Fraser Green

Fraser Green

Former political campaigner and current fundraising strategist with a knack for understanding how audiences will react to messages.

Fundraising Trend #2: The Near-Extinct New Donor

June 26, 2017

Any fundraiser who’s done new donor acquisition in the past decade knows just how hard it’s become to bring new donors into your charity’s fold. And not only is it hard to find the bodies, it’s awfully expensive to bring them in.

To give you a broad idea, here’s an example just from my own experience in direct mail. 15 or 20 years ago, a charity would invest $22 to bring a first-time donor onto the file. About 50% of those first-time donors would ‘convert’ to a second gift – so the cost of a repeat donor would be about $44.

Today, that same charity might spend $52 to bring in a first-time donor. And to make matters worse, today’s conversion rate with that same charity has dropped to 38%. In this case, the new cost of a repeat donor has become $136. That’s three times as expensive as it was before.

Now, this example involved an ordinary charity and its direct mail program – but the disappearing new donor is endemic to pretty much every corner of the philanthropic world. Those TV charity infomercials (known as DRTV) aren’t working like they used to at finding new support. Nor is the tactic of canvassers in vests signing up donors on the sidewalk. Hospitals used to be able to write to ex-patients, and replace their annual donor attrition at no net cost. Those days too, are long gone.

WHAT’S CHANGED In Donor Acquisition?

In my opinion, the biggest reasons for this huge change in the marketplace are demographic and economic. Two of the three reasons have to do with donor age and the third reason involves the state of the economy.

  • For years, members of the Civic Generational Cohort carried society’s philanthropic load. Members of this generation (that was born before the end of World War 2) loved to give to many charities – and kept giving to the same charities year after year. But today, the youngest members of this generation are in their early to mid-seventies – and many are in their 80s and 90s. These guys have done their philanthropic part – and their giving days are behind them.
  • Next, we have the Baby Boomers. This is by far the biggest population swell that has ever come through society. Boomers today are aged between 52 and 72 – in other words, they are now fully engaged in their philanthropic stage of life. (Any experienced fundraiser will tell you that people become serious donors at about age 50.) Now, it’s members of the much smaller Gen X that are reaching their philanthropic prime – but their numbers just don’t compare with the Boomer cohort that came before it.
  • Finally, we’re almost a decade in to the aftermath of the economic meltdown that hit in the fall of 2007. Even though most economists would tell you that the economy is showing signs of health again, most people you talk with are more skeptical. We have not seen much in the way of real growth in giving in the past ten years. And yet, charity boards and CEOs seem to think that they can keep raising fundraising targets just because they want more money. Sorry guys – it’s a zero sum game these days. You will only grow your market share by taking it from someone else. And that someone else isn’t going to surrender their revenue easily.

WHAT CAN YOU DO ABOUT IT?

From a strategic approach, it makes sense in these times to consolidate your support and make it as efficient as possible. For most charities, this is not an environment in which to plan for big growth in donor numbers. Rather, the emphasis should be on maximizing net revenues from the donors that you do have.

Here are the three most common prescriptions I talk with clients about these days:

  1. Convert and renew as many of your current donors as possible. The more donors you can keep, the fewer you’ll need to find as replacements. There are probably six specific steps you could take to improve your donor retention efforts like offering them more communications choices, communicating results of donor investments more clearly, saying thank you faster and more often, asking for input – the list goes on and on. (It’s worth noting the findings of UK philanthropy academic Adrian Sargeant. He has shown that if you can increase your donor retention rate by 10% over time, you can increase net revenues by up to 50%! So, it’s pretty obvious that retention is a great place to start.)
  2. Segment and leverage much greater support from the right pockets of your current single-gift annual donors. Sure, three-quarters of your donor base probably won’t change their giving much. But one-quarter or less can double your net revenues by converting or upgrading to monthly giving, mid-level (say $500 to $1,000) giving and making bequests. The trick here is to deliver powerfully persuasive messages about the right type of giving to the right audience.
  3. At the end of the day, you will have to prospect for new donors – there’s no question about that. My advice is to try to create between four and six new smaller streams of new donors – rather than the one big stream you may have relied on for years. Maybe there was a time when all you had to do was trade lists and do prospect mailings a couple of times a year. Today, you might want to thoughtfully convert event participants to monthly giving, persuade tribute donors to support your cause and motivate your fans to become donor recruiters. Every situation is different – and your portfolio of opportunities probably won’t look like anyone else’s. But you need to give it careful thought.

SUMMING UP – THERE IS HOPE!

The trend is clear. There are fewer donors in this country year after year. Yet, that smaller group of donors continues to give more money. Your challenge is to give up the ‘one size fits all’ mentality and start using a scalpel instead of a meat cleaver on your database.

If you’re strategic, smart and patient, you will succeed – and your job will feel more rewarding to you than it ever has before.


This is Part 2 of my six-part summer reading series. I’m walking you through review the six trends that we’re paying closest attention to – and why you should be, too. Check out Part 1, where we dive into the decline of donor loyalty.

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