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OF THE DMA NONPROFIT FEDERATION The importance of MID-LEVEL donors p.4 OF THE DMA NONPROFIT FEDERATION VOLUME 20 • ISSUE 3 • SEPTEMBER 2017 Also in this issue: A note from the editor 3 Donor journey mapping 7 Senny’s policy scorecard 10 Chicago conference highlights 12

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Page 1: The importance of MID-LEVEL donors · The importance . of MID-LEVEL. donors. p.4. OF THE DMA NONPROFIT FEDERATION. VOLUME 20 • ISSUE 3 • SEPTEMBER 2017. ... MAX BUNCH VICE PRESIDENT

OF THE DMA NONPROFIT FEDERATION

The importance of MID-LEVEL

donors p.4

OF THE DMA NONPROFIT FEDERATION

VOLUME 20 • ISSUE 3 • SEPTEMBER 2017

Also in this issue:

A note from the editor 3

Donor journey mapping 7

Senny’s policy scorecard 10

Chicago conference highlights 12

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The Journal of the DMA Nonprofit Federation 2 Volume 20 / Issue 3 / September 2017

MEMBERS

Mr. John Bell MMI Direct

Mr. Lane BrooksFood & Water Watch

Ms. Stephanie CeruoloInfogroup

Ms. Rita ElbenFreshAddress, Inc.

Mr. Nick EllingerDonorVoice

Mr. John ErnstWiland

Mr. Craig FinstadAmerican Lung Association

Mr. Steve FroehlichALSAC — St. Jude

Mr. Tom GaffnyTom Gaffny Consulting

Mr. Kevin GaschlerDucks Unlimited

Ms. Jacqui GrosethOlive Crest

Mr. Steve HarrisonRuss Reid

Ms. Jennifer HonadelEpsilon

Mr. Eric JohnsonTHD, Inc.

Mr. Tim KerstenRKD Group

Ms. Gretchen LittlefieldInfogroup Ex Officio

Mr. Scott Douglas MeltonNational Aquarium

Ms. Alicia MeulensteenASPCA

Mr. Jeff NickelTrueSense Marketing

Ms. Kim PostulartAlzheimer’s Association

Ms. Jann Schultz

Mr. David StraussThe Nature Conservancy

Ms. Angela StruebingCDR Fundraising Group

Ms. Adrian White SlagleOperation Smile

Mr. Craig ZeltsarNNE Marketing

2017 DMA Nonprofit Federation Advisory Council

CHAIR

Ms. Tracey BurgoonDAV

VICE CHAIR

Mr. Nate DrushellInfoCision Management Corp.

DMANF Staff

Jocelyn Argarin, CMPDirector of Conferences & Education

Xenia “Senny” Boone, Esq. General Counsel & Executive Director

Alicia OsgoodDirector of Membership & Communications

DMA Nonprofit Federation

@DMANF & @AliOzDC

Members Only

The DMA Nonprofit Federation of the Data & Marketing Association protects & defends nonprofit fundraising across marketing channels to advance responsible data-driven fundraising & marketing.

225 Reinekers Lane, Suite 325 Alexandria, VA 22314 nonprofitfederation.org

The Journal is published online three times per year — January, April, and September.

Alicia Osgood Managing Editor [email protected]

Leslie Oakey Publication & Website Design

[email protected]

News UpdateAn every-other Thursday round-up of nonprofit-specific news delivered to your inbox

Nonprofit CareersThe latest jobs, delivered to your inbox weekly

Sign up for either newsletter (or both!) by emailing [email protected].

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The Journal of the DMA Nonprofit Federation 3 Volume 20 / Issue 3 / September 2017

Dear Readers:

Thank you again to all who joined us for the 2017 Chicago Nonprofit Conference in Chicago, IL. Enjoy the photos included with this edition and view the full album on the DMANF Facebook page.

Also in this edition, study mid-level donors; explore donor journey mapping and review Senny’s Policy Scorecard.

As always, thanks to all of you for your support of the DMANF. Submit a session proposal by October 6 and mark your calendar now for the 2018 Washington Nonprofit Conference.

Best,

Managing Editor [email protected]

Please submit your session proposal

by October 6, 2017!

