More than 2 million Australians will receive a pay rise of 3.5% from July 1st. This means that the new minimum wage will be $18.29 per hour or $22.86 for casual workers and will have a direct impact on the profitability of our F2F suppliers and potentially on the cost per acquisition (CPA) of our f2f pledges.
For those agencies that have just begun to directly employ or pay a base wage to their fundraisers, this will be tough to stomach. Managing their employees just got 3.5% harder. For those who have been paying wages and superannuation for years, this is just another annual rise that makes it more difficult to run a profitable company under the intense scrutiny of media hawks and charity partners pushing back on costs.
I am not saying that increasing minimum wage is a bad thing. It is true that Australian minimum wage is among the highest in the world, but it is also true that Australia is a really expensive country to live in. We just need to work out how we can operate effectively within these parameters.
History shows us that most suppliers have handled fee rises gradually with grace and for years had not increased the CPA in line with the new higher minimum wage even though it tightly squeezed their margins. Similarly, many did not pass on the cost of eForms technology such as Waysact/Evergiving or Floodgate, or many of the site costs to their charity partners until it became absolutely necessary to do so.
But we are living in a new era of F2F where the fee rises can seem brutish and exploitative and can be heard being justified by the cry of “it’s not our fault, we have to pay base wage now” even though the agencies that have paid wages for years had not increased their fees.
Are charities are now being asked to pay a premium for travel trips and shopping centres as well as compliance fees with weakened protections against lower quality products, so what can we do? Should the average gift go up 3.5% so that the multiplier or fee percentage doesn’t rise? Or do we again refocus our attention away from CPA and back onto lifetime value (LTV)?
The PFRA and Slingshot Data are researching the answer to the perennial question that our F2F efforts are based on – ‘how long do F2F donors give for?’ Once we benchmark this, we can hold our suppliers to account for poor performance (quality not quantity) and start to make informed decisions over the price charities should pay for the product. I’m willing to pay 200% of year one for a donor that will give for ten years because the LTV is the KPI I care about not CPA.