Good Afternoon Everyone. We are grateful for the opportunity that we have to present to you our analysis of and recommendations for Paralyzed Veterans of America. I am Zachary Carter and these are my colleagues Joe Britton, Heather Michaelson, Brian Smole and Smit Thacker.
By way of agenda, I will give a brief introduction to our findings as well as an evaluation of the non-profit industry. We will then discuss fundraising, PVA’s visibility imperative, membership, and a tool for evaluating programs before giving our final thoughts.
Over the past 60+ years, Paralyzed Veterans of America has quietly built a robust and far-reaching non-profit organization that benefits veterans and non-veterans alike. Today, however, PVA finds itself in a mature industry and facing a recession. With increased competition for donor dollars on the one hand and increased demand for services on the other, the organization is in need of careful evaluation in order to determine how to successfully navigate itself to a sustainable future.This navigation is complicated by the fact that donors are increasingly turning to newer forms of fundraising, PVA’s membership is aging, and the organization’s culture of humility and being the VSO world’s ‘best kept secret’ which is actually limiting PVA’s potential. Additionally, since the nonprofit industry is maturing, PVA cannot simply continue to cut programs and expect to grow. They have to innovate in order to grow. So what can PVA change about its mission, work and programming to be more sustainable?Over the next few minutes, we will provide analysis and recommend specific actions that PVA can take in order to build a sustainable future. These recommendations include:Transitioning to using online resources to acquire new donors while keeping its direct mail program to appeal and inform current donors.Increasing the organization’s visibilityGrowing membershipEvaluating programs more efficiently and more frequently
In order to assess the sustainability of PVA’s programs, it is essential that we also evaluate the largest portion of its expenditures – fundraising –as well as address the organization’s serious visibility challenge. Our research shows that PVA does a remarkable job of serving veterans and making choices that improve their quality of life. We do not presume to know more than PVA about its programs and services, but we intend to build upon that expertise by providing PVA with a decision-making process which will enable the organization to strengthen its programs and become more sustainable. While this will require innovative change, this analysis will not compromise the organization’s core mission and function.
In order to build the foundation of our presentation, I’m going to briefly discuss the non-profit industry as it stands today. The non-profit industry is growing at an incredible rate. According to the IRS website, the number of tax-exempt organizations grew by 33% during the first decade of this century and continues to grow at a fast pace. A subset of this group, the number of non-profits has grown by 19% and our specific subset, Veterans’ non-profit organizations, has grown by nearly 13%. These numbers translate to increased competition for donor support as well as government funding and organizations like PVA now finds themselves competing against giants such as DAV as well as newcomers like IAVA and Wounded Warriors.
In addition to an increase in the number of competitors, the non-profit industry finds itself rebounding from the recession much slower than usual. According to Giving USA’s 2012 Annual Report, since 1971 the average rate of growth in giving during the immediate two years after the end of a recession averaged 2.4%, but this recession has averaged only 1.1%. This illustration on the left shows what PVAs contribution revenue would look like had giving returned to its traditional rate after the 2009 and the graph on the right shows PVA’s growth at only 1.1%
Another important trend to evaluate within the non-profit industry is that while funding is increasing at a remarkably slow rate (54% slower than in past recessions), demand for services is skyrocketing! According to the Non-Profit Finance Fund 2012 Survey, 85% of non-profits surveyed said that they experienced increases in demand in 2011, while 88% said they expect increases in demand for 2012. As we have already discussed, the number of VSO’s grew by 13% between 2000 and 2010.I have presented to you several important facts and an analysis on the non-profit industry as it stands today and how it is affecting PVA. The question I propose to you all now is Therefore, what? What does this mean for the future of non-profits and specifically PVA. Based on our analysis, we have concluded that within the next 5 years:The industry will continue to become more populated as more non-profits are established. This will cause an increase in competition for donor dollars.Organizations will learn to do less with less. Finally, as competition increases, organizations must adapt to donor demographics and new fundraising channels.
