White PapersThe fundraising challenge 57.2% of the adult population gives to charity each month in the UK with the average total donation being £14. This means that, on average, 0.9% of the UK Gross Domestic Product finds it way to charitable causes each month. Yet UK charities could do better as information from other countries shows. For example, in the US approximately 2% of the US GDP1 goes to charitable donations. This discrepancy shows that there is the potential in the UK to develop donor relationships and encourage higher value or longer term giving.
White PaperWritten by Graham BinnsExecutive SummaryUK not-for-profit organisations face an increasing series of challenges related to their fund-raising activities.These challenges include:Increased competition for charitable donationsA steady decrease in legacy giving growthA failure to realise the full value of gift aidA decrease in effectiveness in traditional recruiting and fundraising effortsAn inability to capitalise on existing donor relationships.Additionally, a lack of joined up processes and systems has led to organisational amnesia in many charities. Due to the nature of existing IT solutions, organisations find themselves with a fragmented group of systems which don t communicate with one another. This system landscape means there are often times one part of the organisation doesn t realise what others are doing with donors.This leads to what Atos Origin calls organisational amnesia an organisation s inability to know the overall value of an individual donor. Fortunately, there is a cure for this Donor Relationship Management (DRM) solutions.A DRM solution helps organisations create a single view of the donor and helps ensure that the donor will have a consistent experience with the organisation. This whitepaper will examine the challenges facing the third sector and how DRM solutions can help resolve the challenges.>>>>>Donor relationship ManageMent A Donor-centric APProAch to GroWthcontentsIssues facing charities 2Components of a DRM strategy 4Marketing 5Fundraising 5Donor services 5Loyalty and membership 6How to successfully achieve DRM 7Untitled Document Donor Relationship ManagementIssues facing charitiesThe fundraising challenge57.2% of the adult population gives to charity each month in the UK with the average total donation being 14. This means that, on average, 0.9% of the UK Gross Domestic Product finds it way to charitable causes each month. Yet UK charities could do better as information from other countries shows. For example, in the US approximately 2% of the US GDP1 goes to charitable donations. This discrepancy shows that there is the potential in the UK to develop donor relationships and encourage higher value or longer term giving.Against this background fundraisers also face a number of key challenges: Increased competition for charitable donations domestic charities face increasing pressure in fundraising as international issues, such as the tsunami appeal, consolidated the position of international charities over domestic. Additionally, smaller charities find it increasingly difficult to compete as larger charities take an increasing share of total donations. This is reflected in the fact that growth in fundraising income for the top 500 charities was 11% compared to 4% for the next 5002.A steady decrease in legacy giving growth there has been limited growth in legacy giving over the last several years and some studies indicate that legacy giving is on the decline. Legacy gifts tend to be given by single people and women more often then men. In 2004, growth in legacies was only 1.3% as compared to 4-5% in previous years. A failure to realise the full value of gift aid a recent study by the Institute of fund-raising indicated that out of the 200,000 charities registered in the UK only 64,000 will make gift aid claims in 2006. If charities were able to be more efficient in collecting gift aid the sector would profit immeasurably. Research shows that if just 5 more charities, in the 1 million income bracket, claimed gift aid 1.3 million additional pounds would be released to the charitable sector3. A decrease in effectiveness in traditional recruiting and fundraising efforts studies have shown that fundraising expenditure is becoming less effective. Benchmarks show that from 2000 to 2004 there was a sharp decline in the effectiveness of direct marketing as a means of fundraising. Effectiveness decreased from 2 per 1 invested to 1.52 over the 5 years of the survey. Only local fundraising has become more cost effective. >>>>An inability to capitalise on existing donor relationships disjointed IT systems and fragmented processes prevent organisations from maximising the giving potential of each donor. The third sector can borrow a lesson from the commercial sector. It is 5 to 7 times more expensive to recruit new customers (donors) to an organisation than to retain existing ones. Commercial organisations have seen huge gain by increasing their wallet-share with existing customers rather than constantly trying to procure new ones. With limited growth in legacies (1.3% in 2004) charities are focusing on active fundraising in particular committed giving where significant investment in donor recruitment has resulting in 17% annual compound growth over the last 5 years. There are indications however that committed giving rate of returns are falling with the returns dropping from 4.07 to 2.85 in 3 years from 2002 to 2004.If the sector is to prevent a continuing fall in fundraising effectiveness then it needs to look at new ways in which it can focus its efforts on developing existing donor relationships rather than focusing on donor recruitment.The technology challengeTechnology should serve to enable processes and activities, however in the third sector technology can often serve as a blocker rather than an enabler. This is due, in part, to the nature of systems that have traditionally been on offer to the third sector, and in part to the traditional structures of third sector organisations. To date, solutions in charities have tended to be point solutions for a single function for example, fundraising, or be-spoke databases which have been created for a specific need.