A dollar raised today is more valuable to the mission than a dollar raised a year from now. But a dollar raised next year is still worth something today. In a nutshell, this is the logic behind direct response acquisition and reactivation investments.
Fundraising decisions can be said to be optimal if they increase net revenue relative to the available alternatives. More specifically, those decisions that increase revenue more than cost or decrease cost more than revenue should be preferred. Further, those decisions with the greatest differential would be most preferred.
These are arguably trivial points until we remember how dynamic these macro-variables of cost and revenue can be. Profoundly underpinning both at present lies inflation.
Yes, there is math in fundraising. This is part of a session “Are You Sure About That? Testing in an Age of Inflation” during the Bridge To Integrated Marketing And Fundraising Conference in National Harbor, Maryland. The speakers were David Allen, senior account executive with Mal Warwick Donordigital and Mike Lair of the Phoenix Children’s Foundation.
At this point, inflation is old news. Not old news in the sense that it is over, vanquished, or past. Rather, old news in that it is no longer new. Just over three years removed from the World Health Organization’s declaration of the pandemic and two removed from the start of the current post-COVID inflationary trend, most everyone has felt in their own way what inflation means to them.
For direct mail fundraising, for instance, inflation has meant several things, but most immediately it has meant higher paper costs. In real terms, a piece of paper in 2019 is worth the same as a piece of paper in 2023. In nominal terms, however, they are vastly different.
Foundational investment levels can be contextualized from which further decisions around fundraising can be made. Of course, understanding that direct mail is more than just acquisition, that direct response is more than just direct mail, that fundraising is more than just direct response, and that nonprofits are more than just fundraising, this example in isolation is rather limited in impact.