Thank you, Zach. These are certainly challenging times. We did extensive research on what others in the industry have been doing to respond to some of the economic and demographic shifts taking place. We know PVA recognizes that its heavy reliance on direct mail is unsustainable, so we wanted to really spend some time looking into what alternatives may exist. Target Analytics in coordination with Blackbaud – which we understand PVA uses from time to time – has highlighted that increasingly donors are making their first contributions online. As this depiction notes, this is occurring across the age continuum, but is especially true for working age Americans. This is important for PVA to note, given its older average membership age and what some may consider a less up-to-date public image. In 2010, another non-profit contract firm, Convio, noted that its clients raised more than $1.3 billion online, up 40 percent from 2009. The key point is that other nonprofits are moving into this space and having success at attracting new donors with online acquisition.
Pursuing online acquisition, however, is more than just simply adopting a new fundraising channel, it is about understanding and being strategic about its use. In fact, when speaking with “Changing our World,” who assists nonprofits in making this switch, they say that fully understanding how these donors are different and what their expectations are has to be the first step. If you aren’t prepared, you are set up to fail. That said, there is enormous potential here and Target Analytics found that the kinds of donors that are acquired online tend to be younger, have higher household incomes and provide greater long-term potential value. The downside they note though is that retention can be a concern and that direct mail is a better channel for driving renewal contributions.
The good news for PVA then is that direct mail is not dead, it just needs to be used strategically. The sweet spot to drive up long-term value using a multi-channel strategy is to capture younger and higher value donors online, but then use the higher retention direct mail channel to drive renewal contributions. This is going to be critical in the long-run in order to sustain any and all of PVA’s programming. Blackbaud, Target Analytics and Convio all recommend such a strategy. In fact, a 2011 Convio study found that 86% of nonprofits saw increased numbers of contributions when moving online, while 46% even saw an increase in contribution amounts. These are all positive signs worth noting, because other nonprofits are taking advantage of them.
We believe that PVA should immediately begin communicating with an online fundraising acquisition firm to establish an online acquisition pilot program – with the goal of making a more tangible transition to online acquisition within 5-10 years. We understand that PVA spent $23.3 million this last fiscal year on direct mail acquisition, so there is a healthy budget to work with in this space. Determining the speed of that transition will – and should – largely be dependent on the success of such acquisition as PVA becomes more familiar with this new fundraising channel. However, a conservative trajectory would show PVA utilizing at least 20% of its acquisition budget for online fundraising over a ten-year period, as this depiction notes. We spoke with LW Robbins, for example, and they note that others like theAmerican Cancer Society, Special Olympics, Vietnam Veterans Memorial Fund and many others are making this transition as we speak. You will pick the firm that is best for you, but typically an online acquisition program develops companion emails based on the direct mail, begins testing different templates, details success rates and presents acquisition options to the client with comprehensive data analytics that both segment your audiences for appropriate messaging and report results by campaign and by audience. I personally do this in the campaign fundraising world and it is amazing to see how quickly data can be compiled and edited. You can test nearly anything, and from conversations with PVA we know how much testing your fundraising team likes to do. Online acquisition will really open the door to perfecting PVA’s message and outreach.
The added benefit of transitioning to online acquisition is that it is a fundraising channel well-positioned to capture younger generations of donors, as we noted previously. Some of you may be sighing and saying not another Facebook and twitter account recommendation…? Trust us, we’re going to go much deeper than that. But first we want to highlight how valuable this age group really is. Millennials – those born since 1981 –will represent the foundation of non-profit giving in the years ahead. Many organizations assume that this population is disengaged and unreliable, but the facts suggest otherwise and in reality 75% of millennials according to Philanthropy.com gave to non-profits in 2011. In fact, a Convio study identifies that Millenials are not giving significantly smaller contributions, they are just giving to fewer organizations. This would suggest that Millennials can be quite profitable if PVA can just reach them. As Americans age, their interests expand and they will want to find more ways to give back. We want to be the organization that they add to their annual giving list.
So what can we do to reach Millennials? It is all about establishing relationships. Unlike those direct mail donors who are satisfied writing a check once or twice a year, younger generations of donors want updates on how their money is being spent, to be told about news, events and volunteer opportunities – which is really important. Even if they do not contribute in the short run, studies show that the best way to create long-term value with millennials is through face-to-face contact – or a ‘find me on Facebook, meet me face-to-face’ method. According to the Center on Philanthropy at Indiana University, “Working with these age groups is about building for the future as much or more than it is about receiving gifts this year and the next.” Part of building that relationships is capturing their interest and engaging them with volunteer opportunities so that they can see PVA’s work firsthand. To increase that personal interaction, other nonprofits, like Book Worm Angels and the Chicago Humanities Festival, are instituting millennial pricing for events and putting twenty something’s on their board as a means of outreach. The Salvation Army has been ahead of the curve creating a comprehensive outreach program called the Young Adult Initiative, which aims to “establish and grow a national network of service-oriented young adults who will be active in all aspects of The Salvation Army’s mission.”
