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Management of unprofitable donors by UK fundraising charities

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Abstract:

This paper presents an overview of current practice in relation to donor profitability management (DPM) in the UK charity sector and develops a model intended to explain the nature of a charity's behaviour in the DPM field. Respondents in 195 fundraising charities completed a questionnaire that established whether or not the sample organisations (i) concerned themselves with the issue of donor profitability, (ii) actively engaged in DPM, and (iii) removed loss making donors from their supporter databases. The questionnaire also examined certain potential antecedents of DPM, including a charity's use of transactional (as opposed to relationship) marketing, “organisational inertia”, a charity's willingness to adopt commercial sector management practices, the degree of a charity management's “psychological closeness” to its donors, fears that DPM might damage a charity's image and reputation, and the availability of adequate information systems. About one in eight of the sample organisations systematically deselected unprofitable donors. Less than half the charities in the sample reduced the volumes of the materials they sent to supporters they believed to be unprofitable and around a quarter implemented other DPM policies (e.g., sending lower quality materials to loss making supporters). The causal model was estimated via the technique of partial least squares. All the abovementioned hypothesised antecedent variables (other than concerns about reputational damage) exerted significant influences on charities' approaches to DPM. However, behaviour did not appear to have been significantly affected by the estimated percentage of loss making donors within a charity's database.

Keywords: DONOR DESELECTION; FUNDRAISING; ORGANISATIONAL CULTURE; PROFITABILITY ANALYSIS; TRANSACTIONAL MARKETING

Document Type: Research Article

DOI: http://dx.doi.org/10.1362/147539211X13210329822509

Publication date: December 1, 2011

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