The latest entry in our data storytelling series addresses new donor acquisition. We call this the data storytelling series because it’s so easy to lose motivation, passion, and interest when it feels like we’re getting into the ‘minutia’ of fundraising data.
You want to be engaging donors. You want to focus on your mission. Your beneficiaries. Your message. The stuff that inspires action and produces change. Data is, well, not any of that.
But if you can begin to see your data itself as part of a story, you’ll begin to see how much your data actually drives all the great things your nonprofit organization is working on.
New donor acquisition is about input. What new, fresh voices, allies, and contributors are joining your cause, and how much of an impact will they make? And, what can you do to keep the pipeline filled? Let’s dive in.
What Is Donor Acquisition?
Donor acquisition refers to the number or the percentage of your donors who are giving for the first time over a given time frame, usually one year.
Donor acquisition is an indicator of the life of your organization. It’s like how eating and drinking provide the body with what it needs to keep living and thriving. Without new donors, a nonprofit begins to wither. A month here or there without many new donors may not matter. But if you’re steadily losing more donors than you’re gaining over a year, or several years, you can end up in real peril.
So, donor acquisition is like the yin to the yang of lapsed donors. You want more coming in than you have going out.
How Donor Acquisition KPI Gets Calculated
You can express donor acquisition as a raw number or as a rate.
For the raw number, simply look at your donor ID numbers for the year (or quarter or other time frame), and count up all the brand new ones. That’s how many new donors you acquired.
To express it as a rate, take the raw number of new donors acquired, and then count up the total of all your donors for that same time period. Then, simply divide the new donors by the total donors, and you get a percentage. Here’s the formula:
New donors/Total donors = Donor acquisition rate
For example, suppose you have 1000 donors in the year. If 200 of those are first time donors, your donor acquisition rate would be 200/1000, which is 20%.
Now, you can also include re-engaged lapsed donors in your ‘new donor’ totals. Technically, these are not new donors, but merely ones who stopped giving and then started giving again. But if you want to include those, your donor acquisition rate will appear to be higher than it otherwise would.
The Fundraising Report Card uses the first approach – it is the number of first-time donors acquired during a given time period.
What Donor Acquisition Tells You
Every year, you lose donors. Many first-time donors never give again. Donor acquisition is about the flip side of that – the new donors you are gaining. Thus, donor acquisition tells the story of the effectiveness of your nonprofit’s marketing efforts.
If you track the donor acquisition metric over time, you’ll begin to see how consistently (or not) your organization attracts new donors. Is it cyclical? Does it rise and fall at similar points of the year? Can you correlate increases in new donors with your efforts to acquire them?
For example, let’s say you have four main fundraising campaigns each year geared toward donor acquisition. When you look at your data, you might observe a healthy bump in new donors during three of those campaigns, but not much impact for the fourth one. And it happens each year.
This would tell you there’s something not working about that fourth campaign, and you should either scrap it or rethink it.
Track Donors from Each Marketing Channel
You’ll get an even stronger picture of your donor acquisition efforts if you can tie new donors to the marketing channels that brought them in. Let’s say you’re using direct mail, three social media channels, and online ads. Each of your campaigns pushes out content on all five of these channels.
If you can track where the donors are coming from, you’ll know which channels are giving you the greatest return on your investment. You might find the majority of new donors engage through direct mail, Facebook, and TikTok, and that hardly any are responding to Instagram and your online ads. If that trend continues for a while, stop spending money on the two channels that aren’t working and devote more to the ones that are.
How do you track this sort of thing?
The simplest way is to create a different donation landing page for each traffic source. It can feature the same or very similar content, but will have a slightly different URL. So, your Instagram posts all feature one donation URL, your Facebook posts use another, your direct mail letters include a printed URL that is also distinct, and so on.
It’s not 100% perfect, because a donor could also just visit your website and give through the main donation page. But the ones who do give to these source-specific pages will show you how much response you’re getting from each channel.
Limitations of the Donor Acquisition Metric
Donor acquisition alone, like most fundraising metrics, tells an incomplete story.
Suppose you gained 500 new donors last year and 400 the year before. Sounds great right? An increase of 100 new donors.
But what if you spent twice as much money on marketing and new donor outreach last year too? With double the expenses, only increasing new donors by 25% doesn’t pencil out to very good math.
So, you have to consider your costs of fundraising, not just the number of new donors. If you spend $25,000 to acquire 500 new donors, that’s an average of $50 per donor.
Is that worth the cost?
To answer that, you really need to know another metric – donor lifetime value. If your average donor is worth $100 over their lifetime, spending $50 to acquire each one doesn’t seem like a very good deal.
Here’s a good analysis of donor acquisition and cost
Ways to Turn Donor Acquisition into Stories
What motivates your new donors to give? And if they give again or become a monthly donor, what leads to that? You can make your donor acquisition metric come alive by finding some real people who are part of these numbers, and report about them to your board and your team.
These are the people who have joined your mission. The more you understand them, the more effectively you’ll be able to keep attracting more people like them.
What can you do? Here’s a simple process you can use:
Call a random new donor
Yes, pick up the phone and call them. Find a new donor who recently gave at any giving level you want, and schedule time in your day to call them.
Do this regularly
To get value out of this, you want to do this consistently. You could call one new donor per week, one per month, two per month, or whatever works for you. Put it on your schedule and commit to it.
Thank them
Begin the call by thanking them for giving and taking interest in your mission. They will be shocked that you called – in a good way.
Talk to them
Have a conversation. Ask what led them to make their recent gift. What motivated them? How did they hear about you? On which traffic source did they hear about your nonprofit? Just have a conversation. There’s really no agenda here other than to listen to them talk and share their heart and mind, and get a sense of why they gave and how they heard about you.
Do NOT ask for a gift
You want this call to end as well as it starts. So do not ask them for another gift. This is a relational call. An information gathering call. End it by thanking them again. You can do this call in just a few minutes. If they’re a talker, it might go longer, but that’s okay. There’s a good chance that by having this call, this first-time donor will become a repeat donor all on their own – but you’re leaving that up to them.
Share Your Insights with Your Board and Team
If you keep doing this regularly, you’ll quickly amass a bank of new donor stories. You’ll have names, giving amounts, and where they came from, and can begin to talk more accurately about what aspects of your mission and organization seem to be most appealing to new donors.
Your board and your team will also begin to get a clearer picture of how donors feel about your organization. And as you infuse what you’ve learned into future fundraising campaigns, you can anticipate higher donor acquisition figures.
If you’re tracking donor acquisition data over the years, you hope to see a steady climb. And again, when you combine acquisition with donor lifetime value and the average donation amounts for new donors, plus your costs of acquisition, you’ll see how well your efforts are working and which new adjustments you may want to make.
The Fundraising Report Card calculates donor acquisition in seconds, along with the other metrics mentioned here including donor lifetime value and average donation amount. It also calculates lapsed donors, so you can compare your new donors with how many you’re losing each year.
Upload your fundraising data to the Report Card and see in minutes a treasure trove of fundraising data. All you need is three things – donor IDs, donation amounts, and donation dates. That’s it!
