Using Donor Feedback and Best Practices in Donor Retention to Improve Declining Renewal Rates at Bailey-Boushay House

Nicole Reese February 28, 2014

Abstract This project explored how, based on best practices in donor retention and donor relations, Bailey-Boushay House can improve or reverse its declining renewal rates. Through an examination of literature on the topic, reports of giving trends in the area and by administering a postal survey to current and lapsed donors, the current stewardship and solicitation strategies of Bailey-Boushay House are analyzed for their effectiveness and efficiency. Based on findings of the survey and trends in the literature, recommendations are given as to how Bailey-Boushay House can optimize stewardship and donor relations to increase donor retention rates. Introduction Since the economic recession of 2008, nonprofit organizations have struggled with the challenge of maintaining donation levels and donor retention rates. In the Pacific Northwest, between 2008 and 2010 (removing donations made by the Bill and Melinda Gates Foundation which rose by 15% during this time) there was an overall funding decrease of 23.5% to charitable organizations (Lewis, 2012). The funding sources that were most heavily impacted were foundation grants, corporate donations, and major giving. The decline of giving in other areas placed an increased importance on the role of annual fund donations for many organizations (LPR Publications, 2009). Generating the lions share of annual fund revenues, the decline in retention rates for direct mail has been an area of focus for many organizations (Flannery & Harris, 2011).

As donation amounts and donor retention rates are decreasing, the demand for human and social services, like those provided by Bailey-Boushay house, are on the rise. Without an active new donor recruitment strategy, the best option to expand declining revenue is to reacquire lapsed donors (Lewis-Lodhi, 2013). The question is how this feat can be accomplished. By adopting best practice in stewardship, relationship fundraising, and donor retention models, Bailey-Boushay House can close the gap in funding deficit, but it is important that these models be adopted in a strategic way that meet the needs, wants, desires, and expectations of the Bailey-Boushay House donor base while still being fiscally efficient. By surveying both lapsed and new donors, and reviewing the literature containing industry best-practices, a comprehensive and tactical strategy has been developed to improve or reverse Bailey-Boushay Houses declining annual fund donor retention rates. Background/History Washington State saw its first reported AIDS case in 1982 (Wood, 2009); by 1987 the number of reported AIDS cases in the state had jumped to 847 in Seattle alone. By the end of the decade there were 4,117 cumulative HIV/AIDS cases, with a combined incidence rate of 19.24 new cases per 100,000 people, and the AIDS mortality rate in the city had reached 9.24 deaths per 100,000 people (Reese, Clark, & Leonard, 2008). While not much was known about the disease at this time, it was known that is was deadly, spreading quickly, and putting strain on the citys health care systems. Starting in 1985, the incidence rate for new AIDS cases in Washington State had been higher than the incidence rate for new HIV cases by an average of 3.97 per 100,000 people annually; some years had a discrepancy as high as 16.08 more new AIDS cases

per 100,000 people over new HIV cases (Reese, Clark, & Leonard, 2008). The practical application of these statistics meant that of the new HIV/AIDS cases in Washington State, the majority of people were being diagnosed after the disease had progressed to full blown AIDS, reducing the patients prognosis and increasing the difficulty and complexity of care. With standard hospitals and nursing care facilities ill-equipped, unable, or unwilling to help HIV/AIDS patients with disease management or end of life care, the majority of people with HIV/AIDS were ending up in local emergency rooms (Shapiro, HIV's New Normal, 2013). The lack of knowledge about the disease generated a great deal of fear in the medical and healthcare community; misinformation about the disease, and the stigma that surrounded people who had contracted it caused many doctors, nurses, and nursing care facility workers to be unwilling to help patients with HIV/AIDS. In the late 1980s, it was not uncommon to find AIDS patients on stretchers, in hospitals hallways, who had passed away waiting for care that was never coming (Shapiro, The New Face of AIDS, 2006). It was clear that something needed to be done to provide dignified end of life care for the people living with AIDS in Seattle. The seeds for Bailey-Boushay House were planted in 1987, when the clinic director for Seattles Pike Place Market Clinic and the AIDS Housing Alliance of Washington (now known as Building Changes) came together for a grant from the Robert Wood Johnson Foundation. The idea was to open a skilled nursing facility that specialized in providing compassionate hospice care for people dying from AIDS, and to provide outpatient care for the chronically homeless living with HIV. When developing the concept for BaileyBoushay House, the King County Commissioners office stated it would not allow a

skilled nursing facility to be opened and operated without support and oversight from one of the citys major hospitals or medical centers. Initially, the Nuns of Providence had agreed to operate the facility; the caveat in this agreement was Bailey-Boushay House would not be able to hand out condoms to clients. Given that this was to be an HIV/AIDS care facility, the board decided that they could not allow this regulation to be enforced. Just at ground breaking was occurring for the facility; Bailey-Boushay House was left without a major area hospital to support it. The board for Bailey-Boushay House reached out to all the major area hospitals for support. The primary concern from medical centers like Swedish, The Polyclinic, and University of Washington Medical Center was the operating cost of Bailey-Boushay House. Because the outpatients were low to no income, and because many of the inpatients receiving end of life care did not have insurance, the facility would have to be run as a nonprofit, and would more than likely be operating at a deficit for the foreseeable future. All but one of the medical centers in the greater Seattle area voiced their compassion for the cause, but ultimately declined the request to operate and assist Bailey-Boushay House. When Virginia Mason Medical Center agreed to support and oversee the operations of Bailey-Boushay House, it is an understatement to say that the boards of Bailey-Boushay, the Pike Place Market Clinic, and the AIDS Housing Alliance were shocked. At the time, Virginia Mason Medical Center was not known as a place for HIV/AIDS care, and the community outreach aspects of the hospital were just starting to be developed. When asked by a local reporter as to why they chose to take on the relationship with Bailey-Boushay House, the board president at the time state, We

decided it was just the right thing to do (Shapiro, The New Face of AIDS, 2006). When Bailey-Boushay House opened its doors in 1992, it was the nations first facility designed to help people living with HIV/AIDS. During its first few years of operation, it was not uncommon for Bailey-Boushay House to lose one or more of its inpatient clients a week to AIDS. The outpatient program could see upwards of 300 clients a day come through its doors. The outpatient clients at Bailey-Boushay House in addition to living with HIV/AIDS are also low-to-no income, chronically homeless, and often dealing with substance abuse and mental illness; because of the additional challenges the outpatient clients face, when Highly Active Antiretroviral Therapy (HAART) was introduced in 1996, the nursing staff at BaileyBoushay House began the medication management program. The medication management program dictated that for their first six months at the facility, a clients medication would be kept at Bailey-Boushay House and administered by its nurses. This insured that clients would have to come to the facility, so the nursing staff could track compliance rates. In addition, nurses taught the patients how to take their medication properly. The medication management program also kept clients safe. According to the Executive director at Bailey-Boushay House, many outpatient clients at the time voiced their concern that others would try assault them and try to steal their medication at night on the streets or in area homeless shelters. After six months, if a client is operating with a 95% compliance rate or higher, they are allowed to take a few days worth of their medication with them when they leave Bailey-Boushay House, however the vast majority of clients opt to keep their medication at Bailey-Boushay House.

