Marketing agencies harvesting big bucks from charities

BY ANTHONY GALLOWAY

As much as $350 of donations are going to the marketing agencies behind charities each time you sign up to a regular giving program, a mojo investigation has revealed.

People who sign up for a standard donation program of around $40 a month but only stay for a year, can see up to 75 per cent of that money go to a marketing agency rather than the intended charity.

Regular giving programs normally consist of monthly donations and can range between $20 to $100 with the average donor typically contributing for three years.

Tim Cansfield-Smith, Communications and Media Manager of Plan Australia, said the average donor for Plan lasts five years.

“The fee to the (marketing) agency is paid back within the first year and then we’ve got four more years where we do not pay any agency fee," he said.

If a donor stays with Plan’s $43 a month regular giving program for five years they’ve contributed over $2,500,with approximately 11 to 13 per cent of this figure going to a marketing agency.

Regular giving programs have become the dominant source of revenue for charities in recent years, with face-to-face marketing emerging as the primary method of persuasion.

“It’s growing because it works,” Mr Cansfield-Smith said.

In a recent study of 16 major Australian charities by Blackbaud’s Target Analytics, it was revealed that nearly 90 per cent of 135,124 new donors were recruited by the face-to-face method, followed by the internet and telemarketing.

Mr Cansfield-Smith said the face-to-face channel is the only one which requires minimal investment upfront by charities as the marketing agency only obtains a percentage if a donor is signed up.

“That’s really different to things like television, radio and direct mail,” Cansfield-Smith said.

"All of those have very immediate upfront costs and there is no guarantee they result in anyone deciding to pick up a phone and sponsor a child.”

Chris McMillan, Chief Executive Officer of the Fundraising Institute Australia, said some charities do not engage a third party to market regular giving programs, but this can prove more costly to the company.