Canadian Not-for-Profits (NFPs) are facing growing demands for their services. These organizations are always looking for more support, but with an increasingly informed donor-base, NFPs need to utilize all of the resources at their disposal and change the way they appeal to Canadians to achieve their goals.
Engaging effectively through corporate entities
Jason Egbuna, Manager, Direct Marketing – Leadership Giving at Princess Margaret Cancer Foundation, spoke with some industry leaders to discover how corporate entities are able to successfully navigate the NFP world. One case in point is Ronald McDonald House Charities of Canada (RMHCC) – a 13-chapter organization that provides a home away from home for the families of seriously ill children who are staying at a nearby hospital. According to Cathy Loblaw, RMHCC’s President and CEO, Ronald McDonald House has doubled the number of bedrooms it has for families over the past five years.
As Loblaw told Egbuna, despite that rapid growth, RMHCC still had to turn away 3,000 families in 2016. With 70% of Canadians living outside of an area with a children’s hospital, there is a need for their services in communities across Canada; therefore, communicating its urgency is a challenge they face on a daily basis.
Canadian Tire Jumpstart Charities is dedicated to removing financial barriers so kids across Canada have the opportunity to get off the sidelines and “get into the game”. Jumpstart helps more than 200,000 kids a year engage in sports. While Jumpstart is a national charity,100% of funds raised remain in their designated neighbourhoods, helping to meet needs in every community. Still, as Jumpstart’s president Landon French explained to Egbuna, it’s tough to keep up with the level of demand in various communities.
So what can NFPs do to help meet these needs effectively? Loblaw says they need to leverage strong leadership, sustainable fundraising processes and strong partnerships with donors.
Linking with large corporate foundations helps charities. French says that one of the benefits of having a relationship with Canadian Tire is the extensive level of support from all banners across the country. Loblaw said that being connected to McDonald’s Restaurants of Canada provides RMHCC with the ability to better cope with growth or economic upheaval. The company accounts for 92% of RMHCC revenues.
Egbuna asked if this means that we are going to see a steady increase in corporate charities and if the public will gravitate towards organizations where donor funds do not have to help with overhead costs.
Loblaw says that everything in the philanthropic world is getting more sophisticated, including donors who will go where they feel their donations are able to make the most impact. She believes that donors want to view organizations as “social impact partners,” not just a place where their donations go to disappear.
French echoed this sentiment, but also connected it to employees feeling engaged with the organization and believing that their work is making a difference. This strong sense of accomplishment has allowed Jumpstart to boast of high employee retention, stating that 92% of their workforce is happy to be a part of the organization.
But while operating costs and targeting funds raised can be more aptly controlled in corporate foundations, there are some challenges. It’s the age-old question that NFP professionals face on a daily basis: how much effective work can you do in the community with the funding that is available? After you have identified the need, started to have an impact in the community, and knowledge of your services grows, how far can you stretch funding before it has an impact on the quality of services you provide?
Mapping the donor journey by segmentation
In order to generate additional funding, NFPs—including those connected with corporate foundations–need to consider all of the options at their disposal, says Rupen Seoni, Senior Vice President and Practice Leader at Environics Analytics (EA). Mapping the customer journey, or more appropriately, the donor journey, is an approach that is helping NFPs find efficiencies.
Understanding the donor journey is a valuable tool because it helps organizations understand how prospects move from thinking about making a donation to becoming donor (or volunteer, or advocate as appropriate). Armed with this information, NFPs can use their resources wisely by designing an engagement strategy that works, explains Seoni.
Inherent to customer journey mapping is some form of segmentation. That is because usually more than one journey or path is required to be effective with diverse prospects that most NFPs are working with.
Here are the key segmentation types:
It has been long understood that annual giving donors have different behaviours, capacity, motivations and donor journeys than those who give in other ways. For Behavioural Segmentation, EA uses NFPs’ own data to create useful segments. Historically, this has simply been by donor type. But with more data available, and the use of more sophisticated techniques, NFPs can look at frequency of donation, participation in events and volunteering to measure engagement to create a more complete picture of donors.
On the other hand, Behavioural Segmentation provides only an internal view of donor behaviours. And it is unclear whether the behaviours are constructs of how the NFP has engaged in the marketplace or the result of an underlying preference in the market. It also is difficult to use for donor acquisition because there is usually no data upon which to segment a prospect. Nor does it provide the motivations behind the behaviours that underlie the segments.
Attitudinal or Psychographic Segmentation
Attitudinal Segmentation uses a survey of donors or prospects to understand the motivations and behaviours around awareness, consideration, engagement and donation. It can help NFPs understand which “hot buttons” to press (and avoid) in their positioning and communications to improve their chances of being noticed by prospects. It also helps align organizations’ outreach efforts around those key motivators.
But it is difficult to systematically tie motivations to individual donors/prospects to action more personalized messaging around the donor journey. Also, describing the segments beyond their attitudes is difficult because when segments are optimized purely on attitudes as the behavioural and demographic dimensions are often “mushy,” notes Seoni. It also does not lead to a clear picture of who the target is.
Demographic Segmentation is very straightforward, easy to understand, and it describes donors and prospects, explains Seoni. It uses surveys and/or neighbourhood demographic estimates. Demographics can help to bridge across segmentation techniques and disparate data sources
But there are literally hundreds of demographic variables, so understanding which ones are relevant for an NFP’s cause is important to create segments using relevant demographic markers. Behaviours and attitudes which can be key drivers in tailoring the donor journey are missing. Moreover, everyone within a demographic segment may not behave the same or have the same beliefs.
No single approach to segmentation is a panacea, says Seoni. Hybrid approaches can solve different business challenges and use some analytical techniques to bridge across these approaches to create a more holistic, functional view of the donor/prospect.
The hybrid approach integrates different dimensions of segmentation and data into a unified view of target segment. It allows NFPs to be more donor/constituent-centric.
Behavioural Segments could be a good starting point in the stewardship of existing donors. Attitudinal Segments could provide better information on the motivators of these donors and be used to make the case more effectively in acquisition efforts. Adding demographic “hooks” in the data that drives the different segmentation approaches allows them to be connected and used more flexibly because demographics tend to be widely available.
EA’s Hybrid models are customizable, created for a specific NFP and can do a better job of explicitly including behavioural data. Neighbourhood segments are not created specifically for an NFP, but have a lot of detail and are usually much less expensive to use.
But additional data, expertise and costs are required to operationalize the hybrid approach. It also must be must be considered in the planning stages of segmentation work and not be an afterthought.
Select an approach or combination that suits immediate needs and can be scaled over the longer term and can link up to other needs.
Think specifically and tactically about how to take action against the segments. The expectations and approach regarding actionability should be clear before undertaking any segmentation project.
Seek out colleagues in other organizations who have adopted integrated segmentation to learn how they structured their segmentation “infrastructure” to meet their needs.
Get good advice from vendors which provide segmentation expertise and services since their perspective across different organizations can be helpful.