OF THE DMA NONPROFIT FEDERATIONOF THE DMA NONPROFIT FEDERATION

VOLUME 21 • ISSUE 3 • OCTOBER 2018

Cover story 4

A note from the editor 3

SPOTLIGHT: Donor-advised funds 8

Avoiding email jail 10

Modeling 13

Senny’s policy scorecard 15

Networking at the Chicago Conference! 17

$$$OVERHEAD

VS. IMPACT

The Journal of the DMA Nonprofit Federation 2 Volume 21 / Issue 3 / October 2018

MEMBERS

Mr. John Bell MMI Direct

Ms. Stephanie CeruoloInfogroup

Mr. Nick EllingerDonorVoice

Mr. John ErnstWiland

Mr. Steve FroehlichALSAC — St. Jude

Mr. Tom GaffnyTom Gaffny Consulting

Mr. Kevin GaschlerDucks Unlimited

Mr. Steve HarrisonOne & All

Ms. Jennifer HonadelEpsilon

Mr. Eric JohnsonTHD, Inc.

Mr. Tim KerstenRKD Group

Ms. Gretchen LittlefieldInfogroup Ex Officio

Ms. Alicia Meulensteen

Ms. Shira Mitchell Special Olympics International

Mr. Jeff NickelTrueSense Marketing

Ms. Elizabeth “Liz” Nielsen Feeding America

Ms. Kim PostulartAlzheimer’s Association

Ms. Jann SchultzMerkle RMG

Mr. David StraussThe Nature Conservancy

Ms. Angela StruebingCDR Fundraising Group

Mr. Craig ZeltsarNNE Marketing

2018DMA Nonprofit Federation Advisory Council

CHAIR

Ms. Tracey BurgoonDAV

VICE CHAIR

Mr. Nate DrushellInfoCision Management Corp.

DMANF Staff

Jocelyn Argarin, CMPDirector of Conferences & Education

Xenia “Senny” Boone, Esq. SVP, Nonprofit Federation, DMA Division of ANA

Alicia OsgoodDirector of Membership & Communications

DMA Nonprofit Federation

@DMANF & @AliOzDC

Members Only

The DMA Nonprofit Federation of the DMA Division of ANA protects & defends nonprofit fundraising across marketing channels to advance responsible data-driven fundraising & marketing.

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The Journal is published online three times per year.

Alicia Osgood Managing Editor AOsgood@ana.net

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News UpdateAn every-other Thursday round-up of nonprofit-specific news delivered to your inbox

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Sign up for either newsletter (or both!) by emailing AOsgood@ana.net.

The Journal of the DMA Nonprofit Federation 3 Volume 21 / Issue 3 / October 2018

Dear Readers:

Thank you again to all who joined us for the 2018 Chicago Nonprofit Conference in Chicago, IL. Enjoy the photos included with this edition and access the full album on the DMANF Facebook page.

Also in this edition, overhead versus impact; spotlight DAF; avoiding email jail; modeling and Senny’s Policy Scorecard.

As always, thanks to all of you for your support of the DMANF. Mark your calendar now for the 2019 Washington Nonprofit Conference.

Best,

Managing Editor AOsgood@ana.net

A NOTE FROM THE EDITOR

Pre-Conference Workshop: Wednesday, February 13

Conference: Thursday, February 14 &

Friday, February 15

Renaissance Washington, DC Downtown Hotel Washington, DC

STAY UPDATED

WashingtonNonprofit

Conference

The Journal of the DMA Nonprofit Federation 4 Volume 21 / Issue 3 / October 2018

Overhead ratio is a flawed way to measure nonprofits. Wise investment in fundraising and administrative expenses grow non-profits and expand services and impact. In-frastructure is the lifeblood of nonprofit mis-sions. The alternative, a starvation cycle where nonprofits invest little and wither away, is too horrid to contemplate. Overhead ratio may not be useful or productive, but very easy. Donors looking for a way to measure nonprofits gravitate toward it.

That is why DMANF partnered with DonorVoice utiliz-ing DonorVoice’s pre-test tool to explore other ways of communicating both overhead and impact. Non-profits need tools to frame their investments and im-pacts positively. The findings are shared here and in a complimentary webinar on the DMANF website.