The introduction of HAART and subsequent antiretroviral (ARV) therapies changed HIV from being a death sentence to being a manageable chronic disease if drug therapies were adhered to with 100% compliance. Between 1995 and 1998, the mortality rate from AIDS in Washington State dropped from 12.25 deaths per 100,000 people to 2.99 deaths per 100,000 people (Reese, Clark, & Leonard, 2008). The key to HAART and ARVs being effecting, however, is the compliance with the medication regiment. If patients are not methodical about taking ARVs, they develop resistance to the drugs, and the disease will progress as if the patient had never been on a drug therapy regime (Shapiro, HIV's New Normal, 2013). There are several combinations of ARVs, or AIDS cocktails, that a patient can try, but not all patients respond to all cocktails, making compliance with medication regimes even more critical for a patients prognosis. 80% of HIV/AIDS patients have only a 60% compliance rate with their medication regime (Paterson, et al., 2000). Bailey-Boushay Houses outpatient clients have a 95% adherence rate through the organizations medication management program. This adherence rate has been vital in proving the effectiveness and importance of Bailey-Boushay Houses outpatient programs to the surrounding community. The medication management program at Bailey-Boushay House helped to not only improve the quality of life for clients, but also extend their life expectancy. When Bailey-Boushay House was in the first planning stages, there was a lot of resistance from the residents of Seattles Madison Valley neighborhood where the facility was going to be located. In addition to fearing the transmission of the disease, the residents were not pleased about the clientele that Bailey-Boushay House was going to be helping. As previously stated, Bailey-Boushay House has two components, the

inpatient program, which provided end of life care and specialized nursing for those dying from HIV/AIDS, and the outpatient program, which helped clients with medication management. In addition to living with HIV/AIDS, Bailey-Boushay House clients face additional challenges; they are low-to-no income, chronically homeless, and often suffering from substance abuse and mental illness. So when staff were able to show how effective their medication management program was, and how well clients were responding to the occupational therapy and life-skills counseling services provided, the surrounding neighborhood let out a collective sigh of relief. By 1995, Bailey-Boushay House was receiving large amounts of positive press coverage both locally and nationally. In addition to operational and medical experience, Virginia Mason Medical Center was able to offer an additional type of support to Bailey-Boushay House: fundraising knowhow. Virginia Mason Medical Center, because of its research efforts and community clinics, had received 501(c)(3) status in the late 1970s. The Virginia Mason Foundation was established in 1983 to handle all major gift, annual fund, corporate, grant, and capital campaign giving. In the first few decades in their relationship with Virginia Mason Foundation, Bailey-Boushay House was given guidance in their philanthropic efforts, and staff support in all appeal production, fundraising events, and major giving ventures. Bailey-Boushay House, though, was still allowed to take the lead on its fundraising until 2007. Along with positive press coverage, and improving local opinions of the organization, came large amounts of unsolicited contributions. In the first 20 years of operation, Bailey-Boushay House was able to operate without a new donor recruitment strategy or

a comprehensive stewardship plan. New donors came to the organization unsolicited by making gifts to honor friends and loved ones that had passed, as well as local HIV/AIDS and LGBTQ rights advocates supporting the organization from press coverage they had seen. The fundraising efforts of the organization had been focused on a patchwork annual fund renewal process. Up until 2005, donors were sent either a spring or fall appeal letter, along with a follow up letter, depending on the time of year that they gave. The only stewardship plan in place was a newsletter (Homefront) that was sent out to all current and lapsed donors 4 times a year. In 2007, Bailey-Boushay House as part of their relationship with the Virginia Mason Medical Center allowed the Virginia Mason Foundation to take over their fundraising operations. At this time, all annual fund donors were sent both the fall and spring appeal, along with follow up letters as necessary, unless a donor had requested to only be solicited once per year. Letters were sent in plain off-white envelopes with the organizations logo in the return address section. The letters being sent to lapsed and current donors contain the same messaging for both the initial ask and the follow up appeal letter. In addition to printed letters, lapsed and current donors alike are placed on the organizations fall telephone solicitation list. An outside company is used to call donors about a month before the fall appeal letters are sent out. Again, the same messaging is used on lapsed and current donors. The stewardship methods in place for annual fund donors (those giving $9,999 or under) consists of the Homefront newsletter and a donor impact postcard that has one story of how one donation helped at a certain area in the facility. The Homefront newsletter was redesigned to be longer, but only come out three times a year. To date,

there is no formal electronic communication, solicitation, or stewardship strategy in place. Despite Bailey-Boushay Houses vital role in the community, the organization has experienced declining revenue from individual contributions since 2005. The organization has been operating under the assumption that the decline in fundraising dollars has two primary root causes1: 1) The declining media coverage of the HIV/AIDS epidemic has changed the perception of urgency for the donor 2) The financial crisis of 2008 caused donors to decrease the amount they are giving, or stop giving all together. In Figure 1, there is a distinct trend that revenue from individual contributions has decreased since 20052. At this same time, as can be seen in Figure 2, there has been a continuous increase in the cost of direct care.

Many HIV/AIDS organizations have experienced a decline in support because of the changing face and demographic of AIDS patients over the past decade. In the early waves of the disease, middle class to upper-middle class gay men were seen as the primary victim of the disease, were as modern perception has shifted more to lower income injecting drug users and/or commercial sex workers (Shapiro, The New Face of AIDS, 2006). Bailey-Boushay House fundraising efforts were not affected by this shift as the organizations clientele has always been the low-to-no income victims of AIDS.
2

The chart shows an increase of giving in 2011, but this increase in revenue was due to one large estate gift that came in during that year. With the estate gift removed, 2011 would follow the same downward trend

Figure 1: Bailey-Boushay House Revenue through Indivitual Gift Contributions from 2005-2012
$800,000.00 $700,000.00 $600,000.00 $500,000.00 $400,000.00 $300,000.00 $200,000.00 $100,000.00 $0.00 2005 2008 2009 2010 2011 2012 Individual Contributions

Figure 2: Cost of Direct Care at BaileyBoushay House from 2005-2012 $9,000,000.00

$8,000,000.00 $7,000,000.00 $6,000,000.00 $5,000,000.00 $4,000,000.00 $3,000,000.00 $2,000,000.00 $1,000,000.00 $0.00 2005 2008 2009 2010 2011 2012 Direct Care

Despite the fact the cost of direct care has increased while donations have been decreasing, the organization has been able to remain fiscally solvent because of an increase in the insurance revenue. When the mortality rate of AIDS started declining,

Bailey-Boushay House had several empty beds on the inpatient care floor. Because the building had been designed around treating patients with difficult to manage end of life care, it was easy for the skilled nursing part of Bailey-Boushay House to be repurposed to treat patients with other challenging terminal or chronic diseases such as ALS, Huntingtons disease, advanced multiple sclerosis, and some forms of brain and bone cancer. This expansion of services also led to an increase in revenue as the new group of inpatients coming in had more insurance coverage than the previous demographic served. Roughly half of the clients in the inpatient program are still HIV/AIDS positive, the insurance coverage for the other 15-16 patients has helped to support the organizations bottom line. But even with the diversification of revenue sources, in order for Bailey-Boushay House to expand its services in the outpatient program, it must secure its philanthropic base. The outpatient program, while receiving minimal government funding in the form of grants, operates at a large deficit. Bailey-Boushay House receives grants from the state and federal government to offset the cost of food and medication for the outpatient program. The grants received cover $3/day for food for each client and $15/day for HIV/AIDS medications per client. The actual cost of food is roughly $15/day per client. The cost of HIV/AIDS medications is around $75/day per client; in addition, many of the outpatient clients are also being treated for mental illness, substance abuse, and other chronic disease associated with HIV/AIDS like tuberculosis. There are additional costs associated with the outpatient program like the free laundry facility, art therapy, addiction counseling, life-skill building classes, and other occupational therapies and

counseling that are not covered by the state and federal grants. These vital programs are funded through individual gift contributions, both major giving and annual fund giving. While the client base of Bailey-Boushay House has expanded and shifted, the mission statement for the organization has not changed. An internal struggle of the Virginia Mason Foundations fundraising team is the Bailey-Boushay House boards lack of urgency to redefine the organizations mission. Because the mission is statically focused on HIV/AIDS even though the organization is helping provide specialized nursing for those with ALS, Huntingtons. et cetera, the Virginia Mason Foundation annual fund staff is not able to send out solicitation appeal, renewal, acquisition or other with, on this addition work. The mission statement is the scope and focus of what the organization is supposed to be doing; even if there is work happening outside of that scope, the organization should not capitalize on it unless the mission statement reflects the additional work or scope (Brinckerhoff, 2009). By rewriting the mission statement, the board of Bailey-Boushay House would be outlining a more realistic depiction of what the organization does, and the benefit that it provides to the community. Literature Review While researching the question, Based on best practices in donor retention and donor relations, how can Bailey-Boushay House (BBH) improve or reverse its declining renewal rates? a series of literature was gathered to look at best practices, common faults in the fields, and trends in the region. The literature collected can be attached to one of three over arching themes: relationship fundraising strategies, donor retention and satisfaction, and best practices in solicitation mediums. In addition to literature reviewing best practices in the field, there are also reports available that look at giving

