Donors are your nonprofit’s greatest resource. The Q2 2022 Fundraising Effectiveness Project paints a concerning picture. From January to June 2022, the number of donors declined by 7%, and overall donor retention decreased by 4.2% year over year. Additionally, retention rates for first-time donors declined from 25.3% in 2016 to 19.3% in 2020, according to nonprofit organizations surveyed by the Association for Fundraising Professionals.
A donor acquisition strategy is essential to every nonprofit’s sustainability because adding new donors to the file will offset donor attrition and provide a new pipeline for future major donors. As we’ll talk about below, donor acquisition direct mail is a long-term investment to grow your donor file and revenue over time, and you need a multi-year view of the outcome.
This article provides insight and perspectives on donor acquisition strategies for direct mail. It should be noted that direct mail is just one channel to acquire new donors. A robust fundraising program should use all available channels to acquire, renew and retain donors.
A deep-dive analysis of your current donor database is the first step you’ll need to take. We recommend you start with these 7 Key Database Metrics.
At the most basic level, the goal is to understand if your donor base is growing or shrinking and how many new donors you will need to acquire each year to offset any projected attrition.
This essential information will allow you to precisely set your donor targets and properly budget for acquisition activities.
Typically, acquisition campaigns will result in an initial net loss because the cost to acquire a new donor (list rental, creative, production, and postage) is greater than the amount of the new donor’s first gift. But this should not be a reason to reduce or eliminate donor acquisition efforts. You can’t grow your program through cost-cutting. New donor acquisition is an investment in your organization’s future. As most nonprofits won’t achieve breakeven until year two, it’s important to have a robust fundraising program in place – one that encourages the new donor to make a second gift as quickly as possible and ultimately become a loyal, multi-year donor.
Campaign KPIs to monitor include:
Direct mail acquisition cost varies significantly by nonprofit sector and the type of mail program (using a premium vs. not, for example).
When planning an acquisition campaign, you should project revenue for the first gift and subsequent year giving.
The slide below shows two important things:
Once you have completed a donor acquisition campaign, you will use that cost to acquire as a benchmark metric to get the most donors for the least cost in subsequent campaigns. The acquisition cost can improve over time as you test creative, offers, and audiences to hone in on the best-performing combination.
The three most common myths about direct mail acquisition are:
As mentioned above, acquisition response rates vary greatly depending on the type of nonprofit, the offer (premium vs. non-premium), brand awareness, and if you have a mature fundraising program or one just getting off the ground. Working with a professional fundraising agency with experience in your industry sector can help you set realistic expectations.
Understanding your target audience starts with knowing your loyal followers. The more accurate your targeting, the less attrition you will have. You’ll recruit better donors who will stay on file longer.
A list model is a potent tool many organizations use to find new donors, and it’s often much easier and cheaper than most organizations realize. A modeled list is built using actual donor data from your organization and others to attempt to predict giving behavior. A modeled list uses the demographics of responders versus non-responders, like age, income, presence of children, et cetera, to see which is the most predictive of the response in the giving behavior we’re trying to replicate with the model.
The best sources of new donors are organizations with missions that are similar or aligned with yours. Who else serves the same (or similar) cause that your organization does? Average gift statistics help you assess which organizations’ donors give larger gifts typically.
You might be surprised to learn that wealth is not typically an indicator of propensity to give – especially in a direct mail program where the initial gifts tend to be more modest. Wealth data certainly has its place, but it’s best used in developing Mid-Level, Major Donor, and Planned Giving programs. The prospects most likely to give to your direct mail acquisition campaign are those with a history of giving to similar organizations and those with a history of taking action via the direct mail channel.
Beyond nonprofit audience donors, publications or catalogs should be scrutinized to identify ones that attract your target demographic. Pay attention to the average unit of sale. While there isn’t a direct correlation between the ability to give and the propensity to give, it is an indicator of their spending comfort level.
Whether you purchase a compiled list or a more expensive response acquisition list, how you process your list can impact the success of your mailing. As you develop your acquisition strategy, be careful not to overlook donors. Review your donor file for counterproductive over-suppression.
Suppression file criteria aren’t sexy or cutting-edge. But proper use of these criteria is an essential tool and building block of a healthy new donor acquisition program.
All acquisition programs should suppress these two key segments of donors:
(Note: You should also suppress your internal Do Not Mail lists, but they may or may not be donors, they could also include your board, major donors, and those who fall into another track.)
If you have a large portion of your lapsed file that you are not planning to try and recapture via the mail, you should NOT suppress them from acquisition mailings.
After a certain amount of time, people forget they gave to you. So, they should be placed back in the acquisition funnel and treated as new prospects. Also, the fact that these long-lapsed donors are actively giving to other organizations indicates that they may respond favorably to your appeal.
Updating your suppression file criteria to avoid over-suppressing will increase the available universe for your acquisition mail. We recently went through this process with a client with a mature acquisition program that was having trouble hitting its target mail quantity. We tightened up the suppression criteria, and the client hit their goal quantity in acquisition for the first time in a long while.
Existing donors are not the only people who should be suppressed from your acquisition mail. A data-processing specialist provides access to valuable resources to ensure that you are mailing to people who are at a current physical address, want to receive your message, and can read your message.
Location is everything. Your fundraising efforts are limited to the size of your service area, but that doesn’t mean you should include your entire service area in your donor acquisition mail efforts. The cost of direct mail—particularly new donor acquisition—is too high not to give some serious thought—before mailing—to where your investment should be directed.
Knowing where your existing donors live is critical. Heavy donor presence in an area indicates that your brand is strong there and that the demographics of the area’s population match those of your current donors. Hold ZIP Codes that have historically been a part of your donor acquisition mailing program to a higher standard than ZIP Codes you have never mailed.
Be careful not to look at gross numbers of current donors by ZIP Code. Calculate a penetration level for each ZIP Code—the percentage of households your donors represent to compare ZIP Code value accurately. You can see that two ZIP Codes with the same number of donors look very different when you look at them from the proper perspective.
ZIP Code 12345: 50 donors / 5,000 households = 1.00% penetration
ZIP Code 12346: 50 donors / 15,000 households = 0.33% penetration
If you’ve achieved a respectable donor penetration level without mailing a ZIP Code, consider what your organization could achieve if you invited people to give! By the same token, if you have been mailing a ZIP Code for years and haven’t gained any real traction there, it’s time to give up and remove them from your costly acquisition mail efforts.
