Ask any nonprofit development director, “How’s your direct mail program going?” and your answer will probably sound a bit like, “Well, we’re not bringing in as many new donors as we used to, but the good news is that higher average gift rates are making up for it.”
We’ve been seeing this trend for years across the nonprofit industry. The COVID-19 pandemic disrupted it as huge swaths of new donors emerged to give in a time of need. But now that the pandemic is over, that trend line is beginning to emerge once again.
This is causing concern for those of us who deal with new donor acquisition on a daily basis. And it’s especially troubling during a time of inflation that results in higher mailing and printing costs and lower bang for your buck on the donations received.
So, I’ve been taking a long look at what’s happening in new donor acquisition, particularly in direct mail. I’ve also had lots of conversations with colleagues across the industry, and I’ve come to a few conclusions (which I’ll share with you here).
What’s causing these donor acquisition struggles?
The Fundraising Effectiveness Project’s 2022 report showed a 10% decline in active donors and an 18.1% drop in new donors across the industry. On top of that, the recent Giving USA report showed a drop in charitable giving for only the fourth time in the last 40 years.
There are numerous macro factors in play across the industry, including the fact that donors are losing trust in nonprofits. At the same time, for-profit companies have begun to market themselves as “cause-driven” organizations, blurring the lines of whose mission is making the world a better place.
But another issue that’s more specific to direct mail acquisition is an over-reliance on cooperative databases (better known as co-ops).
Don’t get me wrong. This is not an attack on co-ops themselves. They serve a very useful purpose in fundraising, but using them too much can cause problems.
For anyone unfamiliar with the co-op system, we have a great FAQ post here. But to give you a simple explanation, co-ops match data from thousands of nonprofit, retail and commercial transactions to build customized audience models for acquisition. For example, if Sally recently gave to two cancer research organizations, she might be flagged as a new donor target for your cancer research organization.
The trouble with an over-reliance on co-ops is twofold:
- If EVERY cancer research organization starts flagging Sally, she gets inundated with mail pieces asking her to give.
- Co-ops can’t help you reach Sally’s neighbor, Ted, who is interested in cancer research but hasn’t given to an organization yet.
Over time, the overuse of co-ops starts to send the same people the same messages, creating a dwindling universe of possible donors. Sound familiar?
Models are only as good as the data flowing in, and they thrive on new inputs. If a model is based on a stagnant pool of donors, the results will dwindle. Nonprofits can help these co-op models by supplying fresh streams of data from diversified sources.
In the meantime, there are additional strategies we can employ to adapt.
3 strategies for a more holistic approach to acquisition
1. Break down the siloes between acquisition and cultivation
This might seem odd at first, but the best acquisition strategy is … better retention of your current donors. Think about it: The more donors you hold onto, the fewer new donors you’ll need to make up that lost revenue.
Retention has also been a struggle across the industry. But we’ve commissioned two important pieces of donor research in the last two years to understand what drives stronger relationships with nonprofits and greater levels of trust in nonprofits.
For a few tips to improve first-year donor retention, check out this blog post.
Another tactic to try is reactivating newly lapsed donors in acquisition. If they responded to the acquisition message but didn’t connect to cultivation efforts, try giving them that same acquisition message again. We’ve seen success in this area, which you can read about here.
2. Optimize your efforts
This is a chance to really dig into the data and determine a more focused approach to acquisition.
Through the use of advanced modeling, we can better understand the actions and behaviors of donors, and we can predict future behaviors—like whether a donor is likely to give again. Data should also help you find the ideal levels of market penetration, frequency of mailings, mail dates, ask arrays and more.
For cultivation, you can segment your donors into deciles and determine where to save money by mailing smarter. We can also use those learnings to evaluate prospect lists on a deeper level, saving you from reaching out to a donor who is unlikely to give.
It’s also an opportunity to test creative across different audiences. What one donor responds to may not work for another. As we learn what imagery and messaging works for current donors, this data can also be applied to acquisition.
3. Diversify your acquisition sources
A good business plan avoids putting all your eggs into one basket. The same should apply to acquisition.
We’ve already talked about not overusing co-ops in direct mail, but we’re not advocating cutting out acquisition or even cutting it back. We’re talking about strategically maximizing your spend.
Digital media is a great investment opportunity to reach new audiences. If you’re looking for a few quick ideas to begin, check out this post. You can start small with Facebook and slowly expand to other media channels like display, video, connected TV and more.
As you plot out your acquisition plans for next year, think about the next 3-5 years as well. Industry trends are showing that we need to adapt.
The point isn’t about picking one strategy or channel over another. It’s about being willing to try new things and finding a balance of where your return on investment is most effective.
- Goodbye, LTV! Why LTN is the future of acquisition
- Digital frontier: Nonprofits can expand their donor base with media prospecting
- How to optimize your digital donor acquisition
- Why cutting acquisition is a terrible idea
- We tested reactivating newly lapsed donors in acquisition. Here’s what happened.