trends both in the region and industry wide. A report published by Philanthropy Northwest (2012) compiled and analyzed philanthropy statistics for the Northwest region for 2010 and 2011. TargetAnalytics published a similar report by Helen Flannery and Rob Harris (2011) that looked at online giving and direct marketing trends for large national organizations. Relationship Fundraising Strategies Relationship fundraising is an important theme throughout the literature. Whether the relationship is cultivated through email (Olsen & Frazier, 2001), with the assistance of a database (Weir & Hibbert, 2000), or throughout a longer cultivation process (Cooks & Sokolic, 2009), relationship fundraising is the key element to keeping donors loyal (Sargeant A. , 2001). Through relationship fundraising, we are helping the donor to develop a stronger, deeper, and more personal connection to the organization, which in turn leads to a larger financial commitment (Weir & Hibbert, 2000). In the article Relationship Fundraising, Sargeant (2001) discusses the important role that relationships play in keeping donors loyal to an organization. In this article, the conclusion is made that whereas one in five donors might deflect from an organization due to a change in financial circumstances, a larger number of donors that deflect are choosing to switch their support to an alternate organization (Sargeant A. , 2001). Combining this statistic with the work of Bennett (2009) on donor regret and satisfaction leads to the hypothesis that if donors that have elected to support an organization other than Bailey-Boushay House were approached with a personalized solicitation that invoked the emotion of regret, a large percentage of them might opt to reinstate their support to Bailey-Boushay House.

To track donor relationships in a dynamic and accessible way, it is important to use a comprehensive database system (Weir & Hibbert, 2000). A strong database allows the fundraiser options in customizing solicitations, keeping a record of interactions and preferred contact methods, along with giving history. Without a database, it is cumbersome to track donor relationships in an accessible and meaningful way (Weir & Hibbert, 2000). An additional benefit of using a database to track donor relationships is the assurance that the relationship is tied to the organization and not the fundraiser. By institutionalizing the donor information, there is an assertion that the relationship between the donor and the organization will be maintained throughout staff turnover (Weir & Hibbert, 2000). The importance of tracking the history of a relationship was highlighted in A Case Study of a successful Donor-Nonprofit Relationship (Cooks & Sokolic, 2009). This case study illustrated that secure large financial contributions is tied to a strong donor-nonprofit relationship that can be years in the making. Without understanding the history of this relationship, it can be difficult to best connect the donor to correct funding opportunity at the organization (Cooks & Sokolic, 2009). With a 14% reduction in grants to support Human Services in the Northwest over the past 5 years (Lewis, 2012), maintaining relationships with individual donors of Bailey-Boushay House is more important than ever. Maintaining a strong relationship with donors can increase donor loyalty, which can not only increase retention rates , but also lead to donors increasing their support of the organization (Cooks & Sokolic, 2009). One key element in Relationship Fundraising is meeting the donor in their medium (Olsen & Frazier, 2001). With email, social media, new media, and smart phone

technologies playing an increasingly important role in donors lives both personally and professionally, electronic communications are not a trend that nonprofit organizations can choose to afford (Olsen & Frazier, 2001). In addition to having a secure electronic relationship development plan in place, it is important that organizations also develop a solid solicitation strategy around email and other new media (LPR Publications, 2009). Best Practices in Solicitation Mediums Direct marketing through snail mail and telephone solicitations have been the dominant fundraising method for annual fund solicitation in modern fundraising almost across the board (Key, 2001). However, because of over solicitation, donor saturation, and donor fatigue, direct mail has experienced a declining return over the past decade (Diamond & Iyer, 2007). With the emphasis of the research question being on improving or reversing the decline in renewal rates, the literature has outlined the importance of diversity in solicitation appeals (Diamond & Iyer, 2007), and the importance of adopting a solid electronic solicitation strategy (Olsen, Keevers, Paul, & Covington, 2001). The literature shows that online donations have been steadily increasing over the past decade, but almost more importantly, online donors tend to have longer and more financially substantial relationships with organization (Flannery & Harris, 2011). Online donors do require a different stewardship approach, though, than traditional direct mail donors. Online donors on average are younger, more financially successful and more highly educated than direct mail donors (Flannery & Harris, 2011). In the Pacific Northwest, new donors acquired through an organizations website are also more likely to volunteer with the organization and are more likely to become monthly

contributors instead of annual contributors (Lewis, 2012). The large financial potential in this area shows that an organizations that uses its web analytics to develop a more dynamic and intuitive version of its donations website will achieve a higher fundraising return on investment than an organization that uses the same money to acquire new donors through list exchanges and other forms of direct mail solicitation (Olsen, Keevers, Paul, & Covington, 2001). While looking at dynamic solicitation strategies, direct mail solicitations will still play a critical role in the foreseeable future (Diamond & Gooding-Williams, 2002); the work of Diamond and Iyer (2007) and Van Dipen et al (2009) highlights the importance of redesigning or remessaging letters to work with specific subset of donors through thorough list segmentation. Diamond and Iyer (2007) segment donors into two groups, passive donors and engaged donors. Passive donors have less of a tie to the organization directly and are more likely to donate in honor of an individual associated with organization, or to a specific project the organization is working on (Diamond & Iyer, 2007). Engaged donors are motivated to donate by the organizations mission statement. Regardless of the staff, engaged donors will continue to support an organization based on its core mission (Diamond & Iyer, 2007). A large percentage of Bailey-Boushay House donors came to the organization by means of an In Memory gift to honor a loved one who died from HIV/AIDS, and spend their last days at BBH. The people giving In Memory donations are motivated by different elements of the organization that the people that give in support of the BBH outpatient program, which supports chronically homeless individuals with HIV/AIDS to rebuild their lives and prepares them for independent living. The work of Diamond and Iyer

(2007) suggests that by additional mailing list segmentation and increased customization of letters, direct mail can have an increased positive effect on both passive (in memory/inpatient) and engaged (outpatient) donors, which will increase direct mail return rates. An additional piece that is looked at in the literature on best practices in solicitation mediums is the role of enclosures (such as address labels, window clings, stickers and bookmarks) in the appeal piece (Diamond & Iyer, 2007) and the effects of additional mailings, both from the same organization and different organization (Van Diepen, Donkers, & Franses, 2009). The commonality between these two studies was the effect of forces outside the appeal letter on the donors decision to support. In the case of an enclosure, if the donor is not already invested in or connected to your cause, the item has an adverse effect on donor response rates (Diamond & Iyer, 2007). If the donor is already invested in your cause, whether or not they have donated to your organization in the past, upon seeing the enclosed item, the donor is more likely to respond to the appeal (Diamond & Iyer, 2007). The enclosed item can have a larger impact on the success of the appeal than the appeal letter itself depending on whether or not the prospective donor feels personally connected to your cause. In the case of additional mailings, donors have reported getting upwards of 1,000 pieces of solicited and unsolicited direct mail appeals a year from various organization; because of this over solicitation, donors have reported opening only one out of every ten pieces of mail (Van Diepen, Donkers, & Franses, 2009). However, mailings from external organizations can also have a positive effect on donor response rates; if a prospective donor feels connected to your cause and has not yet donated, their response

to an external organizations solicitation can invoke a feeling of guilt which increased the likelihood of a positive response rate to your organizations appeal letter (Van Diepen, Donkers, & Franses, 2009). Donor Retention and Satisfaction Mentioned several times throughout the literature is the notion that guilt and regret are powerful emotions in donor retention and reacquisition (Bennett, 2009), (Sargeant, Hudson, & Wilson, 2012). Lapsed donors who feel guilt while reading a letter from an organization they no longer support are significantly more likely to reinstate their support (Sargeant, Hudson, & Wilson, 2012). If a donor regrets deflecting from the organization, they are also more likely to reinstate their support (Bennett, 2009). With the average Washington donor lapsing from an organization after five years of support (Lewis, 2012), the lapsed donor pool of an organization offers a large amount of opportunity for increasing donation rates. Donors that had previously donated to an organization are significantly more likely to reinstate their support than a nondonor is to start supporting an organization (Naskrent & Siebelt, 2011). In this, it has been said that retention is the new acquisition (Lewis-Lodhi, 2013). In addition to having a higher response rate to direct mail than nondonors, lapsed donor reacquisition yields a higher return on investment than new donor acquisition (Sargeant A. , Donor Retention: What Do We Know and What Can We Do About It?, 2013). The work of Naskrent and Siebelt (2011) also shows that an organizations lapsed donors are that nonprofits best candidates for acquisition. Because the lapsed donors have already had exposure to the organization, they have significantly more trust, linkage, and commitment potential than nondonors (Naskrent & Siebelt, 2011). In order to make

