Bloomerang's Steven Shattuck on the Pete the Planner Radio Show

Our own Steven Shattuck chats about donor communications, the ALS Ice Bucket Challenge, The Overhead Myth and cause marketing on the Pete the Planner Radio Show:

Full Transcript:

Announcer: You’re listening to Pete the Planner on 93 WIBC.

Pete the Planner: I love financial experiments, and I love infographics, and when you combine the two together you get my favorite thing of the week. That’s what we’re going to start this week’s Pete the Planner show with on 93 WIBC. I am the aforementioned Pete the Planner. You are you. Let’s get started.

Hey, I was messing around Twitter this week and I saw one of my friends from Bloomerang, which is a fundraising company. I’ll let them explain what they do, because I did just a horrendously poor job of that. They did this experiment in which they gave $5 to 50 different nonprofits in July of 2014 to see what would happen and how those nonprofits would interact and try to get them within the fundraising cycles of those interactions.

The V.P. of marketing for Bloomerang joins me now, Steven Shattuck. Steven, hello.

Steven Shattuck: Hello. Thanks for having me.

Pete the Planner: Please explain Bloomerang better than I just did. I’m sorry. Don’t fist fight me or anything.

Steven Shattuck: No, that wasn’t too bad. We’re a cloud-based fundraising database for nonprofits. It’s basically a software program that nonprofits can use to manage all their donor relationships.

Pete the Planner: Well, there you go. See? I can’t say any of those words. I know three of them. I know what a cloud is, because I watch the weather.

Your experiment was brilliant. On July 18, 2014 you took $5 donations and you put them towards 50 individual nonprofits. What was the point? What were you trying to accomplish?

Steven Shattuck: This is something we encourage new employees at our company to do just to see how nonprofits that they support really nurture relationships with donors. I decided to do it on a bigger scale to see how nonprofits respond, how they follow up, and how they communicate to donors in the hopes of building that relationship out and getting more donations in the future.

Pete the Planner: Were you surprised with the results? Let’s start to get through some of the results. What were you seeing? What are the trends in interacting with new first time donors?

Steven Shattuck: Yeah. If you look at the infographic and the stats, the nonprofits did a lot of things right. They did some things that maybe show some room for improvement. Nobody’s perfect. I wasn’t terribly surprised by a lot of the results. Nonprofits aren’t known to be really awesome communicators, to be honest with you. On average, nonprofits only retain about 22% of first time donors, which is pretty low.

Pete the Planner: Yes.

Steven Shattuck: If you look at some of the results that we’ll talk about, you can see maybe why that’s the case.

Pete the Planner: The first thing that jumps out to me is the very first number on the infographic. By the way, if people want to see it, go to bloomerang.co.

Steven Shattuck: Yes.

Pete the Planner: It’s bloomerang.co. It’s like .com, except the M is on vacation or something . . .

Steven Shattuck: No M. The M is on vacation.

Pete the Planner: The M is on vacation. Ninety-six percent of the 50 nonprofits, I’ll do the math, it’s 48 of them, sent an email receipt to you within 60 seconds of the donation.

Steven Shattuck: Yes.

Pete the Planner: How important do you think that is?

Steven Shattuck: That they all passed with flying colors, except for the two who didn’t do that. These were all online donations. We made the $5 donation through their website and we used a real name. We used an intern’s name here at the company and real contact information. It definitely looked like a real person.

Since it’s an online donation, nonprofits want to send that right away. Because if you make an online transaction, whether it’s a purchase, a donation, anything, you want to make sure that it went through, that it was a real thing, that the credit card was accepted and all those things. Sending that right away is very important. They all did a great job of that for the most part.

Pete the Planner: Things got a little weird after that.

Steven Shattuck: Yeah.

Pete the Planner: Because you can get different types of emails confirming your transaction. There were, what, three different methods that people used.

Steven Shattuck: Yeah. You can get an email from the payment processor which is like PayPal or Google Wallet or something like that, and 22 out of 48 sent that email from the payment processor.

