As you may know already, I’m a big fan of Jeff Brooks and his Donor Power Blog.
Many thanks Jeff for his link to my post, “Fundraise Like it Was 2007!” I’m glad to know Jeff is reading and loving our content!
What does Jeff have to do with this post you ask? Well, Jeff’s latest contribution toFundraising Success Magazine is called“Choose Your Budget-Cut Battles Wisely”.
Jeff wisely notes that cutting back on donor acquisition budgets now will have long term financial effects lasting well into the years when the economy has stabilized and is growing again.
Cutting back on branding and advertising is a smarter move and here’s some of the reasons Jeff (and myself) happen to think that ‘s true…
“The hard-to-see truth is that donors grow more valuable to the organization every year they’re with you. Their responsiveness, retention, even their likelihood of upgrading their giving amounts — they all increase every year. Here’s how it plays out:”
- At the point of acquisition, you’re losing money.
- By the end of the first year, you’re breaking even among those new donors.
- The following year — your second with that group — you’re earning a 2-to-1 return from them.
- In the third year, your return rises to around 3-to-1. Starting to look good.
- The real payoff comes in the fourth and following years, when those established donors are returning $10 (or more) for every dollar you spend.
If you don’t get new donors this year, you won’t have second-year donors next year. More seriously, you won’t have fourth-year donors in four years. It’s as if those cuts leave a black hole in the middle of your donor base — a vacuum where there should have been responsive, committed donors.”
Thanks Jeff for your words of wisdom.
Yoav