[ASK AN EXPERT] What's A Good New Donor Acquisition Rate?

Our Ask An Expert series features real questions answered by Claire Axelrad, J.D., CFRE, our very own Fundraising Coach, also known as Charity Clairity.

Today’s question comes from a nonprofit employee who wants advice on what would be considered a good new donor acquisition rate.

Dear Charity Clairity,

I’m wondering if you have a data point readily available in your brilliant brain?  I know about donor retention rates, goals, etc., but I’m not finding much data on what is a good new donor acquisition rate or goal annually. 

 Is there some kind of nonprofit industry standard that says you should add 10% new donors over last year….or something like that?

— Anchorless

Dear Anchorless,

There’s no precise answer to that question, because a lot depends on (1) what you do, and (2) what else is going on in the world.

Let’s begin with external factors. For example:

• During the pandemic, if you were a food bank, you’d be well-situated to acquire many, many new donors.
• Natural disasters lead to an outpouring of philanthropic support for human services organizations.
• Political turmoil leads to an outpouring of support for values-based organizations impacted by that turmoil.

And so forth. Donors respond in times of crisis. Your job is to make the urgent case for support and share it across as many mediums as possible.

You are not, however, simply at the mercy of the environment. Whatever your mission, the better you tailor your message to what’s top of mind for people, the more likely you’ll be able to inspire them to make a gift to you now. I happen to serve on the board of a theater company, and they were able to speak directly to theater’s ability to open people’s minds and hearts, inspire empathy, create community, and build an understanding of togetherness, not otherness. Due to the on-target messaging, and the fact they coupled the “talk” with some “walk” — creating free Zoom plays people could stream — they found themselves generating many donations from folks who’d never given before.

The best information we have is from the Fundraising Effectiveness Project (FEP) reports. These can be downloaded for free. The 2020 report showed an 18.5% increase in donors overall, but that varied by sector. And, remember, there were a lot of truly urgent reasons for people to give over the turbulent period so new donor acquisition may have been particularly robust. I wouldn’t suggest you hold yourself to an increase of this amount.

Now let’s move to acquisition factors over which you have more control. Direct mail results hover around 0.5% (they were 2% when I began in this industry, but there’s just a lot more competition for donor dollars today). So, the number of new donors you acquire will depend on the number of folks to whom you mail. How much can you invest? Direct mail acquisition is the most expensive fundraising strategy, costing $1 – $1.25 per dollar raised. The real benefit is in the lifetime value of these newly acquired donors. It’s critical you understand and own this truth, because if you don’t also invest in building and implementing a strong donor loyalty plan there’s almost no point in acquiring these donors. Acquisition strategy and retention strategy go hand-in-hand.

Beyond direct mail, there are of course other less expensive new donor acquisition strategies (e.g., events, social media, email to your own non-donor lists, text messaging, etc.). Or you may be lucky to get some free publicity from other media.

However the new donors arrive at your doorstep, you must have a strong donor retention plan in place. Last year, per the FEP, new donor retention averaged just 19%. You can’t really cheer the fact you acquired X new donors without simultaneously cheering the fact you retained an above-average number of last year’s new donors. Otherwise you’ll have a steady stream of donors in, donors out. That’s expensive and, ultimately, not sustainable.

The best way to set an acquisition goal is to look at your own performance over the past several years. How many donors did you acquire, on average?

All things being equal, something a little more than that would be a reasonable goal to shoot for. If last year was a “windfall” year due to circumstances beyond your control, take that into account and set expectations accordingly. If last year you didn’t try at all because you shut down, lost staff or otherwise put fundraising “on hold,” also consider that and perhaps set more aggressive goals.

I hope this gives you some anchors to ground your acquisition strategy moving forward,

— Charity Clairity

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