Give More Tomorrow

The last post talked about the vital financial impact that an Opt Out Auto-Upgrade can have on an organisations finances, and the potential bad feeling that can arise from them. I also mentioned that I’d talk about alternatives, better ways of maintaining the value of your data base, so I better keep my promise.

One of the biggest innovations in this space over the last few years has been the variations on the donor opting in to an Auto-Upgrade. At some point, often the point of recruitment, the donor makes a pledge that their donation will increase by x amount at y point. The y could be either 12 months from now or a specific month; the x comes from a number of potential systems of which I’ll outline some below. Before that lets look at why it works so well.

–          It means that they know their gift will retain its power in relative terms over the length of the donation.  Without prompting, most people won’t think about their gift loosing impact over the years, but if you suggest it to them, most will easily understand this.

–          Delaying the increase appeals to people’s knowledge of their own procrastination. In the main people know their lazy, this is a way of giving people the nudge to their future selves to do something their future selves will like, but which they wouldn’t get around to off their own back.

–          As long as they are not a born pessimist, people tend  think that they’ll be in a better position this time next year than they are today (note, I’m basing this on the sunny outlook of Australians). They are likely to get a pay rise of some sort,  they may think they’re in line for a promotion, they may have paid off a bit more of their mortgage etc… A delayed increase works with enthusiasm for the future.

–          It gives the donor control.  They may be a pessimist, they may be thinking of retiring the beauty of the opt in auto upgrade means that the opt in allows for people to be individuals. There is very little chance that the donor will feel negatively toward the organisation as a result.

–          For the charity receiving the increase, not only is there the increase in monthly revenue, but also this is predictable.  You can predict with greater certainty what the monthly income will be.

For the donor and the charity, there are very few negatives.  However, public facing fundraisers and agencies will need to do some extra work.  It takes time to explain the donation increase and to collect the data and to train on doing these things. .  Most cases I’ve seen have not involved an extra payment for asking for an opt in Auto Upgrade. Mainly this is because it would mean paying for something speculative rather than easily quantifiable (the donor could cancel the donation or the upgrade). Even if the increase does eventuate there will be no return on investment for over a year.  In addition any reward passed down to the public facing fundraiser would mean that the PFF is more likely to talk people into doing it who don’t really want to, thus skewing and success rate/ROI estimate. That said, keeping an agency too accountable for something that you don’t directly reward them for  is both difficult and questionable.  Uptake rates in particular are hard to manage if you can’t provide a financial incentive.  For any agencies reading this though, especially those I work with, I would make the point that the increased revenue and ROI is only going to be positive for them in the future.

In terms of what this increase is, a number of approaches are being used. The initial idea was to link the yearly opt in upgrade to the rate of inflation. This is certainly the clearest way of demonstrating that a donation needs to increase to retain its impact, it’s also the most future proof allowing for any unexpected inflation levels.  The unusual the amount by which it increases lends itself to a rounding when the donor is asked for a one off upgrade (eg. If they are increasing their donation from $25 to $25.78, why not just increase it to $26?)  There are some issues with this approach.  Firstly, not everyone finds it easy to understand.  Although the idea of inflation is generally understood, explaining it comprehensively and accurately can prove harder especially in the brief amount of time we get with donors at point of recruitment.

A second idea of an opt in auto upgrade was to have a set amount that the gift increases by each year.  Say a dollar or two.  This is certainly easier to communicate at point of recruitment, but it suffers in that it doesn’t take into account the initial pledge level – a dollar on $30 is half the percentage increase that a dollar on $15.

My personal preference is to allow the PFF negotiate an increase with the donor, this gives them control of the upgrade as well as ownership of it. If pitched correctly, this should not only minimize the number of people who get annoyed by the increase, but potentially also maximise the amount by which they upgrade. One of the added bonuses of this final method is that many donors are actually suggesting they increase their donation by more than inflation.  If they are optimistic about their personal circumstances and believe they will be better off in 12 months, especially those who have recently finished studying. Many will pledge 15-20% increases in the future and it perversely becomes important to limit the uplift amounts to ensure they don’t let themselves in for a nasty shock in three or four years time.

The opt in approach to an Auto Upgrade will always give you a lower uptake level than the opt out approach.  Although there isn’t any clear data to benchmark, figures I’ve seen have varied there has been anything from two thirds opting in to just 20%. Although product and proposition play a role here, by far the biggest influence on uptake seems to be making sure everyone gets asked. But it contains far less risk both in terms of both retention and reputation.  It also should not replace the specific upgrade ask (by phone or DM) as this gives a greater increase per donor and hypothetically better retention.  However due to it’s balance of cost efficiency, low risk and high potency, it’s seems likely to be a part of many RG programs moving forward.

PS.  As fundraisers I’m pretty sure you’ll all be reading this PS. I really appreciate all the feedback from the last article, on my Facebook page, through email and especially from those of you I don’t know well in the comments section.  It’s obvious that opt out upgrades are still controversial and stir up a lot of passions. I welcome any thoughts or comments you have, wether you agree with me or not so please don’t be shy: Comment below, share on your networks drop me a line.

PPS. Apologies for the more irregular updates of late.  A heady combination of End of the Financial Year workload, moving house etc… has held me back.  I look forward to being more regular in the future (I can’t believe it’s taken me this long to make that joke).