Pareto Benchmarking 2017: Competing Priorities

Pareto Benchmarking 2017: Competing Priorities

With its charity membership continuing to grow – Pareto Fundraising had 28 members in 2010 and now has 82 – the organisation’s benchmarking is becoming increasingly relevant. Lise Taylor, Fundraising and Philanthropy, reports on its 2017 results.

Australia is the third most generous country in the world and it has experienced some of the most cost effective acquisition globally, but although the sector has experienced 0.3% growth in individual giving overall during 2016, almost 20 of the benchmarked charities saw a decline in income over the past two years,” Pareto Co-founder, Sean Triner, told the packed room at the International Convention Centre Sydney on Tuesday 4 April at the halfday launch of the 2017 Pareto Fundraising Benchmarking Program.

He added, “Many charities are running out of traditional donor prospects – much of the low hanging fruit has been gathered. This means we need to change as a sector.” Prior to delving into the report’s details, Triner revealed that overall there had been some big bequests, regular giving continued to grow, and that although child sponsorship had been flat for a decade it was still the best-ever regular giving product.

He also recommended that charities utilise two-year forward planning at a minimum, not one year. “Rolling 12-month income is important, especially in relation to retention, but charities are doing too much short-term thinking. In fact, even five years is too short for planning, for example a bequest plan requires at least 10 years before any payoff can be expected. Charities also need to change the way they budget: lifetime value modelling is required,” he emphasised.


Regular giving Representing almost 50% of income, regular giving is now a key focus for charities with both long and recent fundraising histories. Although most regular giving recruitment was from face-to-face fundraising followed by phone then online, face-to-face recruitment peaked in 2015 and was down 11% in 2016.

It was speculated during audience discussion that face-to-face volumes were down because of supplier capacity issues, increasing prices and other problems in the sector such as industrial action and increased compliance requirements.

Fiona McPhee, Head of Insights & Strategy at Pareto, noted that it isn’t possible any more to have a combination of low price, high volume and high quality of face-to-face recruitment. Even so, this form of fundraising is still the channel driving a large volume of new donors into the market and many charities continue to see growth here. With its charity membership continuing to grow – Pareto Fundraising had 28 members in 2010 and now has 82 – the organisation’s benchmarking is becoming increasingly relevant. Lise Taylor reports on its 2017 results.

“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 and channel diversification because of their focus on long-term value rather than short-term volume impact,” she added.

This is affecting most channels for regular giving recruitment and the more robust programs are using a variety of channels to diversify risk. Two-step regular giving recruitment has increased in volume with charities generating their own leads via digital programs and converting on the phone. This is delivering promising, quality regular givers. Overall, during 2016, average monthly donations for regular giving included: • face-to-face at $31 per month • non face-to-face at $25 per month • telephone/online lead conversion at $21 per month • overall range from $25 to $35 per month.

McPhee suggested attrition is tracking OK, with little change in year-one attrition over the past five years, but overall can be reduced via good declines management (with a need to monitor non-starter rates) along with a call for more attention to upgrade strategies.


Cash giving Cash income represented 24% of total individual giving income in 2016 but it was down a little on 2015, which Triner says is worrying because most bequest and high value giving is developed from cash donors. “There has also been a big decline in new cash recruits (direct mail is at -25.98%),” he says.

After several years of high volumes of direct mail cash donor acquisition, increasing production and postage costs and market saturation for high volume recruiters has seen the economics of direct mail acquisition challenged. However, charities new to the method and some individual programs are bucking the trend.

Triner noted, “Taking a long-term view and ensuring you have mid-value, major donor and bequest programs in place will ensure investment in a cash program pays off in the longer term.” Online, however, is OK at 13.85% growth but represents a tiny proportion of new cash donors overall. Growth of cash giving online is seen within warm programs from improving channel integration. “The trouble with this is that most charities are not very good at integrating online – we are not doing it well but it does work if done well!” noted Triner.

He added that charities can work harder at encouraging second gifts – they have been decreasing year on year but some charities are dong 10% to 15% better than others: “The opportunity is there.”


