How Nonprofits Harness the Power of Direct Marketing ft. Shannon McCracken

Shannon McCracken: – Many non-profit organizations rely on their direct marketing and more to the point their donors who give through direct marketing channels. So direct marketing is important to non-profits because of the amount of revenue that comes in, because of the unrestricted nature of that revenue. So there’s always some sort of economic roller coaster and direct marketing has some predictability even through that. Social media is a great place to find new audiences and start to talk about, educate on the mission, on the work that you’re doing as well as your brand.

Shelly Singh: – Hello and welcome to The Growth Genius Series brought to you by DMAAsia and Infidigit. My name is Shelly and I’m the host of this series. Today our guest speaker is Shannon McCracken. Shannon is founding CEO of the non-profit Alliance, an association that was launched in 2018 with unprecedented support to promote, protect and strengthen the non-profit sector. She was named to The Nonprofit Times Power and Influence top 50 in 2022. Prior to her role with TNPA, Shannon spent two years as Charity Navigator’s Chief development officer facilitating communication with non-profit organizations and dramatically increasing resources to ensure successful implementation of a new strategic plan. She now serves on Charity Navigator’s board of directors, Shannon also served as a DMA Nonprofit Federation Advisory Council chair and chair of the Ethics Committee. Welcome, Shannon.

Shannon: – Thank you, Shelly, it’s a pleasure to be here.

Shelly: – So Shannon, please tell us little about your professional journey and how you started with the non-profit industry, how did you develop your interest in this?

Shannon: – Absolutely. Well you covered a lot of my resume journey, I will say the way I started with the non-profit sector was really coming out of college and wanting to do something in the advertising world. I mean that was really my interest when I was 22-years-old and I was really fortunate in my first role to be not quite an advertising and direct marketing which I didn’t know a lot about and working for non-profit clients and just the bug bit me and I loved what I was doing, I loved the data component of it, blended with the creativity, it just really both sides of my brain were challenged and this added bonus, right, of working in the non-profit and the social impact space. And so my second job was actually within the Special Olympics, within a large non-profit organization and I thought I would stay there for a couple years and learn the ropes and I stayed for 17 years. And it was because of the challenging work that we were doing that constantly changed and we kept raising the bar for ourselves and what we were looking to accomplish. I worked with really wonderful people and then the mission itself. So when it was time to move on from that, as you said I was looking for something that was a little bit more kind of ten thousand foot level for the sector and how I could think about the health and sustainability of the sector overall and so that landed me really fantastic opportunity with the Charity Navigator for a couple years and then I was invited to come in and help launch this new Association for Non-Profit Organizations and Companies that work with nonprofits and so it’s just been a really unplanned but like rolled out beautifully sort of journey.

Shelly: – Yeah. Thanks for sharing. So direct marketing has always been a substantial part of non-profit fundraising raising programs. We hear much more about large gift donors’, foundations, events and corporate support. In the digital age, how important is direct marketing to nonprofits?

Shannon: – Oh gosh, it is incredibly important to nonprofits. So many non-profit organizations rely on their direct marketing and more to the point their donors who give through direct marketing channels for more than half sometimes, upwards of 70% or 80% of the organization’s revenue. And importantly the direct marketing revenue and the contributions that come in from everyday givers, people like you and me and, you know, caring about this abundance of organizations. That tends to be unrestricted money which means that it is up to the organizations how to spend it where most needed to serve their purpose and their mission. And that often isn’t the case for those mega gifts that you mentioned that we see in the headlines or for corporate and foundational giving. So direct marketing is important to non-profits because of the amount of revenue that comes in, because of the unrestricted nature of that revenue and because direct marketing is by its nature a crowd force, right? Many thousands, for some organizations millions of donors who every year are supporting this particular organization, that provides some stability and predictability for organizations even during some of the economic roller coaster like I was going to say like we’ve lived through for the past couple years but I think we live through it cyclically, right, so there’s always some sort of economic roller coaster and direct marketing has some predictability even through that.

Shelly: – Great. So what are some of the challenges nonprofits face with effective marketing?

