#34 The hidden costs of F2F
A comment from my last post prompted me to discuss further the real cost of face-to-face fundraising. By this, I don’t mean the potential for damage to your brand, or the increased pressure on fundraising managers to produce results, I mean the actual dollar and cents cost.
It is true that most charities are looking to spend less per pledge on their face-to-face donors as this has a direct impact on return. ROI may not be the best metric to measure the success of your campaign, but it definitely helps when trying to get support from your board for the channel. It is also true that, as for-profit companies, the agencies are looking to either cut costs or charge more for the same or slightly improved product so that their margins are wider and the risk reduced.
The first example of agencies doing this was adding fees for travel trips. I always found this outrageous as you, as a client, did not ask them to go on a travel trip, they do it to get their sign-up rate up, and generally produced worse quality from these trips. This means that you pay an extra $30 per pledge, for worse pledges.
One way that made perfect sense to the agencies but not so much to the client was bringing verification calling in-house so that an agency caller would check the quality of the donation. This is putting the fox in charge of the henhouse. This allowed the supplier to charge an extra $5 per pledge and make a slightly higher profit. Some agencies are fine and trustworthy. You can allow them to cull the poor-quality pledges by swinging the axe of truth down on the necks, but others do not see the incentive of cancelling bad donors and would rather send them on to you at a cost. If your attrition is poor, remove this service from the supplier and send it to a third party.
There are some fees that I accept as part-and-parcel of fundraising. ePledge costs associated with the electronic collection of donor data that will range between $1.50 and $5 are merely a fee that replaces a pre-existing one for paper pledge forms. Although they cost a little more, the data you get is usually clean and usable. I also agree with the agencies that location fees should be passed on to the charity client as these are often unavoidable. I will add that there are ways to do this, and I would advise charity clients to pay $20-30 per pledge signed-up in the shopping centre rather than carry this risk of $1,600 cost with potentially no return.
There are ways to insure your bank balance against dodgy fundraising/donors. One way is the clawback model that refunds you 100% of the pledge fee for donors who cancel within a pre-agreed timeframe. The sticky area is the costs that are not refunded. Although the average pledge fee seems to hover around 100% of year one (x12), some agencies are charging up to $150 per pledge on top of this in extras and citing ‘compliance reasons’. If you see these extras you should seriously contemplate what they are and what it means to your bottom-line. That is $150 that will not be included in the pledge fee, so are therefore not refundable. This means that a $30 donor can cost you $510, but you’ll only receive back $360 of this. This is daylight robbery.
Before signing a contract, be sure of all the associated costs and those that will be refunded if the supplier generates poor-quality pledges. Part of the reason you use agencies to lower your risk, so make sure you are covered for this.
As a final parting thought, there is one extra fee that can produce fantastic results but must be under your control. These are incentives. Do not pay for incentives that are forced upon you by the agency, like pins to celebrate the volume of pledges that one agency forced upon me in the past. This is bullying. You can and should contribute to their success through mutually agreed competitions and prizes. It is the role of the agency to perform, that is one reason why they are hired, but it is a great idea to bring your fundraisers closer to your cause by celebrating them and rewarding them with cause-related gifts or experiences. They spend more time each day speaking about your cause than anyone else on the planet, so praise, celebrate and reward good fundraising.