5 Keys to Prospecting on a Budget

As a recovering fundraiser, I am acutely aware of the importance of a vibrant acquisition program. Acquisition is an essential part of any fundraising program, as it:

  • Replaces constituents that do not reactivate
  • Adds additional sources of revenue
  • Injects new blood into your file, introducing new opportunities and growth
  • Feeds your funnel, including new major- and legacy-giving prospects

A vibrant acquisition program is indicative of an organization on the rise, while a slow decline in active file counts is unsustainable. I know, fundraising 101, right?

If you have observed any industry data over the last six years or so, you also know that acquisition is getting continuously more difficult and more expensive. Since 2001, the number of nonprofit organizations that are competing for mind and wallet share continues to increase significantly (some estimates have it around a 45 percent to 50 percent increase), and the number of donors and total revenue have remained relatively flat. As a result, the pools are overfished and donors are saturated with acquisition requests and renewals. Yet, as organizations have tightened their belts over the last few years, one of the first budget items to go is the acquisition budget, largely because organizations historically have not been able to quantify the impact of acquisition on the immediate bottom line — it’s a short-term money-losing proposition in the eyes of management.

Less budget, more costly, critically important to the long-term health of the organization — sounds pretty dire, right? This is one scary trend that I dare not minimize.

As brilliant fundraisers, we must get smarter about how we can overcome the acquisition quagmire — and reverse these trends. Here are some suggestions.

Build the business case for budget
We generally use the wrong metrics to show the value of acquisition to management. Metrics like donors acquired and break-even duration don’t tie back to short-term revenue or show the impact on long-term organizational health. We must change the way that we approach the business case to secure the funding necessary to keep the organization healthy.

This is a long-term investment — use long-term metrics. Measuring the “long-term value (LTV)” of the constituents acquired helps you show the value of the acquisition program over time to the organization as well as helps you make smarter decisions about how to pursue acquisition in the future. Measure the LTV at various intervals, including lifetime, and roll it up to both the list and the marketing effort. You may find, for example, faith-based lists convert less donors but are extremely profitable long term, or that certain catalog lists have a high acquisition count but negative LTV. Taking the long-term view may hurt short-term statistics, but remember the big-picture goal is long-term organizational health.

Related Content
  • Julie Staub

    Your comments are always most interesting and I read them daily to glean whatever I can from them. However, you only ever speak of organisations that already have large existing donor bases. What about the new organisations starting up. How do we go about starting to build up a donor base. With everybody fighting for the same piece of the pie, finding donors from a base of zero is not easy task! Any suggestions? Julie

  • Tim Grailer

    Julie –

    Great question! Every organization is a little different when it comes to budgetary constraints, but my best suggestion is to focus on ‘free names’. Event participants, board members, partners, email sign-ups are where I would start. Paid acquisition is not realistic for organizations that don’t have an existing stream of donors and revenue to count on.

    I served on the board of an organization that hosted annual walk events. Although they captured information from participants, they never really reached out to them for annual or regular donations outside of the event. By transforming these folks into more consistent donors, we were able to establish a program and eventually evolve to partnering with sister organizations on exchanging names.

    If you are starting from scratch (no warm prospects), a good marketing effort to collect names and addresses and digital information (social media and email) is constructive. Reach out to coworkers, corporate partners, governement agencies to collect this information and try and convert them into donors.

    My suggestion is to start out via digital channels, as starting offline programs require a much larger investment. Start with social media pages and a website with email sign up.

    Again, every organization is a little different. These are some tips that have worked for me in the past. Hope this helps!