these solicitation efforts successful, though, Bailey-Boushay House must frame their strategy around specific marketing to lapsed donors. The literature suggests that the language used for reacquiring lapsed donors should be very different than the language used for renewing current donors (Naskrent & Siebelt, 2011). Anecdotal evidence of donor impact (patient stories, projects completed, children saved) has a stronger impact on renewing current donors than it does on lapsed donors (Naskrent & Siebelt, 2011). Lapsed donors are more motivated by language that invokes an emotional response about the organization itself (Bennett, 2009). Letters that refer that illustrate the organizations longing to reconnect with the lapsed donor are the most effective at reacquiring lapsed donors (Bennett, 2009). When surveyed about influences on commitment and reasons for stopping support of an organization, the two most common reasons given for a donor withdrawing support from an organization were: 1. Switching to another charity 2. A negative change in personal financial circumstances Additional reasons for discontinuing support included 1. Inappropriate ask amounts 2. A lack of satisfaction with donor communication/responses 3. In some cases the donor did not remember ever supporting the charity, this translates into the organization not making an impact on the donor. . In the instance of a donor being dissatisfied with the ask amount or communications, the use of database marketing to track donor giving history and communication

preferences could have a strong positive effect on these deflection influences (Key, 2001). The literature shows us that a significant portion of why people stop giving to an organization is within the organizations control (Naskrent & Siebelt, 2011). The nonprofit cannot have a personal impact on a donors financial situation, but they can change marketing techniques to be more responsive to donors needs, adjust ask amount to more accurately reflect a donors giving history, and they can certainly adjust messaging to be more interesting to donors (Bennett, 2009). The work of Bennett (2009) can be coupled with the research on effective direct mail solicitations but Diamond and Iyer (2007) to develop an appeal that would be informative and motivational to passive and engaged lapsed donors, and in turn, increase the renewal rates from this group. Description of Framework Used for Analysis To assess the current state of affairs at Bailey-Boushay House and make recommendations for how to improve or reverse declining renewal rates, I will be looking at the current solicitation and stewardship systems in place and comparing them against best practices that are listed in the literature. Recommendations will be broken down by the overarching themes that were found in the literature: 1) Relationship Fundraising Strategies 2) Best Practices in Solicitation Mediums 3) Donor Retention and Satisfaction

Because organizations do not exist in a vacuum, I will also be comparing the fundraising performance of Bailey-Boushay House against similar organizations in the region using the Trends in Northwest Giving (Lewis, 2012)report and the Internet and Multichannel Giving Report (Flannery & Harris, 2011). The Trends in Northwest Giving report is particularly useful as it illustrates the performance of similar organizations in the same geographical region. This parallel narrative will help to paint a more complete picture of Bailey-Boushay Houses fundraising performance from 2010-2012. The BLACKBAUD DONOR GIVING REPORT will help to illustrate how Bailey-Boushay Houses fundraising performance compared to similar sized organizations across the United States. Again, this report will help by framing realistic performance standards during this time period. Methods To reach a conclusion on how Bailey-Boushay House can improve or reverse its declining renewal rates, there were two different courses of action. The first was a thorough investigation into best practices through peer review articles and analyzing the overarching themes against current stewardship and retention practices utilized by Bailey-Boushay House. The second was a set of donor surveys, sent to current and lapsed donors to get a sense of how they felt about the organizations solicitation and stewardship practices. In analyzing best practices in the field, the first step was identifying overarching themes in the literature. The three primary themes that were identified were: 1) Relationship Fundraising Strategies

2) Best Practices in Solicitation Mediums 3) Donor Retention and Satisfaction Once the commonalities within each theme were identified, they were compared to current systems and strategies that are in place at Bailey-Boushay House. From this, recommendations were made on how best practices could be adopted into, or replace current strategies to help improve the organizations retention rate. Survey In the literature, there were a number of themes that needed donor input to determine whether or not they were viable solutions or problems for Bailey-Boushay House. In order to explore these ideas with donors, a current donor survey and a lapsed donor survey were developed to be sent out through standard mail. For this project, a current donor is defined as someone who has given to the organization within the last 18 months. A lapsed donor is defined as someone who has given to the organization within the last four years, but has not donated within the last 18 months. Due to budgetary and time restrictions, the decision was made to send each survey to 250 donors within the target audience, for a total of 500 surveys being sent out. This 500 represents roughly 20% of donors that receive Bailey-Boushay House solicitations. The surveys were sent out with a corresponding letter that set up why the donor was receiving the survey, and what the results would be used for. Sample Letters can be seen in Appendix 1 and Appendix 2. Because the organization wanted to be able to track trends in demographics, the donors unique identification numbers were printed on the lower right had corner of the survey.

Since we wanted to differentiate the surveys from appeal letters, the phrase Please Open! Survey Enclosed! was printed on the back of each envelope. The literature showed that when envelopes are unique, donors are more likely to open them and respond to the contents (Diamond & Gooding-Williams, 2002). The belief is the phrase printed on the back of the surveys will increase the survey response rate from the current survey response rate of 3.4% experienced by Bailey-Boushay House. H1: By printing a script on the back of the envelope, making it distinctive from standard Bailey-Boushey House letters, the survey response rate will be greater than the organizations standard response rate of 3.4%. Current Donor Survey The current donor survey was developed to see how current donors feel about the current solicitation and recognition process. Donors were asked about the amount they were asked for, the frequency with which they were being asked, and how they would prefer to be recognized. The complete current donor survey can be seen in Appendix 3. In addition, donors were asked which of the programs being offered by Baily-Boushay House they would like to learn more about. The purpose of this question was to gauge interest in specific programs, and also to help guide the content of the 2014 BaileyBoushay House newsletters. The list for the current donor survey was pulled using the following criteria: 1) Donor gave to Bailey-Boushay House within the last 18 months 2) The donation was a response to a direct mail appeal 3) The donation was over $25

4) The donation was under $9,999.99 5) The donor has not requested to be removed from the Bailey-Boushay House mailing list. 6) The donor has not requested to donate anonymously 7) The donor is not currently in strategy for a major gift The list of donors meeting all the above criteria was pulled out of the organizations database (The Raisers Edge), and saved as an Excel file. There were a total of 547 donors that met all the above criteria. To narrow the list down to the 250 needed for the survey, the list was sorted by donor identification number, and a random block of 250 donors were selected from the center of the spreadsheet. Lapsed Donor Survey The goal of the lapsed donor survey was to evaluate donor motivations behind the lapsing of support. Donors were asked if they felt their gift had made an impact at the organization, to select from a multiple choice list why they stopped supporting BaileyBoushay House, and if they would be more or less likely to renew is asked for a lower amount. Exploring the concepts of donor regret discussed by Bennett (2009) and Sargeant, Hudson, & Wilson (2012), the donor was also asked if they regretted stopping their support to Bailey-Boushay House. For the complete survey, please see Appendix 4. The list for the lapsed donor survey was pulled from The Raisers Edge using the following criteria 1) Donor has donated in the past four years 2) Donor has not donated in the past 18 months

3) The donation was above $25 4) The donations was below $9,999.99 5) The donation was not made in honor of or in memory (hon/mem gifts) of someone 6) The last donation was made in response to a direct mail appeal 7) The donor has not requested to be removed from the Bailey-Boushay House mailing list 8) The donor has not requested to donate anonymously 9) The donor is not currently in strategy for a major gift The additional criteria levels were added to try and eliminate donors that might skew results on the lapsed donor survey. Many one-time memorial gifts are made to BaileyBoushay House as the organization provides end-of-life hospice care by individuals. Knowing that the majority of hon/mem gifts are one time, it was decided that it was more important to get out the root cause of annual fund members lapsing, so hon/mem donors were excluded from the list. It was also decided that since people who have not donated in four years no longer receive the organizations newsletter, they would be less familiar with the current work of Bailey-Boushay House, and would provide less useful data. When the donors meeting the above criteria were pulled out of Raisers Edge, the list consisted of 2,576 individuals. This list was then sorted by donors unique identification number, and a random block of 250 donors were selected from the center of the list. It was acknowledged that the lapsed donor survey has a known bias of involvement as the lapsed donors who respond to a survey would be more likely to respond to other call-to-

actions put out by the organization. However, because this group of people has not responded to a solicitation appeal in the last 18 months, it was determined that this bias is not enough to invalidate the results of the data. The literature shows that the two most common reasons a person stops supporting an organization are: 1) They have had a change to their personal financial situation (Lapsed Donor A, or LDA) 2) They chose to support another organization (Lapsed Donor B, or LDB) A change in personal financial circumstances suggests that an LDA would still be supporting the organization if s/he could (Naskrent & Siebelt, 2011). Consistent with what the literature suggests, it is believed that the data will show a correlation between people that have identified themselves at LDAs, and those who state they would be willing to start donating again if solicited at a lower amount. H2: Lapsed donors who answered they stopped giving because of a change in personal financial circumstances will be more likely to answer More Likely to Renew to the question, If you were sent a renewal letter with a lower suggested donation amount, would you be more likely or less likely to restart your support Compiling Data Once the completed surveys are returned from donors, the information will be entered into SurveyMonkey.com so the results can be analyzed.

