Many nonprofits make the decision to either scale back new donor acquisition or cut it altogether to reduce cost and maximize net revenue. This is the topic we’re going to address in the fifth installment of Fundraising Myth Busters.
Before we dig in, if you haven’t had a chance to read the first four myths, you can check them all out here (Donor acquisition; Brand advertising & direct response fundraising; Solicitation frequency; Online-acquired donors)
Alright, here we go…
Myth #5
Cutting donor acquisition will improve revenue
What we know
- Long-term revenue growth requires that your organization have enough donors giving at high enough levels to cover the losses you experience through donor file attrition (donors who stop giving), and donors downgrading their annual giving (i.e., giving less this year than in the prior year).
What we did to validate this myth
- We looked at multi-year trends in active donors and total revenue for organizations that reduced or stopped donor acquisition, and compared those to charities that maintained average acquisition investments year-over-year.
What we learned
- Contrary to the hypothesis, organizations that cut or stopped acquisition experienced a multi-year decrease in total income.
- The average decrease in income for organizations that cut or stopped acquisition was sixteen percent (16%).
- The time it took these organizations to recover from the decision to cut or stop acquisition averaged 2.5 years.
Maximizing long-term revenue requires a robust acquisition strategy, as well as ongoing donor cultivation and stewardship efforts. You can, and should, maintain all three – with a focus on optimizing each investment to achieve a desired ROI. It’s not an either/or proposition.
