This post is the first in a series from CMA’s Not-for-Profit Council on innovation in donor acquisition. Interested in learning more on non-profit innovation? CMA has an upcoming session and networking lunch on October 5 in downtown Toronto – please come join the conversation!
The plea heard by marketers across the country from their fundraising colleagues is for help to acquire more donors. Organizations across the developed world continue to invest heavily in donor acquisition and costs to acquire are exploding. Investments in multi-channel campaigns or strategies to attract the next generation of donors are consuming precious resources, and still there is concern about donor acquisition.
Each year, charities attract donors through a wide variety of activities; people engage with their causes on a regular basis, so why is there such an obsession with donor acquisition? Traditional thinking says that you need to acquire more donors to keep growing. Reading that the average North American retention rate of new donors is 23% and 61% for existing donors you can be forgiven for thinking that there is a need for continuous replenishment. Based on this data, our obsession is justified - or is it?
The more we consulted, researched and reflected on what we heard and read, the more we realized that the hard work and investment of scarce resources may be wasted. Quite simply, not-for-profits may not be focused on the right problem! Is donor acquisition really the challenge here or perhaps the sector might be suffering from something much more concerning ... a problem of donor retention? Don’t get us wrong -- acquiring new donors is important. But when 77% of your new donors leave after their first gift, we owe it to ourselves and our organizations to ask questions. The first gift was motivated by something; few people wake up in the morning and suddenly say that “today I will make a donation to charity xyz.” Something compelled that donor to act in the first place, and understanding that motivation represents a tremendous opportunity.
That first gift serves as an introduction to your cause and what you offer as a donor experience. Donors evaluate the passion of the organization through those early interactions: passion for the cause and more importantly, the cause’s passion for their supporters. Not-for-profits need to be conscious of this and ensure they have a focus on early retention efforts. Namely a first year engagement strategy with important milestones in the beginning of the relationship such as a ‘thank you’ call, email, or other communication that reinforces for the donor that they made the right decision in supporting your cause. Don’t forget to ask important questions so that you can learn more about them and their motivations. Remember that the first year is just the beginning -- what is your second year strategy? How are you going to retain these donors, and perhaps even upgrade their level of giving?
The acquisition of donors for the sake of meeting acquisition targets may end up costing more in the longer term. Escalating costs to acquire, in some places, have reached proportions that are impossible to justify unless we succeed in keeping donors longer. Consequently, we need to shift our focus towards stewardship -- giving donors the best possible experience. Changing our internal conversation from short-term measures of acquisition performance like the cost per acquired donor, response rate and average first-time donation, while important, should be integrated with conversations about finding ways to recruit and retain donors that will have a higher lifetime value.
While the issues of donor acquisition have dominated management discussions at many a charity it is time to elevate the conversation and eliminate the silos between fundraising and marketing. More effective retention strategies, which result in a more positive donor experience, have the best opportunity to impact the bottom line. North America is still focused on individual gifts, with the option of monthly giving thrown in; in the U.K., for example the transition to monthly giving was made more than 20 years ago with an estimated 60% of donors having shifted to automated payments, increasing their retention rates and the lifetime value of their donors. This in turn has increased the importance of ongoing stewardship.
To be successful, we need to move these conversations out of traditional silos and recognize that strategy, analysis and inspiring communication are keys to acquisition and long-term retention. Stop looking at your donors in isolation; cultivate the pipeline that annual donors (including the oft-forgotten mid-level donors) represent and develop a roadmap using data insights to map your donor journey from a marketing perspective and have clear strategies for migration. These are just some of the ways marketers can add value to what has traditionally been a fundraising conversation.
Having said all of that, we are not recommending that donor acquisition efforts should stop! But they should change. Gone are the days of mass efforts to acquire new donors, today we should be focused on “smart acquisition.”
Sources / Additional Reading
- 2015 Nonprofit Communications Trends Report
- Curt Swindoll. The Future of Fundraising. Stanford Social Innovation Review, 2015
- The Future of Fundraising. Charity Parade, 2015
- New Lexicon of Fundraising (whitepaper). Think Consulting Solutions, 2013
- Ken Burnett. The Future of Fundraising (a five-part blog series), 2015
- Chuck Longfield. Acquisition Trends and New Donor Stewardship. npENGAGE, 2013
- Association of Fundraising Professionals 2014 Fundraising Effectiveness Survey Report
- KCI Philanthrophy
- Interview with Tony Elischer, Managing Director, THINK Consulting Solutions