Pre-Conference Workshop: Wednesday, February 21

Conference: Thursday, February 22 &

Friday, February 23

Renaissance Washington DC Hotel

A note from the Editor

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CONTINUED4

The Journal of the DMA Nonprofit Federation 4 Volume 20 / Issue 3 / September 2017

MAX BUNCH

VICE PRESIDENT OF CONSULTING,

CLIENT SERVICES, & ANALYTICS, RKD GROUP

Developing a MID-LEVEL

donor program

Many nonprofits have either neglected or mis-managed this portion of their file. In addition, data research tells us that it is easier for ma-

jor donors to naturally migrate out of direct response files than to encourage mid-level giving. Developing mid-level givers is hard work and hence, for a long time, it has been avoided.

Today, however, with the number of direct response donors shrinking, focusing on mid-level donors has become a necessity. And while the upside of a vibrant mid-level program is very attractive, there are also many pitfalls to jumping into this development process unprepared. In the coming paragraphs, I hope to out-line a prudent process of developing a mid-level donor program that minimizes your chances of failure and maximizes your chances of building a program that is properly tailored to your donor base.

DATA LEADS THE DISCUSSIONAt RKD Group, we believe that every nonprofit donor base is different. Yes, there are similarities and best practices that drive much of our thinking. But the spe-cific strategies we recommend are driven first by the historical giving data available, combined with the unique goals of each nonprofit. For this reason, the first step in developing a vibrant mid-level donor program is to understand the unique historical giving profiles of your current donors. The definition of a mid-level donor will vary by nonprofit, and believe it or not, your data will tell you where the most potential is located.

Don’t arbitrarily set a level

for mid-level giving.

For some, the bar may be $1,000 in annual giving. For others it might be as high as $3,000 or as low as $500. But the data will indicate where this optimal transition giving level is located. Can it change over time? Of course. Can you develop aspirational goals to raise this level? Absolutely! But go in with your eyes open as to what is immediately possible and what is reasonably achievable over time.

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CONTINUED4

The Journal of the DMA Nonprofit Federation 5 Volume 20 / Issue 3 / September 2017

BEWARE MID AND MAJOR DONOR CONFUSIONThe initial gifts of mid and major donors are often simi-lar, but RKD giving data research bears out two distinct differences.

Major donors — who are properly cultivated, mi-grate up from community giving quickly, usually within the first 18 months. Yes, there are some exceptions to this rule, specifically some major donors will take years to give a large gift but this is more an indication of the development program and familiarity with the cause, not the donor. Major donors typically give larger gifts less frequently. They also require personal attention, special recognition, phone calls and face-to-face com-munication.

Mid-level donors — settle in to a giving level over time, renew at extremely high levels and may increase their giving by additional gifts rather than increased gift size. They desire regular communication, often from multiple channels, but shy away from personal face-to-face contact. After 24 months, rarely do mid-level do-nors become major donors, but seldom do they lapse.

Given the above facts, it is imperative to do donor research early on to determine the correct path for those donors with significant upgrade potential. Re-search can triage donors into four primary upgrade categories:

� Sustainers — monthly supporters

� Mid-level donors — donors giving $500 to $20,000 depending on the program

� Major donors — donors giving $10,000 to $100,000 or more depending on the program

� Planned giving candidates — donors who include the cause in their will or trust

At RKD we look at three primary factors to deter-mine the upgrade potential of these groups:

� Behavior — giving to your cause and others

� Propensity — RKD proprietary giving algorithm to determine likelihood of upgrading

� Capacity — market research on financial power usually indicated by net worth of $1 million or more

These three primary factors, along with 2,000 addi-tional individual attributes, determine which upgrade category is best suited for the donor. Once targeted, the donor will fall into a communication strategy de-signed to optimize their long-term giving.

For the sake of this article, we will expound on mid-level giving only, but make note, each of the four upgrade categories require a disciplined communi-cation plan and development track to optimize their potential.

DEVELOPING A PLAN THAT FITS YOUR CAUSEWhen it comes to mid-level giving programs, there is no one definitive type of program that insures success. Success can be achieved via a variety of methods, but one axiom rings true throughout: be disciplined and consistent over time.

Pick a plan and stick to it. Of course test to insure success

and modify accordingly, but don’t jump in and out of the process.

