memo

July 11, 2018 David Miliband President and CEO International Rescue Committee Subject: Data Analysis Consultation Dear Mr. Miliband,

The International Rescue Committee (IRC) administers much-needed humanitarian aid worldwide and is always in need of raising additional funds to support ongoing efforts to help people whose lives and livelihoods are shattered by conflict and disaster to survive, recover and gain control of their future. Your team hired our team to advise the IRC in potential ways that you can use data to help strengthen your global fundraising efforts.

In our research with your team, we learned the IRC does an excellent job securing government and foundation grants; however, over 67% of the IRC’s total revenue comes from government & foundation sources (Exhibit 1). This percentage was alarming to us especially during this tumultuous political climate where organizations like yours are continually in the public eye and grantmaking organizations especially government funders and private foundations are under increasing pressure. According to the Giving USA 2018 report, giving by individuals rose by 5.2%, representing 70% of $410.02b of all giving (see Exhibit 2).

Based on that we recommend to you and your team at the IRC to shift your fundraising focus to diversity away from your reliance on foundation funds and put more focus and effort into cultivating new and existing individual donors. The IRC has a wonderful opportunity to focus on building their individual giving program, which is a sustainable diverse fundraising strategy.

Donors are becoming increasingly selective with their philanthropic dollars. More organizations are competing for a finite source of revenue. Nevertheless, the IRC has a strong reputation within the nonprofit sector and has been given a 4-star rating by Charity Navigator and an A+ by Charity Watch. Donors are giving to organizations that have a history of investing most of their revenue into programs. The IRC has an opportunity to leverage these achievements to increase attention and interest from prospective donors. In recent years, the IRC’s overall funding has steadily increased (Exhibit 3), and the organization is in a position to bolster its individual giving strategy.

Before drafting recommendations for the IRC, we conducted a thorough review of the data decision making framework. We sought to uncover problems, or opportunities, for the IRC to improve its fundraising strategy.

Framework Step Key Questions we needed answered

1. Identify the problem or opportunity Can the IRC diversify their funding streams to increase the the amount of dollars raided through individual donors so they can be less dependent on

government and private foundation grants

2. Gather Information What data is publicly available and what data do we have access to through our consulting engagement with the IRC? We gathered key information and reviewed the IRC’s financial data, including past financial statements and 990 Forms. We searched for the breakdown of revenue sources to ascertain the percentage of overall individual giving.

3. Analyze the Information What did we learn from the information we gathered? What can we recommend to the IRC?

4. Develop Options What is the ideal end state? That the IRC diversifies their funding streams to ensure that they are not dependent on the grant funding and to increase the number of dollars coming in the door through fundraising.

5. Evaluate Alternatives Is there an option to increase the amount of grants that the IRC is receiving? Should we recommend that the IRC diversify the sources of grant funding? You could however there is more potential and consistency of funding streams by growing their individual funding program. We explored alternative courses of action and noted that we could potentially shift our attention to finding other government and foundation grants, so that the risk of losing any of our government grants may be mitigated. We reasoned that the IRC could also secure multi-year commitments from key government allies or increase the number of special events. We also sought to carefully interpret the data. It is possible that the financial data we analyzed shows a higher than usual percentage of government grants and foundation grants, but that these past few years are outliers to the norm. In other words, the IRC may have a history of higher individual giving

totals that have since leveled off in recent years. Another point we considered was the role of foundation giving. As foundations are endowed by individuals and corporations, some of the IRC’s largest benefactors may donate funds through their foundations.

6. Make a Decision What are the first key steps needed and what are the risks? We developed options, evaluated alternatives - including shifting our focus on bolstering special events - and ultimately made a decision to move forward with our recommendations. We knew we needed to identify staff to spearhead the initiative and gain organizational buy-in.

