After strong appeal fundraising over the past couple of years, there was always going to be a point at which things started to slow down. With increasing inflation and the Reserve Bank attempting to manage this by increasing interest rates, there has been a lot of concern about how this may impact campaigns.
We’ve had a look across a set of our client results to see how donors have behaved in spring 2022 compared to spring 2021.
|Spring 2022 Campaign Performance|
|A comparison of gross income for appeals in Spring 2021 & 2022|
|ID||Campaign Type||Gross Income 2021||Gross Income 2022||Gross Variance||Pct Variance|
Looking at the gross income performance of the campaign, one would be forgiven for saying that income is down compared to last year. However, as with most things, it is more complicated than just a simple number. We need to consider, who we targeted, how much we asked them for, and what we told them. It adds a level of complexity beyond how gross income changed.
To understand the performance of our campaigns, we can look at the change in our response rates and average gifts for a set of comparable micro-segments across our donor base. For the purposes of this analysis, we’ve limited our data set to donor segments who’ve made cash gifts within the last 12 months.
In the chart above, the coloured dots show each of the different charities included in the analysis. We can clearly observe that more segments suffered worse performance than achieved better performance. We can also see that some charities had consistently lower responses, while others mostly saw improvements.
When we look at the average gift, things look much more balanced, with very little deviation from the mid-line. This suggests to us that the main cause for the decline across a number of organisations relates more to the response rate than the average gift.
Breaking down the detail
To get a better understanding of whether the difference is between the types of activity, we can split the charts based on whether the activity is a Newsletter or an Appeal.
Looking at the response rates broadly shows that across both activities, the response rate across segments has reduced; noticeably more for Newsletters where response rates have been high in the past.
Once again, the average gifts tend to persist around the midline with minor deviances up and down on each side of the line. This is to be expected for this subset of analysis as these donors have given recently (within the last 12 months) and remember how much they give to each charity.
While we’ve compared the actual response and average gifts across each campaign, we can also look at the relative difference between the campaigns from this year, and the campaigns from last year to see how much better or worse we did.
It’s interesting to note that across both types of activities, we do see consistent reductions in response once we get beyond response rates of about 8%. Where the response rate was less than 8% for activities in spring 2021, we notice a little more variance, with some charities seeing noticeable improvements in some of those responses.
It’s not surprising after the previous average gift charts to see that for the relative performance, most of the segments hold reasonably closely to the neutral line.
The last piece of our analysis is making sense of how reliable our assumptions are that the response rate is down (causing the impact on our campaigns) and that the average gift has remained stable. We’ve used a technique called bootstrapping to make sense of these figures. This is a computational sampling method to calculate the uncertainty around various metrics. In this case, our response rate and average gift. It allows us to be confident about how much variance we might expect to see if we were to run a test again under the same circumstances. For our purposes, it allows us to understand whether things are genuinely down compared to the previous year or does it just have that appearance.
When looking at the bootstrapped results, we look at both the absolute and relative differences.
- The absolute difference tells us how many units difference it is to last year. e.g. Last year, my response rate was 10%; I have an absolute difference of -2%, so this year, my response rate is 8%.
- The relative difference tells us the proportion of difference we have. e.g. Last year, my response rate was 10%; I have a relative difference of -20%, which means my response rate this year is 8%.
- Note: the reason we include both is that the absolute difference for some appeals could be greater than the actual response rate, suggesting a negative response rate.
|Bootstrapped Response Rates|
|Description||Lower Confidence Limit||Estimate||Upper Confidence Limit|
|Absolute - Newsletter||(3.49%)||(2.11%)||(0.79%)|
|Absolute - Appeal||(2.02%)||(1.20%)||(0.37%)|
|Relative - Newsletter||63.51%||83.99%||129.78%|
|Relative - Appeal||77.99%||83.31%||96.66%|
The table above shows the estimated response rate difference in two ways. We look at both the absolute difference and the relative difference. Looking at the absolute figures show that, on average, campaigns in Spring 2022 were down by about 1.5%. The lower and upper confidence limits show the potential variance could range from as low as 2.25% to as small as 0.81%. Either way, it clearly shows us that the response rates are down for the analysed micro-segments. When we apply the campaign breakdown, it’s evident that the Newsletters had a worse outcome than the appeals, reinforcing that case studies are more effective at raising funds than impact-focused messages.
|Bootstrapped Average Gift|
|Description||Lower Confidence Limit||Estimate||Upper Confidence Limit|
|Absolute - Newsletter||($19.61)||($1.57)||$16.93|
|Absolute - Appeal||($12.90)||$8.59||$32.95|
|Relative - Appeal||98.98%||106.17%||114.72%|
Our Average Gift table shows a slightly different picture of the response rate. However, this makes sense as our charts showed more neutral behaviour. Here we see what appears to be an overall increase in average gift of almost $5, but our confidence interval indicates variances of a $10.41 reduction to as much as a $21.87 increase. Ultimately, this means there is no clear increase or decrease in average gift value for our Spring 2023 campaigns.
Having this understanding that campaigns didn’t perform so well in Spring 2022 allows us to consider how we can improve our upcoming campaigns. While we can’t be certain that economic circumstances have driven the reductions, the difference in outcomes for the Newsletters vs Appeals suggests that without a strong case for support, donors may be less likely to respond than they have in the past.
There are two recommendations to consider to mitigate the risk of suppressed response rates over the next 6 months (to the end of 2023).
- Make sure your ask strategy remains sensitive to what donors are indicating by their giving behaviour. We’ve suggested that clients should anchor their ask strategies this year to the Last Cash Gift. This ensures that we respect the amounts they indicate they can give as their giving behaviour changes.
- While our newsletters primarily focus on impact and providing donor care, including dollar handles throughout can help encourage donors to give when prompted with a related ask in the response mechanism.
2023 will be a more challenging time for appeal fundraising than in the last two years as attempts are made to stabilise the economy. This means it’s more important than ever to get sound advice on who to talk to, how much to ask for, and how you should be asking. If you need additional data support, don’t hesitate to get in touch.