Leveraging experimentation in non-profit digital marketing
When you read the word “experimentation” in an article like this, chances are you think of marketing execs sitting around a table discussing customer acquisition cost (CAC), conversion rates and lifetime value (LTV).
But experimentation is experimentation is experimentation.
A multi-billion dollar enterprise runs a landing page test? Experimentation.
A non-profit organization tests a donation call to action (CTA)? Experimentation.
A local farmer joins a cooperative? Experimentation.
A man gives a community a cow instead of a cup of milk? Experimentation.
Experimentation and optimization take many forms in many industries. But the goal always remains the same: to make something (or someone) better than before.
The nuances of experimentation in the non-profit industry are particularly interesting, though.
Current state of the North American non-profit industry
According to the 2018 USA Giving Report, over $400 billion was donated in 2017. That’s 2.1% of gross domestic product (GDP), up 3% from 2016.
The majority of donations come from individuals (70%, up 3% from 2016). Foundations (16%, up 6% from 2016), legacy gifts or bequests (9%, up 2% from 2016), and corporations (5%, up 8% from 2016) follow distantly behind.
The non-profit space is huge. There are a number of different causes and there are a number of different organizations for all of those causes. You have everything from political organizations to humanitarian relief. There’s also hospitals, universities, cancer research, advocacy organizations for civic rights, etc.
But the level of charitable giving as a ratio of GDP has remained relatively constant over the last 50 or 60 years, at least in the United States. It’s pretty consistently around 2%, so there’s not a big pie that grows. That pie just keeps getting more and more fragmented as new organizations come up.
The report found that donor dollars are fairly evenly distributed:
- Religious – 31% (up 2% from 2016)
- Education – 14% (up 6% from 2016)
- Human Services – 12% (up 5% from 2016)
- Foundations – 11% (up 6% from 2016)
- Health – 9% (up 15% from 2016)
- Public Society Benefits – 7% (up 7% from 2016)
- International – 6% (down 4% from 2016)
- Environmental / Animal Welfare – 5% (up 8% from 2016)
International charities were the only segment to see a year over year decline.
International aid organizations, like ourselves, are seeing a slight decline. Why? People have more and more interest in domestic causes. But in the last three years, since the last United States presidential election, even some of those domestic organizations are slowing down as attention has shifted to human rights and political advocacy organizations.
Despite slight improvements in recent years, The Panel Study of Income Dynamics (PSID) found that charitable giving, overall, has trended downward since the beginning of the 21st century.
Between 2000 and 2014, the number of Americans donating to non-profit organizations fell from 66.2% to 55.5%. People ages 51 to 60 are the prime demographic for charitable giving. In 2000, 78% of them made a donation. By 2014, that number had fallen to 58%.
Lower income households were donating less in 2014 than they were in 2000. Giving decreased by 10% for those earning less than $50,000 of annual income. Even high income households (more than $150,000 of annual income) saw a 5% decrease in giving.
Religious organizations received a large share of donor dollars in 2017, but they too are seeing a decline on a longer timeline. Donors who reported a religious affiliation gave 11% less in 2014 than they did in 2000 while unaffiliated donors only gave 7% less.
The good news is that Americans who do donate are giving more—which explains the increases from 2016 to 2017, noted above. In 2000, households that donated gave an average of $2,041 (in current dollars). That average rose to $2,514 in 2014 (in current dollars).
So, where are the biggest opportunities for donor dollar growth in 2020 and beyond?
- Entrepreneurs: A 2018 report found that entrepreneurs are highly likely to give to charity, regardless of their annual income.
- Millennials: 84% of Millennials give to charitable organizations compared to just 59% of Generation X and 72% of Baby Boomers.
- Digital: In 2017, online giving in the United States increased 12.1% while overall giving was only up 4.1%. Similarly, 79% of charities recently reported seeing social media as a successful channel for fundraising.
- Women: Women reportedly gave 63% of the donations received through the 2016 Giving Tuesday campaign in the United States.
Note that because 70% of donations come from individuals, the non-profit industry is very susceptible to external factors. For example, a new tax law or regulation could lower the number of people giving to charity seemingly overnight. Tax deductions, interest rates, rent prices, economic confidence, etc. could all suddenly have a major impact on the non-profit industry.
Introducing…Heifer International: An international nonprofit
Heifer International is a non-profit organization dedicated to working with communities around the world to end hunger and poverty, and better care for the Earth. They work to empower international families by:
- training people in sustainable farming;
- helping farmers gain access to the market;
- empowering women.
The goal is simple, but incredibly ambitious: zero. Zero hunger, zero poverty, zero environmental damage. For more than 75 years, they’ve worked in 25 countries to provide more than 32 million families with the tools and training they need to escape poverty. Still, today, nearly 1 billion people live in poverty.
