How much of the funding gap would individuals fill?

By Jacqueline Conciatore

In this time of unprecedented threat to public broadcasting, people are responding with unprecedented generosity to station’s pleas for support. TV station WPBA in Atlanta beat its $75,000 pledging goal by 39 percent, with pitching help from hometown boy Newt Gingrich. The boon fell just short of doubling WPBA’s in-take during last year’s March drive — $42,000.

If donations to the system expand permanently by 15 percent,  the increase would amount to about $58.5 million — one-fifth of this year’s federal appropriation to CPB.

Pacifica station WBAI in New York broke a record for community radio stations with an $820,000 January drive. Nearby, WNYC — facing local threats as well as federal — piled up $1.1 million, almost beating its own record for having the biggest drive in public radio’s history, which it did while under threat of sale in February 1994.

Now for the bad news. Although Gingrich and others who favor zeroing-out CPB’s appropriation argue that the public will help sustain public broadcasting if it truly values its programming, fundraisers in the field say the recent pledge gains are only “crisis-giving” and won’t persist in the long-term.

They say no combination of the revenue sources touted as solutions so far — public giving, merchandising, enhanced underwriting or spectrum exploitation — can equal the $285 million CPB appropriation. Some say, however, that individual giving is expandable, if stations do a better job of renewing first-time givers as members and acquiring major gifts from the wealthy.

“Can’t count on it”

Public television’s March on-air drive garnered $44.2 million in pledges, a 15 percent increase over last year’s $38.3 million. About 593,000 people pledged support, up 13 percent from last year’s 525,000. Several public radio stations also showed gains in pledges, but it’s too early for systemwide figures: radio’s coordinated spring drive doesn’t come until early April.

If donations to the system expanded all year by 15 percent, the increase would amount to about $58.5 million — one-fifth of this year’s federal appropriation to CPB, based on the corporation’s 1993 membership income figures.

The 15 percent increase at TV stations seems to jibe with a recent analysis commissioned by CPB that figured individual giving would make up about 14 percent of lost federal dollars. But the figures probably aren’t comparable: for one thing, this increase occurred before any final loss of its federal subsidy. More importantly, National Economic Research Associates economist Steven Schwartz says, the hypothetical 14 percent increase includes anticipated major donations as well as basic-level pledges.

Schwartz’s analysis of potential nonfederal revenue concluded that neither individual contributions nor increased licensing revenues could offset the loss of the federal subsidy. His estimate that individual giving might bring in 14 cents for every lost federal dollar was based on a 1989 study by Bruce Robert Kingma of Texas A&M University. Kingma found that when government funding to 66 radio stations increased, individual gifts decreased by an average 14 percent. While Schwartz admits that donors might not react the same way in the event of a federal funding decrease, he says individual giving is not likely to rise more than 20 or 30 percent.

In his analysis, Schwartz also noted that any stations’ gains in individual giving would be determined by factors such as market size and affluence.

John Sutton, NPR’s research director and head of public radio’s On-Air Fundraising Partnership, says analysis of the revenue impact of lost subsidies must take into account the effect of program spending cutbacks. Since the quality and appeal of programs drives giving, “If programming isn’t in the equation, then you can’t predict it,” he says.

Sutton and several station fundraisers did predict that the pledging booms are short-term. Some say they’ve seen crisis-giving operate at the local station level. Others say it is a phenomenon in the nonprofit world generally; the International Red Cross provides the classic example, in times of famine and other disasters. Says Schwartz: “People see a pressing need. When the need seemingly disappears, then they go back to long-term giving patterns.” Though some stations are cashing in on the possible defunding of public broadcasting now, “they can’t keep that level of threat forever.”

Stations must work hard to sustain the higher levels of giving and membership, Sutton says. “We can’t write it off as short-term,” he says, “but we can’t count on it.”

Bringing in big gifts

Capturing major donations and renewing first-time memberships have not been strong points for public broadcasting. The industry has relied more on its greatest, most readily available asset — the airwaves — to bring in the dough. “What happened with the influence of on-air, we learned fundraising more as a matter of processing a media event than as a matter of engaging people, than as a matter of soliciting them,” says Christopher Dann, managing director of the consulting firm Dodd Smith Dann and one-time marketing and development director at KQED, San Francisco. As a result, stations haven’t built relationships with donors, and have failed to coordinate pledging, renewing, and major-giving efforts, he said.

In the last few years, however, some radio and television stations have built major giving programs. Partly through a CPB-sponsored major gifts acceleration project, annual growth in unrestricted major giving to public TV stations has grown about 40 percent over the last three years, according to PBS Development Senior Vice President Jonathan Abbott. “We’ve only begun to realize the potential of major giving,” he says.