Half the battle of being able to judge success is having reliable data. A consistent program will afford you the baseline numbers over time that will make re-liable analysis possible. Also, don’t expect an immedi-ate exponential return on investment. Year-over-year progress will be evident, but exponential growth takes

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The Journal of the DMA Nonprofit Federation 6 Volume 20 / Issue 3 / September 2017

time. Fortunately, thoughtful analytics and disciplined review can minimize your risk and maximize your re-turn over the first three years.

With that said, RKD has developed successful mid-level giving programs that set a standard in form and style.

The direction taken is usually dictated by the program goals,

channel mix of acquired donors, size of the program, benefits available,

the desired flexibility and cost.

Again, it is important to note here that “one size fits all” is not a way to approach this opportunity. The unique drivers of the program are:

� Program goals — Some mid-level giving programs are specifically designed to increase renewal. Due to the cause and offer, data research may indicate this program could start earlier in the giving process, focusing on cumulative giving above $500. Oth-er programs can easily lift this number to $2,000, $3,000 or $5,000. Remember, advanced analytics combined with your program goals will lead the way.

� Channel mix of acquired donors — Digital culti-vation will play a pivotal role in all mid-level giving programs. Industry best practices show digitally acquired donors are your best and easiest donors to convert to monthly sustainers. But the high aver-age gift of digital donors also makes them excellent candidates for mid-level giving. At RKD we recog-nize that a companion email to a direct mail cam-paign is the tip of the iceberg in digitally optimizing a mid-level program (or a mass donor program). Search engine marketing, digital media, Google grants, social marketing and site optimization are essential to any vibrant digital giving program.

� Size — Some smaller programs may be forced into a more Spartan mid-level giving program because of the limited number of donors who will fall into this giving target.

� Benefits — Many causes have built in benefits that provide natural steps to mid-level giving. You’ll see this often in membership programs that offer pass-es, site visits and access to special events. For less member-oriented programs, the benefits can in-clude increased access to insider information, the latest news about research, invitations to WebExs and tele-town hall meetings or special recognition in publications. When it comes to mid-level giving, you use what’s available to you or you manufac-ture it in an emotionally gratifying way to the donor.

� Desired flexibility — Some nonprofits, due to a va-riety of factors above, may desire increased flexi-bility in moving donors in and out of the mid-level giving group. Pragmatically speaking, dedicating budget and energy to the program at this time is just not a priority. Still, even in these situations, a mid-level program can be designed purely off data, variable copy and increased package quality.

� Cost — Regardless of the program you choose to develop, it’s going to cost money. The return on investment and increased revenue far outweigh the cost or it wouldn’t even be recommended. Still, some nonprofits have to make mid-level giv-ing a second or third priority behind other devel-opment goals.

The end result is that some mid-level giving pro-grams have a special name, branded materials, giving levels and benefits. Other programs may be as simple as more expensive packaging, a slightly lighter mail schedule, increased postage or special copy. At the end of the day, however, following these guidelines will help develop a mid-level giving program tailored to fit your specific cause and donor profile. n

Max Bunch is Executive Vice President of Consulting, Client Services, and Analytics at RKD Group. Max is a 35-year advertising veteran with 30 years of nonprofit fundraising expertise.

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CONTINUED4

The Journal of the DMA Nonprofit Federation 7 Volume 20 / Issue 3 / September 2017

Donor journey mapping is a noble effort. We often fixate on the details such as response rates, average gifts, nets per piece – at the expense of donor satisfac-tion. We don’t hear donor irritation or suggestions for improvement. When donor journeys respond to donor feedback, they succeed.

Yet donor journey mapping is often conducted when the inputs are sticky notes and caffeine, not do-nor experience data and strategy. It can be entertain-ing to brainstorm what donors might want. But how confident should we be in those “insights”?

Even some of the best fundraisers struggle to divine what their donors want. The talented professionals at Oxfam UK had their staff and donors rate 20 differ-ent offer ideas. Donors’ top three offers were ranked among the worst by staff. And the second worst piece, according to the donors, was the staff’s favorite.

This caused Paul Vanags, Oxfam UK’s Head of Pub-lic Fundraising, to say: “People who work at Oxfam are… a very poor guide to what supporters are going to think… This has serious implications for innovators in charity.”

