1. Fundraising Tactics & Efficiency: Results from a National Survey Thomas H. Pollak & Mark Hager Center on Nonprofits and Philanthropy, The Urban Institute Patrick Rooney Center on Philanthropy, Indiana University Association of Fundraising Professionals (AFP) * * * * * October 2003 Chicago

2. The Project Nonprofit Fundraising & Administrative Costs: Assessing Current Practices & Developing a Framework for Reporting Understand scope & sources of variation in fundraising & administrative costs, & identify problems or inconsistencies in their measurement and reporting Develop & disseminate accessible reports, tools, & guidelines to public, practitioners & policy-makers Initiate a fact-based dialogue on how to ensure comparable & uniform reporting of these costs

3. Survey Questions Use of staff and volunteers Use of fundraising information systems Fundraising tactics Auditing and cost allocation Professional fundraisers Standards & requirements of donors & others Indirect fundraising by affiliates or federated funding orgs.

4. Research Question Are some fundraising strategies more efficient than others? I.e., do they generate more direct contributions per dollar of fundraising expense?

5. Survey Results Mailed surveys to 3,000+ NPOs 1,500+ returned (51% response rate) Sample was stratified random sample: –Stratified by: Size & Subsector Sample and responses both closely mirror overall nonprofit sector.

6. Survey Results Caveats and Concerns –Surveys always have several sources of possible bias: Non-responders may differ from responders systematically in important ways. Item non-response bias among responders. Veracity of responses. Perceived incentives to respond.

7. Survey Results Caveats and Concerns Specific to this Study –Not always clear whether responders declared costs in a consistent manner. Direct costs (printing and postage) Direct labor costs Indirect labor costs (CEO, etc.) Indirect costs (rent, utilities) Gross vs. net revenues for special events and mailings, etc.

8. Survey Results See “How Fundraising is Carried Out in U.S. Nonprofit Organizations.” Mark Hager, Patrick Rooney and Tom Pollak. International Journal of Nonprofit and Voluntary Sector Marketing, Vol 7, No. 4, 2002, pp. 311-324. Covers Fundraising Roles of CEO, CDO, Volunteers, Consultants, etc.

9. Survey Results Forthcoming articles in NonProfit Quarterly –“Management and General Expenses: The Other Half of Overhead” –“Is Grant Proposal Writing a Fundraising Expense” Forthcoming article in Giving USA Update –“Variations in the Cost of Fundraising” Variations by size, age, mission using 990s.

10. Direct Mail Number of complete responses: 342. Number stating they do not use: 812 Incomplete data: 245 Skipped line, matrix or “unsure”: 141 Mean: 36.4 Median: 10 25 th & 75 th Percentiles: 4.5—25.9 % Using this tactic (among fundraiser’s): 43%

11. Telephone Calls Number of complete responses: 35 Number stating they do not use: 1198 Incomplete data: 83 Skipped line, matrix or “unsure”: 224 Mean: 54.7 Median: 11.9 25 th & 75 th Percentiles: 2.6-42.0 % Using this tactic (among fundraiser’s): 9%

12. E-Mail Number of complete responses: 9 Number stating they do not use: 1296 Incomplete data: 39 Skipped line, matrix or “unsure”: 196 Mean: 17.6 Median: 7.5 25 th & 75 th Percentiles: 0.5-21.3 % Using this tactic (among fundraiser’s): 4%

13. Special Events Number of complete responses: 540 Number stating they do not use: 559 Incomplete data: 304 Skipped line, matrix or “unsure”: 137 Mean: 9.1 Median: 3.2 25 th & 75 th Percentiles: 2.0-6.3 % Using this tactic (among fundraiser’s): 62%

14. WEB Number of complete responses: 24 Number stating they do not use: 1118 Incomplete data: 201 Skipped line, matrix or “unsure”: 197 Mean: 8.8 Median: 7.0 25 th & 75 th Percentiles: 1.8 – 10.0 % Using this tactic (among fundraisers): 16%

