Data key to success for charities
Imagine you are a charity. You need to set out your donor strategy for the next few years of operations to fund your good works. Should you build lifetime relationships with donors, who offer large sums over a long time period? Or aim for multiple donors, each offering a small amount of cash to the organisation?
ActionAid has always tended towards the former strategy. It has traditionally signed up people to sponsoring a child over the long term, costing £15 a month. It aims to find at least 11,000 new sponsors each year.
But now ActionAid is adopting a new targeted strategy to attract one-off donors. The shift is part of a five-year plan for change within the organisation, which hopes to boost funds, increase supporter numbers and diversify income. It hopes to boost its income to £75m by 2017, up from £55m now.
It’s a good move, based on clever analysis of data of the donor market and also the type of people who donate to ActionAid. The top reason people stop giving to charities is being unable to afford it, according to fast.MAP research published in Marketing Week last year. With the shaky global economy making people unable or unwilling to commit portions of money over any long-term period, it makes sense to encourage more ad hoc donations.
There are also new pressures on big philanthropic donations, which mean that relying exclusively on large-scale donors is no longer a great strategy for many non-profits. The cap on tax breaks announced in the recent budget – anyone attempting to claim more than £50,000 in relief, which is the equivalent of making a £200,000 lump sum donation – would be hit by a new cap at 25% of income – could hit charitable donations by millions of pounds a year, claims the Charities Aid Foundation.
ActionAid is not alone in trying to diversify its income. Another large charity told me last week that it had spent the first three months of this year carrying out a large and rigorous data analysis programme. This organisation has identified more than 30 different types of donor – from those wanting to leave a hefty legacy to those people prepared to give a couple of pounds but engage no further. It will market to each of those groups separately.
With so many good causes out there and increasingly tight budgets for consumers, it is more important than ever for charities to target people correctly. There are some causes I’d like to support regularly and others where I would like to donate only when I have some surplus cash. Those charities that get segmentation right will be those that recognise this and manage to take my money off me.