Therefore, PVA must respond to these trends by enabling the organization to reach these younger Americans – in part through online fundraising acquisition that was just discussed. While the channel for reaching Millennials is critical, creating a personal connection with these Americans is key. This may sound like a lot of work, but PVA must establish long-term relationships with these future donors in order to create a strong fundraising foundation in the years ahead. Much like the Salvation Army, PVA should create a staff-driven initiative aimed at not only ensuring its website is ready to capture younger Americans, but also to ensure PVA’s message is reaching these future donors and that the organization better manages their relationships with them. They must be drawn in through volunteerism, fostered through outreach and relationship management, and ultimately become invested in PVA’s mission and service. This engagement and relationship management is all about connecting people to PVA’s mission and work, which in a way boils down to increasing the organization’s visibility. I’d like to pass it on to Heather who can speak more to this important and related issue.
Thanks Joe. So Zach talked about the non profit industry trends and what they mean for PVA. Joe suggested a fairly big fundraising shift in order to create long term sustainability. We also saw some potential mid and long term savings that could help you better fund your worthy programming. I am going to talk about something else that directly affects program funding and long term sustainability. Matt Evans, an expert in non-profit value creation, states “”. We think that this two-part value proposition should drive nearly every choice that PVA makes. If PVA fails to convey that a need exists ORthat it is the best organization to address that need, other VSOs will fill the void and eat away at PVA’s ultimate sustainability – eroding its ability to support any one of the key foundational programs or services. This is much like the metaphor of the tree falling in the forest. No matter how life enriching any of PVA’s programs are, if no one knows about it, a lot of value is lost.
This may be something that you’ve seen before, in fact we commend you all for embarking on the road to PVA brand consistency. We think that is a HUGE step in the right direction. AND we also believe it goes much deeper than that. Joe talked about how important it is to establish relationship management with younger donors. It is no longer enough that people can recall something in an individual sense about a particular nonprofit, such as a logo, or one event, but that it is rather the depth of understanding that creates value. It is the personality of the brand that creates the largest brand equity and maintains profitable long term relationships.We not only want them to recognize and relate to the logo, but we also want them to connect with and understand the work that PVA does. For PVA to be be sustainable, we will need Americans to know all of the important programming that PVA conducts , like sports, veterans’ benefits, architecture, health care and advocacy/government affairs programs. Being the “best kept secret” does not benefit PVA. In fact, in this sense, the themost important work may not be services that you provide, but your ability to convey the value of those services.
When our group met with you, we were struck by the intelligence and humility of each and every staff member. The more we talked, the more we learned about the depth of the services that you provide and the number of lives that PVA affects. Being the “best kept secret” of the VSOs indicates that the value message that wehave been talking about is not getting out. Neither through members nor from the organization itself.Part of the equation is uniform brand dissemination so that average Americans can better recognize PVA, but it is also about enriching that understanding so that they also see a brand personality and fully understand what PVA does. In order to achieve that, PVA must treat every service they provide as a visibility, differentiation and brand investment, which necessitates full buy in from its media, fundraising, and marketing departments.As the value proposition eluded to, PVA must differentiate itself from other VSO’s. The program evaluation tool that zach will present will help identify a process for focusing on differentiating PVA’s unique work.Additionally, value must be created by managing the relationships with donors to feed them information about PVA’s work, especially in ways that newer generations of donors increasingly desire.Everything that PVA does must be seen as an investment. Providing these life changing services is not enough, you must also go the extra mile to ensure that value is created by marketing and taking credit for that work. Virtue is no longer its own reward.Culturally, PVA must shed its humility. While such an endearing personal trait, it isn’t service you as an organizations. You must be certain that everyone in the organization buys into the necessity of taking credit for all the great work that you do. We know that this will be a colossal culture shift. You simply cannot remain the ‘best kept secret.’As I said, a program evaluation tool will help you to focus the team on this cultural shift. Also, Smit has some ideas about membership that we think may help as well.