To test these treatments, an advisory group of non-profits listed the things to assess:

Trust indicators

� Who your gift helps

� How overhead is presented

� Donor control

� Donor identity

We then created several treatments for each variable. The Pre-Test Tool’s survey creates simulated communications using

these treatments and asks donors which they prefer, like your eye doctor asking you

whether you prefer lenses A or B. From that data, you may determine not only what version of each vari-able works best, but what variable is most important to get right.

For this test, we created a fictional cancer charity so those taking the test would have no predispositions about the brand. (And we chose cancer because it is sufficiently widespread that you will get a mix of peo-ple who have or have had the disease, those who know someone who has, and those who have no per-sonal experience.)

So what’s the #1 thing you can do to allay donor con-cerns about overhead? Eliminate the overhead from their gift.

It turns out that donors do not care how you spend your money; they care how you spend their money.

Researchers (Gneezy et al) tested this with charity: water and Kids Korps USA. They said that Kids Korps

NICK ELLINGER VP OF MARKETING STRATEGY DONORVOICE

GET DONORS TO CARE ABOUT THEIR IMPACT, NOT YOUR OVERHEAD

$$$

The Journal of the DMA Nonprofit Federation 5 Volume 21 / Issue 3 / October 2018

USA’s overhead was 0% and changed charity: water’s (alleged) overhead rate. When donors were told chari-ty: water’s overhead was 0%, 73% of donors chose it. If overhead ballooned to 50%, 49% of participants gave to it. So, naturally, as overhead went up, preference went down. However, they also asked how many peo-ple would give to charity: water if they were at 50% overhead, but that overhead was covered. That is, charity: water was still (in this hypothetical example) an inefficient charity, but that donor’s personal donation did not support those costs. In this case, 71% of donors chose to give – functionally the same as if charity: wa-ter had no overhead at all.

In other words, donors do not care how you spend your donations. They care greatly how you spend their donations. A campaign advertising a lead gift covered overhead had twice the response rate of a traditional matching gift campaign.

The DonorVoice/DMA Nonprofit Federation results were the same. The most important factor was how overhead was treated. Having a grant to cover all over-head costs was the #1 by a wide margin. Number two was the traditional pie chart where 80% of funds go to programs and 20% to fundraising and administrative costs. Not talking about overhead, disclosing the cost of a communication, and asking for an additional $5 to cover overhead were in a three-way tie for last place.

#2 most important was use a trust indicator. We test-ed the Charity Navigator four-star charity seal, a DMA certification seal, GuideStar Platinum seal, a star rating and testimonial based on the excellent system used at Compassion International, and nothing.

Anything beat nothing.

Even the lowest performing trust indicator (in this case, the testimonial and rating) substantially overperforms not showing a trust indicator at all.

The Charity Navigator rating performed best, followed by GuideStar and DMA certification, which virtually tied.

However, the DMA does not have a DMA certification so a bogus seal increased trust. Do not use a bogus seal, of course. Even if you do not have a four-star Char-ity Navigator rating, you may bolster your credentials with a BBB rating, GuideStar seal or donor testimonials.

We conducted this test with a pretend charity with no brand name or credentialing and uniquely reliant on validation. What would happen if we did this with an actual charity? Researcher Baris Yoruk found that a one-star increase in the charity rating led a 19.5% in-crease in charitable contributions.

But wait… That was only the result for relatively small and unknown charities. For larger charities, Yoruk found that third-party ratings had an insignificant im-pact on donations. External validators may be more important as you are introducing yourself to donors (i.e., acquisition) than to those who already love you.

Lesson three was to match your donors’ identity. Donors preferred an identity statement that matched their own experience. If you personally knew what it is like to have cancer or care for someone with cancer, that statement spoke to you.

An incorrect identity was worse than not having an iden-tity statement at all. For example, the statement “you ha-ven’t experienced cancer in your life but you can imag-ine what it is like for those who have” polled worse than leaving this section blank. Most people in the sample had a personal experience with cancer, whether direct or indirect. Inaccurate matching hurt results.

It turns out that donors do not care how you spend YOUR money; they care how you spend THEIR money.

