Not all fundraising letters should be about raising money. Every non-profit fundraising campaign should also mail donor acquisition letters to attract new donors. Why? Because you always need to focus on growing your donor base and replacing those who have stopped donating to your cause.
Are donor acquisition mailings profitable? No they are not, but you should be mailing them anyway. Fundraising letter writing expert Alan Sharpe explains the reasons why in the guest article below.
Fundraising Letters Should Raise Donors, Not Donations, When Mailed to Strangers
Are you willing to spend $1.25 to raise $1? To lose money to make money? You should be. Most donor acquisition mailings never pay for themselves. They lose money. And rightly so.
Acquisition letters (letters designed to acquire new donors) should be a vital part of your development program. Current donors fall away.
Some lose interest in your mission. Some lose their jobs. Other leave the country. Some die. You need to be mailing fundraising letters to people who have never supported your cause in order to replace the donors who fall away every year through no fault of yours.
But to be successful at acquiring new donors, you need to ignore one set of numbers and fix your eyes on another.
The numbers to “ignore” are the costs of getting your first donation. According to James Greenfield, in his excellent book, Fund Raising (second edition), you can expect to pay anywhere from $1.25 to $1.50 to raise $1 with an acquisition mailing. That doesn’t sound like a wise use of your resources, does it?
But with acquisition fundraising letters, you need to have your eyes fixed on the lifetime value of your donor, not the short-term value of their first gift. You need to remind yourself (along with your board members, key volunteers and inexperienced colleagues) that your goal with acquisition mailings is to acquire friends, not funds.
Let me illustrate.Let’s say you mail a fundraising letter to a list of 10,000 strangers. These are people who have not supported your organization before but might.
Assume that your costs for writing, design, production and postage come to $0.60 a piece. Your mailing costs are thus $6,000. Let’s say you receive a 1 percent response rate. That’s 100 gifts.
Further assume that the average gift is $30. Your income is $30 x 100 donors, namely, $3,000.
Your costs are: $6,000.
Your income is: $3,000.
Your net loss for the campaign is: $3,000.
Are you in trouble? No.
Here’s what you tell your executive director. “We gained 100 new donors. And up to 80 percent of them will give again, provided we follow up properly and solicit their gifts in the right way in the future.”
Each of these new donors effectively cost you $30 each – your net loss divided by your total of new donors.
Are you willing to spend $30 today to raise a friend who will likely give your organization hundreds of dollars in gifts in years to come? You should be, provided you can remember that your goal with acquisition letters is to raise a donor, not a donation.
My thanks go to Stanley Weinstein and his book, The Complete Guide to Fundraising Management (second edition), for his insight into the economics of donor acquisition.
About The Author
Alan Sharpe is a a fundraising practitioner, author, trainer and speaker. Through his books, handbooks and workshops, Alan helps not-for-profit organizations worldwide to acquire more donors, raise more funds and build stronger relationships. As the Director of Direct Development with The Gideons International In Canada, Alan manages their direct mail, major gifts and planned giving programs.
Fundraising Letters & Donor Acquisition
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