NPR, too, is targeting major donors, for itself and stations. In 1993, it set up the NPR Foundation to raise money toward a $3 million endowment. Development Vice President Barbara Hall recently said she hopes to help stations strengthen their capacity to win major gifts. Last year, the network held joint fundraisers with WBEZ, Chicago, and with WCPN, Cleveland, jetting in a crew of NPR stars to help schmooze at the evening events.

The emphasis on soliciting large gifts means station heads will have to spend more time seeking money than heretofore, says Dann and others. “C.E.O.’s have been virtually exempt from fundraising obligations, a privilege not enjoyed by many heads of nonprofits,” Dan says.

The same has been true of many station boards, says Scott Elliott, station manager, WCET, Cincinnati, though his station has shaped its board to be a strong on soliciting and/or giving, he said. “Public broadcasting has not typically followed the old board maxim of give, get, or get off.”

Some fundraisers say bequests and other planned gifts hold great potential for building major-gifts programs. “We’re about to see a multi-trillion dollar transfer of wealth to baby boomers from the pre-War generation,” says Abbott. “The hot topic in the nonprofit world is addressing planned-giving opportunities.” The transfer will move $7 trillion to baby boomers and charities, sources say.

But fierce competition among nonprofits makes some development officers question the value of planned-giving as a revenue source. “There are lots of organizations trying to get into rich people’s wills,” says Schwartz. “It’s not something you can count on. … It should be considered manna from heaven.” Fundraisers say the groups most successful at netting bequests and other such gifts are hospitals, religious organizations, animal welfare groups, colleges and universities, and foundations.

Dann believes public broadcasting outlets are at a disadvantage in the competition for planned gifts. People’s notions about immortality comes into play when they make bequests, so those organizations with a deeply person appeal or some sort of “monumentality” have the edge over broadcasting, with its ephemeral nature, he says. “Public television in particular deals in pictures that fly and technology that changes rapidly. You can’t plant ivy on the stuff. It won’t grow.”

Re-upping first-timers

Improving renewal rates of first-time givers can be an inexpensive way to raise revenue. On the average, stations lose about half of first-time givers, most sources say, though Dann believes they lose closer to 60 or 70 percent. Renewal rates go up dramatically after the second year of membership: Some data shows members renew at a 70-80 percent rate after their second donation.

PBS is conducting a study with Dodd Smith Dann on retention of first-time givers who sign up during on-air drives. WETA-TV, WGBH-TV, and Minnesota Public Radio are participating.

The stations are making $3 to $4 investments in “bonding” with the donors, via communications that serve various purposes: thanking contributors, discussing the upcoming program season, and asking about their program interests.

Dann says he had several hypotheses going into the study. One is that givers feel something akin to buyer’s remorse after they pledge, and so it behooves stations to “reward people emotionally for what they’ve done,” he said. The study also tests evidence that surprisingly shows people who receive another fundraising appeal very soon after making their first gift are more likely to renew. The research is also testing different fundraising appeals, one generic and another specifically targeted to first-time givers, he said.

PBS has already encouraged stations to make nominal investments in building relationships with givers, Abbott says.

Counting the days

In the wake of federal funding cuts, stations may feel pressure to increase the number of their pledge days.

Some say adding pledge days is perilous beyond a certain threshold. Pointing to the leveling-off of membership support after a steady rise from the early 1970s, independent producer Nat Katzman in a July 1993 column in Current posited that pledging becomes counterproductive after a certain number of days, beyond which it serves mostly to annoy listeners. Recently he said TV has “maybe reached the peak” of pledge days the public will tolerate. Remote-control zappers make on-air fundraising even more difficult, he said.

For his part, Dann believes the number of pledge days is not a problem, given evidence that shows the public understands the system’s need to hold on-air pledge drives. Rather, the public becomes annoyed by the increasing levels of freneticism they sense in hosts as the days pile on, he says.

WCET’s Elliott disagrees. He believes stations will make more money if they increase their number of pledge days. The best way for the system to maintain itself, he says, is to stick to the basics. “Stations should send renewal notices as long as it is profitable, make multiple gift appeals during the year, take full advantage of pledge opportunities, and be willing to put up with the inevitable flak from extensive pledging. We should do the things we have been doing, but better and well, and not ashamed or shy about doing them.”

His own bosses thought they expanded pledging as far as it should go, however. WCET was pitching 70 days out of the year, which became an issue in the local media, he says. They decided to heed the message from the market and lessen the number of pledge days. To compensate for lost revenue, the station reduced staff and ad spending, and canceled some national programs. Management got what it wanted: “The flak has gone away this year,” Elliott says.

WGBH researcher Pat Harris speaks for many other pubcasters when she says the grail public television really needs to discover is more pledge programming with “wow” appeal.

“If I could have one wish for an infusion of money, it’d be to find another “Three Tenors” — one blockbuster pledge program that somehow hit a nerve, something that makes people say, ‘Yes, that’s why I love public television!’ ”

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