Your organization is doing well if 85 percent of your donors renew their support each year, according to Stanley Weinstein in his book The Complete Guide to Fundraising Management.
To put it another way, you are doing well if no more than 15 percent of your donors fall away each year.
So do the math.
If your organization has 10,000 active donors, and if 8,500 (85 percent) of them renew each year, then 1,500 (15 percent) of them will drop off every year. Ouch.
This is the main reason that you need to create and manage a well-planned, annual donor acquisition program. You cannot afford to simply mail to your existing donors only. You need to replace the donors who never renew. Without a steady influx of new donors, you will be moving backwards each year, not forwards.
Here are some tips for running a successful annual donor acquisition program.
1. Know your attrition rate
Naturally, if you are to replace the donors who fall away each year, you need to know how many need replacing. That means you need to calculate your attrition rate. Your attrition rate is simply the rate at which donors do not renew their gifts, usually expressed as a percentage of active donors.
2. Recruit as well as replace
Your donor acquisition program likely needs to increase your donor base as well. You not only need to replace the donors who stop giving each year. You need to add new donors as well. So if your attrition rate is 15 percent annually and your goal is to increase your donor file by 10 annually, then you need to increase your donor file by 25 percent each year.
3. Mail in sufficient numbers to meet your acquisition goals
Another number that you need to know is your response rate for acquisition mailings. If your acquisition control package currently generates a response rate of one percent, then you must mail 100 packages to acquire one new donor.
So how many packages must you mail each year to reach your donor acquisition goals?
Well, using our previous example, if you have 10,000 active donors in your house file, and if you lose 15 percent of them each year through attrition, and if you want to increase the size of your list by 10 percent each year, then you must acquire 2,500 new donors each year (25 percent of your total list of 10,000).
So, if your acquisition package attracts one new donor for every 100 packages that you mail, then to attract 2,500 new donors each year you must mail 250,000 donor acquisition packages each year (1% of 250,000 = 2,500).
4. Aim to raise friends, not funds
Most acquisition mailings lose money or barely break even. According to James Greenfield, in his excellent book, Fund Raising (second edition), you can expect to pay anywhere from $1.25 to $1.50 to raise $1 with an acquisition mailing. That doesn’t sound like a wise use of your resources, does it? But with acquisition fundraising letters, you need to have your eyes fixed on the lifetime value of your donor, not the short-term value of their first gift.
5. Agonize over your list more than your package
The single most important factor in determining your success in direct mail donor acquisition is your list. A poor letter mailed to a great list will generate a response. But a terrific letter mailed to the wrong people will generate nothing.
So before you rent a list of names and drop an expensive direct mail acquisition package in the mail, examine the potential donors on your list. Make sure they are good prospects for a donation today—and tomorrow.
They need to meet at least three criteria:
1. have the capacity to make a donation now
2. have an interest in your cause or the people you help
3. stand a good chance of making repeated donations