From the Desk of: Steve Elliott
How much should you spend to acquire new donors?
It's a good question, but it presumes another question...
Should you spend to acquire new donors?
The answer to that question is...
You already are spending to acquire new donors, even if you don't realize it!
New donors don't just appear ex-nihilo (out of nothing). Only God creates ex-nihilo. Organizations can't create anything ex-nihilo. New donors are always the result of some effort (and some spending). That effort/cost may be a direct cost or an indirect cost.
+ + "I want Free Donors!!!"
For example, let's say you do some outreach that creates buzz in the news or social media. As a result of that buzz, people find your website and they donate.
Free donors!!!
Well, kind of. In reality, you spent considerable amounts on that outreach which created the earned media which resulted in the attention that created the donors.
What I just described is every organization's dream... that the outreach will create enough lift to create new donors. Many organizations start this way. I would say that is always part of the story for every organization, but only part. And I would argue that if/when your outreach is creating that kind of lift, that's precisely when you should spend even more to create more donors!
So, in review, you are spending to create new donors (for example, if you are paying a PR firm, you're really paying for donors and donor lift indirectly). The question is, how much should you spend to add a new donor, we'll call him Donor Bob?
Well, that largely depends on how much Donor Bob is worth to your organization, which goes back to last week's discussion of Lifetime value (LTV).
So here's the secret...
+ + The secret successful organizations know...
The largest and most successful non-profits understand that they must pay for Donor Bob. They would love to acquire Donor Bob at break even but, because they understand LTV, 
they generally acquire donors at less than break even.
It's what has been called in the direct mail business the "prospecting cage." The printer would guarantee break even on the prospecting mailing through an agreement in which the new donors were put in a bookkeeping "cage" whereby the printer was paid back for the printing costs out of subsequent gifts. Donors would be "released" from the cage in 3-9 months typically.
The direct mail "cage" only makes sense because of solid LTV metrics. I would argue that all donor acquisition programs only make sense because of LTV.
+ + Prove it!
So now that you know you are going to pay for new donors, how much should you pay?
Not as little as possible... As little as provable.
If you can prove a donor acquisition program at or near break even, then do it until the prospecting vendor screams STOP!
The key is to keep testing until you can prove your donor acquisition model at a cost that works with your lifetime value.
And here's why you need a proven model for donor acquisition.
Because it's the only way to plan your growth! If you can prove a donor acquisition model, you can now scale that model to meet the growth goals. Without a provable model of growth, you're waiting for some event that may or may not happen to trigger that growth or lift.
+ + Scenario: "Let's grow 20% next year...
Let's say your board wants to increase your donor income by 20% next year. It sounds great. So you run the numbers...
Let's say you have 10,000 active donors and your attrition rate is 20%. If your organization doesn't want to spend on acquisition, you can report that you will need to "cream" the list (i.e. get more from your donors through more frequent marketing, campaigns that motivate extra giving, major donor work, planned giving, etc.) to reach the 20% increase goal.
Don't underestimate the challenge of increasing 20% without new donors. In the above scenario, you'll need to get about 50% more from current donors (80% remaining have to produce 120% of prior year) by "creaming" your list.
To reach the 20% growth through new donor acquisition, you'll need at least 4,000 new donors at your historic first-gift average in the next year. If your new donor gift average is higher than your historic average, you can expect a higher LTV for these new donors and you may need less than 4,000.
Your growth plan will likely involve a combination of increasing current donor utility and getting new donors. With a LTV estimate , you can build a plan/budget to meet the goal.
+ + Takeaways...
So here are some takeaways:
1. You must spend to acquire new donors.
2. Spend as little as you can prove, and build a growth plan around that!
3. You have to test donor acquisition to prove donor acquisition, so test a lot!
My team at Grassroots Action has been acquiring donors for organizations for more than two decades. We've had considerable success proving donor acquisition models that work for our partners. Our approach isn't about marketing plans, it's about acquiring data.
I'd love the opportunity to help you add new donors and enhance the lifetime value of your donors with strategies, campaigns and messaging that fit your vision and mission. Give me a call or set up a time to chat below.
Steve Elliott
757-537-8063
[email protected]
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© 2025 Steve Elliott. Grassroots Action, Inc.
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