This is a guest blog by DonorSearch.
A common misconception in nonprofit fundraising is that donor acquisition is the opposite of donor retention. But in reality, these activities are two sides of the same coin. After all, to retain a donor, you first have to acquire them!
However, donor acquisition and retention serve different purposes within your nonprofit’s strategy—expanding and strengthening your supporter base, respectively—and many fundraising efforts can benefit from both. If you’re wondering which one to prioritize given your organization’s situation and goals, you aren’t alone.
In this guide, we’ll dive into donor acquisition and retention individually before comparing their importance to your nonprofit’s strategy. Let’s get started!
Donor Acquisition
According to DonorSearch, “Donor acquisition is the process of identifying and securing new donors for your nonprofit. The goal of donor acquisition is to expand the available support for your mission, whether you’re trying to fund specific upcoming initiatives or make sure you’re bringing in enough revenue to cover day-to-day expenses.”
Let’s explore the benefits of acquiring new donors and how you can do so practically.
Benefits
Donor acquisition requires a significant investment of time, funds, and strategic effort to be effective. However, when done well, it enables your nonprofit to:
Expand its supporter base. Acquiring new donors not only grows the number of supporters your organization has but also introduces your mission to new audiences.
Achieve higher fundraising goals. Naturally, a larger donor base allows you to bring in more revenue during your nonprofit’s most important fundraising efforts, from capital campaigns to year-end giving.
Create potential for organizational growth. Looking to the long term, donor acquisition helps your nonprofit build the necessary capacity to scale up its operations.
Strategies
Your donor acquisition strategy will vary depending on your available resources and potential supporters’ giving level (i.e., whether they’re likely to make a small, mid-size, or major gift). However, here are a few best practices that work across the board:
Identify your target audience. In addition to gift size, consider factors like demographics, interests, giving motivations, and communication preferences when deciding who to target with your outreach materials. Segmentation allows you to develop tailored messages that potential donors are more likely to respond to.
Provide educational resources. Help new supporters understand your organization’s mission and initiatives by explaining relevant details in your outreach and using impact statistics and stories to back up your claims. Additionally, make sure potential donors have easy access to documents like your annual report and recent Form 990s in case they want to dig deeper into how your nonprofit uses donations.
Offer various opportunities for engagement. If new supporters aren’t ready to make a monetary gift, allow them to contribute to your mission in other ways. For instance, you could invite them to a fundraising event, request in-kind donations of goods or services, promote volunteer opportunities, or encourage them to participate in advocacy efforts.
The more money you plan to request from a donor, the more targeted and in-depth your acquisition strategies need to be to succeed. In particular, major donor acquisition requires your team to conduct prospect research to find potential donors who are financially capable of making large gifts and willing to do so based on their philanthropic histories and affinity for your mission.
Donor Retention
Donor retention refers to the actions your team takes to maintain relationships with donors after they give with the goal of securing their continued support. When donors feel connected to your organization and satisfied with their giving experience, they’ll be more likely to keep contributing year after year.
The opposite of donor retention is donor attrition or churn, which happens when a supporter stops engaging with your nonprofit. Donors who disengage for a certain amount of time (usually one year) are known as lapsed donors.
Benefits
Retaining donors is critical for your nonprofit to implement sustainable fundraising and financial practices. This is because it allows your organization to:
Save money. On average, nonprofits spend $1.50 per dollar raised to acquire a new donor, but only $0.20 per dollar raised to retain an existing one. These numbers factor in outreach material production, research, and staff time, among other expenses.
Build stronger donor relationships. When you get to know your donors, you can tailor your requests for donations and other types of support to their preferences. Personalizing appeals shows supporters you value them, and combined with their growing passion for your mission, your extra effort makes them more likely to increase their support over time.
Enhance your reputation. Donors who feel loyal to an organization often spread the word about it to their friends and family, helping you acquire supporters while using less effort and resources. Depending on their networks, they could even introduce you to prospective major donors or corporate sponsors.
Strategies
Some donors lapse for reasons outside your nonprofit’s control, such as changes in their financial situation or priorities in life. However, you can combat other common reasons for donor churn (e.g., donor fatigue or feeling unappreciated) by:
Expressing gratitude for every contribution. Effective stewardship determines your potential for retention since it shows donors you value them. No contribution is too small to deserve recognition, but your appreciation for each supporter should match their gift size. A thank-you email or text is sufficient for a $10 donation, while a $10,000 gift warrants greater recognition like an annual report mention or inclusion on a donor wall.
Communicating regularly post-donation. For low-level donors, Winspire recommends creating an automated welcome email series in which the donor receives one or two messages per week to keep your organization top of mind. With major donors, re-establish the personalized communication cadence you developed during the cultivation phase.
Strategically encouraging further involvement. Although it’s tempting to request another gift right away, too many fundraising asks can overwhelm donors and cause them to lapse. Instead, mix up your solicitations with messages promoting other engagement opportunities (events, volunteering, etc.) and informational content that demonstrates the impact of your supporters’ contributions.
According to Fundraising Report Card, the average year-over-year donor retention rate in the nonprofit sector is just under 35%. Use this benchmark as your organization’s initial goal if you haven’t hit it yet. Then, build from there to create a loyal, stable supporter base for your mission.
Should My Nonprofit Prioritize Acquisition or Retention?
The short answer is it depends. If your organization is planning for growth in the near future, the short-term costs of acquisition are likely worth the long-term advantages. However, if you want to lay a foundation for deeper donor relationships and financial stability, focusing on retention is your best bet.