Is It Dangerous to Cut Back on Fund-Raising Costs?

Our tendency is to cut back where as the right direction might be to start a new initiative in order to energize our donors!
December 18, 2008

Many fund raisers are facing pressure to cut costs as donations drop. But Jeff Malloch, a direct-mail consultant, warns that cost-cutting mania can lead to really bad decisions.
Writing in a letter posted on The Agitator blog, he tells nonprofit officials to remember that reducing expenses only makes sense if it contributes over the longer term to higher (or more stable) revenues.

Mr. Malloch takes on several fund-raising ideas in a recent Chronicle article, saying they focus too much on cutbacks and not enough on innovation. For example, he says that the Mint Museum of Art’s decision to combine three solicitations into one year-end mailing, which saved $5,000.
Writes Mr. Malloch: “This is a dangerous move without any testing to back it up. She may have saved $5,000, but she needs to consider how much revenue she potentially loses by combining three entirely different messages and appeals into one, likely now a disjointed and confusing mailing?”
He also takes issue with Catholic Charities USA’s decision to replace its traditional year-end letter to donors with a postcard bearing photographs of people in need.
The postcard idea may have been cheaper to produce, says Mr. Malloch, but it ignores research that longer letters do work and, by not including a return envelope, doesn’t provide donors with an easy way to give.

In another post on The Agitator blog, Roger Craver writes about a friend’s “contrarian approach” to fund raising during the recession.
The friend, Jerry Huntsinger, a freelance writer, tells fund raisers not to “go silent” with donors simply to save some money. He also urges charities to be aggressive in their fund raising during the recession, so they don’t miss the recovery; to mention the word recession frequently, so donors are aware of the difficulties they’re facing; and to “reduce your staff instead of reducing your mailings.”
Perhaps his boldest advice is to “launch a new program,” which he says will energize donors.