August, 2008Is this particular e-news for you? Maybe. Regional and local charities with relatively small donor bases need to understand the role that direct mail plays in acquiring new donors.
"At every organization, some level of donor attrition is inevitable," says Stephen Hitchcock, author of Open Immediately: Straight Talk on Direct Mail Fundraising. "In any given year, at least 10 percent and more likely 20 percent of your donor base will fade away."
If you neglect acquisition, in other words, you doom your organization's charitable giving.
"If you stop acquiring donors now," Hitchcock says, "in as few as five years you could end up with next to none. Therefore any organization desiring a long-term future must invest in some level of acquisition." It seems especially urgent for a charity that counts its donors in the hundreds or low thousands. An unreplenished donor base will definitely stunt your growth.
You can go about acquisition many ways -- collecting names at fundraising events, for instance. But the conventional route is to do a mailing. You send out a direct mail solicitation to households you don't already mail to, asking for their support.
Not just any households, of course. You want households you feel might be predisposed to your cause for some reason. If you're trying to acquire new donors for a family planning clinic, for example, you might target women in certain zip codes. If you're trying to acquire new donors for an adolescent mental health center, you might target parents inside your service area.
You mail your solicitation. Within 12 to 14 days, you will have most of your return. Over the next six months, a couple more responses will wander in; but pretty much all your response will be in your hands within two weeks. How exciting ... and fast ... and, of course, sometimes devastating, if you've done something amiss and the response rate isn't good.
But let's assume the solicitation went fine: the appeal was good enough to achieve an average successful response. In 2008, in the United States, experts say an okay (not flaming great, not miserable) response to an acquisition mailing is one half of 1 percent (0.5 percent). If you mailed 20,000 pieces, a typical successful response, therefore, would yield for your organization 100 new donors.
The big question then becomes: Is that enough? Well, that all depends on your goal. What are you measuring?
If you're measuring immediate cash income, you might conclude that the effort wasn't worth the trouble and cost. If, for instance, the average gift from these 100 new donors was $25, you've just brought in $2,500. Which probably covers just a fraction of the cost of printing and postage.
By another standard, though, you've done surprisingly well. Wasn't the real purpose of this particular mailing to plug a hole?
You set out to replace your annual 10 to 20 percent donor attrition. If you have 500 donors in your current base, and you lose the full 20 percent (i.e., 100 donors depart), then your acquisition mailing has at least broken even, which is the goal. Those 100 new donors replace your loss.
But a no-growth goal doesn't get you far. So you probably want to do more with your acquisition mailing than simply make up a loss; you want to expand your donor base.
Now you have to recalculate. You work out the problem on a scrap of paper. You currently have those 500 donors in your base. (You write down the number 500.) You're going to lose 20 percent of them, worse case. (You multiply 500 by 20 percent, which equals 100.) So you need 100 new donors to make up that difference. Plus you want to grow your base by 10 percent, which translates into 50 new donors. (You add your replacement goal of 100 to your growth goal of 50.) Your total goal has become: 150 new donors acquired.
Mailing to 20,000 households, you won't make your goal, at one-half of 1 percent. If you mail to 30,000 households instead, you will, since one-half of 1 percent multiplied by 30,000 equals 150.
To measure how effective any kind of communication has been, you have to know first what constitutes success for you. Many fundraisers would argue that acquiring new donors is more important than acquiring instant dollars, assuming you hold on to those new donors for dear life, welcoming them, thanking them copiously, keeping them well informed.
The best in-depth discussion of a long-term donor's ultimate value I know is in Building Donor Loyalty, by researchers Adrian Sargeant and Elaine Jay. Judging from its miserable sales ranking on Amazon, it's a book that far too few people buy. Too bad: it will change your thinking about the promise inherent in acquiring new donors. Do your organization a favor: read Building Donor Loyalty.
Tom Ahern is recognized as one of North America’s top authorities on nonprofit and donor communications. His "Love Thy Reader" workshops win rave reviews at fundraising conferences across the U.S. and Canada.
Tom's workshops have trained thousands of nonprofit staff and board in the revenue-building secrets of psychology, marketing, writing, and graphic design. In 2005 he joined other world-class experts as a faculty member for the IFC's weeklong conference in the Netherlands, attended by fundraisers from 80 countries.
He is the author of The Mercifully Brief, Real World Guide to Raising More Money with Newsletters Than You Ever Thought Possible, released in October 2005 by Emerson & Church. A second book titled How to Write Fundraising Materials That Raise More Money. John Wiley & Sons, the premier publisher of books for the nonprofit industry, in January 2006 contracted with Tom (and his wife, consultant Simone Joyaux) to produce a new book with the working title, Nonprofit Fundraising Communications: A Practical and Profitable Approach. Tom is also an award-winning magazine journalist, for articles on health, women's rights and other social justice issues. Visit www.aherncomm.com.