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Weekly UpdatesCutting costs and boosting revenues is a goal for any nonprofit, especially during economic downturns. For those looking to do both, nonprofits could re-examine how they handle one of their most important assets--their donor lists.
Exchanging lists is much more economical than renting, with a net difference of as much as $70/m to $100/m (per thousand names), said Lauri Palladino Simone, senior vice president at Greenwich, Conn.-based May Development Services (Direct Media Millard, an infoGroup Company).
Exchanging lists can cost anywhere from $5/m to $15/m in processing fees while renting lists can run from $65/m to $100/m in base fees, before select charges are added.
Some nonprofits won't exchange with commercial mailers or political mailers, and there are those that won't rent or exchange their lists at all. It depends on internal policies. "Most nonprofits are making their lists available," she said, but some also do exchange-only. A file with less than 50,000 names usually means an exchange only, Simone said.
Increasing costs have put an increased focus on efficiency. Exchanging lists can yield "quite a bit" of savings, with a name costing less than a penny as opposed to 5 or more cents for renting, said Michael Kertelits, account executive at RMI Direct in Danbury, Conn. Pennies might not sound like much until you do a 1-million piece mailing.
In addition to a base fee of $65/m to $100/m, $5/m to $20/m can be added depending on the type of select, such as, recency, donor amount, age, and other demographics. The most valuable selects are things like age, income, recency of the file and contribution level, Kertelits said.
Small charities end up with high acquisition costs to grow their lists because they need to rent lists. "You can have success exchanging with local nonprofits but to grow more, you have to go to bigger nonprofits," Simone said. When trying to put together an aggressive campaign, organizations will rent some names from larger charities. "That's where you're going to have the counts, especially in larger metropolitan areas," she said.
"If you're exchanging, then exchange all you can, because you will save in the long run," Simone said. "You want to get as many exchange names as you can, so it's beneficial from the standpoint of being cost effective in your acquisition program," she said.
It depends on the policy of the nonprofit whether they rent or exchange lists, Simone said, but "if they're pretty savvy about what they're doing," they'll do both.
"Everybody's policy is different," Simone said. "Nonprofits that do make their names available for rent have a nice healthy income stream." Those exchanging, or doing both, she said, are saving money on acquisition, and generating income that can be put toward acquisition costs.
Sometimes nonprofits whack others with a non-reciprocal fee of as much as $20/m, if another organization rents a list but does not make its own list available. The other mailer would want to have access to those names; if your list is not on the market. That generally happens with organizations that are in the mail a lot, said Kathleen Stivaletti, client relationship director at Lake Group Media, Rye, N.Y.
Maintaining exchange balances is critical when exchanging your lists. "That's money on the books. It's free, but at the same time, if you're not taking advantage of that, you're leaving money on the table," Stivaletti said.
While a nonprofit might not be paying hard dollars like a traditional list rental, she said outstanding exchange balances can be like free names for your organization. When a balance is creeping into the six figures, the other organization is "just pounding your names away, and you're not taking advantage of that. Someone needs to be minding that shop," Stivaletti said.
If an exchange balance leans too far to one organization, the other nonprofit can hold back exchanging until it reduces its name balance, she said. List rental can help defray the costs of other aspects of your mailing, whether it's postage, printing or merge/purge. "No one's going to send you a donation until all that's done," Stivaletti said.
Exchanging lists instead of renting lists might seem like a no-brainer when looking at your bottom line expenses but it doesn't help the income side of the ledger.
If a nonprofit is thinking about putting its names on the market, Simone said it should expect to net about $1.25 per name rented, but it also depends on how many names it has and how often the file is turned. For example, an organization with a 50,000-name list would only be turning it a few times a year.
Some smaller organizations not having luck exchanging their small fists may rent it for a simple, flat fee, Simone said, like $300 for 2,000 names. The base price, she said, can depend on what segment of their list is being made available for rent.
List rental revenue can yield significant dollars and have a big impact on the overall cost of a program. Nonprofits must manage list rental income against exchange balances, making sure on the acquisition side they keep costs low by exchanging as much as they can, Kertelits said. While most nonprofits are trying to exchange more, once they do, they have to realize the impact on the other side, where they might not have the rental income they once did. "Exchanging that much more, a nonprofit could be saving on the acquisition side but losing list rental income," he said.
Renting versus exchanging lists depends on an organization's goals. If the goal is to bring as many new donors to a file as possible, optimize the ability to do so and reduce costs as much, then it would want to exchange as much as possible, if the goal is to maintain file size, then a nonprofit might think about exchanging less aggressively, Kertelits said.
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