ACF Insight - Australian Conservation Foundation .: Chartered Accountants Student Challenge :.

ACF Insight

Team members:
Jarrod Bayliss-McCulloch (Monash University Clayton)

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Synopsis

Executive Summary:

The Australian Conservation Foundation (ACF) is funded almost entirely by individual donations and membership. In fact, donations from members and supporters account for 93% of ACF’s annual income.

At the same time, Australian is undergoing a period of difficult economic conditions. Budget Paper No. 1, Statement 2 observed that “powerful countervailing forces are confronting the Australian economy. Slower global growth, tighter credit conditions and higher interest rates are expected to slow Australia's economic growth. Counteracting this, robust growth in emerging economies is supporting large rises in Australia's terms of trade, providing further stimulus to incomes and contributing to already heightened price pressures.”

Australian households are confronted with an environment of rising interest rates, inflation and costs of living, which are having a dampening effect on spending and reducing personal discretionary income. As a result, the coming years are expected to present significant challenges for not-for-profit organisations like the ACF. This is because the diminishing levels of discretionary income, in turn, reduce individuals’ capacity and willingness to donate funds to Australian not-for-profit organisations.

For ACF, which derives 93% of its revenue from member and supporter donations, the consequences are potentially catastrophic.

In light of these impending challenges, ACF wishes to formulate a strategy for managing this risk, in order to minimise the impact of a potential recession.

Considering the unique characteristics and nature of ACF’s operations, mission and strategic objectives, we have devised four key strategies to ensure the ACF maintains its strength and resilience over the coming years:

1. Donor support: Strategies to more effectively target potential donors.

2. Expenditure and Supplier Management: Strategic Workforce Planning to reduce costs and improve workforce efficiency.

3. Campaign ROI: Strategies to maximise the efficiency and effectiveness of existing campaigns.

4. Investment and Funds Management: Strategies to ensure prudent ongoing investment and funds management.

It is our intention that this report should offer a practical and insightful perspective on the challenges currently facing your organisation.

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Thank you for your submission. We were interested in the concepts of prioritising prospects and lifecycle segregation introduced in your submission. With reference to the 4 types of donors noted, what could be done to target donations from these different groups?

By Judge on June 17 2008, 21:03

Hi Jarrod,

I like the general format of your report. The formatting is quite easy on the eye and has just the right amount of 'gloss' without any unnecessary gimmicks. The only thing I noted was that you had the website of 'CAPTure' in yellow! This is very difficult to read on white.

Other than that, I liked your idea of quoting from outside sources - Kintera was gold (the company actually looks at increasing effectiveness of fundraising efforts through software solutions). The quote from the President was spot on.

I also liked the idea of Facebook/social networking website targeting but I fear it would probably have a marginal effect. Of course I don't have the data, but I believe most of the 93% small donors maybe outside the target market for sites like facebook. Could be wrong though. Would it be interesting to see the age,sex,location,propensity distribution of the 93% small donors?

Lastly, I think your financial management principles are sound, no question. The problem is that (we found this difficult to deal with too) how do u justify something like share investment "in the realm of 15-20%"? Especially since they have done well with share investments...and then what if they used the recession to pick up investments at cheaper rates? Who knows!

Good work with this and your other submissions for the CA Challenge.

Regards,
Dale from MDJL

By Dale Joachim on June 19 2008, 09:07

Dear judge,

Thank you for your question about using lifecycle segmentation to target ACF’s donors.

As you noted, my report discusses lifecycle segmentation based on four categories of donors: new donors, transition donors, core donors and lapsed donors.

These have been defined as follows:

New donors:
Donors with no prior giving history with the organisation. Their first gift falls within the fiscal year.

Transition donors:
Donors in this category are eligible to continue giving for their second year in a row. They make the transition from New donors if in the previous fiscal year they gave their first gift to the organisation.

Core donors:
These donors have given a gift to the organisation in each of the two previous fiscal years. In the previous fiscal year they may have been core donors or Transition donors.

Lapsed donors:
These donors did not give a gift to the organisation in the last fiscal year. They are Recently Lapsed if they have not given in the last 13-24 months and Deeply lapsed if they have not given a gift in more than 25 months

If I understand your question correctly, you’re asking about specific ideas for targeting each class of donor.

This is a difficult question to answer, largely because lifecycle segmentation cannot be carried out in isolation, ie it needs to executed in conjunction with the kind of “affinity, attachment, propensity and ability” analysis recommended by David Lawson at Kintera. This, in turn, is because the key is understanding the donor, and the donor lifecycle is just one characteristic of potential donors.

Having said that, I’ve been able to research a few general guidelines for targeting donors that fall into specific lifecycle groups:

1. Communicate less with those less likely to respond. They can include:
• Low-dollar donors
• Lapsed donors
• Single-interest donors (those who never respond to offers other than one type)

2. Make sure core donors have plenty of donation options to choose from, including a choice of how ACF communicates with them.

3. For transition donors, point (2) is even more important. Actively make them aware of the different options available. Market a monthly or annual direct debit option to make it easy for those who are willing to continue donating to do so on a regular basis and without being prompted by regular fundraising communications.

4. For new donors, stick to the basics. The key is to get the message out there as much as possible. Make as many people aware of ACF’s varied campaigns as possible, follow up on new interest and enquiries and let potential donors know about the various donation options.

As noted above, all four points can be refined and more acutely targeted by data mining with reference to the other characteristics of donors.

Thanks again for your question, and I hope my response has been helpful.

Regards,

Jarrod Bayliss-McCulloch.

By Jarrod Bayliss-McCulloch on June 20 2008, 08:25

Hi Jarrod

Thanks for another excellent submission. I really like your focus on Strategic Workforce Planning and use of a software solution to achieve that.

I have a question about suppliers that you referred to in your report. You noted that the ACF workforce is a significant part of ACF “suppliers” – workforce.

In terms of ACF fundraising conducted jointly with external service providers, the gross expenditure on fundraising involving them is substantial. $2 Million this year, up from $1.5 Million last year

How will your strategic workforce plan work with the external providers?

Do you plan to reduce the dependence on these providers?

How can you “Review key process against industry best practice” of an external provider?

Thanks and Goodluck!

By Danny Mau on June 21 2008, 16:50

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