Cover Your Acquisition Costs Through Recurring Donations

What’s your strategy to create ongoing engagements with donors?

I recently had a great conversation with Tim Sarrantonio from Neon One during which he mentioned that nonprofit research data suggest that it typically costs $1.25 to bring in that first $1 in donations.

That means that more work needs to be done to turn that first dollar you receive into a long-term relationship to cover your audience acquisition cost (called “customer acquisition cost” or CAC in the for-profit world).

One tactic to employ here would be to encourage donors to set up a monthly, recurring donation at the onset. Encouraging monthly investments of a smaller amount per month enables you to do several things:

  1. Reframe the conversation to one that is easily grasped and acted upon. Example: “Your monthly donation of $5 is less than the cost of one trip to Starbucks and feeds one hungry student a healthy meal.” That changes the conversation to focus on the benefits of your stakeholder’s investment and how a little goes a really long way toward doing some good for the world.
  2. Increase your yield over a given year. It’s often far easier to ask for a monthly $10 lift than a one-time $100 investment. People just come at those two numbers from a significantly different perspective when approached with the options. Even though a $10/month investment in your organization amounts to more than the $100 ask over the course of the year, people have a different emotional response to each of these requests.
  3. It builds your list. When you can attract and bond with more people, you have more opportunities to inspire them to be stewards and promoters of your organization. Increasing the number of engaged stakeholders improves your ability to get your message out to an even wider audience and gives you a bigger pond in which to fish for additional, ongoing engagement.
  4. It gives you opportunities to escalate. I started out as a small, monthly donor to a number of organizations who, over the years, have increased my investment simply by asking for a little more over the lifetime of my engagement. $15/month can easily be upped to $20, then $22.50, etc. One year, we were even in the position to provide a larger, one-time donation. Once people are part of your “team” they tend to stay there and if you do a good job of nurturing them, their involvement can grow.

Need some help turning that $1.25 investment you have made in your stakeholders into more than just $1? Give us a shout.