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Fundraising Letters Should Raise Donors, Not Donations, When
Mailed to Strangers
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By Alan Sharpe
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Are you willing to spend $1.25 to raise $1? To lose money tomake money? You should be. Most donor acquisition mailings neverpay for themselves. They lose money. And rightly so.
Acquisition letters (letters designed to acquire new donors)should be a vital part of your development program. Currentdonors fall away. Some lose interest in your mission. Some losetheir jobs. Other leave the country. Some die. You need to bemailing fundraising letters to people who have never supportedyour cause in order to replace the donors who fall away everyyear through no fault of yours.
But to be successful at acquiring new donors, you need to ignoreone set of numbers and fix your eyes on another. The numbers to"ignore" are the costs of getting your first donation. Accordingto James Greenfield, in his excellent book, Fund Raising(second edition), you can expect to pay anywhere from $1.25 to$1.50 to raise $1 with an acquisition mailing. That doesn'tsound like a wise use of your resources, does it?
But with acquisition fundraising letters, you need to have youreyes fixed on the lifetime value of your donor, not theshort-term value of their first gift. You need to remindyourself (along with your board members, key volunteers andinexperienced colleagues) that your goal with acquisitionmailings is to acquire friends, not funds.
Let me illustrate.
Let's say you mail a fundraising letter to a list of 10,000strangers. These are people who have not supported yourorganization before but might. Assume that your costs forwriting, design, production and postage come to $0.60 a piece.Your mailing costs are thus $6,000. Let's say you receive a 1percent response rate. That's 100 gifts. Further assume that theaverage gift is $30 Your income is $30 x 100 donors, namely,$3,000.
Your costs are: $6,000
Your income is: $3,000
Your net loss for the campaign is: $3,000
Are you in trouble? No. Here's what you tell your executivedirector. "We gained 100 new donors. And up to 80 percent ofthem will give again, provided we follow up properly and solicittheir gifts in the right way in the future."
Each of these new donors effectively cost you $30 each (your netloss divided by total new donors). Are you willing to spend $30today to raise a friend who will likely give your organizationhundreds of dollars in gifts in years to come? You should be,provided you can remember that your goal with acquisitionletters is to raise a donor, not a donation.
My thanks go to Stanley Weinstein and his book, The CompleteGuide to Fundraising Management (second edition), for hisinsight into the economics of donor acquisition.
© 2005 Sharpe Copy Inc. You may reprint thisarticle online and in print provided the links remain live andthe content remains unaltered (including the "About the author"message).
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