High-value giving and bequests High-value gifts (donors are generally considered to be both those giving one-off donations of over $1,000 and regular givers donating over $1,000 in a year) comprise mid-value donors and major gifts, and represent just 0.5% of the donor pool. These cash donors contributed 13% of total income in 2016 and were the most likely to have confirmed a bequest (an average of 2.8% of all high-value givers have confirmed a bequest to one or more charities in the program).

Some good news is that high-value cash gifts are increasing each year, with June (tax time) being the key period for these gifts, with 88% of these donors already giving, highlighting how critical retention and development of higher value donors is to overall income.

Pareto Fundraising Strategist Andrew Martin points out, however, that for mainstream charities, major donor and mid-value fundraising is under-achieving in Australia. He says, “The big money is going to the arts and education but not mainstream charities and yet the best fundraising return on investment comes from the major gifts group, which is why fundraisers have a clear opportunity to develop their mid-value fundraising strategies as a key feeder to major gifts and bequests.”

Data capture is critical and Martin noted benchmarking bequests remain a challenge due to poor data capture by some charities. When it comes to income, members of the benchmarking program received over $400 million from bequests in 2016. Existing donors were increasingly giving bequests, up from 31% of bequest income seven years ago to 42% in 2016…

Recency of donor engagement is important, and with pledged bequests it was recommended that fundraisers keep in mind that residual bequests (bequests of a set amount) have a larger monetary value than pecuniary bequests (which is a percentage of a will). Martin notes that bequest fundraising is a long game and budgeting for activity and returns beyond the usual 12-month budget cycle is critical to implementing truly successful bequest programs.


Digital giving Basic usage of Google Analytics by participating charities continued to provide an opportunity as some charities do not use the functionality available to them to monitor and track online donor behaviours. For those charities that did tracking in 2016, website visitors continued to grow, up 12% between 2015 and 2016.

Although 25- to 34-year-olds are the biggest users, prospects aged 45 plus were better targets because young people online were not ‘digging into their pockets’ – 52% more income was generated by the over 45s than the under 45s.

Dan Wilson, Insights Manager at Pareto, noted that search is the crux of everything digital and donors are searching for charity brand names. Good sources of traffic are from Facebook (Facebook is the single biggest source of social media traffic with 99% of it coming from the platform), self-referrals (sites that refer to other sites) and email. Twitter, on the other hand, was termed “a blip on the radar”.

“The charities on Facebook that are raising more money are doing so by asking for donations on a frequent basis,” he noted. The best time for posting appears to be from 6pm to 8pm because that’s when most traffic occurs and desktop ranks highest in relation to donation conversions.


Donor retention The benchmarking indicated charities were not retaining donors as well yearon- year, with all numbers down. While the costs of program delivery were increasing, group discussion highlighted the imperative to spend money on supporter service and donor care.

Triner explained that the data shows the first two years of a donor’s relationship are the most critical for ensuring longer-term value but those charities doing the best on value over time appear to have a more integrated approach to acquisition and retention (as opposed to siloed approaches).

McPhee comments, “Retention is not determined by just what is sent out. It is impacted by how your administration is managed (declines management for regular giving was highlighted as being particularly important), your supporter services (customer service auditing and benchmarked mystery shopping were discussed as critical ways to inform improvement) and your donor care strategies (human interaction being a critical component of well-planned donor experience management).”

Advice from the UK The session ended with a video call to UK fundraising expert Ken Burnett, who works with UK charities to address the adverse publicity received by the charity sector there. Burnett said it was critical to understand that giving should be a pleasure for donors and their experience must take centre stage. He advised fundraisers to have responsible data policies (he was emphatic in his desire that Australian charities not end up in an opt-in situation like that faced by UK charities today) and to give donors practical choices in relation to how they are communicated with: “The donor should control the relationship.” Most importantly he encouraged fundraisers to focus on providing fast, frequent and fabulous feedback to donors.

Competing priorities The overarching message was that donor love that offers great experiences is what will make the difference for charities. Triner highlighted that because warm retention programs are based on ‘facts’ they should be non-negotiable, but too often are negotiable. He added, “Acquisition is critical to maintain and gain ground but the market is changing faster than ever and ‘set and forget’ strategies are not working. Critically, the whole sector needs to invest in research and development or it will go backwards.”

The big questions that need answering are: How can we juggle competing priorities on a tight budget? How can resources be split?