What is the alternative? It’s outside-in thinking, based on true donor preference. Here, touch points are kept, fixed, or dropped based on empirical data about what works, why, and whether what works dif-fers by segment.

Three nonprofits — Catholic Relief Services, Am-nesty Belgium, and an animal charity that would like to remain anonymous — show the way to science-based

donor journeys. Within each of these case studies are three common threads:

� Receiving and acting upon explicit feedback from donors

� Understanding who donors are

� Customizing donors’ experiences based on their identities, preferences, and commitment to your organization

Catholic Relief Services: When less is moreA few years ago, CRS’s retention rates were below the industry average. While there was still strong financial performance from their direct marketing, low retention was the storm on the horizon.

To remedy this, CRS undertook a modeling exercise. The first step was collecting the missing data from their CRM to build a model identifying which touch points to fix, drop and scale. They measured donor com-mitment and satisfaction with their CRS experiences in a survey. They combined this survey data with the behavioral data from their database. They combined this quality, loyalty and transactional data. Thus they could map out exactly why their best and most loyal donors were loyal, what they could do to improve, and how much they stood to gain when they improved.

NICK ELLINGER VP OF MARKETING STRATEGY, DONORVOICE

Where do your donor journeys lead?

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The Journal of the DMA Nonprofit Federation 8 Volume 20 / Issue 3 / September 2017

Their donor base was heavily Catholic. CRS do-nors desperately wanted to live out their Catholic faith through their gifts and by living in solidarity with the poor overseas. And CRS wasn’t achieving this for them as much as they could.

CRS also found that donors were donating not be-cause of their donor services and frequent appeals, but despite them. In fact, if CRS could lift a donor’s 1-10 rating of how CRS was doing at asking for their feed-back by a point, that donor’s lifetime value increased by $13. Similarly, asking an appropriate number of times had a value of almost $6 for one point on this scale.

This commitment study became the blueprint for their new donor journey. They wanted to keep their fo-cus on the poor and clean water, which donors valued. And they wanted to fix their donor feedback systems, appeals to Catholic identity, and the too-frequent solic-itation for support.

They tested these aspects for a full year. They took a segment of donors, with a control and made signifi-cant changes:

� They asked for feedback in every communication – mail, outbound email, and post-online donation.

� They eliminated seven mail pieces and more than ten email asks over the period of a year.

� They replaced one mail ask with a program launch telling donors about this new donorcentric ap-proach. They replaced another with a request for feedback. Neither mail piece contained “an ask.”

� And they revised each pilot communication to fo-cus more on Catholic identity, the donor experi-ence, and behavioral science.

The results of this program are extremely impressive:

� Every single mail piece in the test group outper-formed the control (by nine to over 70 percent).

� Both the program announcement and feedback mailings had response rates of over five percent and they netted revenue without an ask

� 75% of the revenues from each mail piece they sent were cannibalized from its brethren.

� There was no real difference in online revenues despite a cut in volume.

CRS tested this program in fiscal year 2017. They are now rolling out with the new donor journey for their entire file. They estimate they will be able to cut about half a million dollars in costs and reallocate it. And they’ll be testing addressing other donor pain points like telemarketing and list sharing to continue to improve.

Amnesty Belgium: Ending the face-to-face revolving doorFrom 2006 to 2015, Amnesty Belgium recruited 15,000 new face-to-face recurring donors. Yet, over that same period, their total active recurring donor rolls were stagnant at about 17,000.

The culprit was attrition in the first six months. Only 60% of donors lasted even this long; drop-off was most brutal in the first couple of months.

They too measured the commitment of their do-nors. Modeling showed donor commitment level, sat-isfaction with their experience with the canvasser, and donor age were highly predictive of continued support. They changed the recruitment process by measuring commitment and satisfaction with the experience with new donors. Then, they reached out to those who were high commitment, but had a bad experience, recovering many monthly donors for the cost of a $4 phone call.

It can be entertaining to brainstorm what donors might want. But how confident should we be in those “insights”?

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The Journal of the DMA Nonprofit Federation 9 Volume 20 / Issue 3 / September 2017

They also tailored their year-one communications based on the commitment level. Low commitment donors needed persuasion to stay for the long term, so they received six additional introductory mailings. These mailings increased retention among these do-nors by 12 percentage points. However, when these same mailings went to highly committed donors, it low-ered their retention by nine percentage points – they were already convinced and resented the volume. Segmentation by commitment level created the best experience, and retention, for each donor group.