The Journal of the DMA Nonprofit Federation 6 Volume 21 / Issue 3 / October 2018

This difference among people camouflages the results. That is, if you look at the overall results, it looks like identity hardly mattered. But when you looked just at people who held an identity (e.g., a direct connection) getting that identity right mattered very much. So too may it be with your results. A test communication could look to have the same results as a control overall, but have a substantial positive impact with one identity and a negative one for another. That is why it is important to test different messages with different identities.

Lesson four was listen to donors’ preferences. Copi-ous research says that many donors would give more if they could direct where their gift went. Yet restricted giving is a giant hemorrhoid. You could end up in your finance department explaining yourself for the rest of your natural life (and some of your unnatural life, rat-tling the chains you forged in life as a warning for the marketers who would follow).

What if you could receive most of the advantages of restricted giving without the disadvantages?

In fact, this technique was almost as important as the trust validators, so you may compensate for your lack of a four-star Charity Navigator rating.

We looked at five conditions. In order of preference:

#1. I want my gift to go toward (select one). No sur-prise here: a classic restricted gift.

#2. Preference in giving: From your area of work, my highest priority is (select one). Note the slight change in copy. Instead of saying your gift will go toward X, you are simply saying what your highest priority is. How close were these? On a 100-point scale, restricting your gift was an 80; expressing preference was a 72. Close enough, as they say, for government work.

#3. Allowing individuals to choose their channels of communication among mail, phone, text, and email. We found in previous research that giving someone

control of communications is the most powerful tool driving opt ins.

#4. Do nothing. Not surprising that this came in last place.

It raises the question… People like stating their prefer-ences, but does it make a difference in the real world?

The American Diabetes Association tested this in acquisition. Their control package had no ability to express a preference and their test version allowed someone to share their highest priority among:

� Finding a cure

� Helping patients and families

� Providing access to care for diabetes

� Supporting medical professionals

The test version had a $3.40 increase in average gift and a 11.6% increase in overall revenue.

That is exactly how results from the DonorVoice/DMA Nonprofit Federation test will be used – as the seeds from which your own testing may grow.

We also tested how stories were told. This would be the fifth lesson, but it is a bit more muddled. There’s a heuristic known as the identifiable victim effect, where telling one story at a time, absent statistics, has the greatest impact. There is a famous study in nonprofit marketing that shows that an appeal that tells the sto-ry of a child does better than an appeal that tells that same story with information about the general prob-lem of poverty in Africa. Even when you put the per-sonal story with the statistics, the personal story alone does better.

So as part of the DonorVoice/DMA Nonprofit Federa-tion test, we wanted to see what type of story had the greatest impact. The results are complicated:

The Journal of the DMA Nonprofit Federation 7 Volume 21 / Issue 3 / October 2018

#1 was combining statistics and story. #2 was just statistics. Last place — was the personal story.

What might explain this? We have seen this before with some pre-test tools and live results. It has to do with the line “more than one every hour,” which is what we used to test statistics. Every time statistics have per-formed well (or even OK), it has been when the statis-tics have been boiled down to “one out of six” or “one every hour” or another form of “one.” That is, when the statistics support an individual narrative, they do better; when they do not, they do not.

This is just a hypothesis; we do not entirely know the mechanism at work here.

Returning to the order, #3 was a listing of mission areas, like what you would see in a lot of nonprofit mailings. And #4 was a donor testimonial. Personally, I thought this last one would perform better. One of the fun parts about testing generally, and using the pre-test tool in particular because of the number of variations, is that there is always something that is a surprise.

This “why” of giving is likely the most specific to the organization doing the asking and the donor file, so take from this what you will.

In summary, you may beat the overhead blues best by:

� Covering the overhead for your donors� Using a trust indicator� Matching your donors’ identities correctly� Allowing your donors to express their

preferences, and� Telling effective stories, including relatable

statistics.

