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Donor Acquisition: A proven strategy for nonprofits

Last updated: August 28, 2023

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Many nonprofit organizations we talk to struggle to acquire new donors profitably. 

They often spend a lot of resources finding potential prospects, writing personalized outreach messages, and nurturing them to secure the donation.

Then, they rinse and repeat this process to meet the next fundraising goal.

As most nonprofits rely on donations for survival, this method can be stressful and exhausting. 

It’s also highly resource intensive, and after winning the low hanging-fruit, many nonprofits find that their donor acquisition strategy is no longer cost-effective.

In this post, we’ll discuss the specific challenges that increase donor acquisition costs and then provide a step-by-step process to solve common donor acquisition challenges.

What is Donor Acquisition?

Donor acquisition is the process nonprofits use to secure charitable donations and funding from individuals or foundations and corporations to fuel their mission. 

The donor acquisition process typically involves identifying potential donors, outreach (usually via social media, email, or even direct mail), advertising, and nurturing prospects to secure the donation. 

The donor acquisition process can last anywhere from a few days to years, depending on the donation size and the nonprofit’s acquisition efficiency. As many nonprofits rely heavily on donations, it’s one of the highest leveraged tasks for teams to execute.   

Why Many Donor Acquisition Strategies Are Unprofitable

Nonprofits that struggle to profitably acquire donors usually face one of the following key challenges: 

Let’s analyze each of these challenges in more detail.

Challenge #1: Identifying Great Donor Prospects 

Basic tools like LinkedIn Sales Navigator can help you guess someone’s net worth, but it doesn’t provide affinity data. Today, donors have plenty of giving options and are unlikely to donate if they don’t have an affinity for your mission, so creating a prospect list based purely on net worth will yield a low response rate.

A more effective strategy to find donors with mission affinity is to reach out to individuals who have contributed to similar nonprofits.

The only drawback with this approach is that all the nonprofits in your industry use this method, meaning donors are instantly overwhelmed with donation requests from similar nonprofits after contributing to a similar organization.

This makes it challenging for your organization to cut through the noise.

The key to standing out and increasing your response rate is identifying prospects with strong mission affinity and the capacity to give before they donate to an organization and receive a deluge of donation requests from competing nonprofits.

Unfortunately, this works because it’s difficult to estimate mission affinity if the individual has no historical donation record. 

Later, we’ll discuss how to estimate mission affinity using alternative data that most nonprofits don’t know about. 

Challenge #2: Scaling Donor Connections

Even if you find a handful of excellent donor prospects, many nonprofits find that their initial cold outreach strategies produce low response rates. 

Sending more personalized messages can help increase response rates, but it requires a lot of time from the team. 

Unfortunately, the opportunity cost of writing personalized emails isn’t always worthwhile. For example, writing personalized emails sacrifices time you could spend working on other high-value tasks, like nurturing existing donor relationships. In addition, the volume of outreach is also limited if the team spends time carefully crafting each message. 

So even if you get higher conversion rates with personalized outreach, the total conversions may yield the same results as the templated cold messages.

It’s also expensive to pay for the team’s time, which can ultimately make the campaign unprofitable.

That’s where engage can step in to help with some of the heavy lifting.  The direct mail and email pieces are drafted based on the donor’s profile and planned giving score. The draft is sent to the appropriate user to review, edit, and send, saving you and your team valuable time and resources.

Challenge #3: Nurturing Existing Donor Relations 

Generating more revenue from an existing donor is much cheaper than closing a new donor. However, few nonprofits have effective systems to keep donors engaged and therefore struggle to keep existing donors committed and interested in the mission. As a result, the donors churn, and your team has to go through the process of acquiring new donors once more. 

Instead, there might be one team member who periodically sends updates when they remember to do so, but there isn’t an efficient tracking system in place. 

As a result, many donors don’t see the impact of their contributions and churn. This reduces the lifetime value of each donor, which increases average donor acquisition costs and requires you to acquire a higher volume of donors to earn the same revenue.   

The good news is that you can solve these challenges by implementing a data-driven donor acquisition strategy. Below, we’ll discuss the step-by-step process to profitably acquire donors.

Profitable Step By Step Donor Acquisition Strategy

To solve the challenges mentioned above, here’s a step-by-step donor acquisition strategy you can implement to profitably acquire new donors.

Step 1: Set a Clear Goal

If your nonprofit has a vague goal or aims to raise as much money as possible, you can’t create a roadmap that outlines the time, effort, and resources required for your fundraising efforts. This means you won’t have clear action tasks for each day, resulting in aimless marketing campaigns that are only semi-effective.