Shannon: – Now I would say one of the biggest challenges most recently specifically of direct mail right now are the rising costs. So everybody regardless of sector, if you’re in direct marketing, you’re in direct mail, you know what I’m talking about. The postage and the paper and the production and processing costs, all of those have gone up considerably. Charitable giving hasn’t necessarily kept pace with that, so it’s more expensive to just raise the same amount of money or engage with the same number of donors, and yes organizations or growing portions of their revenue are coming from digital and other channels, but direct mail is still the workhorse. And so those cost some of those labour challenges and supply chain challenges and that has really stretched non-profit organizations through these last couple of years.

Shelly: – So, another channel which plays a very important role is social media but it is crowded with so many messages. How can a non-profit organization stand out on social media?

Shannon: – Oh, that’s a good question. It comes down to authenticity always, so I’m going to generalize here, hopefully I don’t get myself in trouble, Shelly, but if we think about for-profit companies we think about, you know, retailers and other corporations, they are messaging for one, here’s my generalization, one audience. They’re messaging to the people who are currently or are most likely to buy their products and services. They can create a lot of goals and a lot of messaging in their voice around that particular audience, whereas non-profits have to think we have a couple different audiences in the social media space. We have the people who are benefiting from the work that we do, from our missions, and we have the people who are supporting the organization through charitable giving and otherwise and sometimes those audiences overlap and sometimes they don’t, so variations of how exclusive those two are. Nonprofits have to strike that right balance so that their messaging speaks to both of those, speaks to their strength and their impact and their ready and willingness to step up for their beneficiaries and also speaks to the great need and the importance of donors and sometimes those two voices are a little bit hard to balance. So I think where nonprofits can really stand out in social media is finding that authentic voice and then here’s the little piece I would add to that is, making sure that that voice is consistent with the way an organization is presenting itself everywhere else, right. So social media is a great place to find new audiences and start to talk about educate on the mission, on the work that you’re doing as well as your brand and sometimes it’s really tempting to kind of meet the standard of a particular social media platform like talking to you Tiktok so that the organizations want to shape their voice to be that but if that voice doesn’t show up anywhere else in their presence including their website and other social media platforms, then it’s going to be hard to hang on to that audience, right, certainly hard to hang on to them anywhere other than the little Tiktok or, you know, that platform’s bubble. So, and, you know, I’ll add one more thought to that is the social listening piece. I think the feedback loop that social media naturally creates is such a great opportunity, a great place for nonprofits to do a little bit of social listening, see how people are talking about them. We can do all the work we want on trying to shape our brand and present it out into the world and have people interpret it the way we want them to interpret it, but ultimately perception is reality. So where do our donors, where do our audiences expect our organization to show up, where are they looking for us to have a voice in some of the social justice or the current news topics that are happening, where are they looking for us to appear, how are they praising us and not praising us and really doing some of that social listening and reacting and adapting to that.

Shelly: – Very interesting. So you were telling me that the number of households giving to charity every year is declining. That’s also somewhat surprising. So what do you think is happening?

Shannon: – Yes, so Indiana University and the Lily School of Philanthropy there reported that in 2018 for the first year the number of charitable households dropped below the 50% mark. Now this was not a like falling-off-the-cliff anomaly year, this trend has been coming for 20 years, you know, we were at like 66% – 67% of households at the turn of the century and then two decades later we dropped below 50%. So it has been a long slow downward crawl, but somehow falling below that particular number really caught people’s attention, made a lot of headlines, made leadership non-profit executives take pause and pay attention. So why is it happening? A lot of factors, again when it’s been happening for that long there are probably many factors in play. We can talk about three of them, you know, one is generational differences in giving. So when I started in the fundraising world, my grandparents were alive and charitable and they had a sense of duty to give because that was just their moral upbringing and they had a sense of loyalty to particular organizations. So maybe it was because that organization touched them in some way, benefited them, it was the organization our family had always supported, but there was this commitment to give loyally every year or on a very regular basis. If you look at our – there are very few of that generation continuing to give. as we look at the overall breakdown of our donors. If you look at the youngest donors who are coming up now, they don’t have that same sense of loyalty to a particular organization. They’re very passionate around a cause but not necessarily an organization and there are lots of ways to support a cause, it could be spread across different organizations but it’s also, you know, giving directly, so not giving through what we consider charitable giving, not through those traditional channels of through an intermediary service organization. It can be using their influence, being brand ambassadors, talking about us on social media, doing events that help support the organization, volunteering, again activism. So habits of giving or habits of showing the way we want to support change in the world are naturally changing and organizations have to evolve and keep up with that and the way we measure that has to catch up with that, so I’d say that’s number one.

