MEMO

CLIENT: The New Mom Project (TNMP)

CAMPAIG Annual Campaign, 3 Year Fundraising Plan
N:
Re: Direct Marketing Plan
To: Gwen Broda
CC: Ibrahim Inayatali
From: Chelsea Dowson
Alex MacDougall
Holly Groeneveld
Colleen Edwards
Sarah Law
Date: April 9, 2017

Executive Summary
TNMP is a Toronto based charity, that distributes baby boxes, filled with
necessities for newborn babies to new moms and families. TNMPs funding
portfolio is made up of grants, events and direct marketing (mail and online).
Currently, direct marketing is the lowest contributor to TNMPs overall
revenue. In this plan we propose a strategy to increase revenue, and acquire
new donors. We will discuss the strategic benefits of direct marketing,
specifically direct mail, summarize direct marketing best practices, and
develop the basis for a plan including three house mailings and an
acquisition mailing, each year.
History

TNMP has limited experience with direct marketing. They have not
done any official campaign mailing. In 2015, TNMP sent fifty Christmas cards
to donors and received about $300.00 in donations. These cards were a
stewardship action, and contained no direct ask. If they can receive these
sorts of results with no formal direct marketing, a direct mail plan seems like
a promising method of fundraising for TNMP. TNMP has also received gifts
online, there appear to be only limited asks through email, social media and
their website. THouh they have been able to generate revenue as well.

The greatest concern for TNMPs implementation of a mail campaign is

the lack of donor records in a database. At present, TNMP has no database
and has a limited record of the information about their current donors.

In 2014, the year TNMP was established, there was no revenue from
direct marketing (mail or online). In 2015, revenue from direct marketing
accounted for 63% ($3048) of the annual financial revenue. In 2016, revenue
from direct marketing accounted for 2% ($948) of the financial revenue; this
proportion is skewed lower because of the Trillium Grant they received that
year.

Policy

The New Mom Project currently has no policies regarding direct

marketing.

Strategy

Including a variety of mailings throughout the year is an important to

create a strategic and effective direct mail campaign. Sending out one
mailing a year may provide results, but the more you create awareness
about the charity and the mission, the more likely a donor will respond to the
appeal. Developing campaign that are based in current events or holidays,
are ideal ways to engage donors throughout the year, especially at times
when donors are more likely to donate.

Mothers Day provides an ideal opportunity for TNMP to engage with

donors, as it is a holiday that ties well with the clients they serve. The other
mailings are flexible, but we recommend a holiday mailing, as that is a
common time for charities to solicit gifts, and donors have a greater
likelihood to give, due to the nature of the season.
 In a direct mail campaign, it is also very important to develop an
integrated marketing plan. This plan includes digital marketing on both social
media and the website. Planning themed execution of social media posts,
with the drop date of the mail campaign, is a necessary tool that will
increase the engagement of the donors with the charity. As a single clear
message is being presented. This is important because many donors may
choose to visit the TNMPs website to learn more before donating; if they see
a consistent message and theme, that is linked to the direct mail campaign,
then they are more likely to give. In this case, it is also very important to
ensure TNMPs website is user friendly and donor centric. Furthermore, the
website needs to be optimized for giving, so that the donate button is clear
and the donor can give and give easily.

Best Practices

There are various forms of direct marketing including direct mail, tele-
fundraising, television ads, and e-mail correspondence. Despite what the
general public might think, telemarketing is the most effective form of direct
marketing and works well in conjunction with a mailing program. However,
due to high start-up and maintenance costs, it is not the most cost effective
solution for a small charity. If done properly, direct mail and e-mail can work
extremely well to reach new prospects and steward current constituents. For
the purpose of this report, the focus is on direct mail. When starting out, its
important for an organization to set a plan and create a strategic brief. By
doing so, one can determine a unique selling point and feature story and who
their target audience is. When coming up with a mail piece you need to
identify a problem and motivate the donor to solve the problem with their
time, money, or voice. A direct mail package generally consists of an outer
envelope, letter, reply form, lift letter (supplementary information or gift) and
a business reply envelope.

One of the most important elements of the direct mail package,

besides the outer envelope, is the letter. In order to write a successful letter,
follow these guidelines. First of all, it must sound like a letter from a friend
and converse intimately, privately and personally with the recipient. Imagine
you are writing to just one person. You want the letter to be donor centered
and less focused on how great the organization is. The letter must tell the
reader how the organization will benefit those who need the service in a way
that helps the donor feel like the hero. It helps if the letter is written in the
format listed below:

Company or personal letterhead

 Date

Salutation

Short indented paragraphs

Senders signature

A P.S. (Post script)

Other tips include writing in present tense with active sentences and
telling a story of just one person who uses your service. According to best
practice, longer letters are generally more successful. Other elements of a
successful letter include statistics, important and relevant dates and data,
quotes from experts, testimonials, and having the letter signed by someone
credible and relevant to the organization.

Direct mail can be costly depending on how many letters youre

sending out, whether or not you have a good relationship with a printing
company, how many pages or inserts are in the package, and if you are
using black and white or colour printing.