Instead, the most successful nonprofit organizations identify a target donation goal and then work backward to create a strategic plan to achieve that number. 

For example, if your goal is to receive $5 million over the next 12 months, you can identify how many donors you’ll need and the donation amount required from each donor to achieve that goal. Then, you can look at your current close rate to estimate how many donors you’ll need to reach out to in order to achieve the goal.

This process allows you to create a roadmap with specific action items to achieve the goal.

Therefore, the key to setting a clear goal is to answer these questions:

  1. Number: How much money do we need to raise?
  2. Timeframe: When do we need this money?
  3. Conversion Rate: Based on past outreach data, how many people will we need to close, and at what donation amount to achieve the end goal?

Once you’ve identified this information, creating a strategy and aligning your team around the mission is much easier.

Step 2: Identify Giving Capacity and Propensity

The first step to creating a donor prospect list is identifying individuals with the capacity to contribute to your mission. 

If you completed the first step and identified a fundraising goal, you should have an estimation of your target gift amount and can therefore create a list of prospects that fit those giving capacity requirements. 

The most common method to estimate giving capacity is identifying high net worth individuals with a tool like LinkedIn Sales Navigator. However, LinkedIn data isn’t always an accurate method to estimate an individual’s giving capacity, and just because someone has a high net worth doesn’t mean they have the propensity to give.

Therefore, creating a list of prospects based on estimations from LinkedIn data will likely yield low response rates. 

Fortunately, you can improve your list of prospects by using a Fundraising Intelligence platform like Kindsight. 

Kindsight contains proprietary data on the fundraising activity of high networth individuals and you can filter prospects based on past fundraising activity to only target individuals with historical donations that match your target gift contribution amount.       

A key differentiator that sets Kindsight apart from other fundraising platforms is that we own the fastest growing charitable giving data platform, VeriGift, which currently has over 210 million donation records. 

Armed with this data, you can create more relevant prospect lists and ensure every potential donor you contact has the capacity to contribute to your campaign and a history of philanthropic giving so that you avoid wasting resources on prospects that can’t contribute your target donation amount. 

This data also helps you avoid awkward situations of making outrageous asks.

Step 3: Identify Giving Affinity 

Many nonprofits simply assume affinity based on a prospect’s general characteristics or behavior.

Unfortunately, assuming affinity usually leads to poor response rates because, with more nonprofit organizations today than ever before, donors can be highly selective about the organizations they support.  

Therefore, even if someone has the capacity and propensity to donate, they probably won’t give if they have only a mild affinity for your mission. 

More sophisticated nonprofits look through public records to exclusively target prospects who recently contributed to nonprofits with similar missions. 

The only problem is that every nonprofit with a similar mission uses this approach to target potential donors with mission affinity. As a result, the donors receive a flood of donation requests from nonprofits just like yours, making it difficult to cut through the noise. 

In addition, a donor who recently gave to a nonprofit may not be interested in giving again to your nonprofit in the near future.  

To find donors with a proven affinity for your mission who aren’t receiving an overwhelming volume of requests, you can use a platform like Kindsight to do the heavy lifting for you. 

It helps you strategically find donors with an affinity for your mission by:

  • Identifying individuals affiliated with foundations that share similar affinity to your nonprofit.
  • Identifying individuals that have a history of giving to nonprofits with similar missions.
  • Identifying individuals who are already giving to your organization, but are also giving more to other similar nonprofits so that you can increase your gift request.

Kindsight also identifies hidden gems, who are prospects who have a great potential to become donors. They have the capacity and are already giving to other nonprofits, though they are not giving as much to yours.

Once you’ve identified prospects that have the capacity, propensity, and affinity to give to your mission, you’ll significantly increase your chances of receiving a positive response. As a result, you’ll receive more conversions and therefore reduce donor acquisition costs.

Step 4: Set a Reasonable Ask

You already set a target donation amount in step one, but that amount might not be the perfect number for every donor. Some people may be able to give more, whereas others may find that the amount is a bit of a stretch.

If you ask for too much, the potential donor may feel embarrassed and choose not to give at all, whereas if you don’t ask enough, you’re leaving money on the table. Either way, you might miss a great opportunity to earn additional revenue. 

Kindsight helps you avoid this situation by allowing you to sort donor prospects by historical contribution amount so that you can tailor your ask to each person. It also offers plenty of additional wealth screening data to accurately gauge their giving capacity.

