Identifying & Calculating a Strong Donor Acquisition Rate
Many trustees and nonprofit administrators are keen to find and utilize strategies to maximize their organization’s average donor acquisition rate, seeking to achieve a metric that would indicate their fundraising efforts are bearing fruit. Though you can find lots of information on “donor acquisition rates,” what is an ideal donor acquisition rate? If your organization has good data on this metric, what do you do with it? How do you improve the donor acquisition rate?
Determining a donor acquisition rate that is helpful for your organization’s fundraising priorities and plans can be difficult, however, since it can be like comparing apples to oranges. What one organization’s donor acquisition rate suggests about its activities might not be reflective of your own nonprofit’s fundraising work.
How to Calculate Your Nonprofit’s Donor Acquisition Rate
First, look at the circumstances surrounding your fundraising work over the last six months or a year: what were the external conditions that your donors were experiencing? During Covid-19, for example, food banks became a source of great relief for many people and thus the recipients of new donations. Their donor acquisition rates would obviously be relatively high for the year. Also, covid-19 suspended in-person activities. If your organization was a community theater group, you likely acquired fewer new donors than you might otherwise have, were your productions up and running. Understanding this, does it make sense to look at “nonprofit donor acquisition rates” overall as a benchmark you can rely upon?
Next, consider the circumstances within your organization during the fundraising period. Perhaps you kept your facility’s doors open to host vaccine clinics during the pandemic. Through that activity, you acquired good contact information from your neighbors and were able to do a special solicitation. From that ask, you acquired new donors. If your donor acquisition rate rose as a result, is this a reliable metric going forward?
Finally, consider the donor acquisition strategies you used when considering rates as a metric for fundraising efficiencies. Did you use direct mail? Did you have a special event? How did social media play a part? Each of these fundraising modalities is effective in its own way and will be more impactful with different types of donors. For example, social media might be more effective with a younger donor demographic, and direct mail might be more effective with another demographic. Each of these touches can be mined for donor acquisition metrics – and strategic fundraising plans can be developed using (or not using!) them.
Creating an Individualized Approach
The fact is, rather than benchmarking your nonprofit against a “general” donor acquisition metric, it is more beneficial to your fundraising efforts to understand what cultivation, solicitation, and stewardship strategies work best for your particular organization with your kinds of donors. Your fundraising team’s time is better spent drilling down on what types of touches you employed, how many were successful, and how much each cost to raise a dollar. (Be mindful, however, that you don’t fall into a trap regarding the cost to raise a dollar. That metric is not the be-all, end-all of donor efficiency metrics and often penalizes smaller nonprofits with paid staff and volunteers who wear lots of hats. Smaller, less overall efficient organizations often have higher costs to raise a dollar simply because of the program and administrative circumstances.)
Finding the effective donor acquisition rates that provide a valid benchmark to measure fundraising efforts can best be achieved by looking at your internal data, not anyone else’s. Use your internal donor acquisition numbers to set internal benchmarks. Using your organization’s donor acquisition numbers as a goal-setting tool can highlight your fundraising operations’ best and worst strategies and provide you with data-backed evidence to discard old techniques and try new ones.
Published July 6, 2022