Writing the RFP: kicking the tires of a prospective list broker.

You're sitting on top of a potential super source of raising funds for your organization--your house donor file. But just how do you put that request for proposal (RFP) out to find the list firm to market it and start the cash flow?

When the Christian Appalachian Project (CAP) in Lancaster, Ky., spent a good part of this past year going through the RFP process, the organization discovered new ways to benefit from a list firm. "We're expecting to use new strategies to maximize our house files," said Sue Sword, executive vice president of CAP. "The new company is coming up with new list exchanges that present opportunities for a significant dollar growth in our program."

The discoveries came through the RFP process. CAP found out about the new vendor's capability by asking about how the company dealt with a file the size of CAP's file. Sword further asked about the firm's expectation for CAP's growth. She learned about the vendor's exchange list rates and how they performed with other organizations.

"One of the most important decisions for our organization is a good list program," Sword said. "This is crucial because we're a big mailer at 24 million (pieces) a year and we require a set yearly growth of around 165,000 names."

That outcome performance is so important that CAP has a clause, stating at the end of the first year CAP reserves the right to end the relationship should such figures not develop.

The RFP process can include basic stages. The organization alerts the development office that the process is part of CAP's usual three-year exploration to test the market. An initial letter should list service requirements, such as securing and ordering names or the numbers desired. The details should indicate the importance of meeting specific mail dates the organization requires.

Yet narrowing the choice down to one of the usual three contenders goes beyond the basics. Organizations need specific details about the vendor. CAP used a scorecard with several categories that looked at:

* General performance;

* Aspects of brokerage and list management;

* Financial viability; and,

* Comments from the references.

The scorecard also looked at how the cultural fit between the organization and vendor would play out. CAP viewed the roles, and responsibilities of the vendor and whether the relationship would be a partnership type or other.

"We have to look at the people beyond the resumes," Sword said. "We went to the sites of the three finalists to visit the facility."

Looking at the facility tells you about the work actually being completed. You can see whether the vendor has a sizable staff or operates out of a one-room office. This tells you the level of established abilities by the company.

Outline the deadlines. "We recognize that schedules must be met," she said. "Because acquisition is so important, we mail every month and we're looking to possibly mail twice a month, so the work by the broker and manager has to keep pace with the schedules."

Sometimes the willingness to explore new methods helps the nonprofit, but that has to be mentioned in the RFP. When the Washington D.C.-based Paralyzed Veterans of America (PVA) began working with its present list manager around two and a half years ago, part of the RFP process specified using enhanced lists, a concept the organization had decided might be useful.

The enhanced list offers opportunities for a house file to be used in secondary and tertiary markets, according to list experts. Enhancements are paid on a royalty basis so costs are not related to the actual client. Renters can specifically seek, for example, just gardeners opposed to all donors. They will pay $50 per thousand, for example, for that select and the client doesn't have a cost because the $50 covers the expense.

"We knew enhanced files opens a lot of doors for fundraising," said Nichole C. Krieger director of direct marketing for the PVA. "This allowed us to market to different groups who otherwise might not think of taking our lists, like the NAACP, which could be looking for African-American overlays."

Yet the use would not have happened without the direct communication through the RFP process that the PVA aimed to use that strategy. Today, the PVA's enhanced file accounts for about 20 percent of the overall list rental revenue. Mailers that make up this revenue are about 10 percent of the total mailers using PVA files. Overall, the PVA has experienced a 20 to 25 percent increase in list rental revenue due to enhanced files.

The RFP has to specify the needs of the organization. The PVA uses a separate list manager from a list broker. That information also had to be part of the RFP.

"While efficiencies exist in cost by having a single broker with manager, you can also have a potential conflict of interest," said Mark Dowis, associate executive director of development for the PVA. "The priority of focusing on management or brokering manifests itself by how much of your lists you are exchanging."

The PVA lowers list costs by using exchanges so the focus is on acquisition more than revenue. "Organizations have to decide whether to divide the services of managing and brokering," said Krieger. "For us, such a large file meant we have concerns for acquisition, and that can depend on staffing, the size and how to maintain that list."

The RFP has to outline a desire to find a vendor that can handle the organization's volume, has experience in selling a similar type of file, and has contacts with the commercial side of the business.

"An organization with 100,000 names might want to focus on a single manager with a broker, and that should be mentioned in the RFP," Dowis said.

How much you can increase your revenue really depends on the list's marketability. Know your lists to describe the ways they can help other organizations. "Go back to the history of your files and the segments," Dowis said.