Smit: http://www.va.gov/vetdata/docs/QuickFacts/population_quickfacts.pdf Sent at 12:28 PM on SundaySmit: http://www.disabled-world.com/disability/statistics/veteran-statistics.php
This examination has already suggested that PVA needs to appeal to younger Americans and millennials specifically, but PVA also has an opportunity to increase its visibility through expanding membership. While not a rifle shot solution, increased numbers that better reflect all those served by the organization will help PVA get noticed outside of their current community and engage more Americans in the great work being done by PVA. That said, we do not believe that their core definition of members needs to change. Many of PVA’s chapters have associate and affiliate memberships, which is a concept that must be populated nationally. This means adding non-veterans who have SCI/D, veterans with other disabilities and even donors that support the cause and want to be officially involved as a ‘member.’ Numbers of members matter because the more Americans that are invested in PVA’s mission and service the more people PVA has interacting with family and friends and spreading the news about their work. This is also important for PVA’s public image. Instead of saying that they have 19,000 members, PVA should market both their core membership and their more expansive affiliate and associate members as well. This has the implied benefit of lending PVA a more influential and impactful image that better reflects all the great work that they do.
My colleagues have presented to you some keychallenges and opportunities facing Paralyzed Veterans of America. It is my hope that you have been able to see how fundraising, brand image, and membership all have direct effects on the organization’s programs and the services it is able to provide to its constituents. The final recommendation we are going to give you today is that PVA must create its own evaluation tool in order to achieve more sustainable programming and to align its services to the fundraising and visibility imperatives this analysis has outlined. In 1999 the Center for Disease Control developed such a tool for evaluating public health programs which is shown here, and provides insights into how PVA can create a successful formula for assessing its own programs. PVA can pull certain practices from this tool and apply it to its own processes. For example, it will be useful for PVA to engage those people directly associated with the program being evaluated. This might include program directors, employees and even volunteers and members who have specific connections to that program. By engaging these individuals throughout the entire evaluation development and implementation process, PVA will be able to increase the utility of the assessment and improve relationship management simultaneously. By documenting lessons learned PVA will be able to show stakeholders that it has evaluated programs in an unbiased and fair manner, and make strategic value proposition choices that improve the organization’s sustainability.Most importantly, as part of the evaluation design piece, we have developed 5 key questions that PVA must ask when evaluating each program.
These five questions are:How does the program create a direct benefit to PVA’s members?How does the program convey a message of value to donors?Is the program financially accountable?How is the program supporting PVA’s core mission and values?How does the program differentiate PVA from other organizations?These five key questions will give PVA the insight they need to understand which of their programs are strengthening the organization’s mission and which need to be tweaked or eliminated altogether.As an example, we would like to run PVA’s architecture program through these five questions:1) How does Architecture create a direct benefit to PVA’s members? The architecture program has granted people with SCI/D easier access to homes, businesses, public spaces, and sports arenas. This program has benefited members and nonmembers alike and is a key program to highlight when PVA is considering how to increase membership and manage its brand.2) How does architecture convey a message of value to donors? Unfortunately, architecture seems to be one of PVAs best kept secrets. While many well-known public buildings have been improved because of your services, there is little advertisement to that fact. By making this work more well known, the organization may be able to attract more donors and therefore increase fundraising efforts as well as augment membership.Is the program financially accountable? From what we can see, it is not entirely clear how much is spent on this program and if the values of “in-kind” donations have been determined. With transparency becoming more important to donors and members, this may be worth noting in your annual report and on your website.How is architecture supporting PVA’s core mission and values? Part of PVA’s mission is to increase the civil rights and opportunities of its members and this program gives people with SCI/D access to places and opportunities that were not available to them even 20 years ago.Finally, how does architecture help PVA differentiate itself from other organizations? During our first visit with you, we learned that PVA is the only VSO that employs architects full-time who are dedicated to improving accessibility to your constituents. This sets PVA apart from other organizations. Unfortunately, as we have mentioned, this work is going wholly unnoticed and therefore you are not realizing the full potential of such an incredible program.As you can see, these five questions will provide PVA with a basis for understanding the strengths and weaknesses of its program. We recommend that you ask these questions frequently and act upon what you learn.