15. Foundation Proposal Writing Number of complete responses: 324 Number stating they do not use: 518 Incomplete data: 618 Skipped line, matrix or “unsure”: 80 Mean: 6.90 Median: 20 25 th & 75 th Percentiles: 7.7 – 60.0 % Using this tactic (among fundraiser’s): 69%

16. Major Gifts Number of complete responses: 124 Number stating they do not use: 930 Incomplete data: 288 Skipped line, matrix or “unsure”: 198 Mean: 172.7 Median: 24.0 25 th & 75 th Percentiles: 8.4 – 100.0 % Using this tactic (among fundraiser’s): 67%

17. Capital Campaigns Number of complete responses: 79 Number stating they do not use: 1120 Incomplete data: 140 Skipped line, matrix or “unsure”: 201 Mean: 427 Median: 20 25 th & 75 th Percentiles: range: 8.0 – 53.8 % Using this tactic (among fundraiser’s): 16%

18. Federated Fund Raising Number of complete responses: 79 Number stating they do not use: 1094 Incomplete data: 210 Skipped line, matrix or “unsure”: 157 Mean: 452.9 Median: 28 25 th & 75 th Percentiles: 7.9 – 63.3 % Using this tactic (among fundraiser’s): 21%

19. Government Proposal Number of complete responses: 285 Number stating they do not use: 681 Incomplete data: 486 Skipped line, matrix or “unsure”: 88 Mean: 869.8 Median: 27.5 25 th & 75 th Percentiles: 9.5 – 102 % Using this tactic (among fundraiser’s): 56%

20. Planned Giving Number of complete responses: 80 Number stating they do not use: 1060 Incomplete data: 188 Skipped line, matrix or “unsure”: 212 Mean: 690.8 Median: 20.0 25 th & 75 th Percentiles: 7.8 – 100 % Using this tactic (among fundraiser’s): 20%

21. Congregations Number of complete responses: 64 Number stating they do not use: 1127 Incomplete data: 153 Skipped line, matrix or “unsure”: 196 Mean: 50.3 Median: 18.0 25 th & 75 th Percentiles: 6.1 – 60.3 % Using this tactic (among fundraiser’s): 16%

22. Door to Door Number of complete responses: 11 Number stating they do not use: 1294 Incomplete data: 35 Skipped line, matrix or “unsure”: 200 Mean: 42.1 Median: 10.0 25 th & 75 th Percentiles: 5.0 – 77.0 % Using this tactic (among fundraiser’s): 3%

23. Ratio of Expenses to Revenues MeanRange 25 %tile Median 75 %tile Direct Mail 0.2515.000.040.100.22 Telephone Solicitation 0.294.000.020.080.39 E-Mail Solicitation 1.7011.190.050.152.07 Special Fundraising Events 0.5133.330.160.320.50 Web Page Advertising 0.593.910.100.140.58 Foundation proposal writing 0.2113.000.020.050.13 Government proposal writing 1.07240.000.010.040.11 Federated Fundraising 0.9162.000.020.040.13 Capital Campaigns 0.173.330.020.050.13 Major Gift Solicitation 0.131.450.010.040.12 Planned Giving 1.90145.000.010.050.13 Solicitation at/from Congregations 0.131.000.020.060.17 Door-to-Door Solicitation 0.190.990.010.100.20

24. Conclusions Fundraising Tactics matter. They have different returns on investments. Other project research using Form 990 data found similar results: tactics matter. Also found that the cost of fundraising varies by size and subsector quite a bit and by age a little. Still much unexplained.

25. Next Steps For tactics with enough responses: –How does the return vary by size and by subsector. Case studies: –How make decisions about how to allocate costs? –How do NPOs track costs and revenues? –What are barriers to tracking costs and revenues? –What would be helpful? Develop templates to help NPOs track costs and revenues.