Amnesty also used the data to discover the can-vassers who were doing the best, and worst, job of recruiting high-quality donors via the proprietary mea-sure of commitment. Traditional metrics like number of monthly donors recruited camouflaged that some recruiters were bringing low-quality donors. These uncommitted donors churned off and cost Amnesty dearly. Low-quality recruiters received more training or were pulled off the account. At the same time, they rewarded recruiters who brought in a higher propor-tion of quality, high-commitment donors. Subsequent trainings codified style and approach.

As a result, Amnesty Belgium cut their six-month at-trition rate in half — from 40% to 20%. They are now looking at how to transfer these gains to other channels.

An anonymous animal charity: The truth about cats and dogsAn animal charity paid a consultant a large amount of money to create a donor segmentation based on a smorgasbord of external and existing CRM data. The segments were scored on the file with names like “en-gaged,” “passive,” “ethical consumers,” and an accom-panying PowerPoint with rich, detailed profiles for each one. However, neither they nor their consultant knew how to create action from these disparate data points.

They too undertook a commitment modeling effort to create donor segmentation based on different mo-tivations. They also could identify the different needs and preferences to reinforce those motivations. They

found they didn’t have one donor file (or seven per the prior consultant). They had two.

Cat people cared about (not surprisingly) cats more than dogs. And they also valued the work this orga-nization did on shelter operations and membership. They didn’t care about the organization’s education-al activities focused on kids or adults to make animal friendly choices.

On the flip side, dog people cared about education-al activities, but felt they weren’t hearing about them at all. They didn’t care about shelter operations and membership.

It was a stark difference for people receiving the same messages for years.

They worked to create different donor journeys – one for cat people and one for dog people. At first contact, they asked potential donors if they were a cat or dog enthusiast. Then, later in the telemarketing script, this identity was played back to them — “but the dogs [or cats] you love are still in trouble.” It would seem like so simple a wording change wouldn’t make a difference.

But it did. The revised script, with only this limited personalization, increased conversion rates by 15%. It also increased the donor value by almost a dollar per month. Now, all communications from the organization are customized to this and a couple other key identi-ties. The subtly different donor journeys are making a real difference for their bottom line.

The donor journey forwardLooking back at the Oxfam example, you see the key difference between a donor journey designed from the inside out and one designed by donors for donors. It starts with listening to your donors’ feedback, then understanding who they are and why they give, and fi-nally (and only then) designing a donor journey specif-ically for them. It may not be as fun as brainstorming in a conference room with pizza and sticky notes, but it’s the only way to make sure your donor journeys lead where donors want to go and, ultimately, where you want them to go. n

Nick Ellinger is VP of Marketing Strategy for DonorVoice, where he works with top nonprofits on their direct marketing strategy and execution, specializing in digital strategy. Before that, he ran Mothers Against Drunk Driving’s individual giving strategy or nine years and, at various points, ran MADD’s fundraising, marketing, and communications efforts, including direct marketing, databases, corporate rela-tions, donor relations, field fundraising, major gifts outreach, Internet strategy, press strategy, and social media strategy.

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CONTINUED4

The Journal of the DMA Nonprofit Federation 10 Volume 20 / Issue 3 / September 2017

Currently donors who itemize their taxes may claim up to 35 percent of the amount donated to charities as a tax deduction. This giving incentive must be preserved at its current rate. However, a reduction in the deduc-tion continues to be seen as a viable option to fund government programs but is detrimental to charities who count on such donations. Many in Congress un-derstand its importance. For example, Senators Thune and Wyden introduced a bill, the Charities Helping Americans Regularly throughout the Year Act (CHARI-TY ACT) to express a sense of the US Senate that the tax deduction should not be reduced.

Now a wide-ranging “tax reform” proposal is being promoted by the Trump Administration that would in-crease the level at which individuals may take a stan-dard deduction. As a result, donors would no longer use itemizations to claim a charitable tax deduction. This would have a drastic impact on donations. We seek to allow a universal charitable tax deduction that could be used regardless of such a standard deduc-tion change that would no longer allow itemizations. If and when action is required, you will be contacted.