Your mileage may vary. Every organization’s donor file is different. Some are uniquely sensitive to over-head because techniques like matches and pie charts trained donors to be coupon shoppers. Others have strong ties of commitment between themselves and their donors that are not likely to be broken because of overhead. We encourage testing for each organi-zation with or without the DonorVoice Pre-Test Tool and hope you come away from this article with grist for your testing mill. n

Nick Ellinger is VP of Marketing Strategy for DonorVoice, where he works with top nonprofits on their direct marketing strategy and

execution, specializing in digital strategy. Before that, he ran Mothers Against Drunk Driving’s individual giving strategy for nine years

and, at various points, ran MADD’s fundraising, marketing, and communications efforts, including direct marketing, databases, corporate

relations, donor relations, field fundraising, major gifts outreach, Internet strategy, press strategy, and social media strategy.

MOVERS&SHAKERSMEET @ DMANF EVENTS!nonprofitfederation.org/events

The Journal of the DMA Nonprofit Federation 8 Volume 21 / Issue 3 / October 2018

Are you making it easy for your donors to give in all the ways they like to contribute? Recent discov-eries confirm that donors with donor-advised fund giving accounts use those accounts for about 65% of their annual giving, more than half of the dollars they contribute.

We tested this and looked at five clients and their recent annual giving outcomes from donors with a giving account. That overall 65% average looks pretty good. But the real learning here is that these DAF donors love to give in many ways and you should be inviting them to give more money and reminding them of all the ways they have given to you.

Here is what we found:

FISCAL YEAR

2018

20162017

2018

20162017

20162017

A

BB

C

DD

EE

TOTAL

DONORS

278

5847

57

212173

137114

GIFT COUNT

303

177 156

190

1,620 488

2,902 2,751

NON DAF REVENUE

$101,447

$14,089 $33,075

$503,597

$573,940 $391,527

$490,243 $313,294

$2,421,213

DAF GIFT COUNT

359

7287

209

270436

481456

DAF REVENUE

$184,190

$30,205 $81,711

$548,210

$409,424 $552,169

$638,468 $1,291,301

$3,735,679

ANNUAL GIVING

$285,637

$44,294 $114,786

$1,051,808

$983,364 $943,696

$1,128,711 $1,604,595

$6,156,892

DAF %AG

64%

68%71%

52%

42%59%

57%80%

61%

We also looked into the three largest sources of funds for all of our clients and wanted to share that as well. The top three sources of funds are Fidelity Charitable, Schwab Charitable and Vanguard Charitable.

JACK DOYLE PRESIDENT AMERGENT

DAFs: ARE YOU READY FOR YEAR-END GIVING

A donor-advised fund, or DAF, is a philanthropic vehicle established at a public charity. It allows donors to make a charitable contribution, receive an immediate tax benefit and then recommend grants from the fund over time.

SPOTLIGHT

The Journal of the DMA Nonprofit Federation 9 Volume 21 / Issue 3 / October 2018

Charitable Sponsor

Funds Managed

Added in 2017

Granted in 2017

Average DAF Account

Average Grant in 2017

FIDELITY

$20,000,000,000

$8,500,000,000

$4,500,000,000

$110,000

$4,500

SCHWAB

$10,000,000,000

$3,080,000,000

$1,600,000,000

$210,000

$4,250

VANGUARD

$8,000,000,000

$1,547,000,000

$760,000,000

$530,000

$8,900

Finally, where do these donors LIKE to make grants? There are 13 organi-zations that appear multiple times on the “most popular” lists published by these charitable sponsors. Doctors without Borders/MSF and Planned Parenthood are listed as most pop-ular to all three.

Four of the most successful university development programs (in both dollars raised and annual alum-ni participation) receive many of the grants from Vanguard which is the reason their average grant is so large and why the average account balance of a Vanguard donor is $500,000+. Those four univer-sities are Harvard, Princeton, Stanford and Penn.

It is safe to say that if you identify your Vanguard Charitable donors, there could be significant giving capacity. You might also have alumni from these and other prestigious universities who have do-nor-advised fund giving accounts who have NOT yet used them for any charitable giving except to their university.