>>1,2 UK Giving 2004/5, Results of the 2004/5 survey of individual charitable giving in the UK , CAF and NCVO, 20063 Promoting Tax Effective Giving, Baseline Research , Institute of Fundraising, 20064 Headline Figures 2000-2004, Median Income per 1 invested in fundraising , Institute of Fundraising and the Centre for Interfirm Comparison, April 2006. 000 001 00 003 004Corporate Corporate 4.67 4.19 4.22 4.33 3.76Trusts9.93 9.57 9.24 7.33 8.22Direct Marketing 2.01 2.06 1.76 1.77 1.52Committed Giving 3.7 3.43 4.07 3.25 2.85Central Fundraising 6.14 5.48 6.04 5.2 4.82Local Fundraising 2.29 2.68 2.6 2.45 2.45Legacies43.37 36.18 40.19 31.67 41.14Total Fundraising 5.31 5.09 5.51 5. 9 5. 9Headline figures 000- 004 - Median income per 1 invested in fundrisingUntitled DocumentDonor Relationship Management 3As departmental needs or new requirements arise new point/be-spoke systems are commissioned.This approach to IT leads to a number of problems:No single view of the donor information about the donor, their activities and their value to the organisation is held in a number of disjointed databases. The organisation has no way to determine the overall value of an individual donor or to understand their most recent activities with the organisation.No easy way to evaluate the overall effectiveness of campaigns and events in relation to others that have taken place. This affects an organisation s ability to up sell and cross sell to donors.A lack of flexibility in systems as new methods for fundraising arise, for example, web-based giving. The technology in many charities cannot easily adapt to new requirements which results in new systems being added to an already fragmented IT architecture. When these systems are put in place they often do not integrate with the rest of the systems thus resulting in a fragmented customer experience.In addition to the technological challenges that organisations face, there are additional challenges in adopting a donor centric approach. Processes can be fragmented across multiple third party call centres, marketing databases and fulfilment centres. Donor interactions are often not captured and shared across the organisation. Data quality is often poor and as information is updated in one department or system it does not flow throughout the organisation.Many organisations in the third sector are less nimble than they would like to be, due to disjointed processes and inadequate legacy IT systems. There is a need for a new approach and cost effective solutions that enable donor management and help get rid of organisational amnesia .Meeting the challenge through improved Donor Relationship Management In 1992 Ken Burnett suggested that Relationship Fundraising was the way forward for increasing fundraising revenues. Burnett proposed that by focusing on and developing relationships with donors fundraising revenues would increase over the longer term. The success of committed giving over the last 5 years is a good example of how fundraising techniques which focus on long term total customer value can generate significant longer term benefits.>>>Additionally, many organisations now provide feedback on how donor s contributions make a difference thus encouraging more donations.Whilst organisations have embraced some of the concepts of donor management there is more to do. Focus needs to be given to managing donor relationships, increasing the percentage of donor wallet-share and promoting loyalty to the charitable cause. In the commercial sector, research indicates that the cost of acquiring new customers is five to seven times more expensive than retaining existing customers. The challenge third sector organisations face is how to keep donors over the long-term, encourage them to give more and increase the range of ways in which the donor gives to the organisation.The sector needs to embrace the concept of Donor Relationship Management (DRM) strategies and solutions. This strategy will help organisations develop a single view of the donor and the insight to maximise the fundraising potential of each donor. DRM can be defined as:A strategy that commits a charity organisation to becoming donor-centric. Improving our knowledge of each donors needs and motivations and working with them as partners can help build longer more valuable relationshipsProviding a joined up customer experience which delivers consistently high levels of quality service resulting in increased donor loyalty.The value of a donor-centric strategyKen Burnett suggested that organisations categorise donors by levels of involvement. Starting with an Inquirer, a Responder, a Donor, a Committed Donor, Big Gifts and finally Bequests. Organisations fundraising activities should focus on moving donors up the ladder of involvement .In the commercial sector, research has indicated that 15% of customers account for 45% of revenues and generate 70% of a company s profits. This knowledge has encouraged organisations to adopt a customer centric approach to focus resources on retaining and developing their most valuable customers.