CFRE Annual Giving and Direct Mail 1 — Questions and Answers
Question 1: What is the primary purpose of an annual fund in a nonprofit organization?
- To fund only capital construction projects
- To provide a broad base of unrestricted operating support from many donors (Correct answer)
- To secure planned gifts from wealthy individuals
- To fund endowment growth exclusively
Correct answer: To provide a broad base of unrestricted operating support from many donors
The annual fund provides broad-based unrestricted operating support, allowing the organization flexibility to meet day-to-day expenses and programmatic needs.
Question 2: Which metric best measures the effectiveness of a direct mail acquisition campaign?
- Average gift size
- Cost per dollar raised (CPDR) (Correct answer)
- Response rate
- Total gross revenue
Correct answer: Cost per dollar raised (CPDR)
Cost per dollar raised (CPDR) measures how efficiently acquisition spending converts to revenue, making it the most comprehensive effectiveness metric.
Question 3: In direct mail fundraising, what does 'RFM' stand for?
- Response, Frequency, Market
- Recency, Frequency, Monetary value (Correct answer)
- Reach, Frequency, Message
- Response, Fulfillment, Management
Correct answer: Recency, Frequency, Monetary value
RFM (Recency, Frequency, Monetary value) is a segmentation model that ranks donors based on when they last gave, how often they give, and the size of their gifts.
Question 4: What is the typical response rate range for a direct mail renewal letter sent to lapsed donors?
- 0.5% to 1%
- 2% to 5% (Correct answer)
- 10% to 15%
- 20% to 30%
Correct answer: 2% to 5%
Lapsed donor reactivation mailings typically achieve 2%–5% response rates, higher than cold acquisition but lower than active donor renewal.
Question 5: Which element of a direct mail appeal package has the greatest impact on response rate?
- The reply device design
- The outer envelope teaser copy
- The list and offer (Correct answer)
- The postage class used
Correct answer: The list and offer
Research consistently shows that the mailing list quality and the strength of the offer (the ask) have the greatest influence on response rate.
Question 6: A donor who has given every year for 5 or more consecutive years is typically categorized as which type of donor?
- Major donor
- Lapsed donor
- Loyal or consecutive donor (Correct answer)
- Prospect
Correct answer: Loyal or consecutive donor
Donors who give consecutively for multiple years are classified as loyal or consecutive donors and are prime candidates for upgrade and major gift conversations.
Question 7: What is 'donor attrition' in the context of annual giving?
- The increase in average gift size year over year
- The percentage of donors who do not renew their gift in a subsequent year (Correct answer)
- The cost of acquiring new donors through direct mail
- The process of moving donors to major gift portfolios
Correct answer: The percentage of donors who do not renew their gift in a subsequent year
Donor attrition (also called lapse rate) measures the percentage of donors who gave in one period but did not renew in the next period.
CFRE Annual Giving and Direct Mail 1
What is the primary purpose of an annual fund in a nonprofit organization?