Only 50 percent of nonprofit startups survive their first years of operation. Of those that do, 30 percent cease to exist after 10 years. And sadly, this year 68 percent of nonprofits plan to cut programs and services (Forbes; NetworkDepot.com).
WHY? They do not acquire enough new donors to offset attrition.
New donors are the lifeblood of any organization. If you stop acquiring new donors, it’s only a matter of time before you, too, will be forced to cut back or close your doors.
Some organizations contend that they can’t absorb the cost of acquiring new donors each year, but this is a risky business model. Acquisition calls for careful planning and smart strategy. With that in mind, here are a few key practices that I call the “secret sauce” to growth:
- Budget for acquisitions. A growth budget is critical to success. To see growth, you must replace donors lost. Every program has a “cost to acquire a new donor” (CAND). Compare that cost to the “long-term donor value” (LTDV) of each donor acquired. Most organizations can keep net acquisition costs between $25 to $100 per donor in the first year. Those same donors will each donate $500 to $1,000 over the next five years. This math works!
- Use a syndicated program. If your nonprofit is a city, state, or regional program, you must use a syndicated program. This is because of the 5,000- name minimal rental requirements for new donor prospecting. Renting names of donors for email, digital, and direct mail acquisition is a critical strategy; acquisition success largely depends on your new name sources. Most proven rental list sources will not have 5,000 prospects in a specific city or region. The only way they can reach the minimum requirement is by renting the list in multiple cities and using it for different nonprofits.
- Diversify new donor sources. New donor acquisition channels have diversified dramatically over the last decade. Multigenerational demographic participation, new media innovation, and AI technology are used to ensure multi-channel acquisition success. Diversifying donor sources is an important means of reducing your risk. Digital acquisition is cheaper, but renewal rates may be lower than 20 percent. Direct mail and events are more expensive, but renewal rates are 50 percent or higher. You need a mix of acquisition sources that includes digital “Meta” donors, rented email donors, rented direct mail donors, and community event donors — to name a few.
Fit Fundraising works with nonprofits, large and small, in human services, international relief, advocacy and education. Founder Roy Jones has helped raise more than half a billion dollars over the last decade alone. Ready to elevate your fundraising efforts to new heights? Discover how Fit Fundraising can transform your results. You can reach Roy at rjones@fitfundraising.com.