As can be seen in Appendix 3 and Appendix 4, both lapsed and current donors have been asked about whether or not they felt their gift made an impact at Bailey-Boushay House. The literature states that current donors have a stronger emotional tie to an organization than lapsed donors, and that donors lapse in part because they did not feel their gift was of any significance to the organization in question (Sargeant, Hudson, & Wilson, 2012). Consistent with the literature, it is believed that returned surveys will show that current donors will more often feel that their gift has made an impact at Bailey-Boushay House. H3: Current donors will be more likely than lapsed donors to answer yes to the question, Do you feel your gift (has) made an impact at Bailey-Boushay House? Results Response Rates Based on the work of Diamond and Gooding-Williams (2002), a hypothesis (H1) was presented that by printing a call to action on the back of the envelope, there would be an increase in donor response to over the standard response rate for donor surveys from the Virginia Mason Foundation which is 3.4%. H1=Observed data (O) > 0.034 Surveys to lapsed and current donors were mailed on January 30, 2014 with a stated deadline of February 14, 2014. During this time, of the 250 current donor surveys, 63 were returned (Observation 2; O2=63/250), of the 250 lapsed donor surveys mailed, 16 were returned (O3=16/250), in total, of the 500 donor surveys mailed, 79 were returned (O1=79/500). The total survey response rate for the project was 15.8% (O1). The

response rate for current donors was 25.2% (O2), and the response rate for lapsed donors was 6.4% (O3). In all three sets of observed data (O1, O2, O3), the hypothesis proved to be true. O1 showed a 12.4% increase over the standard response rate. O2 showed a 21.8% increase over the standard response rate. O3 showed a 3% increase over the standard response rate. H1= O>0.034 H1= 0.158 > 0.034

Current Donor Survey Of the 63 respondents, 30 people responded to the first question on the survey about Bailey-Boushay House programs. Donors were asked to select up to three programs they would like to learn more about. As can be seen in Figure 3, 20% of people wanted more information on Medication Management programs, 26.7% of people wanted to learn more about specialized nursing, 56.7% wanted to learn more about Life-Skills Counseling and Social Services, 40% wanted to learn more about the Nutrition Program, and 73.3% wanted to learn more about Other Therapies offered.

Figure 3 Responses to Question 1 of Bailey-Boushay House Current Donor Survey The following is a list of programs offered by Bailey-Boushay House to our clients. Please select up to three programs that you would like to learn more about Answer Options Medication Management Specialized Nursing Life-skills Counseling/Social Services Response Percent 20.0% 26.7% 56.7% Response Count 6 8 17

40.0% Nutrition Program Other Therapies (occupational, art therapy, service 73.3% animals) answered question skipped question

12 22 30 33

Of the 63 respondents, 63 people answered question 2, focusing on the frequency with which donors are solicited. The question was asked as a 1-5 rating system with 1 being they were solicited too frequently and 5 being they would donate more often if asked, on average people answered a 2.67 on the 5 point scale. As can be seen in Figure 4, 5 people felt they were solicited too frequently, 13 people felt they were somewhere in between being solicited too frequently and the right amount, 44 people felt they were solicited the proper amount, and 1 person said they would give more often if asked.

Figure 4 Responses to Question 2 of Bailey-Boushay House Current Donor Survey On a scale of 1-5, please tell us how yuo feel about the frequency with which you are solicited Answer Options I am solicited too frequently 5 13 I am solicited the proper amount 44 0 I would give more often if asked Rating Average Response Count 63 63 0

1 2.67 answered question skipped question

Question 3 of the current donor survey looked at the size of the donation people are asked for. Like question 2, this was posed as a 1-5 rating scale, with 1 meaning the donor

felt they were being asked for too large of a donation, and 5 meaning they would give a larger donation if asked. The average rating for this question was 2.91. As can be seen in Figure 5, only 1 donor felt they were being asked for too large a donation, 48 donors felt they were being asked for the proper amount, and 2 donors stated they would give a larger donation if asked.

Figure 5 Responses to Question 3 of Bailey-Boushay House Current Donor Survey On a scale of 1-5, please tell us how you feel about the amount you are asked for in solicitations Answer Options I am asked for too high a donation 1 7 I am asked for the proper amount 48 0 I would give a larger donation if asked Rating Average Response Count 58 58 5

2 2.91 answered question skipped question

Question 4 asks donors if they feel their gift has made an impact on Bailey-Boushay House. The options were Yes, No, Dont Know, and Other with a space to specify that response. The one person that listed Other did not provide further clarification to their answer. As can be seen in Figure 6, 49 people stated Yes, the feel as though their gift has an impact on Bailey-Boushay House. Figure 7 illustrates the percentage break down for each answer among the 63 respondents.

Figure 6 Response to Question 4 of Bailey-Boushay House Current Donor Survey

Do you feel like your gift has an impact to the Bailey-Boushay House? Answer Options Yes No Don't Know Other Response Percent 77.8% 0.0% 20.6% 1.6% answered question skipped question Response Count 49 0 13 1 63 0

Figure 7 Response to Question 4 of Bailey-Bousahy House Current Donor Survey Do you feel like your gift has an impact to the Bailey-Boushay House? Yes No Don't Know 1% Other

21% 0%

78%

Question 5 in the current donor survey asked donors how they would prefer to be acknowledged for their gift. In Figure 8, we see that 49 donors are happy with the current acknowledgement letter provided by the organization, 1 person preferred a hand signed acknowledgement letter, 14 people preferred an email acknowledgement letter, 2 people requested personalized notes, and one person stated they would like a thank you phone call.

Figure 8

Responses to Question 5 of the Bailey-Boushay House Current Donor Survey How would you like to be recognized for your donation? (mark all that apply) Answer Options Current acknowledgement letter Hand signed acknowledgement letter Email acknowledgement letter Personalized note Thank you call answered question skipped question Response Percent 81.7% 1.7% 23.3% 3.3% 1.7% Response Count 49 1 14 2 1 60 3

The one person who stated they preferred a phone call noted they felt it would save the organization money to not have to send a letter. Of the 14 people who stated they would prefer and email acknowledgment, 6 provided their email address in the next question. Of the 60 people who responded to this question, 15 people noted they only needed an acknowledgement because of their taxes. Question 6 asked donors if they had any additional comments. 30 people responded to this question. Of those 30, all comments focused around either why the donor started supporting Bailey-Boushay House and/or thanking the organization for the work they are doing. The final question on the current donor survey asked if the donor would preferred electronic communication in the future, and if so, for the donor to provide their name and email address; 21 people, or 33.3% of respondents provided a name and email address. Lapsed Donor Survey

Question 1 of the lapsed donor survey asked donors if they felt their gift had made an impact on Bailey-Boushay House. The options were Yes, No, Dont Know, and Other with a space to specify that response. As can be seen in Figure 9, 9 people stated Yes they felt their gift made an impact, 0 people stated No, 6 people said they did not know if their gift made an impact, and 1 person marked Other. The one person that listed Other noted, Every gift is important.