The language is duplicated by list people who handle the RFPs. "One of the most difficult parts of the RFP process is that many nonprofit people don't know who their donors are," said Judith E. Antisdel, president of Anne-Tisdale Direct, a mailing service and list broker in Towson, Md. "Nonprofits need to know a type of profile from the list with details about why donors bothered to give."

RFPs arrive on Antisdel's desk, she said, many times with haphazardly given information that requires her to sift through the major details. "RFPs might look for a printing service, or a list broker, but I will have to go back to the client five times because they are afraid to give too much information."

Some key details would include the type of nonprofit, the type of programs run, which lists have been used before, and which segments worked. The strategy of whether you are willing to look for lists outside the usual scope is also crucial. "The relationship has to share a dialogue between the list broker and the client," she said.

Giving the past history of donors adds such details. Segments differ in performance and might correlate to giving patterns such as those giving over $150, or those under $10. To seek renters, information about the income range, the professional status, and geography lets the broker know your track record.

Antisdel shared a story about an organization that widened the focus on lists from a broker. The organization dealt with diseases affecting joints and one chapter wanted to test new list areas even if the area was unusual.

"This showed a good example of exploring," she said. "We tested lovers of country music, and that average person (donor) was not associated with the disease."

However, the result turned out to be a surprise. Even though low-volume givers were found, those donors repeated and stayed with the cause. "We might get $1 to $20 donations," she said. "But this led us to cultivate them for the future because country music lovers kept giving no matter how many times we asked."

This approach allowed the nonprofit to cultivate the higher value donor with another package in a different format. "They were going after 15,000 in acquisition in the past," she said. "Now they are going after 35,000 to 50,000 new people."

Find out about the capability of the vendor by placing this detail in the RFP. Also ask to speak to non-competitive clients of the list firm. Make sure references are handled appropriately and in a timely manner.

Goals could be misleading some nonprofits in the RFP process, according to Susan Anstrand, CEO of Names in the News, a list broker and manager for nonprofits in Oakland, Calif. "Some have high expectations for the money to make on lists," she said. "Maybe they have restrictions and don't want to exchange political lists or don't allow commercial usage. Other restrictions could occur if they only put out their $10 to $50 donors."

Nonprofit planners should think out the marketing. Place in the RFP a way to fred how the list manager promotes. "Which vehicles are used to promote it? Does the vendor go to trade shows?" she asked. "Find out what charges and commissions are different from usual, like charges for keeping records on exchanges."

A simple goal like PVA's focus on acquisition could lead to confusion if not mentioned in the RFP. Anstrand explained how one managing vendor suggested a nonprofit with 300,000 names was failing because the organization only made $100,000 instead of $500,000 from the names.

"They wouldn't understand the exchange importance to the nonprofit," she said." Some business models say exchanges don't work, that the client has to rent the list, but that means more money for the list manager."

Be specific. Use language like: We mail 10 million in acquisition mailing, and 25 in cold acquisition, so a large portion of names will be in exchange. Keep that in consideration in planning.

Specify the type of person on the lists you desire. For example, rule out one cent to $5 names, or 63-month people. Cut off donors at the 48-month level.

For pricing suggestions, mention that you're not interested in too low or too high pricing. Generally you can find the market of a list. For example, a political or disease affinity list might have pricing between $80 and $120 a thousand. "You can go with the less expensive or the median ones." she said.

Nonprofits can increase the income by widening approaches, but Anstrand also said you can't expect to turn around the list performance overnight.

How often should an organization review the RFP process? "I would like to keep a client forever, but if the service is falling down or the monthly goals are low, then it might be time," Anstrand said. "Some have rules to review every three years or at least to send out an RFP to gain information."

"A successful relationship depends on a continuing ongoing process," said Kathleen Stivaletti, client relationship director at Lake Group Media Inc., a list broker and manager in Rye, N.Y. "Improvements can be made in a casual discussion and then followed up in a review during a more formal basis maybe every two years."

Look for trouble spots. "I follow up with mailers to see how the mailing performed, and we analyze where certain strengths and weaknesses showed up," she said. "Find a vendor who is willing to go through this process at each step."

One part of the reviewing process occurs when the nonprofit reviews plans from the list vendor. The RFP can help both sides understand the timing of when the nonprofit will give an okay to the vendor's plans.

