Fundraising and the Economy: Early Returns

A few NPR News stations have started their fall on-air fundraising campaigns. The early results are good. The number of givers relative to audience is holdinig up. There's doesn't appear to be a drop off in pledge amounts of $1,000 and up.

Example: WSHU in Fairfield, CT has conducted just 4.5 hours of fundraising over the past three days. More than 700 donors have given just under $68,000. There have been 6 gifts ranging between $1,000 and $3,000.

It is important to focus on the station's service when fundraising this fall, especially with all of the important news to cover each day. The case for giving has never been stronger. Listeners experience the value of public radio every day and they appear to be quite willing to support it, even when (especially when?) they are hearing about the current financial crisis.

It's Not the Economy

Winter fundraising season is in full swing and we're getting questions about the effect of the economy on pledge drives. While there's no doubt some listeners are feeling a budget pinch, the economy should not have any effect on the overall results of a pledge drive.

The reason? Almost every station has room for improvement. There's always an opportunity to get better. At those stations running their pledge drives at absolute peak performance -- all two or three of them -- there is room for improvement in direct mail and web-based fundraising.

We can't control the economy, but we can control how we raise money. So before you let "it's the economy" become a reason for raising less money, consider how your station might get better.

A Truly New Business Model

Once again, territory we’ve covered before but it’s worth covering again.

Changing public radio’s business model requires more than fiddling with pledge drives and individual giving. It requires changing how stations spend money.

Here’s one way public radio could make more money from listeners, save stations money on network programming, and potentially cut back on pledge drives.

Let NPR raise money directly from listeners in exchange for cutting station dues and fees to an average of $100,000 per year per station. That’s it. The average station would pay $100,000 per year for everything – all programs, all services.

Here’s the math.

In FY 08 NPR will get just under $70,000,000 from station dues and fees. That number gets reduced to around $30,000,000 under the new pricing scheme.

Stations save $40,000,000 in dues and fees which can be invested in some of the local expenses stations are being urged to make -- like local news, HD Radio, and the web.

“But will stations earn as much in listener support?” you ask.

Why yes, they will.

DEI and NPR just embarked on a project to help public radio grow the number of donors from 2.5 million to 3 million annually. Industry benchmarks show this is a realistic goal.

Suppose NPR gets all 500,000 new donors through direct mail and the web. No national on-air pledge drives allowed. Results from other national non-profits suggest this is a very realistic goal.

500,000 donors at an average annual gift of $100 grosses NPR $50,000,000. NPR could spend up to $10,000,000 to earn that money (20-cents on the dollar) and break even on a net revenue basis with the current business model.

By the way, that 20-cents on the dollar is far more efficient than what stations spend to raise money. While $10 million looks like a lot of money, it's important to remember that stations currently spend about $18 mllion to raise $50 million in listener support.

It’s cocktail napkin math, but it works quite well. Will the new donors average $100 in the first year? Probably not. Will NPR get more than 500,000 new donors? That’s very likely.

Will some current station givers donate to the network? Probably. Will it be so many that the station will end up losing money in the deal? No.

Analyses of local market membership roles show that many listeners give to more than one public radio station. Research from a few years ago showed most donors won’t stop supporting one station in their market just because they started listening to and supporting another. That principle will apply in this situation as well.

And there will be new joint station/NPR fundraising opportunities in this model that could further grow station donor bases and net fundraising revenue.

We believe significantly different results require a significantly different effort. Ideas such as these needed to be tested if public radio truly wants to adjust its business model to give stations the flexibility to spend more locally, cut back on pledge drives, or both.

Simplifying On-Line Giving

On-line giving is very simple at some station web sites and an almost impossible task at others. Either way, public radio stations can make the process easier for potential givers by creating a specific web address for their secure on-line pledge pages.

It's such a simple idea it's hard to believe it's not a routine practice in public radio. We first suggested it to a client that is a joint licensee, which requested to remain anonymous for this article.

For those of you unfamiliar with the industry, a joint licensee has at least one TV station and one radio station, often bearing the same call letters. Radio and TV often share a common web address such as WXXX.org. Radio listeners and TV viewers are directed to the same web site to contribute. From there, it is up to the potential donor to find the correct links to make a radio or TV contribution. It can be quite confusing.

Web giving is made more confusing as on-line content directors update their sites with new bells and whistles. What makes for a an engaging web site can work against creating a simple, utilitarian on-line giving function.

In the past, our client created a splash page during pledge drives that give visitors the option to go to the radio pledge page or to the main site. That was a decent solution and it will remain in place.

But our client decided to make giving even easier by acquiring the web address WXXXradio.org and pointing it at the secure on-line giving page. That's the address they will promote on-air for on-line giving. It means listeners have one or two fewer clicks to navigate when trying to give.

Any station can do this, even if it isn't a joint licensee. WXXXpledge.org works just as well. It's easy enough for on-air pitchers to say and for listeners to remember. And it's a good step towards making on-line giving easier and faster.