Number two, and I find this one fascinating and we could have a whole other podcast episode on this sometime, Shelly, but it’s tied to fewer people attending church services regularly. So we know that’s a trend, right, we know fewer people are showing up on their day of worship and attending services and when you think about it the way that many of us learn to give and learned that was by watching our parents and our grandparents and our neighbours giving in a house of worship, showing up every week and, you know, passing a plate or whatever that looks like within your worship service and it taught us that’s just what we do, whatever we have and you don’t have to be super wealthy and you don’t have to sit down and do it like only at your end, it was just something that we did. And with fewer people attending worship services and seeing that behaviour and learning that behaviour and weaving it into our being, some of that habit of giving has fallen away, has eroded .And giving to faith organizations continues to be the largest sector of giving when we look at the total breakdown every year, so giving to faith organizations is still very large but it is shrinking,  so being aware of that. And then I would say the third or a third, there are many, I would say a third factor in the declining number of households that are giving is because households don’t look the same as they did when many organizations started their donor acquisition programs. So a lot of, let’s talk specifically about direct marketing here, a lot of our direct marketing strategies are control packages, our messaging and our asks and the imagery that we use and the timing, you know, all of it was built around what has historically worked and so much of fundraising was constructed on white donors, white donors of a certain age, many if you look at donor demographics on pretty much any direct marketing fundraising file out there they tend to be 60, 65 plus, 70 plus, you know, we continue to fundraise in the same way that we always have and if we do that then we’re appealing to a smaller and smaller number of people. 

Households are, you know, evolving and so it’s really about nonprofits needing to remain or regain relevance to meet our current households, our current population are changing demographics, to meet them where they are and create fundraising appeals and engagement opportunities that are a good fit, are engaging and attractive and enticing and really embrace people of many different sizes, shapes and flavours.

Shelly: – Yeah. So, it sounds like you see the decline in direct marketing donors as an opportunity for fundraisers. Can you talk more about that?

Shannon: – I do, so on this final point where  I acknowledge that falling below the 50% mark is alarming because for those we rely on those direct marketing donors to keep our doors open, that is continuing to decline on a slow downward trend. So if it’s just a blip you can figure out what went wrong and fix it, but this is long-term two decades of trends. So we see that happening, we’ve caught leadership’s attention, we’ve caught executives attention, our CFO is paying attention, right, and we can recognize that not only are the demographics of the country changing, that’s a fact, but we’re in this moment of time when there is so much open conversation and acknowledgment around social justice and inclusion. And so the intersection of those two points declining giving and really being able to talk frankly about inclusion and problems of exclusion it’s this great pivot point for organizations, for fundraisers to be leaders on making the case for long-term investment in finding ways to reach new segments of donors, donors who don’t look like the people who have traditionally supported organizations in our traditional giving ways and really opening ourselves to new and different kind of support.

Shelly: – So what are some of the, let’s say top three trends local and global which you are seeing in the nonprofit industry and what are your recommendations , you know, for the non-profits in the horizon of three to five years?