Figure 9 Response to Question 1 of the Bailey-Boushay House Lapsed Donor Survey Do you feel your gift made an impact at Bailey-Boushay House? Answer Options Yes No Don't Know Other Other (please specify) Response Percent 56.3% 0.0% 37.5% 6.3% answered question skipped question Response Count 9 0 6 1 1 16 0

Figure 10 illustrates the percentage break down for each answer among the 16 respondents.

Figure 10 Response to Question 1 of Bailey-Bousahy House Current Donor Survey Do you feel like your gift has an impact to the Bailey-Boushay House? Yes No Don't Know Other

6%

38% 56%

0%

Question 2 asked donors if they regretted stopping their support of Bailey-Boushay House. As can be seen in Figure 11, 2 people stated Yes, 10 people said No, and 4 people chose Other.

Figure 10 Response to Question 2 of Bailey-Boushay House Lapsed Donor Survey Do you regret stopping your support of Bailey-Boushay House Answer Options Yes No Other Other (please specify) Response Percent 12.5% 62.5% 25.0% answered question skipped question Response Count 2 10 4 3 16 0

Of the 4 respondents that chose Other, 3 people clarified their response. The responses were as follows: 1) But I continue to support other worthy causes 2) I don't think that I have completely stopped giving. I feel that I still occasionally send a check. 3) I support as I can Question 3 of the survey looked at how the suggested donation level effected giving. Donors were asked, If you were sent a renewal letter with a lower suggested donation amount, would you be more likely or less likely to restart your support? Response options were More Likely to Renew, Less Likely to Renew, and The Suggested Donation Level Does Not Impact My Giving Decision. All 16 respondents chose The Suggested Donation Level Does Not Impact My Giving Decision. Question 4 of the survey was an analysis on why people chose to stop supporting BaileyBoushay House. As can be seen in Figure 11, one person stated they were solicited too frequently by the organization, 8 people had a change to their personal financial circumstances, 9 people chose to support other organization, and 3 people chose Other.

Figure 11 Response to Question 4 of Bailey-Boushay House Lapsed Donor Survey Please tell us why you stopped supporting Bailey-Boushay House (mark all that apply) Answer Options Response Percent Response Count 0 1 8 9 3 4 15 1

0.0% My donation was a onetime memorial gift I was solicited too frequently by Bailey-Boushay 6.7% House 53.3% I had a change in my personal financial situation 60.0% I chose to support another organization 20.0% Other Other (please specify) answered question skipped question

The following clarifications were given by people who chose Other: 1) I don't mind getting mailed solicitations from you- I like to support you and I send $25-$50 occasionally. 2) I supported BBH for years because I was personally involved in work around supporting folks w/AIDS. Now I am choosing another direction 3) Prefer to support in my community The one person who did not answer the question wrote in the follow comment: 1) Wasn't aware we had stopped donating! Sorry! Question 5 asked donors for any additional comments. Of the 16 respondents, 9 people wrote in additional comments. Comment subjects included reasons people had stopped supporting, the other organizations or causes they have chosen to support, the story of why they started supporting Bailey-Boushay House, and one person commented PSThat is my really cool dog on the stamp!

Question 6 asked donors if they would prefer electronic communication in the future to please provide their name and email address. Two peoples supplied their information. Discussion and Analysis In the beginning of 2014, the Virginia Mason Foundation was given the task of raising an additional 25% from annual fund donors. As stated in the methods section, the point of the current donor survey was to gauge how current Bailey-Boushay Donors feel about the solicitation and stewardship process to determine where the most growth can occur, or where changes need to be made to meet the elevated solicitation goal. The lapsed donor survey was administered to analyze why donors stopped giving to Bailey-Boushay House, and to assess what re-acquisition strategies would have the greatest likelihood of being successful. The current donor survey results showed that donors are being asked for donations the proper amount of times. On a scale of 1-5, with 1 being I am asked too frequently, and 5 being I would give more often if asked, the average response was a 2.67. The next question, however, showed that donors would be inclined to give a larger donation if asked. Question 3 on the new donor survey uses the same 1-5 scale, with 1 being I am asked for too much money, and 5 being, I would give a larger donation if asked. The average answer on this question was 2.91. In addition 3.45% of donors stated they would give a larger donation if asked, whereas only 1.72% of donors stated they were being asked for too high of a donation amount. The survey results echo the findings of current BaileyBoushay House solicitation practices. In the current state, a donor is asked for three

donation levels on their appeal letter, with the smallest of these donations starting 1025% above what their last gift was. The survey shows that Bailey-Boushay House donors would be inclined to donate slightly more if asked, so the Virginia Mason Foundation should test different percentage increases to see what percent increase over the last gift yields the highest return on solicitation appeal letters. Question 4 of the current donor survey looked at whether or not current donors felt their gift made an impact on Bailey-Boushay House. The literature states that a strong connection to the organization is crucial for stewardship and donor loyalty. If the Virginia Mason Foundation wants to maintain its relationship with Bailey-Boushay House donors, it is critical that the impact a donors gift has on the House is made clear to the donor. Of the 63 people that answered this question, 49 stated yes, that they felt their gift made an impact, but 13 donors said they did not know whether or not their gift made an impact; this translates to 20.6% of donors, or roughly one in five, not knowing if their gift has made an impact on the organization. If the organization cannot illustrate to annual fund donors that their gift is crucial to the survival of the organization, then there is no reason for donors to maintain loyalty (Naskrent & Siebelt, 2011). A stewardship plan dedicated to portraying the role that a donors gift plays in the lives of Bailey-Boushay House clients could go a long was to increase the percentage of people who see and feel the impact of the contribution they have made. Historically, the stewardship plan for annual fund donors has consisted of 3-4 newsletters a year, and 1-2 donor impact postcard that shares a patient story. To increase the visibility of the impact a donors gift has on Bailey-Boushay House, the organization should strongly consider

increasing the coverage of donor impact stories in the newsletter, and increase the number of donor impact touches to one per fiscal quarter. In addition, the organization should utilize its online and web presence by placing donor impact stories on their website and linking to it from their Facebook page (Olsen & Frazier, 2001). Question number 5 on the current donor survey looked at how donors wanted to be recognized for their gift. The organization wanted to gauge if they should be utilizing more personal methods of acknowledgement outside of their current acknowledgement letter, or if they should be moving to a more electronic platform. The goal is to communicate with donors in their preferred method to strengthen their relationship with the organization (Sargeant A. , 2013). Of the donors that responded to this question, over 81% of them said the preferred the current acknowledgement letter. 23% of respondents, or 14 people, said they would prefer an email acknowledgement letter. Of these 14 people, only 4 gave their email address on the survey; in total, 21 people gave their email address on the survey. The inconsistency in these two responses shows that Bailey-Boushay House donors by in large use email as a form of communication, but it is not their preferred method of communication (Olsen & Frazier, 2001). The lapsed donor survey had a lower response rate than the current donor survey, 6% versus 25%, however a larger percentage of respondents completed the entire survey. For the current donor survey, only 47% of people answered all questions on the survey (not counting the request for an email address and/or the additional comments section). In contrast, 93% of the lapsed donor surveys were returned will all questions answered. At the beginning of this project, it was acknowledged that there was a known bias that lapsed donors that responded to the survey were likely to be more invested in the

organization than lapsed donor that did not respond, however, the fact that 93% of the surveys returned were complete shows that there is more interest in this group that originally anticipated. Those who responded were more committed that was originally expected. The first question on the lapsed donor survey was focused on perceived donor impact. The organization wanted to see if people who allowed their membership to lapse felt their gift had an impact on the organization. Whereas the majority of donors still felt their gift had made an impact on the organization, 9 donors, or 53.6%, a large percentage also stated they did not know whether or not their gift made an impact on the organization, 6 donors, or 37.5%. H3 for the projected stated Current donors (CD) will be more likely than lapsed donors (LD) to answer yes to the question, Do you feel your gift (has) made an impact3 at Bailey-Boushay House? H3= CD > LD CD = 77.8% | LD = 56.3% H3 = 77.8% > 56.3% We see here that H3 was proven to be true; current donors were more likely to respond yes to feeling their gift made an impact at Bailey-Boushay House. This again illustrates the importance of increasing the amount of donor impact literature published by the organization.