Since the beginning, the experimentation mindset has permeated the organization and powered this mission.
As our organization evolved into mass market fundraising, we relied heavily on direct mail. The direct mail industry is very disciplined when it comes to experimentation and testing, and this was a part of our approach to direct mail as well.
We test everything about our mail packages, from the color of the envelopes and the fonts they use to how we label the outside and how we address the person on the inside—everything.
So we’ve always had this experimentation culture in terms of our marketing strategy—dating back to before the web.
That experimentation culture extends from website optimization…
Web optimization for us is all about fundraising, which allows us to do more field work and help more people… to help end hunger and poverty. That’s ultimately where all paths from experimentation go for us.
At a lower level, it helps us understand all of our marketing investments better and make smarter decisions so that we’re better stewards of our donor dollars. We’re always trying to spend less money to get more donations, which experimentation allows us to do.
…all the way through to field work in poverty-stricken countries:
We work with the people in those local areas, to empower them to be our implementers. We employ people around the world, we employ people locally in the countries we work in. Sharing lessons that we’ve learned with one another is a cornerstone for us.
We encourage all of our international staff to communicate what they’ve learned in their countries so that other implementers can try to adopt those learnings into the countries where they work. Experimentation really goes everywhere; it runs through our whole organization. We take experimentation very seriously and we think it’s the key to staying relevant.
With such a large mission, the Heifer International team needs to be fearless, nimble and fast. Experimentation and optimization power the work of their marketing team, of course. But they also ensure more donor dollars end up in the field, and that implementers around the world are making the smartest decisions about how to combat hunger and poverty.
How experimentation fuels Heifer International’s work
Given the decline in donor dollars for international charities and other external industry challenges, how is Heifer International thriving after 75 years?
Non-profit growth comes down to three factors, all of which can be considered multipliers:
New Donors x Donation Frequency x Average Donation Value
For example, increasing the number of new donors by 30% would have an exponential impact, even if the donation frequency and average donation value remained the same. If you increase each of the three multipliers by just 30%, you more than double your growth.
Ideally, you run experiments focused on increasing each of the three multipliers.
It’s unlikely you’ll end up with a 30%, 30%, 30% growth split among the multipliers, even if you divide your time and energy evenly. Increasing donation frequency and average donation value as much as possible first will make increasing the number of new donors later on even more effective.
While experimentation is baked into everything Heifer International does, web experimentation has been particularly effective for them so far. This shouldn’t be surprising given the rise of online giving, but Heifer International’s website is a huge generator of donation revenue.
They really unlocked the power of web experimentation when they started using the qualitative to power the quantitative through behavioral science.
So much of what WiderFunnel does with our experimentation program is grounded in behavioral science. What we’ve been really trying to understand are the motivations of our donors and donors in general.
Why do people donate? How do they choose the charities that they donate to? How do they choose how much to donate?
Everyone does something because of a need and charitable giving is no exception. Behavioral science is about trying to understand that need so we can fill it better. The biggest things we’ve done in our experimentation program have been grounded in behavioral science.
— Harper Grubbs
Behavioral science is such an integral part of optimizing the user experience (UX). You can’t control tax laws, tax deductions, interest rates, rent prices or other external factors, but you can develop a deep understanding of who your audience is, what motivates them, and how you fulfill their needs. That understanding leads to a more empathetic, more optimized UX.
Most recently, the WiderFunnel behavioral science team and Heifer International worked together to better understand Giving Tuesday, the Tuesday after Thanksgiving in the United States.
We did some research to understand how people are approaching it. It’s really a thing! I was surprised by how much it has become a thing.
What we heard over and over again from people in the study is that they’re starting to look at Giving Tuesday as a temporal landmark, a period in time like New Year’s Day where you make changes, make resolutions.
It became clear that people are planning for Giving Tuesday farther ahead of time than we’d anticipated. Based on this information, we have been able to adjust our approach to this important day.
— Harper Grubbs
Layering behavioral science into an experimentation program means designing for donor needs and providing a superior UX, but it also means running smarter experiments.
For example, insights from behavioral science have helped Heifer International’s experimentation program compete with inherent seasonality:
The majority of our fundraising happens during the holiday season—I imagine this is true for a lot of non-profit organizations. That makes it hard for us to run an experiment in July or August, and accurately predict what it’s going to do during the holiday season. The other side of that is as you get into the holiday season, donor intent goes up. So, it’s harder to move the needle throughout the rest of the year.
— Harper Grubbs
Running web experiments during holiday seasons can be tricky.
On one hand, the increased traffic and interest means an increased testing capacity, which means you can run more tests, faster. On the other hand, anomaly traffic is… well… an anomaly. It’s difficult to say with certainty whether insights from the rest of the year will be applicable during the holidays or whether insights from the holidays will be applicable throughout the rest of the year.