Shannon: – I would say I don’t think this first one counts as a trend yet but maybe if we say it enough it’ll become true. I’m starting to hear more non-profits talk about creating generalists among their fundraising teams. So for a long time our industry has really supported development of specialists, social media specialists, somebody who specializes in monthly giving, somebody who really knows direct mail versus somebody else in the department who’s focused on digital, we have all these subject matter experts and it’s great when you put all of those together as a team and everybody brings their particular expertise and you have all these little pieces make a complete puzzle. The challenges when you look at – pick out any one of those individuals, any one of those staff members, it’s really hard when they are trying to advance in their career to be able to show that they’re prepared to manage and lead and strategically guide something more than their little piece of the puzzle, because they don’t have necessarily the right terminology around it or they haven’t managed those pieces. So when they’re on an interview or an internal review and they’re asked the question about something more than their piece of that puzzle, they can come up short. And it’s such a disservice to our industry that we have these great subject matter experts and yet we’re not necessarily raising up people who are really ready to take on management of a whole department, for example, or a much larger team or a bigger strategy. So again I’m hearing more organizations recognizing that and some of it is we do a better job of recognizing it when the job market is hard for employers, right, when there are fewer great people out there, we’re really looking internally and recognizing we don’t have somebody who can move into a spot that’s just opened up and we have to look outside the organization, so that’s one piece creating more generalise in our professional development for fundraisers.

A second one, organizations and I would say this is more of a trend, organizations becoming more aware of and responsive to the changes in data privacy regulations, recognizing the impact that that has now and will continue to have on direct marketing and starting to build and Implement strategies that create opportunities and reasons for donors to share first party data to really to opt-in to participate in some of that data collection and share more. And I think I keep using the word resiliency today but that seems to be a theme for our industry right now. So that is some awareness and reaction to data privacy changes and consumer privacy concerns and, you know.

The third then and this is a longer running trend but just continued sophistication in multi-channel and omni-channel we’ve been saying that and doing that for a long time now but again more sophistication more of putting the pieces together, really thinking about how we show up and not thinking about donors or audiences in categories, really recognizing that people are existing across all of our channels. It’s our channels that we’ve categorized, not the donors and thinking about how we create that consistency and that storyline and that real continuation of our brand and our messaging through all of those pieces.

Shelly: – So another my question was that what do you recommend, what are your recommendations where should the non-profit focus?

Shannon: – Recommendations, so I would recommend and support all of those trends, continuing to invest in all of those pieces, diversification and support of our profession, I might put up at the highest in that recommendation just because I’m not completely sure that it’s caught on yet, but something to really, you know, think about we know in the non-profit space that there is very high turnover of non-profit fundraisers, there can be high turnover non-profit roles, period, hard stop and fundraisers especially so and different reasons for that. Sometimes it’s high expectations that are difficult to meet. I’m really looking at things and looking at budget numbers and one-year chunks and it’s almost like a pass /  fail test and there are many other factors that go in there. I mean we could unpack all of that but thinking about ways as senior leaders, thinking about ways that we really change some of the existing infrastructure around professional development and creating greater paths to keep people in our space, in the non-profit fundraising world, we need future generations of really experienced smart direct marketers and fundraisers.

Shelly: – Great. So thanks for sharing. This brings us to our last segment of this episode, so let’s talk about after hours. Tell us about one passion you follow and how it helps to elevate your profession?

Shannon: – How it helps to elevate my profession, I mean when you say passion, I have two teenagers, I have a daughter who’s in high school and is deeply involved in the theatre program and then I have a son who plays college baseball. So my passion is I get to go be a fan to both of those. I have zero theatre talent. I am, you know, don’t ask me to hit a baseball, so to be able to go and watch other people, the people who I happen to think are pretty fantastic, watch them develop and show their talents and be successful and learn when they’re not, you know, when they don’t have great days, that is what gets me excited and how it elevates the profession. I mean it certainly sends me back to work as a more balanced whole person and, you know, we all need that today.

Shelly: – Great. So how can our viewers connect with you, find you, where can they find you?

Shannon: – Absolutely. Well, to learn more about The Non-Profit Alliance and to learn about membership in our association, to learn about the policies we work on in our upcoming programs, just come to our website tnpa.org and I am very findable on LinkedIn and would love to connect there.

Shelly: – Thank you so much, Shannon, for your insights on the non-profit industry. The role of non-profit in society can have ripple effects throughout the economy. Everyone benefits from the work of nonprofits in one way or another whether they realize it or not. It’s very important that they succeed. Thanks again.

To all our viewers, thanks for listening if you liked and enjoyed the show please like it, leave a rating and review. I’ll see you next time in a new episode with a new speaker. Till then peace.