Why Does Donor Acquisition Suck?

It’s Not What You Think.

Every year since 2005 fewer new donors were acquired by non-profit organizations than the year before.

There are nearly as many theories for this troubling trend as there are fundraisers. Most are centered around organizations’ failure to engage, thank, or otherwise provide donors a meaningful giving experience.

While all of these are likely contributors, I believe there is a much larger economic explanation that will continue to adversely affect the fundraising marketplace for the foreseeable future: inflation and its disruptions to traditional retirement investments.

A foundational principle of organized fundraising is that giving is a function of age—older people give the most money and comprise the majority of donors. Numerous industry reports support this principle. For example, Blackbaud’s report on generational giving found that 69% of all donations come from donors over the age of 50. Therefore, it is important to understand how economic trends are affecting people who are retired or are nearing retirement age.

According to a report in the December 2023 issue of Philanthropy News Digest, 47% of people report that inflation is affecting their charitable giving. A Bank of America Study of Philanthropy found that households with less than an annual income of $200,000 are simply not able to give nearly as much as they once did.

Inflation affects seniors and retirees on a fixed income, more than people in the labor market. A September 2023 Giving USA study reported that approximately 45% of Boomers and Seniors are giving less because of inflation.

With seniors and Boomers pulling back in their philanthropy, it may be tempting to look to younger generations to fill in the gaps, but that, too, presents significant challenges. According to Blackbaud, donors born between 1981 and 1995 represent just 11% of total giving in the U.S. and contribute two-thirds less than older donors annually.

So what to do?

First, organizations must recalibrate their acquisition strategies to invest in the acquisition of quality donors. This means a focus on life-time-value, not upfront cost to acquire or 1-year ROI. Analysis will tell you which lists produce donors who have the greatest value over time. Join gift amount is also a critical factor that correlates with higher life-time-value.

Focus your acquisition investment on acquiring as many high-quality donors as reasonably possible. What matters in today’s marketplace is quality, not quantity.

Board mandated or arbitrary limits on cost per donor or months to break-even are outmoded and need to be eliminated to thrive in today’s fundraising reality.

Second, organizations must invest more in donor retention. If you acquire better prospects who are more likely to be upgraded and retained, this job is infinitely easier. Also, because you have acquired better prospects, you can invest more to quickly secure a second gift and/or convert new donors to monthly giving.

Third, take a good hard look at your solicitation schedule and integration strategies. Donors are being approached by your competitors in ever more sophisticated ways. Are you reaching donors frequently enough and in their preferred channels? If you think you are contacting donors too often, you almost certainly are not. Donors’ tolerance for communication from organizations they support is far greater than you think. Don’t be afraid to reach out and engage them.

Good luck and happy fundraising!