As a result, you’ll be able to maximize each donation without embarrassing any potential donors. 

Step 5: Craft a Personalized Outreach Message

Now that you have a list of excellent target prospects, you have a much higher chance of receiving a positive response if you craft a great message.

The goal of the first message is to open the conversation and get them interested in your organization, so don’t immediately ask for a donation.

A great message that resonates with the donor needs some personalization, but writing unique emails to each prospect is time consuming. However, given that these prospects are high quality, it’s worth the effort.

If you don’t have time to personalize each email yourself, you can use an email marketing platform to assist you in this. You can take the prospect list you created inside the platform and craft an email template with dynamic personalization.

 

This allows you to spend a fraction of the time writing emails and still send a personalized, relevant outreach to each prospect. 

Step 6: Reach Out At An Opportune Moment

Timing has a huge impact on a donor’s likelihood to contribute to your mission. If a donor’s wealth status recently changed, they experienced an impactful family event or recently gave to an organization, they may be more or less likely to donate to your mission.

This information is difficult to uncover, as you’ll probably discover very limited information from a Google search regarding personal events that impact a prospect’s giving propensity. It’s also quite time consuming to analyze each donor and gauge whether or not it makes sense to reach out to them. 

We built Kindsight to do this research for you. In fact, you can set Real-Time Alerts to receive a notification when a person’s status changes. For example, you can set an alert if you want to be notified when a person purchases real estate or gives to a similar organization.

This data is updated daily, so you’ll have an edge over competing nonprofits that rely on manually searching records or media announcements for donor status updates. 

Step 7: Nurture The Relationship

After you receive a response from a donor, it may take months or even years to close the deal. After the initial message, you may want to invite them to an event you’re hosting and get them involved in the community. 

It’s also important to clearly articulate the impact of your mission and vision, as mission affinity is one of the most important variables in a donor’s nonprofit selection. 

In addition to inviting prospects to events and personally communicating with them, you can also use email marketing, paid ads, and content to keep your organization top of mind and retarget them throughout the journey. 

It’s also worth noting that following up with prospects is essential to closing a deal as most high net worth individuals have a lot of contacts and busy lives, making it easy for them to forget about your organization.

Step 8: Measure Results

The key to improving your donor acquisition strategy is to identify patterns that lead to the best results and then double down on those efforts. 

For example, if you notice that 80% of donors that gave to your organization also gave to another specific organization , target more donors that gave a similar amount to that specific organization

A few different variables you can track include:

  • Donor segmentation (e.g., giving to a particular foundation) 
  • Email outreach templates
  • Specific alerts (e.g., recent real estate purchase)
  • Ad campaigns

It’s also important to track efforts that are not profitable. For example, if you notice that a particular ad campaign is costing you more money than it’s generating, shut it off or test a different strategy.

Step 9: Rengage Existing Donors

It costs significantly more to find, nurture, and close a new donor than to convince an existing donor to make another donation or increase their gift. 

So instead of focusing on finding and closing new donors, aim to strengthen existing donor relationships. You can do this by sending regular updates showing them how their donation has impacted the community.

For example, if their donation helped you break ground for a new building, send them photos and videos from the buildsite. Or, if the donation helped towards food security , send clips of the filled fridges as well as a breakdown of how many people will be helped. 

Along with the donation update, you can tell them about specific projects on the horizon and how they can make an additional gift to fund those projects. By strategically making your ask directly after showing them the impact they’ve had on your mission, you’re much more likely to have a higher response rate.

You can also use Kindsight’s platform to identify donors giving significantly more to similar organizations to increase your gift request.

In addition to maximizing your gift amount, be sure to also engage with them frequently without asking for money. For example, send them holiday cards and even a gift basket on their birthday without asking for anything in return. You can update them on how their contribution impacts the community, but don’t pitch them for more money.

At the end of the day, donors contribute to organizations for the emotional satisfaction that charity work provides. So if you want more donations, give donors more emotional satisfaction by providing more updates and give donors more emotional satisfaction.  

Improve Your Donor Acquisition Strategy Today

Donor acquisition is becoming increasingly difficult as there are more nonprofits vying for donations than ever before, and donors are more selective about the organizations they support.

The donor acquisition strategies you used a few years ago might not work today, but simply shifting to using quality data to identify and engage with prospects can solve these challenges.

That’s why we built Kindsight. It gives you the data you need to quickly identify the best prospects and profitably acquire donors in less time.

To see for yourself how Kindsight works, schedule a demo today.


Written by Admin

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