FYI Blog

Do you have the guts to invest in fundraising?

No denying it: donor acquisition is down across the industry. Nonprofits are acquiring fewer donors, and many are experiencing volatile results and declining response rates, according to the Fundraising Effectiveness Project’s Quarterly Fundraising Report (June 2019). The number of donors is down; the number of donors who are giving is down; revenue is down.

So what do we do with this reality?

One voice might tell you to stop throwing “good” money after “bad” – shut down your acquisition program and plug up that money drain. But when acquisition is down, that’s not the time to pull back; that’s the time to dig deeper into the analytics to make your acquisition more effective and expand your investment to offset these declines in order to ensure the stability of your file.

Some organizations and their boards think performance is flagging because direct marketing and direct mail are dying breeds. But I take the counterintuitive approach that this is not a symptom of our industry’s decline, but rather, a call to build for the future, which is critical even when times are tough.

Here’s an example: One Avalon client had experienced a huge shortfall in acquisition income as a result of flagging response rates now that the Trump-bump was no longer benefitting their program. Since direct marketing is the organization’s largest departmental budget, when leadership focused on balancing the budget, they naturally looked to cut there. But we were able to show their board (via our ROI analysis and long-range forecasting) that it didn’t make sense to look at that year in a vacuum, but instead look at the long term – how previous investments successfully returned, and how they’d miss out on revenue if they scaled back investment now.

The board agreed to increase investment, recognizing the need to embrace the short-term loss for long-term gain. This is never an easy sell. The key is to identify the RIGHT level of acquisition for each organization, based on the analytics of their donors, their market, their funding, their fundraising environment, etc.

However you look at it – from the Japanese proverb: fall down seven times, get up eight….or the threat of FOMO (teen talk for fear of missing out) – you’ve GOT to stay in the game. Because if you cut acquisition to the bone, you’ll miss those new donors and have no way of stemming attrition. And not just today, but that cut to your acquisition program will have a negative impact on your program for almost a decade to come.

Spending now as an investment in future revenue can take some guts. But this is a conversation nonprofits are having, and/or need to have, as an ongoing part of program development. We’re doing it every day.