‘me-ism’ world is to find cause-related marketing that will drive [younger consumers] to you. You link yourself to them with concerts and other events.”

The holiday season is crucial for soup kitchens, rescue missions and shelters that can draw as much as 75% of contributions during the fourth quarter. The Los Angeles Mission raised $18 million during its 1999 fiscal year, with the lion’s share of donations occurring during the fourth quarter.

For years, the mission at Wall and Fifth streets paid homeless people to prepare 1.2 million monthly newsletters and solicitations. But fund-raising in May was shifted back to Russ Reid Co., a Pasadena-based firm that raises funds for more than 50 rescue missions nationwide. The mission had used Russ Reid in the 1980s, but subsequently decided it could do the job itself.

“We tried raising money by ourselves, but the reality was that it didn’t work,” Gonzales said. “That decision was an eye-opener for us . . . we know how to do the things that go into running a rescue mission. We have a responsibility to our donors to run as effective and efficient operation as we can, so we owe it to our donors to save every penny we can.”

Russ Reid, which works exclusively with nonprofits, attempts to cut fund-raising costs by spreading creative, production and mailing costs among like-minded missions. Letters mailed this holiday season on behalf of client missions, for example, shared common artwork of an angel blowing on a trumpet and identical pleas for donations.

The Los Angeles Mission’s letter included a seven-paragraph vignette of Rubin, a Southern Californian who credits the Mission with reversing his “downward spiral to the streets.” Signed by the Rev. Ron Brown, the mission’s executive director, the letter promised that “your gift of $15.70 will help provide 10 meals.”

The Washington, D.C., Central Union Mission letter told the story of George, a troubled man who abandoned his wife and children and became addicted to drugs. The letter signed by Executive Director David O. Treadwell promised that “your gift of $13.30 will help provide seven meals.”

While shifting to a professional fund-raiser was “difficult,” Gonzales says the professionally written letters are benefiting those who receive assistance. “We’re not advertisers or marketers,” Gonzales said. “There’s always going to be some boilerplate in a letter, but organizations like Russ Reid know advertising and marketing.”

Shared letters crafted by professionals can help to cut fund-raising costs, according to the Assn. of Gospel Rescue Missions, a Kansas City-based group that oversees cooperative purchasing and retirement programs for missions. “If they can more economically send letters that have been tested and proven to be effective, then local missions don’t have to reinvent the wheel each time,” said Phil Rydeman, the association’s director of communications.

Some fund-raisers eschew appeals written by marketing professionals. “Maybe I’m an old-fashioned guy, but I write my own letters,” said Joe Carroll, a Catholic priest who serves as president of St. Vincent de Paul Village in San Diego. “I consider the relationship with donors to be personal because they’re giving to Father Joe.”

Russ Reid President Keith Jespersen maintains that the letters do what they’re supposed to do: give missions with thin operating margins a cost-effective way to raise funds. “One beautiful thing about a formula is that it helps keep costs down,” Jespersen said. “And formulas do work--the Salvation Army kettle is a formula. People stand out in front of the supermarket and ring bells--and people drop in loose change. It’s a formula that’s been used for over 100 years.”

The Winchester, Va.-based Evangelical Council for Financial Responsibility, which helps to police fund-raising appeals, doesn’t object to shared fund-raising letters as long as specific details--for example, the references to Rubin and George, and the specific costs of providing services--are accurate.

“You hope that nonprofits, especially religious nonprofits would strive diligently to meet not just the minimal standards, but would strive to the highest standard,” said Edwards, who occasionally investigates complaints lodged with the Evangelical Council.

Professional marketers say that truth in advertising is more important in the nonprofit sector than the commercial world. “If you cross the line in order to get the dollar, you might do fine in the short-term, but if it’s not true, you’re risking your integrity,” Brewer said.

It’s also dangerous when creative types use powerful tricks of the trade that work well when selling cars or consumer goods.

“If you get slick and clever, or if you go cutesy, you might win [advertising industry] awards,” Brewer said. “But those campaigns generally don’t reap the desired response. Success comes with a much more down-to-earth, gritty, two-color simple statement about the need to be filled. The simple, direct appeal is what works.”