September 8, 2008 | Categories Donation Processing, DonorPerfect Fundraising Software, Fundraising Strategies

How to Determine Donation “Ask” Amounts

Calculating Donor Life Time Value

How to Maximize “Holiday Ask” Results

It’s turning in that time of year again where non profits across the country are preparing their direct mail file for their largest direct mail fundraising effort – The Holiday Ask.

The Holiday Ask is so important that in a study conducted by the Center on Philanthropy at Indiana University, they discovered The Secret

“…the researchers also asked respondents about how much of their giving occurs from Thanksgiving to New Year’s. On average, people make 24 percent of their annual donations in those six weeks–or about twice what one would expect if giving were equally distributed throughout the year.”
–Source: Giving and Volunteer Research, The Center on Philanthropy at Indiana University

Year End Donations Are Very Important

Since about 1/4 of the total giving is made during this important time frame, it’s even more important to make sure that your direct mail campaign not only targets the right donors, but that it also targets the right amount for each donor. In fact, since the number one reason people give money to charity is because they are asked, then it also holds true that you should make sure to ask the right amount.

You certainly wouldn’t want to ask a major donor for a $25 gift when they are capable of giving $500 or more. Likewise, asking a new donor for $500 when their largest previous gift was $30 is also nonsensical. The secret is to ask more than they gave in the past but not too much more to dissuade them from giving at all.

As a result, direct mail operators have for years used ‘secret’ formulas to calculate the ask amounts in the direct mail piece. Using a combination of research, experience, a little voodoo and a bit of luck, these experts can take your donor file and create the perfect ask amount for each of your donors.

What Information will Direct Mail Vendors Require

Typically, to take advantage of this tactic, direct mail vendors will require these pieces of information for each donor:

  • Last Contribution Amount
  • Last Contribution Date
  • Maximum Contribution Amount
  • Initial Gift Amount

Other fields to consider include the dates of both the maximum and initial gift amounts. For users of our DonorPerfect CRM fundraising software, it’s very simple to include these calculated fields with your export- in fact they are always included in our standard donor export.

Now, what happens if you aren’t taking advantage of a direct mail vendor’s expertise? Is there anything you can do? The answer is YES! Basically, all of these ‘next ask’ variants rely on a combination of the donor’s history to reasonably predict an upgraded gift amount.

How to Determine the Correct Fundraising “Ask” Amount

For example, one could simply use the Maximum Gift Amount * 1.20 and round off to the nearest $5. This way, you could maximize your potential by asking for amounts that are 20% more than their maximum gift.

Another variant would be to simply take the Last Contribution Amount and again multiply it by 1.2 rounding off to the nearest $5.

Yet another way that works is to blend both the last contribution amount and maximum gift amount, and take a certain percentage of each, add them together, and then round. For example:

(70% * (Maximum Gift Amount) + 30% * (Last Contribution Amount)) *120% = New Ask Amount

Larger organizations can and do spend a lot of time asking the right amount. Because their donor files are so large, a 1% difference in the amount of each response could make or break the success of their mailing. For the vast majority of smaller organizations, using the blended approach will most likely do the trick.

How Many “Ask” Amounts Should Nonprofits Include

Finally, one should always show at least three ask amounts in the direct mail piece, along with a spot for “Other”- for those cases where we completely missed the mark, or when the donor may have won the lottery!

As with any direct mailing, you should test, test, test, and then test some more. Though the above tactics are generally recognized as a good rule of thumb, each organization is different and like the infomercial says, “Your results may vary.”

Written by Amanda Foran