School Spends Money to Make Money

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A combination of elaborate direct mail pieces and bare-bones mailings with a letter and little more by St. Joseph's Indian School has increased its donor file by 8 percent and net income by 12 percent in the past year. The nonprofit collected about $14 million in direct mail in 2000.

The elaborate pieces feature more personalization and color as well as premiums included with the mailing. They are tested more frequently, said Kory Christianson, director of development.

"Fundraising costs have been skyrocketing, but our net income has more than proportionally increased to offset costs," he said.

A residential/educational facility for Native Americans run by the Priests of the Sacred Heart, St. Joseph's Indian School currently has 220 students of Lakota descent.

In December, the school sent 250,000 packages with personalized date books to donors who had previously given $10 or more. The date book, which replaced a calendar, increased the cost per package by 16 cents, for a total cost of 61 cents per package. But it also increased the response rate from 6.9 percent to 12.5 percent and brought in an average gift of $17.50, an increase of 70 cents.

The previous month, fundraisers tested 25,000 house file packages with premium peel-off holiday gift stickers against 25,000 house file packages without the stickers. The stickers raised the price per package from 20.08 cents to 27.5 cents, but they also raised the average gift from $18.12 to $18.94 and the response rate from 4.71 percent to 5.66 percent.

The nonprofit uses lists of contributors to other Christian organizations or Native American causes to send 8.5 million acquisition packages from August to March. These packages contain premiums such as address labels, key chains, pins and pendants. They bring in a response rate of about 2 percent and an average gift of $10 to $13.

St. Joseph's also has set up three donor clubs that receive monthly appeals. Unlike the acquisition mailings, which include premiums, mailings to the clubs include no frills and are designed to limit expenses. Christianson said these clubs "bring in substantial net income by allowing us to mail to donor segments that would otherwise be marginally profitable or not profitable at all."

The first group consists of 75,000 people who made an initial gift of less than $10; the second contains 45,000 people who made an initial gift of $10 to $15; and the third includes 15,000 people who gave an initial gift of $20 or more.

Donors whose initial gift was less than $10 receive a letter and a reply form with a verse from the Bible. It costs 17 cents and brings in an average gift of $4.50 and a response rate of 12 percent.

The other two clubs receive a package containing a letter, a reply form, and a drawing and message from one of the St. Joseph's children. The package costs 25 cents per piece to produce and mail. For those whose initial gift was $10 to $15, the package had a response rate of 7 percent and an average subsequent donation of $14. Among the 15,000 people who gave an initial gift of $20 or more, the mailings have a very high 50 percent response rate and an average gift of $20 for subsequent donations.

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