The decision of whether or not to test on seasonal traffic isn’t black and white, but in the very seasonal non-profit industry, it might just be a necessary evil. Here are a few things to keep in mind when running tests during the holidays:
- If you run an A/B test during the holidays, consider running the test again to confirm the results or quantify the impact the holiday season had on the initial results.
- Take big swings and test drastic changes, not micro conversions.
- Try running tests exclusively on returning donors or visitors.
- You may want to run a bandit test instead of an A/B test.
Despite the uncertainty of the non-profit industry as a whole, the marriage of behavioral science and experimentation has been vital for sustaining growth:
The international relief sector has definitely seen a decline in interest in recent years. But our experimentation program has allowed us to continuously improve our donation conversion rate. If we had not been doing all of this experimentation and optimization work, we would be in a lot of trouble with our online fundraising. Instead, our online fundraising efforts are outperforming industry trends.
— Harper Grubbs
Celebrating 75 years of change
This year, Heifer International is celebrating 75 years of change, both internally and in communities around the world. Staying relevant, let alone growing, for the better part of a century invariably means embracing change and evolution.
For Heifer International, that evolution hasn’t just been the marketing mediums themselves, but the brand and messaging as well.
During the first 40 years, at least, of our organization, most of our support came from churches and other like-minded groups. Our organization started with a man, Dan West, volunteering during the Spanish Civil War in the 40s.
He was a conscientious objector because of his faith; he was a member of the Church of the Brethren. He was volunteering in a refugee camp, serving little cups of milk every day. He got this idea: what if we could give these people not just a cup of milk, but a whole cow?
— Harper Grubbs
Heifer International was born out of that idea. Initially, Heifer provided families around the world with heifers and training in how to care for these animals, ultimately providing nutrition and generating income. That story of “the gift of a cow” became Heifer International’s brand, and today, most people still think about the organization in these terms.
For 75 years, we have been the animal organization that gives people cows. Our brand has been powered by this aspect of gift giving, and to many of our donors, we are known for our gift catalog that lets them give meaningful gifts to their friends and family at Christmas every year.
— Harper Grubbs
Of course, the root of Heifer International’s work is, and always has been, the people. The cute, cuddly animals were simply a vehicle for improving the lives of international families and communities.
More recently, we’ve really tried to let people know that we are a sustainable development organization. While we still use livestock to change lives, our message is evolving to focus more on the people we’re working with. We’re using more of the voice of the people to tell their success stories. It’s always been our model to empower communities to be self sustaining, and then get out of the way. Now we’re really highlighting that in our marketing.
— Harper Grubbs
On a mission to put themselves out of business, they’ve been accelerating their approach over the last few years. From a cup of milk a day 75 years ago to long value chains that fuel local economies today, Heifer International has changed with the world, not despite it:
Now we’re really focused on connecting people in the field with the value chain. So, it’s helping farmers develop cooperatives where they can sell their milk directly to a yogurt company without the middleman in there, taking a big chunk of the profit. That then allows the farmers to produce more, which has this whole other impact on their local economy.
Studies have shown that it has this overall lift in the local economy where more people are employed. Why? Now the person who is selling their milk has more money and more milk to produce, which means they need someone to work on their farm, which means that newly employed person has more money, which means they can send their kid to school. And on and on and on. There’s this thriving market system all of a sudden that didn’t exist before.
— Harper Grubbs
Heifer International is testing and learning to accelerate their conversion rate, which means they can spend less to get more donations, which means more donor dollars go towards helping people around the world, which means… experimentation creates a value chain of its own!
Above all, Heifer International is testing and learning to help impoverished people sustainably achieve a living income.
Using experimentation to increase confidence in a world of uncertainty
There is much more uncertainty in experimentation in the non-profit industry, whether you’re dealing with seasonality for a web experiment or how best to empower women farmers in Nepal.
We don’t have the luxury to just throw more dollars at something. That leads to experimentation. What if I did this? What if I tried that? What if I used this in that way? We want to help more people, more quickly.
— Harper Grubbs
Here’s what you can learn from Heifer International’s 75 years of experimentation:
- When fundraising, focus on: entrepreneurs, Millennials, digital, and women.
- Experimentation is a mindset, a culture. Don’t let it begin and end with web experiments.
- Test and learn! Encourage the sharing of insights, whether they come from successes or failures, throughout your organization.
- Focus on the three multipliers: new donors, donation frequency, and average donation value.
- Marry behavioral science and experimentation to improve your UX and run smarter, more impactful tests.
- Lean into the uncertainty of testing during seasonal months, but be realistic and strategic with your approach.
Do you work in digital marketing in the nonprofit sector? We’d love to have to a conversation with you about how we can help you increase your digital fundraising. Drop us a line at [email protected] or reach out via our “Contact Us” form.
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