Then, 26 out of 48 sent an email from the actual nonprofit. It came from the organization saying thanks for the donation, we got the credit card information, here’s your receipt. That’s ideal, because it’s coming from the nonprofit and there’s a little bit more personalization there, rather than an I.R.S. looking receipt from a payment processor. It doesn’t really do much to make the organization feel good.

If you’re a nonprofit, you want to send that from your actual branded organization so it looks a little more personalized.

Pete the Planner: At any point in the process or the experiment did you feel like any individual nonprofit made you feel like oh, it’s only $5?

Steven Shattuck: That’s interesting. If you read the comments on the infographic, there’s a lot of discussion along that point. To me, it shouldn’t matter how much the donation amount was. The $5 as an amount sends a lot of interesting signals that maybe nonprofits should treat them very specially. All donors need to be treated special, especially first time donations.

Pete the Planner: Sure.

Steven Shattuck: This was a first time donation to all 50 of those organizations. You want that person to give again, so you really want to make them feel special. The $5 I’m not too concerned about with that being a low amount. I’ll probably do another experiment and maybe raise that to $20 or $25 just to see what happens. I really should’ve gotten 50 phone calls, to be honest with you, or 50 handwritten notes.

Pete the Planner: How many phone calls and how many handwritten notes did you get?

Steven Shattuck: We got zero phone calls, which is bad. It’s interesting, because 19 out of the 50 donation forms asked for a phone number, so if you’re going to ask . . .

Pete the Planner: Okay, and you gave one?

Steven Shattuck: Yeah, we definitely gave one. If you’re going to ask, why not call the donor and say thanks so much, we know you’re a new donor, can I tell you a little bit more about the organization and how your $5 is helping.

That really makes a difference. If nonprofits have that capacity, and I think all nonprofits do have that capacity, definitely call a first time donor, because it’s going to make a huge, huge difference.

Pete the Planner: And you got two handwritten notes.

Steven Shattuck: Yeah, two handwritten notes as the second response. That’s really nice. That shows they took a little bit more personalization, took some time to thank the donor. That’s a good thing to do.

You can have maybe a board member do that or your executive director. Even a volunteer can do that. You can get a team of volunteers together, get a couple of pizzas, and just write all of the handwritten notes from that week and send them out. It’s going to make the donor feel really special if you do that.

Pete the Planner: You know, I think I’m buying your theory on why the $5 amount is a bigger deal.

Steven Shattuck: Yes.

Pete the Planner: I’ll give a hundred bucks or whatever some place which is honestly a generic amount of money to donate.

Steven Shattuck: Right.

Pete the Planner: That’s not to get weird. Let’s just let that comment lie. Five dollars is unusual, so you’re either looking at someone that doesn’t have a lot of means, that you should encourage them, or it’s a bigger deal to them than someone maybe just throwing out a hundred bucks.

Steven Shattuck: Exactly. The other thing about $5 is $5 is a really ideal amount for a monthly recurring gift.

Pete the Planner: Yeah.

Steven Shattuck: If you were going to call a first time donor, which you should, and if they donated $5 you should say hey, would you consider donating $5 a month and continuing your support of the organization.

Asking for a second gift is something that a nonprofit should do very quickly in the organization in the timeline of the relationship. I think that’s something that maybe nonprofits are a little scared to do because of maybe donor fatigue or they don’t want to ask too much.

Five dollars, like you said, sends a really interesting signal that hey, maybe they could actually give this on an ongoing basis. If you see a donation amount that is smaller maybe than your average intake, reach out to those people. Find out what’s going on with them as you build that relationship. Maybe you can turn that into something that happens more often rather than just once a year.

Pete the Planner: What sort of feedback . . . It just occurred to me as we’re doing this. Is it possible after this segment you can stick around for another one and we can talk ice bucket challenge after this?

Steven Shattuck: Let’s do it. Yeah, sure, absolutely.

Pete the Planner: All right. Two segments with Steven Shattuck today from Bloomerang. That means someone’s email question is not getting answered here on the Pete the Planner show.

Steven Shattuck: Sorry.