>>Relationship fundraising is an approach to the marketing of a cause that centers on the unique and special relationship between a not-for-profit and each supporter. Its overriding consideration is to care for and develop that bond and to do nothing that might damage or jeopardise it. Every activity is therefore geared towards making sure donors know they are important, valued, considered, which has the effect of maximising funds per donor in the long-term Ken Burnett, Relationship Fundraising , (1992)Untitled Document4 Donor Relationship ManagementDonor analysisCampaignexecutionCampaignplanningResponsemgmt.CorporatetrustsMajordonorsContact centresInternetself-serviceLoyaltyGift aidmanagementMembershipadminImproved campaignrate-of-returnTargetprofitabledonorsLower costnew-mediacampaignsImprovedfundraisingrate-of-returnLowerrecruitment costsImprovedretentionImprovedforecastingImproveddonorretentionIncreasedlife time valueIncrease up-sell/cross sellIncreaseup-sell/cross sellImprovedgift aidrecoveryUp-sell/cross sellLoweradmin costsImprovedaccountabilityRecruitmore profitabledonorsImproveddonor lifetime valueLegaciesEventsCommittedgiversSelf serviceCommunicationsPersonalisationMult-channelaccessCasemanagementVolunteersportalLoyalty/MembershipDonor ServicesFundraisingRetailCAPABILITYDRM BENEFITSSINGLEVIEW OF THEDONORWithin the sector, a donor centric approach will enable charities to identify high value or high potential donors and service them in a way which encourages increased and longer term giving. However, to be truly donor centric organisations have to consider aligning their organisation, people, processes and the technology around the donor. Ultimately charities should aim to provide donors with an excellent customer experience which puts the relationship and the donor at its centre. In this way, organisations can realise the true value of a donor-centric strategy. When an organisation adopts a DRM approach it will fnd that its interactions with its donors will change in a perceptible way. The organisation will be able to:Recognise and appreciate the overall contributions a donor has made to the charity including regular donations, volunteering and retail spendMake giving easy, quick and possible at any time by using any channel the donor prefers whilst providing feedback on their total giving profileProvide a personal experience with newsletters providing information on relevant news, events and campaignsEncourage donors to become an active supporter getting involved and contributing in as may ways as possible by tailoring invitations to a donor s personal tasteShow donors how their donations are making a difference.Organisations that adopt a DRM approach will be able to deliver superior service to donors, captialise on existing donor relationships and invigorate their fundraising efforts.>>>>>Components of a DRM strategyDRM is a combination of people, process and technology all focused on the donor experience. To be truly effective, it must address processes for dealing with donors; help people within the charity embrace a new approach; provide IT solutions that underpin the new processes and enable the people in their roles.At the heart of a DRM solution is a single view of the donor a 360 degree view, which captures a full interaction history, donor profile information and the total value of the donor. In essence, any touch point the donor has with your organisation is captured and can be used to enhance the donor experience. A single view of the donor allows charities to address organisational amnesia , preserve donor relationships and increase wallet-share of the donor s charitable contributions. Additionally, it will help ensure that all parts of the organisation have relevant information at their fingertips to help deliver excellent customer service.A DRM solution provides functionality and support for marketing, fundraising, donor services and loyalty and membership. The diagram below outlines the capability and benefits of a DRM model.Untitled DocumentDonor Relationship Management 5MarketingFrom donor insight to actionA single view of the donor is important but how this information is exploited by charities in order to improve donor retention and increased revenue is key. In a DRM system, organisations can track and understand key donor metrics such as, donor life time value, frequency and monetary contributions. Charities can use this information to develop more efficient and effective marketing and fundraising strategies for distinct donor segments. Organisations which are able to turn this insight into action in terms of how they market to, fundraise and service donors can improve donor retention and increase the average contributions per donor. Additionally, more targeted campaigns tend to have a positive effect of increasing the rate of return on marketing and fundraising activity. More targeted and effective direct marketingThe execution of more targeted and more effective campaigns can help reverse the recent decline in the rate of return for direct marketing activities in the not-for-profit sector.DRM systems benefit direct marketing efforts by providing the data required for improved segmentation of the donor base and advanced campaign management tools which enable organisations to plan, execute and monitor the response to campaigns more effectively.A DRM solution will facilitate the usage of multi-touch, multi-channel campaigns with automated response management and analysis enabling charities to create campaigns across e-mail, the internet, call centres and direct mail. Targeted, multi-touch campaigns provide better results then a traditional campaign.FundraisingImprove effectiveness of fundraising activitySome fundraising activities such as those focused on corporate, trusts, major donors and legacies would benefit from adopting sales management tools and processes. These tools are designed to make the prospecting process as efficient and effective as possible.DRM solutions give organisations the functionality and ability to provide opportunity management, generate and track fundraising activities and forecast results. This functionality can help underpin the implementation of consistent best practice and drive better results at a lower cost.Faster time to market for eventsDRM delivers a flexible events management system which reduces the time needed to plan, launch and execute an event. This functionality should enable reminders to be sent to donors who have participated in previous events, facilitate the donor being able to register and pay online and garner feedback