Pareto Fundraising Benchmarking Australia 2019

By Dearne Cameron, CEO

The 2018 Pareto Benchmarking Study Australia was delivered to full rooms in Sydney and Melbourne in late March 2019.

The full analysis and reports belong to the charities who participated in Benchmarking and attended our sessions. But in the spirit of sharing, here are some of the key topics discussed.

We’ve focused on our top six. Most will seem familiar. However, our Benchmarking analysis shows that if you turn your attention to these, you are likely to see an improvement in income and retention.

On falling donor retention rates – the picture’s not great:

“Donor retention continues to present one of the greatest risks to future income stability, as most mid-value, high-value and bequest giving comes from long-term, single-gift donors.”
Fiona McPhee, Head of Insights & Strategy, Pareto Fundraising

Single gifts accounted for 25% of total giving last year – 16% coming from gifts of $1,000 or more (mid-value, high-value and major donors).

Charities retained about 43% of their single gift donors from 2017 to 2018.

Second gift rates, for new single gift donors stabilised, but are still lower than a decade ago – rates are now 29% for offline donors and 13% for online donors.

The average gift of a direct mail single-gift donor was $126 in 2018. The average gift of an online single-gift donor in 2018 was $163.

Action steps:

1. To lift donor retention, charities should focus on less attrition, higher retention of the most valuable donors and more upgrades than cancellations or downgrades.

2. Use your data to understand your retention rates for first-time donors, ongoing donors, lapsed donors and overall donors.  Only then can you set goals for improvement.

3. Try to make your retention program multi-channel. Donors of all generations are interacting across multiple platforms, so today it’s much more than just separate direct mail, telephone and email appeals. 

4. Donor engagement and stewardship require a long-term plan and commitment. Investment of time and money needs to be made throughout the donor’s time as a supporter

On how fewer donors are giving but giving more:

“Some good news is that mid and high-value single gifts are increasing each year, with June 2018 (tax time) alone showing a 13% increase in giving. This highlights how critical retention and development of higher value donors is to overall income.”
Kerren Morris, Strategy Director, Pareto Fundraising

There has been 11 years of steady growth in high value donations, representing a great return on fundraising investment.

Mid-value regular givers are showing the greatest year on year growth.

Action steps:

1. The best use of a fundraising budget is to spend more money on less people which will help you raise more income at a lower cost.

2. Focus a great deal of your effort on the Pareto Principle. That small group of donors who have the capacity and ability to make larger gifts and potentially leave a gift in their Will.

3. Offer your donors a service experience that is personalised to them and delivers what they need to keep supporting your mission.

On the rise of Gifts in Wills:

“We need fundraisers to lead a legacy movement that makes it normal, easy, inspiring and natural for donors to leave a gift in their Will to their favourite cause.”
Stephen George, Fundraising & Leadership Coach & Consultant

Gifts in Wills continues to grow and in 2018 represented 20% of fundraised income, having more than doubled in the past decade.

The average bequest value was $65,000.

The pledged bequest rate is now at 3.2% for loyal active cash donors.

The financial return to charities from bequests is usually the highest of all forms of fundraising – partly due to the large number received of legacies received apparently ‘out of the blue’ – which was 67% in 2018.

With our ageing population and the ‘baby boomer bulge’, it all points to strong gains in bequest values in the next two decades.

Action steps:

1. An organisational strategy to grow Gifts in Wills is critical for organisations committed to long-term, sustainable funding streams.

2. With Gifts in Wills being realised approximately seven to 10 years after confirmation, a move from short-term to long-term thinking is required. And lifetime value modelling is required.

On how it’s wise to invest in a digital strategy:

“The last 10 years have been all about growth in digital, but it still only represents 9% of total income to charities. So, don’t over-invest while the return on investment is low, but invest to build your digital community and infrastructure for the future.”
James Herlihy, Digital Strategy Director, Pareto Fundraising

Online income has grown 280% since 2009 and 64% since 2014. Charity website sessions have grown more than 100% since 2014.

For website sessions, the steady march of mobile continues  – up 400% since 2014. As does the domination of organic search.

Income is a different story, with desktop dominating … but mobile showing a definite increase year on year.

The donor consideration process may involve many touchpoints across multiple devices before donating (probably via desktop). All touchpoints are important.

Older people give online as much as younger – with conversion rates (particularly for men) increasing with age.

Action steps:

1. Invest to build your digital community and infrastructure, with a longer-term 3 to 5 year return on investment.

2. Work hard to understand how your donor moves across many touchpoints and devices before they make the decision to donate.

3. Digital fundraising is not a ‘silver bullet’. Your digital program needs investment in a mix of healthy channels.

On how regular giving is still the engine room of fundraising:

“The expectation of achieving high volume, good quality, low-cost recruits needs to be adjusted. The charities leading the way are those looking for quality over volume, channel diversification and lifetime value.”
Andrew Martin, Fundraising Strategist, Pareto Fundraising

Regular giving income has plateaued – the first ever decline in face-to-face income, but it has been offset somewhat by growth in other channels.

Year 1 retention is trending downward  – now at just 48% in 2018. The first time we have attrited (52%) more than has been retained.

The best results come from a mix of channels in order to diversity risk: direct mail, broadcast media, telephone and two-step campaigns for digital lead generation with telephone conversion.

Action steps:

1. The best regular giving results come from a mix of solicitation channels to diversity risk.

2. You can’t set and forget regular giving.  Make sure all your processes are effective and efficient to maximise retention. And understand how your processes affect your retention rates.

3. A strong, emotionally engaging proposition is critical.

4. Fundraisers need to play the long game – looking at returns over five+ years and building engagement towards a bequest commitment.

Our thanks go to all our member charities who have participated in Pareto Fundraising Benchmarking over many years. You and your data help provide critical learnings for everyone in the fundraising sector. Plus, you’re contributing to a bank of knowledge on the past, present and future of fundraising in Australia. Thank you.

If you’d like to know more about how your organisation can be part of Benchmarking contact Pareto Fundraising

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