Pete the Planner: Somebody, honestly, will probably have to file bankruptcy because of you, Steven.

Steven Shattuck: Oh, no. Just email me. I’ll do what I can.

Pete the Planner: Hopefully, it’s Tom Brady. All right. Did you give any feedback to the nonprofits that you dealt with with this?

Steven Shattuck: We didn’t. I’m keeping the names anonymous, and they aren’t any nonprofits that we have a relationship necessarily with. Yeah, we’re not going to do that necessarily. I think that we published this and it’s getting a lot of attention. I think every nonprofit can look at this and maybe re-evaluate their strategy, and maybe pick up a couple of things they can do differently. That was our goal, honestly.

Pete the Planner: I like this, because at first glance to some people this may seem like why do you need a thank you for sending $5.

Steven Shattuck: Right.

Pete the Planner: But, that’s not what it’s about. It’s about making the nonprofit . . . I was going to say profitable, but that’s not a good way to go. It’s about making the nonprofit successful, because they have a good fundraising strategy.

Steven Shattuck: Yeah, absolutely. I think in a study I saw yesterday, something like 70% or 75% of an average nonprofit’s revenue comes from an individual donor. It doesn’t come from the government, or grants, or corporations. It comes from individuals, so building those relationships over the long term is really important.

In many cases the thank you is the first communication that a donor will have with an organization past the first donation. That thank you, that first follow up, how quickly it comes, the content of it, the format of it, is so, so critical to getting that relationship off the ground, because donor acquisition, a first time donation, it’s really expensive to get that.

Pete the Planner: Yeah.

Steven Shattuck: You think about direct mail and advertising and all the things that nonprofits do. If you can get that second gift, the retention rate skyrockets from something like 22% to, like, 60% that they’ll make a donation in the next year. That second gift is so, so critical, and how you communicate to get it is probably the most important thing a nonprofit can do other than the actual mission that they support.

Pete the Planner: Or, they can start the world’s largest viral marketing campaign . . .

Steven Shattuck: Yeah.

Pete the Planner: . . . which is the ice bucket challenge which we’ll talk about here after the break. Steven Shattuck from Bloomerang joins us. It’s The Steven Shattuck Show here with Pete the Planner here on 93 WIBC.

Steven Shattuck: Thanks.

Announcer: You’re listening to Pete the Planner on 93 WIBC.

Pete the Planner: All right. You’ve seen the ice bucket challenge whether you wanted to see it or not. It’s everywhere. People are dumping buckets of ice over each other’s head. It’s all in an effort to raise money for A.L.S. A former college baseball player was stricken with A.L.S. Long story short, now everyone in the world is dumping ice on each other’s head.

Steven Shattuck with Bloomerang joins me for a second segment on what we are affectionately calling The Steven Shattuck Show here on 93 WIBC. Steven, was this the most successful fundraising campaign of all time?

Steven Shattuck: Probably, especially in the social media era. I think they’re over $100 million total so far. Last year, by comparison, they only raised something like $3 million in the whole year. I would say yes, it’s probably the most successful campaign of all time, especially in our generation at least.

Pete the Planner: There was a lot of everything around this. There was criticism and praise. Early on, I was slightly jaded towards it if I’m being honest. Then, I kind of got over myself and was like you know what, there’s nothing wrong with this. I will say the weirdest part for me was the timing, that they couldn’t control, in relation to what was going on in Ferguson, Missouri.

Steven Shattuck: Yeah.

Pete the Planner: That was really strange, yet it didn’t really slow down this monster of a campaign.

Steven Shattuck: Yeah. It’s interesting. I think that maybe that led to its success in a weird way, because it did happen in sort of a down news cycle. Maybe people were looking for something to be happy about and do something fun, because there was a ton of bad news in late July and early August. I think that fed some of the frenzy of the campaign, to be honest.

Pete the Planner: Will this change how nonprofits, even relatively big ones like A.L.S., challenge donors? In our earlier segment we talked about how people try to leverage a $5 donation. How can they leverage a viral activity like this?

