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| Path: Main Street > Resources/Library > Research Articles > Feature Article |
Count your donors and your dollars in direct mail fundraising
By Alan Sharpe
July 16, 2007One of the greatest mistakes I see nonprofit organizations making is watching their dollars and not their donors.
When I conduct a comprehensive audit of an organization's direct mail fundraising program, I invariably discover that they have all sorts of hard numbers about their response rates, average gifts and cost to raise a dollar. But they lack data on donor attrition rates, donor renewal rates and first-time donor conversion rates. Big mistake.
You need to look beyond your dollars and see the donors who gave them. Without donors you won't have any dollars. My apologies to my readers in the UK, Europe, Asia and Africa, since you do not use the dollar as your currency. But the alliteration I'm looking for (donors and dollars) only works on this side of the pond, so please bear with me.
You could be happy today with your direct mail program if it generated an average gift of $45 but never realize that over half of your donors give you just one gift and never give again. See where I'm headed here?
Your average gift doesn't tell you everything you need to know about your health any more than your response rate tells you everything.
In the direct mail fundraising business, your goal is to acquire and retain donors. Emphasis on the word retain. So some of the numbers you need to be watching have everything to do with donors and nothing to do with dollars.
Here are three metrics you should be following:
- First-time donor conversion rate: The percentage of first-time donors who give a second gift.
- Renewal rate: Percentage of donors in any given year who gave last year and this year as well (they "renewed" their gift this year, in other words).
- Attrition rate: Percentage of donors who stop giving each year.
Yes, a healthy direct mail fundraising program generates a respectable net return on investment and keeps costs at a reasonable level. But it also acquires donors at a pace that exceeds the donor attrition rate. And it retains the donors it acquires, for as long as possible. So watch your donors as well as your dollars. You'll stay out of trouble.
Alan Sharpe is a professional fundraising letter writer, instructor, mentor, author and newsletter publisher. Alan helps nonprofit organizations worldwide to raise funds, build relationships and retain loyal donors using cost-effective, compelling, creative fundraising letters. Receive free tips like this each week by signing up for Alan Sharpe's Fundraising Letter.
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