Make sure all your donors in all your commu-nications channels know you accept donor-ad-vised fund grants. Thinking about and then doing what is needed to make it easy for your donors to give is the reward you will receive this year end and every year. n

Jack Doyle is President of Amergent, NCDC Corpo-

rate Partner. Since 1978, Jack has been involved with

providing direct mail fund raising and consulting services

to a variety of nonprofit organizations. He has been a

speaker for DMA, NCDC and regional NCDC meetings,

most recently speaking about donor-advised funds and

how nonprofits can inspire donors to give using these

accounts. Jack is a past Board Chair of the Association

of Direct Response Professionals (ADRFCO). Previously,

he served as a Corporate Partner Representative to the

NCDC Board, Chair of the NCDC Lumen Award Commit-

tee and as Vice Chair of the DMA Nonprofit Federation.

Jack was the 2013 recipient of the NCDC George T.

Holloway award for Distinguished Service. In 2018, Jack

was honored by the Franciscan Friars of the Atonement

at their annual gala where he received the Graymoor

Award for his philanthropy and significant contributions

to the cause of religious and charitable fundraising.

CHARITIES SUPPORTED

Doctors Without Borders USA

Planned Parenthood Federation of America

American Civil Liberties Union Foundation

American Red Cross

International Rescue Committee

Natural Resources Defense Council

Oxfam-America

Samaritan's Purse

Southern Poverty Law Center

St. Jude Children's Research Hospital

The Nature Conservancy

The Salvation Army

U.S. Funds for UNICEF

Alzheimer's Association

American Cancer Society

American Heart Association

Campus Crusade for Christ

Catholic Relief Services

Church of Jesus Christ of Latter-day-Saints

Compassion International

Feeding America

Habitat for Humanity

Harvard University

Pan-Mass Challenge

Princeton University

Save the Children Federation

Stanford University

The United Way

University Pennsylvania

World Vision

FIDELITY

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

SCHWAB

X

X

X

X

X

VANGUARD

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

DAF - TOP SUPPORTED CHARITIES IN FY2017

The Journal of the DMA Nonprofit Federation 10 Volume 21 / Issue 3 / October 2018

BECCA LUCKETT SENIOR ACCOUNT EXECUTIVECDR FUNDRAISING GROUP

Did you know email mailbox providers change their filtering specifications all the time without explaining what they did and when they did it? This can make reaching your donor’s inbox incredibly challenging — in fact, only 28% of all messages sent worldwide ever actually make it to inboxes. Yikes!

But fear not! There are things you can do to improve your deliverability rate. Below we will explore the fol-lowing strategies: 1) improving your sender reputation, 2) removing SPAM traps from your email list, and 3) minimizing SPAM complaint rates.

Sender ReputationYour sender reputation is the most important metric when it comes to email deliverability. Think of it like your credit score. You can still buy a car with a low credit score, but your interest rate will be higher than someone who has a better credit score. The same goes with your sender reputation. You can still send emails with a poor sender reputation, but a smaller percentage of your emails will reach inboxes.

I bet you are wondering what makes up your send-er reputation and how you may improve it. I have you covered. Your sender reputation is made up of two parts: your domain and IP reputation.

Your domain is your registered name on the internet (i.e., @organization.org). Your IP address is the num-ber listed in the domain name system (DNS) that sends email on behalf of your domain. What may affect your sender reputation?

� SPAM complaints

� Sending emails to SPAM traps

� Emailing unknown users

� Getting on blacklists

� Low email engagement rates (how many people are opening and clicking on your email)

Why does all this matter? Because all the effort you put into developing engaging and relevant content could be for naught if the end user never even has the chance to open your email.

STAYING OUT OF EMAIL JAIL

The Journal of the DMA Nonprofit Federation 11 Volume 21 / Issue 3 / October 2018

You may find your sender reputation at senderscore.org or connect with your IT department to find out your Postmaster score for each inbox provider.

SPAM TrapsNow that you know SPAM traps can negatively affect your sender reputation, it is time to learn what SPAM traps are and how not to fall victim to them.

If your email list is 10 years old, you’re not alone. Many of us are in the same boat. You have probably been growing your list for some time now and maybe used some practices to acquire emails that are no longer a best practice—like buying lists. Why is buying lists no longer a best practice? Two words for you: SPAM traps! (And many other reasons.) SPAM traps come into play when mailbox providers calculate your send-er reputation.

Here is something important to know: Everyone has SPAM traps on their file … even good email marketers! Another important bit of information: Some traps are more damaging to your sender reputation than others.