Steven Shattuck: You’ve got to remember that A.L.S. didn’t initiate this. It just happened on its own, then A.L.S. jumped on for the ride, and now they’ve taken hold of it.

I don’t see a lot of nonprofits trying to replicate this necessarily, because it was sort of a once in a lifetime flash in the pan thing. If nonprofits try to replicate it, like you said, I think that jaded type feeling is going to come up again in the public psyche.

It does legitimize, I think, social media and peer to peer fundraising as a fundraising source. I think we’ll see a lot more nonprofits maybe experiment with things that maybe they wouldn’t have normally had the confidence to do now that this campaign has been successful.

Pete the Planner: What do you think A.L.S. is going to do with $100 million? How much is going to get dumped into research, or how much is going to get dumped into awareness campaigns?

Steven Shattuck: Yeah. They’ve got a big spotlight on them, because donors really care how their dollars are spent. They’re going to have to be very transparent about how all this money is being spent. That’s really difficult.

I think that there’s a lot of debate on how much a nonprofit should spend on overhead. A lot of people have very strong feelings about that. Me, personally, I don’t mind the overhead spend so much as long as some money does go towards the actual mission of the organization.

When you look at this campaign, since it was a peer to peer campaign, a lot of the money was donated because someone was challenged, not necessarily because someone really believes in A.L.S. Foundation’s mission or has a direct connection to that disease or that cause.

Pete the Planner: Right.

Steven Shattuck: I think the challenge for A.L.S. is spending the money wisely but also retaining those donors. Because $100 million, $97 million more than they had last year, that’s a lot of new donors to the organization. It’s going to be a challenge to get those people to donate a second time or a third time.

That’s what they should focus on, I think, is getting those people to become longtime supporters of the organization. If they slingshot back to $3 million next year and then maintain that, that’s going to be a weird spike in their actual revenue stream. Their goal should be to sustain that over a long period of time and not have it be a flash in the pan.

Pete the Planner: I have a series of uncomfortable questions to ask.

Steven Shattuck: Okay.

Pete the Planner: These are not uncomfortable for you, but just uncomfortable to hear in general. Number one, what are the chances that the higher ups within that particular organization get a raise this year?

Steven Shattuck: I think they’ll get a raise if they can at least split the difference. They went from $3 million to $100 million. If they can next year maybe do $20 million to $50 million, that’ll show that they are really successful in leveraging the success of this. It’s going to be about leveraging the success, not necessarily that hey, we had this awesome year.

Remember, A.L.S. didn’t invent this campaign. It wasn’t someone in their committee meeting saying hey, we should create this campaign and see what happens. That didn’t really happen.

I think if they spend the money wisely and if they’re able to maintain positive public support for the organization then someone should get a raise. This next year is really when we’re going to see whether they were truly successful in leveraging the campaign.

Pete the Planner: Another way to look at this, too, is that they’ve just done 33 years of fundraising.

Steven Shattuck: Yeah.

Pete the Planner: At what point strategically can they say we’re, of course, going to try to leverage this great fortune, and take the pressure off themselves and say you know what, if we only raise $3.5 million next year, it’s okay, because we have 33 years of fundraising taken care of?

Steven Shattuck: That’s true, but the public I don’t think will be satisfied by that. You look at some of the backlash. A lot of the backlash is centered around well, this is a disease that doesn’t kill as many Americans as some other diseases.

Pete the Planner: That’s weird criticism.

Steven Shattuck: That is really weird. That makes me uncomfortable.

Pete the Planner: Me, too.

Steven Shattuck: I don’t really understand that, but there is some legitimacy to that, because obviously all causes are worthwhile to support. There’s really going to be a spotlight on the organization to act responsibly.

I don’t think the public will be satisfied if this organization doesn’t grow and really do awesome things with this money. Pouring a bucket on your head, okay, that was a little bit of an inconvenience. Some of these donors do have skin in the game, and they just want to see the organization be successful. If they don’t grow, I think there will be some significant backlash that actually will hurt the organization.

