Should I Prioritize New or Existing Donors?
It's a question we all have to reckon with: Should I prioritize new or existing donors? In this post, we're going to help you break it down so you can decide what's best for your organization.
Now, we can't (and won't) tell you WHAT to do, but we can tell you WHY we strongly suggest prioritizing existing donors. Even though we know that acquiring new donors is a necessary and valuable part of any fundraising strategy.
One great way to answer this question of prioritization for YOUR organization is by measuring your donor acquisition cost and comparing it with how much is they are currently bringing in.
What happens when you prioritize new donors?
Before we begin, we must understand Donor Acquisition Cost.
Donor acquisition cost (DAC) is the price you pay to convince a potential donor to make a gift to your organization. This can include things like the cost of marketing and advertising and donor incentives and rewards expenses, as well as the cost of staff and other overhead expenses. What exactly you include depends on your organization.
Therefore an important metric to consider when evaluating or establishing your fundraising budget each year. It can include things like the cost of marketing/advertising your appeals, donor incentives & rewards expenses, include the cost of staff salaries and other overhead expenses, etc.
Two big things to consider when looking at donor acquisition cost
There are three big things we need to know when it comes to looks at your DAC.
- How much are you spending in total?
- How many donors do you have in your database?
With those numbers known you can divide A by B to identify your DAC.
Feel free to use the tools below to help calculate your DAC.
When we break these metrics down, it becomes a lot easier to see where we stand and where we should head next. Once you've calculated your DAC, take the time to ask yourself what insights you can glean from it. Perhaps you've realized that you're spending too much to acquire new donors while you have a database of untouched donors that are likely to donate if you asked?
Now, let's consider the other side of the coin.
Why prioritizing existing donors is important
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