Tactics

We suggest that TNMP carryout two types of mail campaigns each

year. We suggest one acquisition mailing and three house list mailings each
year. The mailing schedule is as follows:

Type Date Theme

House 1 February Valentines Day
Acquisition 1 February Valentines Day
House 2 May Mothers Day
House 3 November Holiday

By balancing two types of mailings TNMP has the opportunity to increase

their donor base, and increase general recognition in the community.

House-List Mailing
A house-list mailing is sent to donors who have already supported
TNMP, and are in the database. This mailing is likely to have a higher
average gift and response rate than an acquisition mailing. A house-list
mailing is strategically important for maintaining donor interest and contact
with TNMP. As these gifts continue donors are likely to increase the size of
their gifts, especially if they are given the opportunity to become monthly
donors.

Acquisition Mailing
The primary motive for an acquisition campaign is the gain donors, and
educate prospects about your organization. Using Canada Posts
Neighbourhood Mailing option, the mailing can be sent out to specific areas
of the city, targeted by region. As this will be the first contact between TNMP
and the recipients. Therefore, response rates and gift sizes will likely be
lower. But it is important to remember that acquisition mailings are
investments in the future of the organization. By gaining donors, and
increasing name recognition and familiarity TNMP will develop a basis of
prospects that will enable a stronger, more prosperous future.

Mailing Details

Prospects

Some of the people that our direct mail plan will be targeting are
nurses, doctors and other medical professionals. Gwen has close connections
with the St. Michaels Hospital and should work with her connections. The
nursing community tends to be close knit and care about causes like TNMP.

Another prospect are families, particularly families in areas like

Roncesvalles, The Danforth and The Beaches. These are high income areas
which means families will have the capacity to give. Also, as these people
have families they understand the importance of having the essentials to
provide the best care to their children.

People who work at social service organizations are communitarian people.

As TNMP is a communitarian organization, social service workers would want
to support an organization like this.

TNMP has been helping refugees coming to Canada who dont have
access to the essentials for their children. Refugee organizations and people
who work at these organizations would want to support TNMP. The refugees
that are being helped by their organization will benefit from being connected
to TNMP as well.

List Rentals
 At this time, there is no room in the budget to rent lists. However, this
should be considered at a later date to increase the success of a direct mail
campaign, through increasing the size and scope of acquisition mailings. It
provides the opportunity to engage with large number of donors, that can be
targeted based on interests, profession, or many other qualities.

For future reference, here is some information on list rentals1:

- Broker fees (vary depending on volume and other factors):

$16/thousand names with a minimum of $50/list

Rental costs:

- Cost per thousand plus select fees (geography, gender) typical list:
$140/thousand

- Plus shipping fee: often $50 flat

- Minimum quantity to rent: often 5,000 names

Neighbourhood Mail

Neighbourhood mail (also known as unaddressed mail) is a service of

Canada Post that enables charities and businesses to send mailings based on
postal code area. The mail is delivered based on postal codes, and is not
addressed to a specific individual. We suggest TNMP utilize neighbourhood
mail and target post codes based on individuals likely to have an emotional
connection to TNMPs mission, and by ability to give.

We recommend the following postal codes, as they are residential areas,

commonly with families, usually with older children, and higher ability to give
due to higher income:

- Roncesvalles: M6R

- Danforth (technically Greektown): M4K

- The Beaches: M4E

- Bloor West Village: M6S

- Davisville Village: M4S

1 Information referenced from guest presentation by ______ from Stephen Thomas, in Ken
Wymans direct marketing class.
Revenue

The revenue goals of this plan are set based on the moderate growth
goals set in Summary of Needs, Case for Support and Outcome Definitions.
The year to year growth of this goal is 15% to allow for a 10% growth in
clients served, and to account for inflation (2.07%)2 as well as any other
additional expenses. A summary of these revenue goals can be found in the
appendix.
We have suggested that TNMP carry-out both acquisition and house-list
mailings. These mailings have different objectives, and the revenues reflect
that.
An acquisition mailing commonly has much lower response rates, and
lower average gift amount, and therefore commonly result in a deficit. Once
the donors are acquired, the life-time value of the donor will exceed the cost
of acquisition, and justify the investment. We have proposed an acquisition
mailing to 1000 households. We chose to be conservative due to TNMPs
limited funds available to invest in campaigns, but we would like to note that
as the number of households mailed increases the cost per unit will
decrease, and will result in a lower cost per dollar raised.
The house mailing is intended for donors who have supported TNMP
before. This list is smaller, therefore has a higher cost per unit, this is also
due to different type of postage required. But, because the individuals are
already familiar with and have an affinity to TNMP, their response rates will
be higher and average gift size will be greater as well. As a result, the
house-list mailing has a surplus, that covers the deficit of the acquisition
mailing and still is able to reach goals.
Based on the two types of campaigns, there are two revenue
projections for direct mail. Both are also outlined and summarized in the
appendix.