Pete the Planner: I like to think I’m not a pessimist and a cynic, but I’m pretty sure I am a cynic at least. I see a year from now, maybe ten months from now, follow up reports from the media over this whole thing and what’s happened per this conversation you and I are having. I see a dark cloud, man, and that’s terrible.

Steven Shattuck: Oh, I know.

Pete the Planner: I think to your point, there’s going to be backlash because people’s ideas, realistic or otherwise, of what should be done aren’t going to be done and the whole thing’s going to get weird. That’s just my guess.

Steven Shattuck: Yeah, especially since this was a social media campaign where people are very vocal. That’s only going to increase the scrutiny and the noise centered around this.

I’m a little more hopeful than you, to be honest. With viral campaigns I think people forget about it quickly. If you think of the viral campaigns that happened maybe in 2013 and 2012, they’re sort of hard to remember now.

Pete the Planner: Yeah, that’s true.

Steven Shattuck: But, while they were happening, man, we knew, and we were keeping an eye on it the whole time. I think that maybe most of the public will forget about this, but the people in the fundraising sector and the people who pay attention to nonprofit news, they’re going to keep an eye on this and they’re going to hold the organization’s feet to the fire on what they do about it.

Pete the Planner: I always find it interesting with both political campaigns and fundraising for nonprofits how more money solves problems. It’s like well, if we had $100 million, does that mean you could cure the disease.

Steven Shattuck: Right.

Pete the Planner: What does all that money buy? There’s always confusion. Generally, the politician with the most money wins. I don’t know. I guess I’m just interested to see what happens.

Steven Shattuck: Yeah. There is a lot of scrutiny on the overhead issue. People assume that a nonprofit, 100% of the donation is going to go towards research or curing the problem, but we’re talking about people who work there, who need a paycheck, who work really hard. They deserve raises, and they deserve bonuses.

My wife is a fundraiser. She’s worked at small nonprofits her whole career. Yeah, they do get paid less. They probably should get paid more. But, people really have a strong feeling about compensation and things with nonprofits.

You’ve got to understand these people should be compensated richly. It’s okay if not 100% of a donation goes towards the actual research, because the nonprofit does have to operate and grow to serve that mission and fulfill all those programs.

Pete the Planner: Before I let you go, NFL season is here, which for the fundraising nonprofit world means the breast cancer awareness campaign is nigh.

Steven Shattuck: Yeah, October.

Pete the Planner: Yeah. It’s been getting weird, too. Again, I feel like the most cynical person in the world with all this good being done. Consistently, it’s been getting weird with the whole Ray Rice issue. What do you think is going to happen this year? Any predictions of how the pink campaign is going to go down this October?

Steven Shattuck: Other than the Patriots winning the Super Bowl . . .

Pete the Planner: Oh, good Lord.

Steven Shattuck: . . . I think that . . . Well, there’s a lot of public scrutiny around the NFL in general.

Pete the Planner: Yeah.

Steven Shattuck: I think that’s going to be what makes or breaks the league looking forward five to ten years. It’s good. The campaign is good as long as it’s not pandering to a specific audience. I think a lot of people criticize the NFL for maybe pandering to the female audience which, of course, they want to improve. I think any attention that a cause gets is good, so I try not to be too cynical about it.

The NFL really needs to walk the walk and talk the talk. It’s easy to make pink penalty flags, but they need to do something. They really need to crack down on what the players are doing, these punishments, and all these activities to legitimize October being breast cancer awareness month. Because if they don’t do those things it’s just going to be pandering at the end of the day.

Pete the Planner: Steven Shattuck, Patriots fan and fundraising genius, I appreciate the two segments you spent with us today. You can learn more about his organization at bloomerang.co. Anything else before we go, Steven?

Steven Shattuck: I don’t think so. Do the ice bucket challenge if you haven’t done it. Just go ahead. You might as well.

Pete the Planner: I donated money. All right. Thank you, Steven. We’ll talk to you again some other time.

Steven Shattuck: All right. See you.

Pete the Planner: Yeah. Coming up after the break, more on the Pete the Planner Show here on 93 WIBC.