Non-Profit IndustryGrowth • From 2000 to 2010, the number of tax-exempt organizations grew by 33% • Non-Profits grew by 19% • Veterans’ Orgs by 12.7% 39,709 1,960,203 36,166 35,249 1,709,205 Tax Exempt Orgs All Non-Profits Veterans Non-Profits 1,473,062 IRS 2011 Nonprofit Data Book 5
Non-Profit IndustryEconomic Trends $106Millions $105 $104 $103 $102 year 2 $101 year 1 $100 recession year $99 $98 Average Growth: Current Growth: 2.4% 1.1%“If we continue to grow at this rate, it will take more than a decadeto get back to where we were in total giving in 2007.” - Patrick Rooney, executive director of the Indiana University Center on Philanthropy 6
Non-Profit IndustryIncreased Demand 54% 85% 13% Post-recession Expected Nonprofit Growth Revenue growth increase in IRS 2011 Data Book Giving USA’s 2012 Annual Report demand for services. Non-Profit Finance Fund 2012 Survey 7
Fundraising Channel Evolution Distribution of New Donors by Age within Origin Channel 2010 Medians joined online joined by mail 33% 24% 25% 27% 22% 22% 12% 14% 11% 9% 1% 0% 3% 4% 18 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75+“Although direct mail remains the dominant channel for new donoracquisitions as well, it has become increasingly common for new donors togive their first gift online.” 8 Target Analytics: “2011 donorCentrics Internet and Multichannel Giving Benchmarking Report”
FundraisingChannel Evolution• It is increasingly common for new donors to give their first gift online, and they tend to be younger and have higher household incomes than mail-acquired donors.• While they tend to give larger gifts than mail donors, online-acquired donors tend to have slightly lower retention rates than mail-acquired donors.Target Analytics: “2011 donorCentrics Internet and Multichannel Giving Benchmarking Report” 9
FundraisingChannel Evolution • Direct mail is not dead, but it needs to be strategically leveraged with other channels of reaching donors to be effective and efficient.• Strong direct mail capabilities can drive up retention and long-term value of new donors acquired online, by transitioning them to direct mail appeal programs – according to Target Analytics. 10
RecommendationFundraising Five year pilot program using 2% of current acquisition budget transitioning to a 20% online acquisition program after 10 years 11
Fundraising Millennials (Gen Y) Number Average Average $ per Estimated of Contributions # of Charity Annual Donors per year Charities ContributionsMatures 30.81M $1066 6.3 $169 $32.7BBoomers 52.26M $901 5.2 $173 $47.1BGen X 35.96M $796 4.2 $190 $28.6BGen Y 28.56M $341 3.6 $95 $9.7B The Next Generation of American Giving, March 2010, Convio“In short, the total annual charitable contributions grow with age, but thedifference is primarily driven by the number of charities contributed to, ratherthan differences in gift size” Giving Institute - Engaging the Next Generation of Donors 12
FundraisingReaching Millennials“Millennial donors are different than donors from past generations – but not inthe ways you might expect. Yes, technology and social media are integral partsof their lives, but these donors are driven by personal relationships and humanconnections.” A 2010 Study of Millennial Giving and Engagement Habits, Achieve-JGA 13
Visibility Imperative “People must be convinced that a real need exists and the nonprofit is the best hope for addressing this need.” Matt Evans, Excellence in Financial Management – Creating Value in the Nonprofit Sector 15
Total Veterans with disabilities Potential Markets (5,500,000) Members PVAsInformation provided by U.S. Census Bureau and Department of Veterans Affairs members with SCI/D (19,000) PVAs members with SCI/D (19,000) Total veterans + non- veterans with SCI/D (750,000) Total Veterans with SCI/D (42,000) Total veterans 18 (20,000,000)
RecommendationMembership Leveraging Visibility SCI/D Veterans Vets with other disabilities, and nonveterans with SCI/D Donors and other Americans invested in PVA 19
Program EvaluationKey Value Questions • How does the program create a direct benefit to PVA’s members? • How does the program convey a message of value to donors? • Is the program financially accountable? • How is the program supporting PVA’s core mission and values? • How does the program differentiate PVA from other organizations? 21
ConclusionRecommendations• Building a sustainable future • Transition to an online acquisition, direct mail appeal structure • Millennial outreach • Increase visibility • Membership growth • Program analysis 22