from attendees. Additionally, event plans should be able to be stored and re-used for annual or recurring events.Grow committed giversCommitted giving fundraising activity can benefit from DRM by providing the mechanisms to target recruitment more effectively whilst focusing on building the relationships with existing committed gives to donate more for longer. As the committed giving potential for new recruits reaches a saturation point the retention and growth of existing committed givers will become essential as the cost and ability to recruit new committed giving donors becomes less effective and more prohibitive. Donor servicesProviding world class donor servicesIn recent years, consumers have become more demanding with regards to the service levels they receive and donors are no exception. When dealing with an organisation they want to be able to resolve a request on first contact without being passed to multiple departments. Customers also expect to interact with organisations through a number of channels - email, web logging of requests, etc. whilst maintaining appropriate levels of service.By creating a donor services contact centre organisations can improve the customer experience by resolving customer issues on first contact, reduce costs through greater efficiency and improve service levels. Additionally, the contact centre can use the opportunities presented by donor interaction to up-sell and cross sell services, where appropriate. Finally, the ability of the contact centre to provide a high quality customer experience will encourage more loyal donors. Untitled Document Donor Relationship ManagementDonor self service to lower costs and create new opportunitiesAccording to research by Continental Research 7% of internet users (1.8 million people) donated to charity online in the last year. Online donations made via CAF suggest that online credit card donations are quickly growing an increase of ~ 250 million in just over 3 years. Clearly the internet is becoming an increasingly important channel for donors to interact with charities.The challenge many charities face is how to have a viable presence on the internet which attracts new donors whilst also offering a superior customer experience.DRM solutions enable donors to access the organisation via the web, choose the time and way in which they wish to give, maintain profile information and serve themselves. All of which provides the donor with increased flexibility whilst reducing administrative costs.An increasing number of the larger charities now facilitate the ability to make a donation online, buy products, register for events and receive monthly personalised newsletters. However, outside of the larger organisations, the majority of charity web sites do not support the ability for a donor to register as a member and do not provide a tailored experience. Providing this ability to donors has a number of advantages:Donors do not have to repeat information which they have already given the charity in order to make additional donations or register for an event. By making the processes quicker donors will be more likely to sign up to new services and make additional donationsA personalised home page can be presented to a donor that provides a statement of the donor s contributions providing valuable recognition for the donor s effortsTargeted offers can be made which are based on the needs and preferences of the individual. If the donor already makes a regular donation then the site can encourage them to increase it rather than to sign upThe donors usage of the web site can be tracked in order to understand the donors interests and further refine content and marketing.Provide a consistent experience across all interaction channelsThe donor should have a consistent high quality customer experience regardless of the channel of communication the donor wishes to use. This should include e-mail, the internet, telephone and written letter. >>>>E-mail response handling is often overlooked and internet sites are often not integrated to any back office systems. By integrating channels, charities can improve the donor experience whilst improving operational efficiency.Loyalty and membership Loyalty schemes to retain donorsLoyalty schemes can offer donors clear incentives to become more involved and remain committed whilst offering an additional opportunity for organisations to understand more about their donors and potentially generate additional revenues.Loyalty schemes in the commercial retail sector have delivered customer data which have helped organisations understand their customer s behaviour better.These schemes have been proven to retain customers longer. Traditionally, loyalty schemes have offered customers awards in terms of cash incentives. However, commercial organisations are now thinking of loyalty schemes in a new way, offering rewards which are designed to encourage customers to adopt new services and hence increase the life time value of the customer.If we apply these concepts to the charity sector, organisations have the clear potential to provide a loyalty scheme which earns points for direct donations, indirect assistance such as volunteering, gift aid donations, taking part in events, purchasing retail items, etc. Rewards for loyalty can range from simple awards recognising contributions through to more sophisticated schemes which encourage the donor to contribute via additional ways for example priority event tickets, special offers on new retail services, etc.Additionally, having a loyalty scheme which enables donors to feel recognised for all of the elements of their support could result in longer term donor loyalty.Leveraging new-media and the internetIn addition to the benefits of donor self service and personalisation the internet also provides a number of additional income generating opportunities. DRM solutions can provide the information and the tools required to enable targeted marketing offers