7. Act on the Decision What are the first key steps needed and what are the risks? See below.

When we looked at the current cost of running the fundraising program (see Exhibit 4) we learned that the IRC is spending a significant amount of money on their funding raising program however their return on investment of those costs is not showing a significant return on investment (see Exhibit 5). We learned that in order to achieve this diversification of funds, the IRC could to focus on three specific KPI’s including donor acquisition rate, donor retention rate and the diversity of funding sources. By making this shift in focus, the IRC could closely track whether they are diversifying, how many new donors they are adding and how long those donors are retained year over year. By starting here the IRC has the opportunity to understand who their donors are, to understand what works when it comes to donor acquisition and understand what communication strategies they need to ensure the donor returns. Here our recommended KPIs in more detail: (1) Variety of Funding Sources We decided to focus on the number of ways donors are contributing to IRC, including donations through direct mail, online, or special events. As we know the merits of a diverse stream of funding sources, we sought to find an area that could use improvement. Ultimately, we focused on increasing our direct mail appeals to build a core base of annual givers, which would provide a stable fundraising source. This is a SMART KPI because we are only reviewing revenue sources, we can measure them easily, and it is feasible for us to analyze these sources over the course of a year.

Recommendation: Increase individual giving through direct mail

• Pros - One of the main benefits includes reaching a new set of prospective donors, or lapsed donors, who may not read IRC’s emails. By reaching out via mail, the IRC can also connect with older donors who are not using technology. Moreover, the IRC can build a core group of sustaining givers and future major gift and planned gift prospects.

• Cons - The costs for the direct mailings must be factored in on the rate of return. Also, it can sometimes be difficult to know whether the direct mail piece compelled the person to give, or if it simply served as a reminder to give and the person was already planning to donate.

(2) Donor acquisition rate

The donor acquisition rate informs an organization of how well it is securing new donors each year. We decided to focus on the click-through rates of one particular email campaign of the IRC. We wanted to know which articles would compel readers to click on the website for more information, and we thought this would be a strong indicator of whether a new donor was engaged with the IRC content. By analyzing trends in the CTR in any given email campaign, we can better tailor our marketing strategy to discover which methods/narratives our future donors are most interested in. This is a SMART KPI because we can measure the IRC’s donor acquisition rate, and compare it to industry standards, it is time-bound and relevant to this project. Recommendation: Analyze Click Through Rates (CTR) in email campaigns

• Pros - Online giving is a popular way to donate, so measuring the CTR is an opportunity to compare the IRC to other leaders in the nonprofit sector. If people are clicking on an email to learn more about the IRC's humanitarian efforts, they are most likely to be an engaged stakeholder, or a potential donor. By tracking this data, the IRC can identify which people to call, email directly, or personally invite to an upcoming event.

• Cons - By focusing on email campaigns, we are not accounting for other ways people become donors. Also, older donors may be more inclined to receive a physical mailer rather than to read updates via email. We noted this opportunity, which is why we also recommended above that the IRC increase its direct mail pieces.

(3) Donor retention rate Steve MacLaughlin notes in his book Data Driven Nonprofits (2016) that the

average donor retention rate is 29% (now up to 31% in 2017). We would recommend that you implement new stewardship processes to effectively engage donors. We want the IRC to strengthen bonds with donors and ensure that they are thanked according to their level of giving, which may encourage them to be lifelong benefactors of the IRC.

This is a SMART KPI because the donor retention rate is a relevant, as a key component of an individual giving strategy. It is specific, and the IRC will track the donor retention rate over a specific time period.

Recommendation: Create detailed stewardship plan to increase donor retention

• Pros - Donors who feel valued are more likely to be continuous, long-term givers; therefore, a program that supports donor engagement and satisfaction would promote donor retention. Stewarding donors is an inexpensive process and the benefits generally outweigh the potential drawbacks.

• Cons - There is an increased competition for donor dollars. Therefore, we are competing with similar organizations to retain our donors. Before finalizing this recommendation, we also reviewed the structure of the fundraising team and decided that the IRC may need to onboard volunteers to make donor thank-you calls or send handwritten letters to key contributors.

Our recommendation is that you implement these three KPIs immediately to ensure that you are on track towards the goal of diversifying your funding streams. By committing to this you will ensure that the IRC will be able to continue focusing on your mission and will not continue to be as reliant on incoming grants as you have been in the past. Additionally, we recommend that you discuss these KPIs at every staff meeting to ensure that your staff members and board understand that these are a priority. With a commitment from leadership and internal staff the IRC is bound to find success in our recommended approach. Thank you for your time and please contact me with any questions. Best, Student A

Resources: Charity Navigator. (2018). https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=3898 MacLaughlin, Steve. (2016). Data Driven Nonprofits. Saltire Press. https://ssir.org/articles/entry/ten_nonprofit_funding_models Giving USA 2018 Report Exhibit 1

Exhibit 2

Exhibit 3

Exhibit 4

Exhibit 5