New Survey Reveals Nonprofits’ Perspectives on Direct Mail Donation Processing and the Benefits of Outsourcing

This month’s blog focuses on a survey commissioned by Merkle Response Management Group on nonprofit direct mail donation processing. Market Connections, Inc. conducted the blind online survey, asking non-profits what methods they use to manage their direct mail responses, how well they think they are addressing key areas, the importance of specific attributes when evaluating current or potential outsource service companies, and perceptions of the benefits of outsourcing. 157 non-profit organizations responded, and all use direct mail as a fundraising tool.

Nonprofits have a broad range of responsibilities and donation processing often requires time commitments that limit resources available for other mission-critical functions. Not surprisingly, the survey revealed that outsourcing this function improves both response speed and security, and elevates overall donor care as well.

Some of the key findings:

• Outsourcing enables greater focus on nonprofit missions and improves efficiencies

Nonprofit organizations seek to dedicate as many resources as possible to activities that most directly impact the mission. Outsourcing donation processing allows nonprofits to strategically allocate limited resources more efficiently and effectively. The survey found that 63 percent of respondents felt outsourcing frees staff to focus on core mission objectives, and 61 percent said that it reduces processing costs and improves overall efficiency.

• Outsourcing donation processing can improve security, accuracy and speed

The survey found that outsourcing improves a nonprofit’s ability to meet security standards. Nearly a quarter of organizations processing donations in-house said meeting PCI compliance standards, essential for safe credit card processing, was challenging. Just 12 percent of those outsourcing the function felt the same. Similarly, the ability to process responses consistently according to established business rules and quickly acknowledge donor gifts was more frequently cited as a challenge for those processing donations in house.

• Nonprofits consider speed and security important characteristics of outsource partners

When choosing to outsource donation processing, security and speed were the most highly ranked attributes. The ability to quickly acknowledge donor gifts with personalized letters was the outsource partner’s top ranked attribute, with 87 percent of respondents noting it as important. Securely handling funds and safeguarding data were the next most frequently referenced attributes at 85 and 84 percent respectively. Even smaller nonprofits that face greater obstacles when it comes to speed and security can address these challenges by outsourcing donation processing capabilities. Lowest cost was among one of the least important elements for respondents, with just 55 percent noting price as a key factor.

Donors often judge a nonprofit by the speed, accuracy and security with which the organization processes their donations and safeguards their personal information. So any improvement in these areas helps strengthen that donor client bond, leading to greater donor value over time.

Besides the immediate benefits of outsourcing – the ability to focus on the core mission; and improved security, accuracy and speed – the survey found that non-profits can realize other advantages:

– Improved processing and data capture for more complete donor profiles

– Reduced infrastructure and technology investments

– Lowered business risk

– Increased access to specialized capabilities and resources, including third party assessments such as Level 1 PCI compliance, SSAE16 audits, ISO Quality Management certifications and more

Outsourcing companies follow the latest best practice protocols for secure handling of funds and data, so non-profits who use them don’t have to assume these additional responsibilities. Compliance criteria change regularly and noncompliance can be expensive, so outsourcing can be seen, in a way, as a form of insurance, providing greater assurances that these processes are being correctly implemented and adhered to. This is especially important for smaller non-profits that may not have the operational sophistication or resources of larger organizations.

The donation processor you choose matters.

There are many challenges with in-house direct mail processing and it’s critically important for nonprofits to partner with the right donation processor – one they can trust to carry out this important function better than they can themselves. Outsourcing donation processing to the right outside partner, one whose focused mission is the efficient, accurate, secure, and timely processing of donations and donor information can play a big part in a non-profit’s growth and success.

At Merkle Response, our nonprofit clients have realized important best practice advantages – from our investment in the latest technologies, maximally efficient processes, consistent service level delivery, comprehensive security processes, to a strong and viable disaster recovery/business continuity plan, adherence to established client defined business rules, and more.

If you are considering outsourcing your donation processing to an outside vendor, carefully consider their approach, capabilities, experience and guiding principals. It’s an extremely important decision.

I hope you’ll take some time to read the full survey report, and feel free to add comments to this blog afterwards. You can find the complete survey report here