Policy ScorecardCurrent issues: September 2017XENIA “SENNY” BOONE, ESQ.DMANF GENERAL COUNSEL & EXECUTIVE DIRECTOR

The DMA Nonprofit Federation protects and defends nonprofit fundraising across mar-

keting channels to advance responsible data-driven fundraising and marketing. How?

We work to preserve charitable giving tax incentives; support postal reform to maintain

a stable United States Postal Service; keep marketing channels open for fundraising and

review unreasonable fundraising solicitation regulations impacting nonprofit organiza-

tions at the state level. We work in tandem with DMA Advocacy on data and privacy

legislation that could curtail overall fundraising via new data restrictions.

Charitable tax deduction & other giving incentives

To date, we successfully defend the charitable tax deduction for individuals, but changes loom…

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The Journal of the DMA Nonprofit Federation 11 Volume 20 / Issue 3 / September 2017

Postal legislation & nonprofit mailing rates

The nonprofit postal rate discount is essential to help eligible nonprofit mailers mail affordably, and the current rate-setting system should remain in place to stave off unpredictable rates. New attempts to raise nonprofit mail rates abound…

There is postal legislation that includes an “exigency” rate as part of the rate base that could raise nonprofit rates. There is also a full review of postal rates across all mail classes underway by the Postal Regulato-ry Commission (PRC) that may result in a change to rate-setting that could increase rates. This is the man-dated ten-year review of the rate-setting process.

Most recently, in addition to an annual Consumer Price Index increase (likely 2% this year); the USPS filed a new regulatory request with the Postal Regulatory Commission that could impact rates from 3.3% to 6.9%. This new tactic is an attempt by the USPS to ensure nonprofit mailers are paying 60% of the Marketing Mail rate at the “subclass” level. The USPS claims the mail mix changed at the subclass level and that therefore, the nonprofit mailers must pay more in order to cover their costs in, for example, the Enhanced Carrier Route rate category. The DMANF filed comments asking the PRC to reject this proposal and urged its members to do the same.

Previously, the DMA filed comments to the PRC sup-porting the current CPI cap which allowed for a more predictable rate each year and stabilized pricing, ad-vocating against changes to the current structure since it may lead to higher rates for its members, in-cluding nonprofit organizations. The DMA is also ac-tively reviewing postal legislation and we will alert the membership should legislation advance.

Please contact us if you require additional information or assistance at 202.861.2498 or [email protected].

Unreasonable rates will lead to a death spiral for the USPS as its customers move to less costly channels such as email and online. The DMANF seeks a preser-vation of the current CPI rate structure offering predict-able, stable rates.

Fair Labor Standards Act (FLSA) Overtime Rule

A federal judge invalidated the Overtime Final Rule is-sued by the Obama Administration as the US Depart-ment of Labor exceeded its authority in doubling the salary level (from a $455 week level to a $913 week level) which would have added new costs to organiza-tions with employees qualified to receive overtime pay due to the higher salary level threshold established under the rule.

The Department of Labor issued a request for informa-tion earlier this summer with a comment deadline of September 25, likely meant to further develop a new overtime threshold for companies and organizations in anticipation of this result. n

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The Journal of the DMA Nonprofit Federation 12 Volume 20 / Issue 3 / September 2017

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The Journal of the DMA Nonprofit Federation 13 Volume 20 / Issue 3 / September 2017

MORE ON FB#ChiNP17

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ADVERTISING SUPPLEMENT | The Journal of the DMA Nonprofit Federation Volume 20 / Issue 3 / September 2017

November 9, 2017 | 8:00 AM - 6:00 PMWashington Hilton | Washington, DC

November 9, 2017 | 8:00 AM - 6:00 PM Washington Hilton | Washington, DC

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The Peer-to-Peer Conference will feature exclusive, in-depth research into peer-to-peer trends and activities, powerful deep dives into numerous peer-to-peer events, tech reviews on the top peer-to-peer enabling technologies, networking time, delicious meals and refreshments and much more. You’ll hear from our ever-expanding list of expert speakers like the CEO of Susan G. Komen, Linda McNeil Tantawi, the CEO & Executive Director of Pledge It & Uplifting Athletes, Scott Shirley, and so many more!

REGISTER TODAY p2p.nonprofi tpro.com