Expenses

Postage
The two types of mailings will require two types of postage. The house
mailings will require standard letter postage, and based on the size of this
mailing live stamps could be used. Standard letter postage costs $0.85 per
unit. The neighbourhood mailing costs $0.16 per unit. In addition to the
postage of the package, a business reply envelope (BRE) should be included
to enable donations to be returned. The postage is paid on BREs based on

2 https://www.statista.com/statistics/271247/inflation-rate-in-canada/
the number returned. For each BRE returned, $0.85 will be charged to TNMP.
TNMP will not be charged for un-returned envelopes.

Printing
Printing costs are estimated based on industry standards, and quotes
from a number of printing houses in the Toronto (research from Direct
Marketing assignment in another class). There is an approximate cost per
unit of $0.80. This cost may be minimized if TNMP establishes relationships
with printing houses that may offer discounted or free printing. Printing costs
will include envelopes, letter and reply forms.

Time
It can be time consuming to develop and coordinate a direct mail
program. Templates will need to be developed, copy written, database
organization, coordinating with the print house and Canada Post, and
developing a strategy for once the donations start being returned.
We would like to make the recommendation to TNMP to consider
returning to Humber next year for help developing their direct mail
campaign, with Ken Wymans Direct Marketing class. This would reduce the
time required for development, and would provide useful, in depth evaluation
to guarantee campaign success.
Appendix

Table 1: Three Year Revenue Goals for Direct Mail Campaigns

DM Revenue Growth Year to Year

Year 1 Year 2 Year 3
Survival $397.96 $406.32 $414.85
$1,355. $1,422. $1,494.
Continuation 15 91 05
Modest $1,755. $2,018. $2,321.
Growth 15 42 19
$4,980. $5,976. $7,171.
Stretch 16 19 43

Table 2: Summary of Total Revenue

Revenue Stream Year 1 Year 2 Year 3

Acquisition $(377.00) $(377.00) $(377.00)
House Mailing $2,203.05 $2,585.69 $2,933.54
$1,826.0 $2,208.6 $2,556.5
Total Revenue 5 9 4
Table 3: Prospect Growth and Attrition, Acquisition and House Mailings

Prospect Growth
From Other
Mailings Sent Donors Aquired Donors Streams
House 1 50 0
Campaign A
Acquisition 1 1000 20
Campaign
House 2 B 70 0
Year 1 Campaign
House 3 C 70 0
Sub-Total 70
Attrition 20%
Total 56 5
House 1 61 0
Campaign A
Acquisition 1 1000 20
Campaign
House 2 B 81 0
Year 2 Campaign
House 3 C 81 0
Sub-Total 81
Attrition 20%
Total 65 6
Year 3 House 1 71 0
Campaign A
Acquisition 1 1000 20
Campaign
House 2 B 91 0
House 3 Campaign 91 0
 C
Sub-Total 129
Attrition 20%
Total 103 7

Table 4: Acquisition Revenue Projections

Acquisition Mailings
Year 1 Year 2 Year 3
Revenue
Prospects Mailed 1000 1000 1000
Response Rate 2% 2% 2%
Average Gift $30.00 $30.00 $30.00
Total Revenue $600.00 $600.00 $600.00

Donors Gained 20 20 20

Estimated Costs
Postage $177.00 $177.00 $177.00
Printing &
Materials $800.00 $800.00 $800.00
Total $977.00 $977.00 $977.00

Time
Requirements 20 hours 20 hours 20 hours

Revenue $600.00 $600.00 $600.00

Expenses $977.00 $977.00 $977.00
Surplus/ $(377.00 $(377.00 $(377.00
(Deficit) ) ) )
 Table 5: House List Revenue Projections

House List Mailings

Year 1 Year 2 Year 3
House 1 House 2 House 3 House 1 House 2 House 3 House 1 House 2 House 3
Revenue
Prospects
Mailed 50 70 70 61 81 81 71 91 91
Response Rate 30% 30% 30% 30% 30% 30% 30% 30% 30%
Average Gift $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00
$675.0 $945.0 $945.0 $823.5 $1,093 $1,093 $958.5 $1,228. $1,228.
Total Revenue 0 0 0 0 .50 .50 0 50 50

Estimated
Costs
Postage $55.25 $77.35 $77.35 $67.41 $89.51 $89.51 78.455 100.555 100.555
Printing &
Materials $40.00 $56.00 $56.00 $48.80 $64.80 $64.80 $56.80 $72.80 $72.80
$133.3 $133.3 $116.2 $154.3 $154.3 $135.2 $173.3 $173.3
Total $95.25 5 5 1 1 1 6 6 6

Time
Requirements 5 hours 5 hours 5 hours 5 hours 5 hours 5 hours 5 hours 5 hours 5 hours

$945.0 $945.0 $823.5 $1,093. $1,093. $958.5 $1,228. $1,228.

Revenue $675.00 0 0 0 50 50 0 50 50
$133.3 $133.3 $116.2 $154.3 $154.3 $135.2 $173.3 $173.3
Expenses $95.25 5 5 1 1 1 6 6 6
Surplus/ $579.7 $811.6 $811.6 $707.3 $939.2 $939.2 $823.2 $1,055 $1,055
(Deficit) 5 5 5 0 0 0 5 .15 .15
Total $2,203.05 $2,585.69 $2,933.54