Donor Acquisition vs. Retention: Why They’re Both Critical

This article was provided by DonorSearch.

It’s no secret that a strong donor base is critical to your nonprofit’s success. After all, your organization needs funding to drive its mission forward and keep its operations running smoothly, and the majority of most nonprofits’ revenue comes from individual donations.

There is an age-old debate in the nonprofit sector around building this public support system: Is it more important for an organization to acquire new donors or retain its existing ones? In a broad sense, this is a question wrongly phrased. Donor acquisition and retention aren’t opposites, but rather two sides of the same coin, and both are critical for funding your nonprofit’s work long-term.

However, your organization may benefit from prioritizing one of these activities over the other for a period of time. To help you map out your strategy, this guide will explore the benefits of donor acquisition and retention, when to focus on each one, and tips for executing these processes effectively.

Donor acquisition is the process of finding new donors for your nonprofit and securing their attention. It’s the first step in the donor management lifecycle, immediately preceding cultivation (where you build relationships with potential new donors) and solicitation (where you ask a donor for their first gift).

According to DonorSearch’s donor acquisition guide, pursuing support from new donors enables your nonprofit to:

• Expand its reach—not only by increasing your overall number of donors, but also by diversifying your supporter base and identifying community members who care about your mission but haven’t contributed to your organization yet.
• Achieve higher fundraising goals, since a larger donor base naturally allows you to bring in more revenue.
• Plan for growth through strategic capacity building and long-term impact planning.

Acquiring new supporters is most important when your nonprofit:

• Is first starting out so it can receive its first individual donations and lay a foundation for its programs and services.
• Is launching a major campaign, since capital campaigns and similar initiatives require many gifts of various sizes to achieve their ambitious goals.
• Has recently experienced significant donor churn and needs to rebuild its supporter base.

If your nonprofit is currently prioritizing donor acquisition, here are a few strategies that will increase your chances of successfully engaging new supporters:

• Promote your organization across multiple channels. Using a combination of online (email, social media, digital ads, etc.) and offline marketing methods (e.g., direct mail or flyers) will maximize the number of touchpoints for potential donors to learn about your nonprofit. Keep all channels consistent in messaging and visual branding to ensure new supporters know who your nonprofit is and what it stands for.
• Leverage existing supporters’ and corporate partners’ networks. Encourage active donors to share your social media content with their followers, and sell branded merchandise so community members can show their support while out and about. Launching co-marketing campaigns with local businesses can also attract their customers to your organization—and direct your existing donors to their company, so it’s a win-win opportunity!
• Conduct prospect research to identify major giving candidates. Prospect research allows your nonprofit to collect detailed information on potential donors’ wealth, philanthropic history, and affinity for your mission. This way, you can pinpoint individuals who would be able and willing to make a large donation to your organization and cultivate them intentionally.

Donor retention encompasses all of the actions you take to maintain relationships with existing donors and secure their continued support. Retention is the penultimate step in the donor lifecycle, falling in between stewardship (where you thank supporters after a successful solicitation) and upgrade (where donors take their contributions to the next level).

Retaining donors provides the following advantages for your nonprofit:

• Saving money—on average, it can cost around $1.50 per dollar raised to acquire a new donor, but just $0.20 to retain an existing one.
• Building stronger relationships that you can rely on in all circumstances and that lead to a more passionate, engaged supporter pool.
• Enhancing your nonprofit’s reputation as a trustworthy organization that cares about its donors and allows community members to make a real difference through their contributions.

Focusing on donor retention is most helpful when:

• Your nonprofit is going about its day-to-day operations, so it can bring in sustainable funding to keep its lights on and programs running.
• You’re facing financial difficulties and need to cut costs while increasing revenue generation.
• You want to rally supporters around a pressing issue or opportunity, since individuals who already recognize and care about your cause are most likely to respond to those calls to action.

Here are a few ways to keep donors coming back to your nonprofit if retention is your current top priority:

• Thank supporters at scale. Although stewardship and retention are often considered separate stages in the donor journey, expressing gratitude is critical for securing long-term support. According to eCardWidget’s donor recognition guide, the size of your thank-you should always match the size of the donation—an email personalized with a donor’s name and gift amount is sufficient for a small contribution, while a major gift would warrant something like an annual report mention or inclusion on a donor wall.
• Create a recurring giving program. Recurring giving helps your organization bring in reliable monthly revenue while making donating more convenient through automation. Ensure your online donation processor supports recurring contributions, allows donors to convert their donation to a monthly gift with one click, and lets you suggest accessible but impactful giving amounts to encourage supporters to join your program.
• Communicate transparently about donors’ impact. In all of your impact-related communications (thank-you notes, annual reports, campaign follow-ups, etc.), clearly explain what individual donors’ contributions have allowed your nonprofit to accomplish. This transparency is especially important when reporting back to supporters who’ve designated their gifts for specific purposes to demonstrate that you’re allocating those funds as intended.

Although you might prioritize one or the other in the short term, donor acquisition and retention are both vital to your nonprofit’s long-term success. Use the tips in this guide to start developing your strategy for whichever process you’re choosing to focus on to achieve your current goals, and make sure to track your organization’s donor acquisition and donor retention rates so you can fine-tune your approach to both over time.