Most nonprofits are seeing lower response rates in direct mail acquisition efforts and many are wondering whether they would be better off cutting back on donor acquisition. An organization that decides to postpone its acquisition program will certainly save money in the short run. But in the long run, revenue will be lost that can never be regained.
When an organization stops acquiring donors for some period of time several things happen. Nonprofits that lose money in acquisition will see a short-term savings. But by failing to acquire new donors they may face lower revenue from their house files for many years to come.
On average, about 20% of the donors that are acquired in a given year will still be contributing to an organization in five years’ time. This is what makes donor acquisition an investment. The five-year value of a group of donors having an average contribution of $20 is $80 to $90 per donor acquired. Therefore, cutting a campaign that could acquire 5,000 new donors will result in a loss of $400,000 to $450,000 in future income.
Without new donors a house file will decrease in size and in revenue production. If this, in turn, leads to a reduction in the money budgeted for acquisition the next year, it can be a considerable length of time before a house file reaches the level it was prior to the disruption of donor acquisition.
If you are under pressure to cut back on acquisition, here are a few suggestions:
Rather than making immediate, drastic cuts in donor acquisition, determine how you can decrease your acquisition costs without endangering your future direct mail revenue.
*** Don Austin is vice president of client strategy at May Development Services in Greenwich, Conn. His email is firstname.lastname@example.org
This article is from NPT Weekly, a publication of The NonProfit Times.
Subscribe to The NPT Weekly eNewsletter or any of our other enewsletters and get the latest news and ideas related to fundraising delivered to your inbox
As we celebrate our 36th year, NPT remains dedicated to supplying breaking news, in-depth reporting, and special issue coverage to help nonprofit executives run their organizations more effectively.