Here is a quick rundown of four types of SPAM traps.

Pristine SPAM Trap: These email addresses were set up solely to capture bad emailers and were never used by an actual person. Because these email addresses are not associated with a human, it’s a signal to mail-box providers that your organization has questionable acquisition methods. Getting caught in a pristine SPAM trap is the most damaging to your sender reputation.

Recycled SPAM Trap: This is an email address that was used by a real human in the past but was abandoned by the user. At some point, the abandoned email ad-dress was converted into a trap by the mailbox provid-er. These email addresses will obviously not open your email, which is why it is so important to incorporate email engagement into your segmentation strategy.

By inbox provider, the length of time before old emails become traps:

� Outlook.com: 270 days inactive

� Gmail: 270 days inactive

� Yahoo!: 180 days (plus an extra 60 days for every year you have been a customer)

� AOL: 90 days inactive

The Typo Trap: We all have the best intentions but ty-pos happpen. Whether it is when the supporter is com-pleting a form on their mobile device or a volunteer is entering supporter information into the database, it is very easy to slip up and leave out a letter. Mailbox providers ding your sender reputation when you send to a non-existent email address.

Role Account Trap: These accounts are usually aliases for multiple recipients, not all of whom are engaged with your organization. The risk of complaints from these email addresses is high.

� Examples: webmaster@, hostmaster@, sales@, support@, postmaster@, info@, abuse@

Now that you know about SPAM traps, here are some tips for removing these traps from your email list:

� Do not allow spammers to infiltrate old forms. Close old surveys, ecards, event pages, and any other ways a bad email address could enter your file.

� Queries are your best friend! If your email plat-form has a query tool, query for email address-es containing those role account keywords or various ways your donors could misspell their email address (e.g., becca@gnail.com).

� Look into an email verification service and run your whole file through it. Group all invalid emails and suppress them from all email sends.

The Journal of the DMA Nonprofit Federation 12 Volume 21 / Issue 3 / October 2018

SPAM Complaint Rates Another factor email inbox providers take into consid-eration are SPAM complaints.

Ever heard the saying “Haters are just confused ad-mirers”? Unfortunately, haters can really damage your sender reputation. E-mail providers heavily factor SPAM complaints into their filtering decision.

SPAM complaint rate = # of complaints/# of emails delivered Some mailbox providers do not provide complaint information back to your email platform, so most take the average and apply that number across unknown domains on a rolling 30-day basis.

Why do people click “This is SPAM”? Sometimes they just meant to unsubscribe, but the SPAM link was the first link they saw. It is important to make your un-subscribe links easy to find. You want your donor to BE KIND AND UNSUBSCRIBE! An unsubscribe has a much smaller effect on your sender reputation than a SPAM complaint.

� What is a good SPAM complaint rate? Campaign monitor suggests you strive for under 0.02% and Blackbaud says 0.01%. But according to a recent Return Path study the average complaint rate for education, nonprofit and government organizations was 0.23%!

So, what is an email marketer to do?

� “We get it; you are not into us anymore.” And that is okay! If certain audiences are not engag-ing with you, stop sending them emails.

� If you have a good sender score in Gmail, they will automatically provide you with an un-subscribe link in the list header, which looks like this:

This is Gmail’s way of rewarding those with a good sender reputation. You want people to click this in-stead of the SPAM link.

� Sign up for SPAM feedback loops. They will let you know who is marking your email as SPAM and why.

Yahoo

AOL

Gmail

Hotmail

We have just scratched the surface on email deliv-erability. For more information, you may view our full slide deck presentation here. Make sure to visit the appendix for some great resources. n

Becca Luckett, Senior Account Executive. Becca Luckett is a

Senior Account Executive at CDR Fundraising Group. She is re-

sponsible for leading digital campaign execution to acquire, culti-

vate, retain and upgrade online donors across multiple nonprofit

clients. Becca graduated Penn State University with a degree in

Advertising (We are...!) and soon after, joined the workforce with

a small communications agency serving nonprofit clients. After

developing a passion for working with nonprofits, she started

working in the digital fundraising space directly for an animal

protection organization. She has now happily settled back on the

agency side with CDR Fundraising Group. She lives in Maryland

with her husband and Lucky Dog rescue pup Harper.