the variable of perceived impact will be represented by

The literature that focused on lapsed donor reacquisition stated that for many lapsed donors invoking a feeling of regret in the language of the appeal would increase the change of renewal (Bennett, 2009). When asked whether or not they regretted stopping their support of Bailey-Boushay House, 62.5% of donors said they did not regret stopping their support while only 12.5% of donors said that they did regret stopping their support. This 50% difference shows that it would not be worthwhile for BaileyBoushay House to pursue a campaign with regret as the main focus of the messaging. An additional 25% of donors chose the response of other, with two thirds of the group stating they had not completely stopped their support of Bailey-Boushay House, but rather they cycle through donating through different organizations. This claim was verified by looking up the donors giving history. There was a pattern of donating to Bailey-Boushay House every other, or every third year. Question 3 of the lapsed donor survey was developed to analyze the impact of suggested donation level on intended giving. In the literature, a trend was illustrated that if donors who had not supported a charity in the last 3 appeal cycles received a letter that offered renewal at a lower rate than their last gift, there was an increase in reacquisition rates (Sargeant, Hudson, & Wilson, 2012) (Sargeant A. , 2013). Against the suggestions in the literature, 100% of the respondents to the lapsed donor survey stated the suggested donation level has no impact on their decision to give. The responses to Question 4, however, did mirror trends in the literature. Question 4 looked at reasons that donors had stopped donating to Bailey-Boushay House. Donors were asked to mark all answers that were applicable to why they chose to shop giving. As was found in the research by Sargeant, Hudson, & Wilson (2012), the

top two reasons Bailey-Boushay House donors stated they stopped supporting were a choice to support other organization (58.8%) and a change in personal financial circumstances (52.9%). Of the 4 of donors that answered other (23% of the responses), three people stated they had moved out the Seattle area, and one person stated they were not aware they had stopped donating. In addition to survey responses found in the literature, the Trends in Northwest Giving report also shows a regional decline in donations to health and human services related organizations over the past few years (Lewis, 2012). Not only was there a decline in the area, but health and human services organizations faced the largest percentage of decline for any filed in the private sector in the Pacific Northwest between 2010 and 2012. This finding points to conclusion that the decline in renewal rates is not something endemic to Bailey-Boushay House, but rather a trend being felt across the region. Regardless of whether or not the decline is unique to Bailay-Boushay House, the matter of how to reverse the decline is still at hand. One of the strategies for reacquiring lapsed donors stated in the literature focused around messaging lapsed donor appeals around receiving a discounted renewal rate (Sargeant A. , 2013). Researching the validity of this strategy for Bailey-Bousay Hosue, H2 stated, Lapsed donors who answered they stopped giving because of a change in personal financial circumstances will be more likely to answer More Likely to Renew to the question, If you were sent a renewal letter with a lower suggested donation amount, would you be more likely or less likely to restart your support. After looking at the survey responses, it was determined that there was no connection between the responses to these two questions. The hypothesis H2 was proven to be false. Because of

this finding, it would not be advisable to attempt a reacquisition appeal based on asking for a lower donation level. Conclusion In order to slow down or reverse declining renewal rates, there are four courses of action Bailey-Boushay House must take: 1) Develop a comprehensive stewardship strategy that incorporates the impact that donors gifts have on the facility and its clients 2) Segment the donor list and provide different messaging and appeal approaches for lapsed and current donors 3) Make better use of physical space on solicitation appeals 4) Develop a mission statement and messaging that more accurately reflect the modern scope of the organizations work Stewardship Plan By confirming H3, a link between feeling the donation of your impact and likelihood to renew a donation has been established. By illustrating a direct connection between a donors gift and the care and quality of life for Bailey-Boushay House clients, the organization creates a compelling case for a renewed donation (Naskrent & Siebelt, 2011). The more often an organization communicates this message, the stronger relationship they develop with their donors (Sargeant A. , Relationship Fundraising: How to Keep Donors Loyal, 2001). A critical point in the communication of a donors impact is that it cannot only be done while asking for money. Like a relative or friend that only reaches out when they need something, the message of the organization is

eventually lost if every time a donor sees your insignia they think they are expected to give. Stewarding a relationship with donors, thanking them and reaching out with more than requests for money, is the crux of relationship fundraising. It is important for Bailey-Boushay House to let donors know what is happening at the facility, how their gift has made that possible, and ask for donor input in realms outside of solicitation letters. As previously stated, the current solicitation plan consists of the Homefront newsletter, and a donor impact postcard. Under the current model, on average, a donor will receive one solicitation for every stewardship piece. (Two appeal letters, two follow up letters, one telefund call to three Homefronts and two donor impact postcards.) This 1:1 ratio is still too high; as a grassroots organization, Bailey-Boushay House should aim to have at least 3 stewardship pieces for every one solicitation piece (Sargeant, Hudson, & Wilson, 2012). Concern about the cost of stewardship pieces is certainly a concern, but there are cost effective, electronic methods that can and should be utilized (Olsen & Frazier, 2001). Instead of having stewardship be based on print media, Bailey-Boushay House should start to use email and social media as a vehicle of stewardship. The literature on online fundraising shows that people who come to the organization through online donations tend to switch to direct mail after about three years of donating, but they still list e-mail at their preferred method of communication (Flannery & Harris, 2011) (Lewis, 2012). The results from both the lapsed and current donor surveys echo this; donors want to provide their email for future communication, but still say they prefer direct mail solicitation. By using email for stewardship purposes, Bailey-Boushay House will be

developing a relationship with donors in their preferred medium in a way that is cost effective for the organization (Olsen, Keevers, Paul, & Covington, 2001). Instead of having only two donor impact postcards, the organization should increase this number to one impact postcard and/or email per fiscal quarter based on the donors preferred method of communication. For those who prefer direct mail, or for whom the organization does not have an email address, a postcard should be mailed out, but for all others, an email should be sent. In addition, the organization should be posting at least one donor impact story per month to their Facebook page, and reference these posts in the newsletter. By referring to the Facebook page in the paper and electronic version of Homefront, the organization can direct more traffic to that site and start to establish it more as a stewardship tool for the future (LPR Publications, 2009). In addition to a cost effective way of sharing donor impact stories, social media will also offer Bailey-Boushay House the opportunity to have a dialogue with its donors. Social media is designed to engage people, not just talk at them. By stewarding meaningful dialogues about the work of the organization and its mission, Bailey-Boushay House will be developing a more dynamic and two-way relationship with its donor base. Donor relationships that are two-sided generate more loyalty amongst the donor base, improve retention rates, and help to improve reacquisition rates for lapsed donors (Naskrent & Siebelt, 2011). Segmenting Donor Lists Inherently, the messaging used for renewing current donors is not as effective on lapsed donors; if it were as effective, the donors would not have become lapsed in the first place

(Bennett, 2009). By using the same messaging on lapsed donors as it is using on current donors, Bailey-Boushay House is not optimizing their efforts on the lapsed donor demographic. The literature shows that the most effective language for reacquiring lapsed donors is phrased 1) To acknowledge that the donor did not give in the previous year 2) To illustrate the impact the organization felt by not having the gift 3) To illustrate that the donors support is still needed for the organization to be successful Current donor language is most effective when focusing exclusively on the impact the donors gift has on the work of the organization (Diamond & Iyer, 2007). By segmenting the donor list, and sending letters with different language to lapsed and current donors, Bailey-Boushay House will be optimizing their face time with donors (Bennett, 2009). Since the messages will be tailored to the specific donor segment, there is a high probability that direct mail appeals will yield a higher retention rate, and a higher return on investment (Diamond & Iyer, 2007). In addition to segmenting direct mail lists, Bailey-Boushay House should also use a more refined approach to its use of telephone solicitation. Currently, lapsed and current alike are put on the telephone solicitation list and then prioritized by the telefund company by donation level. This method has illustrated a declining return over the past 5 years. The literature suggests that telefund operations are most successful when used to reengaged lapsed donors (Bennett, 2009) (Naskrent & Siebelt, 2011). Instead of using a script that uses the same messaging of donor impact, a telefund is more successful if operators first engage the donor as to why they stopped their support, address that area

