High Donor Acquisition

From Jack Doyle, Amergent President & CEO

Today’s issue of ALLThingsDAF can be considered a two-fer—you know, when you get two really good outcomes for the price of one.

For a long time, the issue related to new donor acquisition had two sides—you were either in the camp for quantity or you were in the camp for quality. Many people didn’t consider that you could have both.

To produce a satisfactory outcome for more high value new donors, you need to combine several suitable strategies to target the right donor prospects, ask them for the right amounts, and create an expectation for ongoing giving. At the same time, you need to play “defense” in order to not include unsuitable prospects in an aggressive gift appeal, so they don’t form a bad opinion of your cause/approach.

Why is this subject in a blog on DAF donors? That’s the two-fer.

When you seek to acquire new donors with a DAF giving account, you will get two kinds of high value donors—ones with a giving account, and ones without. BOTH kinds of donors will be much higher in initial gift amount and lifetime value (LTV) than anything else you acquire by mail, so it’s a win-win.

Schwab Charitable (SC) launched a new web interface for its donors; in the past the donor was asked to fill-in any amount. Now the default settings for all SC donors is an array of amounts, e.g. $50, $100, $250, $500, and $1,000. I presume these are the most popular amounts among Schwab Charitable donors. (Coincidently, $100, $200, $500, and $1,000 were the top four unaided choices for first time gifts in Amergent DAF donor audits for all charitable sponsors.)

 

These same grant/gift size metrics will apply to the DAF donors at Fidelity Charitable.

With this information, you can create a working plan that applies the following strategies into a high value (HV) new donor approach:

  1. To find the right prospects within your net name prospect pool, ask your modeling partners and co-op partners to note which households have a history of multiple recent donations of $50 or more; add in HV customer data if available.
  2. Offline and online donor prospects should be part of this effort.
  3. Subtract prospect households from this campaign if there is evidence of a lot of recent gifts of less than $25.
  4. Support your ask array of $100, $250, $500, and $1,000 with suitable symbolic use of funds (expenses you need to address/cover immediately); feel free to test other ask arrays, but don’t ask for less than $100 and ask for $1,000 or more at the high end.

What to expect?

Well, you won’t find a lot of prospects who will qualify under these business rules. But you will get an extraordinary overall average gift. You won’t get a lot of new DAF donors, but the ones you find are likely to give an overall average gift 10 times the others’ average.

If two out of every 100 new high value donors use a DAF giving account, that’s good (they’ll have the impact of 20 donors over time).

Attribution will be a challenge.

You will need the high value new donor prospect finder file for multiple purposes, not just for attribution of the responder to the list source.

  • We need a clear accounting of responders by channel, responders whose gift came from a DAF charitable sponsor or community foundation, how many non-DAF online gifts came through the website, and how many direct mail (DM) gifts were returned.
  • All initial income needs to be rolled into the return on investment (ROI) and LTV projections, so hard credits as well as soft credits for the DAF grants.
  • Your modeling partners need response files for all responders, not just DM gifts.
  • We’re not in development to generate one gift; one major objective is creating new donor relationships of all sizes that will last a long time and be satisfying for the donor. Getting the largest HV new donor responders into the hands of the professionals with the best donor stewardship skills can make it especially good for the donors.

Here are some numbers from $100+ new donors to consider from four different clients:

  • Client A has been going after high value new donors for several years, and now they yield more than 10% of the names acquired at $100 or more; the HV donor average gift is more than five times greater than the overall average gift of all new donors. Net income generated from $100 new donors will represent 150% of their four-year net income, meaning the net funds support recovering the costs of low-dollar donors unable to recover their net cost to acquire. The TAKEAWAY: implement strategies to acquire one in ten new donors you can call “high value” – DAF donors and others.
  • Clients B, C, and D have adopted the high value approach and the outcomes represented here are from prior acquisition (ACQ) years two to four years ago. Consider their reaction when they learned:
    • About five percent of their new donors were giving $100 or more.
    • 60 percent of their four-year overall net income came from this five percent.
    • So why wouldn’t you want more of them?
    • The ratio of HV average gift to overall average wasn’t yet up to five in a couple of cases but will be with more HV gifts.
    • All of these examples had GREAT FY2020 ACQ outcomes and are doing well in FY2021. We expect great net income outcomes in three to four years.

Summary

Even if 90 percent of your new donors come in below $100 but 10% do give $100 or more initial gifts, you will achieve outstanding near- and long-term net income outcomes.

In 100% of all your ACQ outreach, you need to prominently encourage donors with DAF giving accounts to go schedule a grant to you as soon as possible and suggest that all you’re looking for at this time is $100, $200, $500, or $1,000.

P.S. Read about the exciting news Fidelity Charitable just announced about eliminating their minimum contribution!

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