Subscribe now! nonprofitfederation.org/jobs

The Journal of the DMA Nonprofit Federation 13 Volume 21 / Issue 3 / October 2018

ALLISON PORTER PRESIDENT AVALON CONSULTING

The most effective fundraisers know that data’s magic lies not only in the numbers we crunch, but also in our interpretations and applications.

From tried-and-true performance reporting to ad-vanced predictive algorithms, more analytics are not necessarily better analytics.

Specifically, predictive modeling and its efficacy have been under careful review recently, including by Ava-lon and our clients. We all know that modeling can im-prove key direct response metrics, but the cost can be significant, so we are ready for a validated and more precise application of this valuable tool.

On the whole, fundraisers have become more com-fortable with modeling. We understand how it works, we are skilled at projecting ROI, and we have begun to employ models more frequently. However, the direct response community also needs to face a hard truth:

Modeling isn’t a one-size-fits-all solution.

As fundraisers, we are on a mission to overthrow the one-size-fits-all approach to data and to unpack the “secret sauce” formula that makes up most modeling practices. Instead, the right mix of analytical tools will:

� Be firmly rooted in best practice.

� Fit the nuance of your file, your program, and your campaigns.

� Deliver actionable information to improve your strategies and drive return on investment.

Testing and backend validations are critical to ensur-ing that you are investing strategically. In addition to individual campaign and model performance, we ag-gressively track results both across organizations and over time. We also follow this issue relentlessly at con-ferences and in publications, in order to incorporate the best of industry wisdom.

Based on our internal and industry research, here is what we know about best-fit modeling:

� Modeling tends to work best for larger organi-zations that have larger universes of names to model.

� Nonprofits most often use modeling for rein-statement, lapsed donor panels in acquisition, and telemarketing. However, appeal, sustainer, and upgrade models can also be effective when used selectively and strategically. Avalon clients

THE FUTURE OF MODELING: KNOW YOUR FILE, KNOW YOUR GOALS

The Journal of the DMA Nonprofit Federation 14 Volume 21 / Issue 3 / October 2018

have used models to successfully boost telemarketing efforts, especially for sustainer call-ing. By prioritizing productive leads (based on call responsiveness history and overall giving) and phonematching only those prospects most likely to respond, our clients can make fewer, but more productive calls, and lower overall expense.

� With large or disparate universes, modeling can boost your results, especially if they are marginal. One Avalon client has success modeling a rolling universe of warm prospects for acquisition by us-ing purchasing information to organize the leads in a manner that would otherwise be unavailable.

� Some organizations use modeling as a more effi-cient selection tool if performance results are sim-ilar to RFM (recency-frequency-monetary value).

� Modeling does not universally outperform RFM in head-to-head tests. Results vary by the program, goals, and size of campaign. Generally speaking, this holds most true with appeals, where

significant data on recent donor behavior is readily available. Avalon’s most recent testing in appeals showed the performance RFM-seg-mented campaigns exceeding those using mod-eling by 11% in revenue per thousand mailed, without costs considered.

� Testing and backend validation will confirm what is best for your program.

My advice? Don’t spend on predictive models simply because you want a data-driven program, because they are the shiny new thing, or because they have worked for your organization in the past.

Instead, look hard at your unique file, consider the ben-efit to each campaign, and weigh those gains against both the model’s direct expense and its indirect imple-mentation cost. Modeling is not an all-or-nothing tool. It can be used in a variety of ways to gain insight and yield gains. n

Allison Porter is the co-founder and president of Avalon Consulting, a full-service agency dedicated to helping progressive nonprofit and

political organizations maximize their fundraising results. Under her leadership, Avalon’s analytical, strategic, and creative capabilities

set the standard for progressive marketing and fundraising. Allison is passionate about the profession of fundraising and the role of

women in that profession. She is a frequent speaker at industry events—recognized across both the nonprofit and fundraising industries

for her strategic leadership and integrated, multi-channel approach to client programs.

