What’s the Cost Per Sustainer?
Sometimes, fundraisers ask me: “What’s the cost per sustainer?” Let me explain a few different types of cost.
1. What should you expect to spend to acquire a new monthly donor? The answer is: It depends. And it’s all over the map because it depends on the channels you’re using or the combination thereof. Let’s take a look at three examples.
The email example above assumes that the cost for the email program is all put toward the sustainer acquisition. If you do that, the cost per sustainer is even lower, but I wanted to show you the max cost per new monthly donor.
The channels above are the ones that are most affordable for most nonprofits. Social media, paid ads and Google ads are typically looked at as cost per lead, and you’ll have to take the creative fees into account. You’ll also need to see what the conversion options are, which is where emails and texting comes into play. Depending on the type of organization, you can go straight for a monthly giving ask online. In other cases, it requires lead generation first, conversion second.
But all in all, you should typically expect to spend no more than $100 to $150 per new sustainer, still well below the annualized revenue, so still breaking even in the first year.
Only when you look at channels like face-to-face and direct response TV do the numbers go up. You can expect to generate much higher numbers of new sustainers. Most nonprofits are willing to spend up to twice the annual value of a sustainer to make it worth their while because the typical monthly donor stays with you for five or more years. Not a bad return on investment, not to mention the positive impact this has on donor retention!
2. What should you expect to spend once you have a new monthly donor? What’s the ongoing cost to maintain a sustainer? This, too, depends on a few different things.
For example, did you promise to send a special premium for joining? Then calculate the cost for that premium and the packing and shipping of it. It’s typically less than $10.
If you don’t have a premium, consider the cost of a thank-you letter and postage. Probably around $1.
Then include your monthly donors in a few of your appeals and newsletters with a special message. The extra ongoing cost is minimal in that case. No different than the maintenance cost of any other donor really. Most nonprofits don’t account for this expense separately, but you’re looking at a few dollars a year. Not enough to break the bank.
Some nonprofits include the cost to charge the gift, which, of course, differs per payment processor type and gift amount, but that, too, is just par for the course. You would have to pay that same amount if someone made one-off gifts at those levels.
Also note that I’m not including the cost for the donor base CRM or payment processor as that’s a given. You can’t raise any funds without it.
3. What should you expect to spend to keep or reactivate a monthly donor?
This is when you are probably not going to spend that much money, but most likely a bit more time. You’ll have to make phone calls to follow up. You may have to send out some targeted emails and letters. You may have to pay a small fee for the credit card updater. All in all, you’re probably looking at a few bucks.
I’ve not seen much sharing about the cost per new monthly donor, but this chart is based on examples from real organizations.
So, there you have it, looking at these numbers, if you add it all up, you’re probably going to break even in six months to a year. Try some of these channels, do some testing and let me know what your numbers look like.
Just think, what’s the value of every donor lost if you don’t invest in monthly donors? What’s the cost of not being able to serve your clients any longer if you don’t invest in monthly giving today?
Erica Waasdorp is one of the leading experts on monthly giving. She is the president of A Direct Solution, a company serving nonprofit organizations with fundraising and direct marketing needs, with a focus on monthly giving and appeals. She authored "Monthly Giving: The Sleeping Giant" and "Monthly Giving Made Easy." She regularly blogs and presents on fundraising, appeals and monthly giving — in person and through webinars. She is happy to answer any questions you may have about this great way of improving retention rates for your donors.
Erica has over 30 years of experience in nonprofits and direct response. She helped the nonprofits she works with raise millions of dollars through monthly giving programs. She is also very actively supports organizations with annual fund planning and execution, ranging from copywriting, creative, lists, print and mail execution.
When she’s not working or writing, Erica can be found on the golf course (she’s a straight shooter) or quietly reading a book. And if there’s an event with a live band, she and her husband, Patrick, can be found on the dance floor. She also loves watching British drama on PBS. Erica and Patrick have two step sons and a cat, Mientje.