Your chief development officer (CDO) wants to tap into the endurance market. “There’s a lot of money coming in that route. We need in. Go forth and conquer.” Your CDO’s expectation of this new event is colored by your organization’s experience with your existing peer-to-peer (P2P) events. The CDO’s expectations and your budget (both revenue and cost) are driven at least to some degree by your other P2P events’ statistics.
The math goes like this:
Income expectation = (P2P typical income) + (high minimum fundraising amount in order to participate) + (registration fee income)
Expense expectation = (logistics cost of endurance event) + (P2P typical expense)
Bad news. The formula is wrong. There is a missing variable. It is “market relationship” versus “social relationship.” Retail-attractive events (endurance) yield market relationships for the most part. Market relationships are characterized by a transactional relationship between the buyer and the seller. Retail-unattractive events (walks, for example) yield social relationships. Social relationships are characterized by, well, love … affection … attachment … empathy.
Most successful P2P events built on social relationships yield the attractive expense-to-income ratios we’ve come to expect from P2P. However, you, my friend, are potentially burnt if you signed onto this formula without accounting for the existence of the market relationship.
How does being in a market relationship with your fundraiser impact the other variables? Let’s look at “P2P typical expense” as an example.
This typical expense includes acquisition. If you are acquiring mission-connected participants as you would with a retail-unattractive walk, for example, you are probably not advertising using big money, but acquiring it, to some degree, through P2P recruitment and existing relationships.
If you are acquiring participants for a retail-attractive event, we have to acknowledge that there is likely a physical and financial barrier to entry. The physical barrier is something like “able to run a marathon” and the financial barrier is “can pay registration fee and do high fundraising.”
Creating a Venn diagram using “mission-connected,” “overcomes physical barrier to entry” and “overcomes financial barrier to entry” shows you how very small your target market is. This creates the need to advertise and acquire in ways that are more expensive.
When you accommodate the above actuality, your broad-recruitment effort yields low mission-connection among your participants.
How else does having a retail-attractive event impact your formula? With the retail-attractive event, you are creating something worth buying and that costs money. To cover your bases you install a registration fee and a minimum fundraising fee. By doing that, you guarantee you are in a market relationship with your fundraiser. They are buying your experience with two types of currency: cash for the registration fee and fundraising dollars for the minimum fundraising fee.
That you put them in a market relationship means a few things:
- You’ve created a consumer, not a fundraiser. Consumers demand better service.
- They likely won’t go over minimum fundraising requirements unless they overshoot attempting to reach minimum.*
- They won’t come back next year at high rates.
If we expect participants to act like we are in a social relationship after we have pushed them into a market relationship, we’ll be disappointed by their behavior. They are behaving predictably; it is our expectations that are illogical.
While we can always find that person in a crowd who is mission-connected and in a social relationship with our organization (for the marketing piece), when taken as a whole, the participant’s relationship will reflect our handling of and our offers to them. For events with a retail-attractive attribute, we are by-and-large in market relationships with our audience. Now, what should we do about that?
If we are in market relationships with our fundraisers, we should acknowledge that fact in our marketing budgets, our infrastructure and in the professionals we hire. Hire a promoter for acquisition, not a P2P fundraising professional. Use the P2P professional to design and deploy the materials supporting the P2P “ask,” but temper expectations of above-minimum fundraising. Count on low retention. Make sure you hire a killer logistics company—you have to deliver a great experience because that is what you sold, not the mission.
We also need to pray the IRS doesn’t figure out that people are buying experiences with fundraising dollars. God forbid that the IRS figures out how to make a portion of that “purchase” made with fundraising dollars eligible for a sales tax, like a gala ticket would be handled.
*Exceptions? Of course! But don’t default to the easy idea that your retail-attractive event is one of those exceptions. Likely it isn’t. BP MS 150, American Diabetes Association Tour De Cure, Crohn’s & Colitis Team Challenge and a few others—I know you’re out there and reflect an entirely different set of human biases and attributes—but that is for future blogs.