Recruitment at what cost? The impact of mass market interpersonal fundraising

Charity fundraisers. Photo by cottonbro studio on Pexels.com

Picture this: you're out shopping, immersed in thoughts of errands or weekend plans, when you're approached by an earnest charity fundraiser armed with a clipboard and a persuasive pitch for support. This form of face-to-face fundraising is common in many countries but has earned the grim moniker of "chugging" (a contraction of "charity" and "mugging"), suggesting public unease with this fundraising method.

If you’ve ever been accosted by friends at a barbeque, you’ll know that many people find such practices to be annoying or even unethical. So why do charities continue to use methods that risk upsetting potential supporters?

The short answer is that there is evidence that interpersonal fundraising methods are effective at recruiting high volumes of new donors, especially face-to-face (where potential donors are approached on public streets or in malls) and door-to-door (where donors are approached in their own homes). However, there is not much evidence about what happens after those donors are recruited: do such donors become committed supporters who are valuable in the longer term?

How does the fundraising method affect donor value over time?

To answer this question, we accessed data from a national benchmarking project, which provided transactional data from 45 large Australian charities. In that data, we had information about 213,404 donors who signed up to make recurring donations to one of the charities during the same calendar year. From the charities’ databases, we also had information about the method of fundraising that recruited them and the actual amounts that they had subsequently donated. Given donors were part of charities, we used multilevel analysis to examine the impact of the fundraising method on donor value in their second year of support.

First, we looked at each fundraising method individually and their associations with donor value [1]. We found that the average donation value varied across different fundraising methods. Relative to face-to-face (the most common method), almost all other methods were associated with larger second-year donation values. Only door-to-door or lead conversion telemarketing performed equally poorly as face-to-face.

Next, we examined the impact of interpersonal interaction on donor value by coding methods involving interpersonal interaction (i.e., face-to-face, door-to-door, telemarketing) or not (e.g., direct mail, TV). We found that donors recruited via methods involving interpersonal interaction contributed an average of $61.38 less in their second year than those recruited through non-interactive methods, representing a 59% reduction in donation value. This reduced second-year donor value was driven primarily by high cancellation rates. Donors recruited using interpersonal interaction were three times more likely to cancel or default from their recurring donation by the end of the first calendar year than donors recruited without interaction.

Why may interpersonal interaction have negative effects on donor value?

Our data didn’t allow us to examine why this reduced support occurred. We have, however, taken the opportunity to speculate some possibilities, which include:

·      Donors approached by fundraisers may feel pressured to give, which could crowd out their potential intrinsic motivations and therefore reduce commitment over time.

·      Donors recruited through interpersonal methods may expect a more interactive relationship with the nonprofit. They may subsequently become disillusioned if follow-up communications are impersonal or generic.

·      Interpersonal approaches may mop up the more reluctant donors, who may not have given at all without such engagement but may be less passionate and more willing to cancel.

What should fundraising managers make of all this?

Many charities rely on interpersonal fundraising methods to hit immediate acquisition targets and maintain visibility in a competitive marketplace. However, our data may set off some alarm bells. Interpersonal methods may get people through the door, so to speak, but those people may be quick to leave again. Given the high cost of interpersonal fundraising, nonprofits may wish to consider carefully if these methods are good investments in the long term.

Beyond concerns over ROI, these data could suggest something more troubling still. We could be inadvertently generating relentless "chug-and-churn" cycles, where donors feel coerced into giving to a charity, only to swiftly disengage and then face the same pressure from another charity down the line, and so on. If true, such a pattern could have devastating long-term consequences for the sector if donors have disengaged repeatedly.

We suggest nonprofit marketers rethink their approach to interpersonal interaction in mass market fundraising. Though, there is plenty of evidence that interpersonal interaction is critically valuable for major donor fundraising. At a minimum, they may wish to audit their fundraisers’ conversations and overhaul their scripts and subsequent donor journeys to minimize negative outcomes.

[1] The fundraising methods encompassed of various channels such as Radio, TV, Press Adverts, Press Inserts, Direct Mail, Email, Unaddressed (not personalized direct mail), Fax, Online, Unsolicited, Phone, Lead Conversion, Face-to-Face, and Door-to-Door approaches.

Click on the link to read the free full-text article: Chapman, C. M., Casey, J., Thottam, A.K., & France, C., (2024). Interpersonal fundraising methods are associated with lower donation value over time. Nonprofit and Voluntary Sector Quarterly, 0(0). https://doi.org/10.1177/08997640241248029

This blog was originally posted on NVSQuarterly