of concern, and then discuss donor impact and renewing a donation (Sargeant, Hudson, & Wilson, 2012). The only current donors that should be renewed through the telefund are those who have stated the telephone is their preferred method of solicitation (Weir & Hibbert, 2000). Telefund efforts cost more per dollar raised than direct mail appeals, so it is important to optimize the use of this medium. By removing current donors from the list, with the exception of the current donors mentioned above, and focusing on using this fundraising method to reacquire lapsed donors, Bailey-Boushay House will be using its fundraising dollars more strategically and optimizing their fiscal efficiency, while also increasing the return on investment of telefund dollars. Ultimately, by segmenting call lists, the organization would spend less to raise more money. Physical Space on Solicitation Appeals In direct mail fundraising, the first challenge an organization faces is getting donors to open the envelope (Diamond & Gooding-Williams, 2002). With some donors receiving solicitations from over 75 organizations annually, it is important to make the BaileyBoushay House appeals stand out. H1 showed that utilizing the space on the back of the envelope increased response rates by an average of 12%. With a donation base of 2,500, and an average donation size of $46, an increased response rate of 12% could conservatively result in an additional $13,800 raised per appeal. By adding copy to the back of the envelopes, the conversation with lapsed and current donors would begin before they even started reading the letter. The importance of their support and the people that their gifts impact could be communicated before the

envelope is even opened. The importance of the Bailey-Boushay House mission would be on their mind before they are asked for money (Diamond & Gooding-Williams, 2002). 12% was the increase in response rate by having simple copy printed on the back of the envelope, but with pictures and color incorporated in the envelope of the appeal, other organization have seen increase of 25%-48% in their response rates (Diamond & Gooding-Williams, 2002). Such an increase would drastically offset any additional costs incurred by the additional design and print work. Mission Statement and Messaging The ability to adjust the organizations mission statement and messaging to more accurately reflect the current work of Bailey-Boushay House would be the most influential move, but it is also the most challenging. The majority of patients in BaileyBoushay Houses inpatient program are still those dying from AIDS, however, the facility also provides end of life care for people with ALS, Parkinsons Disease, Huntingtons Disease, and certain types of cancer that require skilled nursing. Without the mission statement reflecting this work, the fundraising team is unable to utilize it in appeal messaging. With all solicitations and appeals speaking to the mission, BaileyBoushay House is unable to speak to the diversified impact until the mission statement is updated to include it. The challenge lies in the facilitys 501(c)(3) filing, its permits with the state and city, and its classification for Medicare and Medicaid reimbursement. When Bailey-Boushay House was established, all of its original paperwork referred to it as an HIV/AIDS facility, not a skilled nursing facility. What would seem like semantics to most, places the board of the organization in a very difficult position. Whereas rewording the mission statement to more accurately reflect and encompass all the work

of the organization would allow Bailey-Boushay House to diversify its fundraising efforts, it would also come at a substantial legal cost as all the city, state, IRS, American Medical Board, Medicare, Medicaid, and Veterans Affairs paperwork would have to be reworked, refilled, and reapproved as well. Without further legal and financial research, it is unclear if this would be a positive or negative cost-benefit relationship for the organization. Recommendations and Further Research The declining renewal and retention rate of Bailey-Boushay House annual fund donors can be reversed with strategic stewardship, messaging, and donor relations practices. If executed correctly, the organization would be able to increase revenue with only minimal increases to expenditures, and without having to invest in an extravagant and costly new donor recruitment strategy. Further legal and financial research would be needed if the board was to pursue and substantial changes to the mission statement of the organization. Other areas for further study include researching what about current messaging is the most effective with donors who are renewing, and what messaging and language is most successful at getting donors to engage once their social media presence is more established.

Appendix 1- Current donor letter January 31, 2014 Alice and Karlis Abolins 2501 SW 122nd Pl Burien, Washington 98146-2522

Dear Alice and Karlis, I am contacting you today because you are a valued supporter of Bailey-Boushay House. My name is Cole Reese and I am a graduate student at Bay Path College, and the Foundation Specialist at the Virginia Mason Foundation. For my thesis project I was required to select a nonprofit to work with, and to develop a research topic that would exercise the concepts I have learned throughout my coursework while also helping my selected organization. After much consideration, I decided to work with one of my favorite organizations, Bailey-Boushay House, on the topic of donor retention. As you know, Bailey-Boushay House (BBH) provides a vital service; for over 20 years BBH has been there to care for the most vulnerable members of our community struggling with HIV/AIDS. In addition, BBH provides them with medication management, nutritious meals, substance abuse counseling, and life skills classes. BBH is able to provide these services because of the generosity of donors like you. To help support the next 20 years, I wanted to help BaileyBoushay House better connect with, and better understand their donor base to help improve the organizations donor renewal rates thus securing their financial future. As part of my research, I am conducting the enclosed donor survey. Your response will help us to understand why you and other donors choose to support Bailey-Boushay House, and how you feel about the solicitation process. Using the enclose envelope, please return your survey by February 14, 2014 so it may be included in the results of the research. I am sincerely grateful for your help with this project.

With heartfelt thanks,

Cole Reese Virginia Mason Foundation cole.reese@vmmc.org

Appendix 2 Lapsed Donor Letter January 31, 2014 Kim Ahlf 15427 11th Ave SW Burien, Washington 98166-2111

Dear Kim, I am contacting you today because you have been a valued supporter of Bailey-Boushay House. My name is Cole Reese and I am a graduate student at Bay Path College, and the Foundation Specialist at the Virginia Mason Foundation. For my thesis project I was required to select a nonprofit to work with, and to develop a research topic that would exercise the concepts I have learned throughout my coursework while also helping my selected organization. After much consideration, I decided to work with one of my favorite organizations, Bailey-Boushay House, on the topic of donor retention. As you know, Bailey-Boushay House (BBH) provides a vital service; for over 20 years BBH has been there to care for the most vulnerable members of our community struggling with HIV/AIDS. In addition, BBH provides them with medication management, nutritious meals, substance abuse counseling, and life skills classes. BBH is able to provide these services because of the generosity of donors like you. To help support the next 20 years, I wanted to help BaileyBoushay House better connect with, and better understand their donor base to help improve the organizations donor renewal rates thus securing their financial future. As part of my research, I am conducting the enclosed donor survey. Your response will help us to understand why you and other donors chose to support Bailey-Boushay House, and how you felt about the solicitation process. Using the enclose envelope, please return your survey by February 14, 2014 so it may be included in the results of the research. I am sincerely grateful for your help with this project.

With heartfelt thanks,

Cole Reese Virginia Mason Foundation cole.reese@vmmc.org

Appendix 3- Current Donor Survey

The following is a list of programs offered by Bailey-Boushay House to our clients. Please select up to three programs that you would like to learn more about. Medication Management Specialized Nursing Life-skills Counseling/Social Services Nutrition Program Other Therapies (occupational, art therapy, service animals) On a scale of 1-5, please tell us how you feel about the frequency with which you are solicited. I am solicited too frequently 1 2 I am solicited the proper amount 3 4 I would give more often if asked 5

On a scale of 1-5, please tell us how you feel about the amount you are asked for in solicitations. I am asked for too high a donation 1 2 I am asked for the proper amount 3 4 I would give a larger donation if asked 5

Do you feel like your gift has an impact to the Bailey-Boushay House? Yes No Dont know Other ___________________________________ How would you like to be recognized for your donation? (mark all that apply) Current acknowledgement letter Hand signed acknowledgement letter Email acknowledgement letter Personalized note Thank you call Additional Comments: ______________________________________________________________________________ ______________________________________________________________________________

Please provide your information if you would like to receive future communications and newsletters electronically Name: ___________________________________ Email: _______________________________

Thank you for taking the time to complete this survey.

Appendix 4- Lapsed Donor Survey Do you feel your gift made an impact at Bailey-Boushay House? Yes No Dont know Other _____________________ Do you regret stopping your support of Bailey-Boushay House? Yes No Other ______________________ If you were sent a renewal letter with a lower suggested donation amount, would you be more likely or less likely to restart your support? More likely to renew Less likely to renew The suggested donation level does not impact my giving decision Please tell us why you stopped supporting Bailey-Boushay House (mark all that apply) My donation was a onetime memorial gift I was solicited too frequently by Bailey-Boushay House I had a change in my personal financial situation I chose to support other organizations Other: __________________________________________________________ Additional comments? ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ___________________________

Please provide your information if you would like to receive future communications and newsletters electronically Name: ___________________________ Email: ________________________________________

Thank you for taking the time to complete this survey

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