via the web site and e-mail. Online web and email campaigns can facilitate up and cross selling, for example committed giving upgrades or targeted local volunteering opportunities. Untitled DocumentDonor Relationship Management Additional means to communicate with donors are proliferating and charities should be exploiting these new ways of interacting. For example, providing podcasts about the organisations latest activities or fundraising efforts not only keep donors informed but may increase giving. Additionally, community technologies such as blogs can help keep donors engaged.PersonalisationLarger charities can find it difficult to help individual donors understand how they are making a difference for their specific interest areas. As organisations grow they must pay particular attention to this issue if they wish to discourage donors from moving away to more focused charities. Personalisation provides the ability to tailor communications based on a specific donor s profile. For example profile information could be used to provide personalised news letters which relate the charities achievements to the donor s specific interests. The web experience can also be personalised to bring together content which is relevant to the individual donor and personalise it in a way which is relevant. Making information more accessible not only makes the charity more accountable but also increases loyalty as donors are more aware of the achievements of the charity. Supporting volunteers and local fundraisingDRM can also empower volunteers and local fundraising efforts by providing them with access to more relevant information. Local fundraisers should not only be able to plan and execute local events but also co-ordinate and execute local campaigns. This ability to make information available and delegate the administration and execution to a local level enables organisations to be more effective in local fundraising efforts.How to successfully achieve DRMThe scope of DRM solutions can include a range of functionality which addresses fundraising, membership, marketing and donor services. However, it is important to remember that DRM is a combination of people, process and technology and as such it should be treated as a journey and not just a project. Organisations must decide how to align their organisation to support donor-centric processes and how to enable their people to embrace this change. Finally, organisations must determine what changes must occur to their IT infrastructure to support this new approach.Experience shows that to be successful organisations need to ensure that they have a clear vision on what they wish to achieve and a clear, staged roadmap which explains how this vision will be delivered. DRM shares some attributes with Customer Relationship Management and as such, charities can benefit from adopting best practice techniques from the commercial marketplace with regards to these systems.Atos Origin s experience shows that the successful adoption of a strategy such as a DRM programme will be underpinned by the following key points:Senior management commitment and involvement in the project will help initiatives succeedDRM initiatives must be led by those that own and manage the customer-facing processesEstablish an effective governance structure to establish accountabilities, allocate resources, and make decisionsEstablish measurable success factors and business goals. Ensure that the DRM solution enables the tracking and reporting of these metricsFactor change into the solution and ensure that the business processes that underpin the programme and the technology are in alignment. Put an effective Change Management and Training Programme in place to help people deal with changeTake a phased, incremental approach to deployment. Successful DRM requires an organisation to learn and accept new business processes and supporting technologies which is best accomplished over time. Additionally, this approach provides early successes and phased return on investmentOrganisations should ensure that users have the opportunity to influence application functionality and enhancements as experience shows that new processes and technologies that do not have a clear benefit for users will not be easily adoptedAttention must be given to the application user interface and workflows to ensure that they are well-aligned with the working practices of day-to-day usersEnsure that you have in place a system of high-quality ongoing management. If the processes and technology do not keep pace with the organisation they will fall into disuseSelect the right partner(s) to help deliver your new solution and ensure that they have a stake in your success.>>>>>>>>>>Untitled DocumentFor further information please contact:crm.uk@atosorigin.com, or visit our website at www.atosorigin.comAtos Origin UK4 Triton SquareRegents PlaceLondonNW1 3HG(0)20 7830 4447Advance with Atos Origin - for business and IT in harmony www.atosorigin.com Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish symbol itself are registered trademarks of Atos Origin SA. December 20061261-1206About Atos originAtos Origin is an international information technology services company. Its business is turning client vision into results through the application of consulting, systems integration and managed operations. The company s annual revenues are EUR 5.5 billion and it employs over 47,000 people in 40 countries. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international blue-chip companies across all sectors. Atos Origin is quoted on the Paris Eurolist Market and trades as Atos Origin, Atos Euronext Market Solutions, Atos Worldline and Atos Consulting".About Atos consultingAtos Consulting is a leading provider of busi-ness, process and technology consultingservices. With more than 2,500 staff globally, it focuses on delivering proven, pragmaticsolutions to the telecom, manufacturing, finan-cial services and public sectors.