"The way the nonprofit reviews can increase the range of our work," Anstrand said. "If they have to look at packages and get back in a week, it's hard to sell those lists because we don't have that time frame."

RFPs should outline a plan that lets both sides proceed with basic ground rules. "If the dimensions are too loose, that leaves the list manager open to make mistakes, but the other side could be too restrictive," she said.

Reasonable deadlines have to be mentioned, according to David James, president of the Bethesda List Center in Bethesda, Md., a mailing list manager and broker. "The three to four people to okay will always be away at an annual conference," he said. "Allow for extra time so that if we're talking about 400 lists a month, we have the time of 10 days for the broker."

Lake Group's Stivaletti once was given an RFP with an expected turnaround of 48 hours. Other times she was given a month. "A three-week period is probably fair depending on the level of detail," she said. "A simple one can be done within a week while complicated RFPs require a full set of financials."

James criticized designers of RFPs for taking other organization's capabilities and filling in "check mark boxes" like the item was a template. "That information may be derived from another organization, but it isn't pertinent to their organization," he said.

First time mailers might see a cause worthy of a 3 percent response rate. "They have to be realistic about what really will be developed," he said. "We might hit a nerve, but we're probably not always going to be as high as they think."

Deadlines can be affected by the limitation placed by a nonprofit's scope. A group focusing on sufferers of ailments can limit the choice of lists from a broker by demanding only related ailment lists. "These limited 50 to 60 lists may not be as available because of the small universe, so an understandable deadline can help expand the possible lists for the organization," he said.

With differing goals by the various types of nonprofits, the standard design of the RFP that exists in most industries doesn't occur when nonprofits seek list brokers or managers.

The bottom line, according to Stivaletti, is to find the right experience in the market for the needs of your organization. Look for similar clients who demonstrate a similar mailing history. Look for a vendor's longevity with clients.

How can you maximize the house file? Allow mailers to come in and use files from areas as diverse as, Good Housekeeping magazine, or Better Homes and Gardens.

"Just because a company makes clothing doesn't mean they live in a separate world from the nonprofit donor," Stivaletti said. "Mutual of Omaha can be a good match, and this is an example of thinking out of the box."

While the enhanced files helped the PVA, such approaches lie out of bounds for smaller sized house files, according to Anthony Carraturo, sales manager for Lake Group. At least a file of 200,000 names is needed to take advantage of the enhanced strategy.

Yet smaller house organizations can set up an RFP for a list manager who has similar size files where they can cross sell. Or mention that you are looking to do co-op advertising. "Put in the contract that you want to be included in at least two co-op ads," he said. "Co-op advertising could boost the revenue around 10 percent."

The success of the RFP for the PVA has happened because of the working relationship, according to Krieger. "We work together on establishing goals," she said. "One priority is that the brokerage side and the management side have to work together."

Krieger wanted a broker with heavy analytical modeling skills. The PVA wanted new sources for high-value names. Even though each firm is a competitor in the market place, the PVA goal was to create a way the broker and manager worked for the benefit of PVA.

"The RFP has to state what goals you seek so the vendors know what to expect" said PVA's Dowis. "They will be judged by their performance through the contract and how they are dealing with the mailings."

Firms start the process with the RFP, then stay on top of vendors.

"Nonprofits have to have clear output measurements," Dowis said. "You have to pay very close attention to this process because you have a lot of revenue and staff time riding on this."

RFP Questions To Find Financial Answers

The financial health of the list vendor strikes hard at the nonprofit. So how can an organization use the RFP process to discover the viability of a list firm?

The Christian Appalachian Project (CAP) in Lancaster, Ky., sere out an RFP this year that especially looked at the financial health in a potential vendor. A key factor was looking for a firm that wasn't affiliated with another company. CAP feared potential problems in financial areas.

"We went through a lot more this year than in the past because we were concerned about Sarbanes-Oxley," said Sue Sword, executive vice president of CAP. "We were not required to seek a real solid history of the company, but financial stability can be based on that, and we will be scrutinized more in this area."

The emphasis was to see the financial security of the vendor by viewing a history of financial stability. The RFP sought documentation of year-end reports, and accounting firms. Also letters from banks verified the history for the three finalists.

The Washington D.C.-based Paralyzed Veterans of America (PVA) used an RFP that mentioned that a team wanted to meet with accounting people of the vendor to see information on the speed of collection. "We wanted to see a track record of longevity in paying their bills in a timely fashion," said Nichole C. Krieger, director of direct marketing for the PVA.

