Why Should We Invest In Donor Acquisition?

Why is donor acquisition so important?

Why should we invest in donor acquisition?

Your organization can’t survive without acquiring new donors. 

Unless you intentionally want fewer donors, you must invest in acquisition every year to maintain your donor file size.

But how much should you invest?

To answer that question, you will need to perform a donor file audit, at least annually.  A file audit should report if your donor file is growing, remaining the same size or shrinking.

If your file is shrinking, you will need to focus on improving your donor renewal, second gift conversion, lapsed donor reactivation AND new donor acquisition strategies.

Regarding the cost, almost all nonprofits acquire new donors at an up-front loss. In direct marketing terms, this loss is measured as “cost-to-acquire.”

It’s very important to understand not just what each new donor “costs,” but also to calculate a donor’s long-term value, since the expectation is your organization’s new donors should yield a return that exceeds the initial investment over a three to five year period.

So what is an acceptable cost-to-acquire for your organization? 

Acceptable cost-to-acquire rates vary widely among organizations, so you will need to gain insights from your annual donor file audit to determine what is best for YOUR organization. 

One point to keep in mind is that the lowest cost-to-acquire isn’t always best.   Premium acquired donors often have a very low up-front cost, but that is usually coupled with a very low long-term value.

If you need help determining your organization’s best cost-to-acquire and your donors’ long-term value, we can help.  Contact us about performing a no-obligation donor file audit.  This report will provide most of the key metrics to help plan the best acquisition strategy. 

You should also always track your cost-to-acquire a new donor at the audience or list level.  It’s easy.  Simply divide the total cost of each list/audience by the number of responses. 

If this seems overwhelming or if you need any assistance developing the best new donor acquisition strategy for your organization, please contact us.  Our team of professional fundraising experts is ready to help!