IT’S AWARDS NOMINATION TIMEDEADLINE: NOVEMBER 16 | Max Hart submissions | Rising Leader submissions

The Journal of the DMA Nonprofit Federation 15 Volume 21 / Issue 3 / October 2018

POLICY SCORECARDCurrent issues: October 2018

XENIA “SENNY” BOONE, ESQ.SVP, NONPROFIT FEDERATION, DMA DIVISION OF ANA

DMA’s Nonprofit Federation protects and defends nonprofit fundraising across marketing channels to advance respon-sible data-driven fundraising and marketing. We preserve charitable giving tax incentives; support postal reform to maintain a stable United States Postal Service; sustain marketing channels for fundraising; and review and challenge unreasonable fundraising solicitation regulations impacting nonprofit organizations at the state level. We work with ad-vocacy staff on data and privacy legislation that could impede overall fundraising through new data restrictions. If you have questions or comments, please contact Senny Boone, Esquire, SVP, Nonprofit Federation, DMA Division of ANA, SBoone@ana.net.

POSTAL Nonprofit premiums are at risk!

The USPS recently issued a proposal for a mail reclassification whereby any non-paper items in-cluded in mailings will no longer be allowed to be mailed at the Marketing Mail rate. If the change is made, nonprofits using premiums for acquisition and retention efforts will face major price increases and a decline in donations. Premiums have been a successful tool for nonprofit organizations because they are used to draw attention to mission and they delight and inform donors as part of the campaigns. The Nonprofit Federation will file comments seeking to stop this unreasonable and costly rule along with commercial mailers and nonprofit organizations by October 22. Learn how to submit your comments to USPS before the deadline at the DMANF website. n

INTERNATIONAL Reminder: GDPR has landed in the U.S.

If you are active in the European Union, you must pay attention to the changes in data rules in the EU to remain compliant and communicate with data subjects there. After several years of debating the new EU data protection framework, the General Data Protection Regulation (“GDPR”) was adopted on April 8, 2016 with a May 25, 2018 effective date.

GDPR does NOT exempt nonprofit organizations that are using EU data or are facing EU data sub-jects via their websites and it has very specific new opt-in consent requirements, sweeping definitions and coverage for data protection and major finan-cial penalties for non-compliance. Review the GDPR requirements and steps to take. n

The Journal of the DMA Nonprofit Federation 16 Volume 21 / Issue 3 / October 2018

CHARITABLE TAX DEDUCTION REDUCTION Reminder: A universal charitable deduction needed

The wide-ranging “tax reform” proposal by the Trump Administration and passed into law by Congress pre-serves the charitable tax deduction, BUT it increases the level at which individuals ($12,000) and couples ($24,000) take a standard deduction instead of itemiz-ing their deductions. As a result, more donors will no longer itemize, and therefore will not utilize their char-itable tax deductions to lessen their tax bills, which will have a major impact on donations. New legislation is needed to allow a universal charitable tax deduc-tion “above the line” for use by everyone, but previ-ously issued amendments did not make it through the final process due to the $200 billion estimated cost. DMANF is part of a large coalition seeking legislation to allow a universal charitable tax deduction, but tax reform will not be completed until after the November 2018 elections. n

CALIFORNIA PRIVACY ACT OF 2020 Serious privacy restrictions ahead

A recent ballot initiative by self-appointed privacy ad-vocate Alastair Mactaggart forced the California leg-islators and tech industry to seek out a legislative fix. The new law, the California Privacy Act, takes effect in 2020, although there are provisions that kick in more quickly and planning is needed now for adequate compliance. The new law does not address nonprofit fundraising, but it has an unintended spillover effect because nonprofit organizations rely on new data to build their files of potential donors and to update current files. Nonprofit organizations will face a dimin-ishing pool of resources and data providers if the law is not changed to allow for legitimate data practices. Harsh penalties for data breach jeopardize legitimate companies by opening them up to expensive lawsuits that could be so costly as to put them out of business. This new law is a true regression to very restrictive data rules that harm data innovation for everyone, in-cluding charities. We seek charities willing to provide case studies of impact to help us advocate for modifi-cations to the law. n

To receive updates on these issues and other developments, please read the bi-weekly

News Update and review the website periodically.

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