Susan Anstrand, CEO of Names in the News, a list broker and manager for nonprofits in Oakland, Calif., suggested asking about the aggressiveness of the sales force. "Are they on the phone all the time, or are they going to trade shows," she asked. "See what systems they have in place if someone fails to pay and owes for your list."

Kathleen Stivaletti, client relationship director at Lake Group Media Inc., a list broker and manager in Rye, N.Y., explained that she often provides financial information on what her company takes in along with the amount of days for a turnaround.

Anthony Carraturo, sales manager for Lake Group, added that you can pick a good list manager by adding in the RFP process a way to find whether the vendor has less than a 1 percent bad debt ratio. "Asking for references is part of everyone's RFP process, but research some clients who are not immediately given," he said. "Look for a vendor you can develop a relationship with, and if the vendor is up-front, they will allow this--otherwise you can weed them out."

Yet even after having a contract in place, the nonprofit has to watch for warning signs of financial problems. "Look for slow payments, or a turnover within the account staff," said Mark Dowis, associate executive director of development for the PVA. "Look at the pattern of average days receivable and average days payable."

Tom Pope, a New York City-based journalist, writes on management issues.

GETTING YOUR LIST STARTED AND MARKETED

There are many list companies that can help you get a revenue stream
from house file of donors. Like any other industry, there are
specialists in every discipline. Here's a list of donor file
specialists to get you started.

AMERICAN LIST COUNCIL      Princeton, N.J.      Fran Green
ATLANTIC LIST              Arlington,Va.        Paul Martin
DIRECT MEDIA               Greenwich, Conn.     Larry May
ESTEE MARKETING GROUP      New Rochelle, N.Y.   Chris Ragusa
HOMEDATA CORP.             Melville, N.Y.       Bruce Dulberg
LIST SERVICE CORP.         Naples, Fla.         Jennifer Girard
MARKET DEVELOPMENT GROUP   Washington, D.C.     Gerry Gretschel
MARY ELIZABETH GRANGER &   Towson, Md.          Bonnie Granger
 ASSOC.
MILLARD                    Darien, Conn.        Ed Bezursik
MKTG SERVICES              Newtown, Pa.         Pamela Mulligan
MOKRYNSKI DIRECT           Hackensack,N.J.      Bob Stein
NATIONAL FUNDRAISING       Crofton, Md.         Pat Rainey
 LISTS
O'NEILL MARKETING CO.      Fairfax, Va.         Rita O'Neill
RMI DIRECT                 Danbury, Conn.       Martin Stein
RUBIN RESPONSE             Schaumburg, Ill.     Linda Rubin
SCADIRECT                  Fairfax, Va.         Katie Oakes
SPECIALIZED FUNDRAISING    Spartanburg, S.C.    Lisa Greene
 SERVICES
STATLISTICS                Danbury, Conn.       Brian Manning
TARGET ANALYSTS GROUP      Cambridge, Mass.     John Mastrobattista
WALTER KARL                Pearl River, N.Y.    Fran Golub

AMERICAN LIST COUNCIL      [phone]   [e-mail]
ATLANTIC LIST              [phone]   [e-mail]
DIRECT MEDIA               [phone]   [e-mail]
ESTEE MARKETING GROUP      [phone]   [e-mail]
HOMEDATA CORP.             [phone]   [e-mail]
LIST SERVICE CORP.         [phone]   [e-mail]
MARKET DEVELOPMENT GROUP   [phone]   ggretschel@marketdevelop-
                                            ment.org
MARY ELIZABETH GRANGER &   [phone]   [e-mail]
 ASSOC.
MILLARD                    [phone]   [e-mail]
MKTG SERVICES              [phone]   [e-mail]
MOKRYNSKI DIRECT           [phone]   [e-mail]
NATIONAL FUNDRAISING       [phone]   [e-mail]
 LISTS
O'NEILL MARKETING CO.      [phone]   [e-mail]
RMI DIRECT                 [phone]   [e-mail]
RUBIN RESPONSE             [phone]   [e-mail]
SCADIRECT                  [phone]   [e-mail]
SPECIALIZED FUNDRAISING    [phone]   lgreene@specializedfund-
 SERVICES                                   raising.com
STATLISTICS                [phone]   [e-mail]
TARGET ANALYSTS GROUP      [phone]   jmastrobattista@target-
                                            site.com
WALTER KARL                [phone]   fran.golub@walterkarl.
                                            infousa.com