The greatest challenge of non-profit organizations is donor acquisition.
The investment into acquiring new donors is costly: on average to acquire a single donor requires an investment of $50 – $100. To acquire a monthly donor requires and investment of between $300 and $600. These just industry averages. There will be many exceptions.
But when the data is analyzed, these figures provide a great starting point.
So, if you want to increase your monthly donor file from 100 – 500 people, you will need an investment, on average, of about $200,000. If you want to receive new income from 1500 new donors, you will have to invest between $125,000 and $150,000. Yes, there are some exceptions. I have a client who is regularly acquiring new monthly donors at between $75 and $100 per new donor. But their activities are highly subsidized and they are still very small.
Revenue growth is increasingly difficult, and small non-profits struggle to understand the principles behind a solid strategic plan. Many reports they read in magazines and at conferences are misleading . For instance, I once heard a speaker say they could creative, print, personalize and distribute an appeal at the cost of 0.55/package. The gentle murmur in the heightened — that was pretty exciting. Someone asked if it would include a small run of, say, 1000 names. The speaker assured the audience that it would. Frankly, that’s extremely bad information, considering Canada Post will usurp about 90% of that budget.
One agency reported a 41% response on a cultivation appeal. That’s unbelievable. And, without a question, non-profits flock to get those results. But the report did not disclose a few factors. First of all, the appeal went to a segment of the data base that was extremely loyal, had given to this particular appeal before and had a large personal investment in the program. Secondly, the appeal contained a premium that the donor was asked to return, whether they gave or not. The results in the report included all returned premiums (we call it a bounce back). It did not distinguish between gifts and non-gifts.
Another client asked us to increase the offer in the appeal because the average gift for their cultivation appeals hovered around the $100 mark. Traditionally, the offer was $30, $50, $100, they felt, because $100 was the average, that we should pop it up to $100, $150 and $250. When we analyzed the data, we discovered that the median gifts (the amounts most often given) where $30, $50 and $100. Changing the dollar handles on the offer would impact overall giving. In order to respond to the multiple levels of donors in their data base, we began using a segmented dollar offer for each appeal that reflected the giving structures of their data base.That way, we could personalize the dollar handles without offending the donors or appearing overly greedy.
Early in my career, a potential client came and asked what they should expect for an average cultivation appeal. I glibly said 7 – 12%. The response to their appeals were coming in at around 3%, so they were quite impressed at the strong response that most of our clients were experiencing. What they forgot to tell me was that more than 50% of the names on their data base had either not given for five or more years or had never given, but were just names that happened to be in the data base. Looking back, they were really fortunate to get a 3% return.
Each non-profit has a unique group of donors. Most organizations have several groups which require special attention. Organizations that have concentrated on monthly gifts and not developed a single gift stream will be much less successful in their special project offers. Monthly donors have committed a monthly gift, they are not motivated to give often beyond that or spontaneously. There are exceptions. When the project appeal is directed at a program that is especially interesting to them and relates strongly to their monthly giving offer, they will consider an extra gift. They will also respond to emergency needs. Donors acquired by strong, emergency oriented offers like: “This child will die unless….” tend to give small amounts and more frequently — but not to the same organizations. Especially if the acquisition offer is at a low dollar value. Unfortunately, these donors rarely become strong, loyal supporters. They are more likely to respond to other organizations with similar, strong urgent, low cost offers.
Other organizations have collected reams of names from trips, walks, “a-thons” and events. While the organization may be strong in data, the value of these names in subsequent offers have the same performance as buying a cold list. That doesn’t mean that we should ignore these people — we just need to understand that they are not loyal to the organization.
The web, while fabulous for emergencies, events, “a-thon” registration and revenue, polls, surveys, holiday programs and engaged activities — still is not a strong acquisition tool. The on-line space is cluttered and people don’t tend to happen upon an non-profit site, but have to led to the site. We still have a lot of work to do to build engaging sites that draw donors back again and again. For the most part, most sites are large brochures of unwieldy information — often written from an organizational stance that is not easily understood by the donor.
I truly enjoy the challenge of acquiring new donors and cultivating them as they grow to really feel inspired by the charity. I believe that each organization has its own value — its own personality — and the fund raising strategy must be built around that. Most of all, the charity must build a strong offer, a healthy way of incorporating overhead and fund raising costs.