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5 Keys to Prospecting on a Budget

February 25, 2013 By Timothy Grailer
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As a recovering fundraiser, I am acutely aware of the importance of a vibrant acquisition program. Acquisition is an essential part of any fundraising program, as it:

  • Replaces constituents that do not reactivate
  • Adds additional sources of revenue
  • Injects new blood into your file, introducing new opportunities and growth
  • Feeds your funnel, including new major- and legacy-giving prospects

A vibrant acquisition program is indicative of an organization on the rise, while a slow decline in active file counts is unsustainable. I know, fundraising 101, right? 

If you have observed any industry data over the last six years or so, you also know that acquisition is getting continuously more difficult and more expensive. Since 2001, the number of nonprofit organizations that are competing for mind and wallet share continues to increase significantly (some estimates have it around a 45 percent to 50 percent increase), and the number of donors and total revenue have remained relatively flat. As a result, the pools are overfished and donors are saturated with acquisition requests and renewals. Yet, as organizations have tightened their belts over the last few years, one of the first budget items to go is the acquisition budget, largely because organizations historically have not been able to quantify the impact of acquisition on the immediate bottom line — it's a short-term money-losing proposition in the eyes of management.

Less budget, more costly, critically important to the long-term health of the organization — sounds pretty dire, right? This is one scary trend that I dare not minimize. 

As brilliant fundraisers, we must get smarter about how we can overcome the acquisition quagmire — and reverse these trends. Here are some suggestions.

Build the business case for budget
We generally use the wrong metrics to show the value of acquisition to management. Metrics like donors acquired and break-even duration don't tie back to short-term revenue or show the impact on long-term organizational health. We must change the way that we approach the business case to secure the funding necessary to keep the organization healthy.

This is a long-term investment — use long-term metrics. Measuring the "long-term value (LTV)" of the constituents acquired helps you show the value of the acquisition program over time to the organization as well as helps you make smarter decisions about how to pursue acquisition in the future. Measure the LTV at various intervals, including lifetime, and roll it up to both the list and the marketing effort. You may find, for example, faith-based lists convert less donors but are extremely profitable long term, or that certain catalog lists have a high acquisition count but negative LTV. Taking the long-term view may hurt short-term statistics, but remember the big-picture goal is long-term organizational health.

 
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