The Secret to Raise Money More Cost-Effectively: Stop Fundraising

Greg Warner

March 13, 2024

The longer I work with nonprofits, the more convinced I become that one of my core beliefs is true:

If organizations ceased nearly all new-donor solicitations, they would be more financially efficient and would hardly lose any revenue.

Is that ‘hot take’ a bit too bold for you?

First, let’s clarify what I’m talking about, and what I’m not talking about, and then we’ll get to some examples and what to do instead.

Fundraising Waste

This is what I am talking about. Right now, most organizations spend lots of money trying to reach new, mostly low-dollar donors through ‘acquisition’ efforts. They do this using a variety of increasingly expensive methods such as:

• Direct mail
• Fundraising events
• Social media advertising
• Other digital advertising
• TV and radio advertising

Do these work? It depends on what you mean by ‘work’. Yes, you can find new donors using these methods. Yes, done well, you can even earn a positive return on investment, especially over time.

But you also have to consider the staff time, meetings, strategy sessions, and other efforts that go into creating campaigns like these. A lot of time, money, sweat, and stress go into these types of fundraising strategies. And for the most part, most of it gets no response.

In direct mail, 2% response is considered good. That means, you expect 98% of your mailings to go straight to the recycling bin. Is there a better way? Again, this can “work,” but it is massively inefficient. It is not cost-effective as a means of reaching new donors.

Why? Because most people don’t want to donate.

Nonprofit Marketing – You Need Some of It

Here’s what I’m not talking about. I’m not saying to shut down your website or cease all donor communication. I’m not saying to just sit there and hope people find you. And for newer, lesser-known organizations, my advice would be somewhat different.

Sending direct mail and email to existing donors and supporters should still have a role. I am speaking mostly about trying to solicit new donors from the masses.

How Much Should Nonprofits Spend on Fundraising?

This has been talked about for decades. There are entire organizations devoted to reporting on how much charities spend on fundraising. And these organizations’ metrics are generally not useful, because they oversimplify a complex question, and they focus people on the wrong issues – things other than your mission.

Some say you should spend no more than 10% of your budget on fundraising. Some say 15%. Some give a range, like 5-20%. It might depend on the age of the organization, the type of programs, or how fundraising sometimes integrates with programs and isn’t clearly distinguished from them.

We’re not going to get into all those weeds.

What I’m suggesting is a new idea:

What if you spent nothing trying to acquire new, low-dollar donors through direct marketing channels? What if you gave up trying to convince people who have never heard of you and weren’t looking for you to make a small, mostly one-time donation? After all, according to the Fundraising Report Card’s Benchmarks, only about 1 in 5 will ever give again anyway.

What should you do instead?

The Ideal World of Cost-Effective Fundraising

Your goal is not to shut down all of your direct response fundraising. In a perfect world, your goal would be to simply attract the people who already care about your cause.

Think about this – who are the easiest donors to win over?

It’s the people who already care about your cause! Most people already care about certain issues more than others. Their passion for these interests can arise from a number of places:

• Life experiences
• Family history
• Books and movies that impacted them
• Political and social issues that matter to them
• Values
• Religious beliefs

And for people who already care about your cause, getting them to donate doesn’t require sending them a mailing every month. What it does require is being known for what you do. Let’s look at some examples.

Example 1 – The College Donor

Colleges and universities are a great example of this because the distinctions between people are clear. First of all, will someone who did NOT attend a college be very likely to donate money to it? Of course not. Their life experience doesn’t align with your cause, at all. If I graduated from the University of Maryland, why would I give money to the University of Wisconsin? Practically nobody would do that.

But what about people who do graduate? Is that your donor pool?

Yes and no. Technically, yes, but practically, no. What do I mean? I mean that most alumni will never donate. Colleges pay fundraising people or use volunteers to call alumni, year after year after year, asking them to donate. They often use the strategy of asking for a particular amount, and then when the prospect resists, they lower the amount several times until it’s down to about four cents per month. Yes, I’m exaggerating a bit.

They send expensive annual program updates and university magazines to people who have never requested them. They track you down and find your new address when you move. They ‘spray and pray’ and persist at this for years.

But who are your best prospects who are likely to give the most? In most cases it’s people who already care and have assets to give. They want to help. They want to be involved. And they will either proactively reach out to you, or they will respond very quickly to your invitations.

A few email surveys sent to graduates will very quickly identify which alumni could ever become potential major donors – which is really what this is all about.

Example 2 – the Disease Donor

This group of donors gives money to hospitals. They also support scientific research that seeks cures for various diseases. And they support medical care for the poor, either in this country or internationally.

But why this disease? Why not all the other diseases?

Why would someone want to donate to help fight HIV in Benin? Why would they give money to breast cancer research? Who gives money to their local hospital, just for fun?

You already know the answer: They give because of some sort of personal connection or experience with that disease.

They may have dealt with it themselves. They may have a friend or relative who battled a particular ailment. An organization they are already part of, such as a church or business group, might be involved with a particular cause, and so the donor gets involved with it because of them. They may have traveled somewhere, not as a vacation, and had a profound life experience that motivates them to want to help the people from that place.

But how many people who have no connection to particular diseases are likely to give money to help fight that disease?

Practically no one.

Would someone whose son died of leukemia be a good candidate for donating to diabetes research? No!

The person who cares about a particular disease is already predisposed to get involved and become a donor. And they will either seek you out on their own initiative, or they will hear about the work you do and decide to get involved.

You can also reach out to such people and again use surveys to gauge potential interest, and start engaging with those who respond positively.

How to Engage New Donors in Cost-Effective Ways

So – how do you attract new donors without using traditional methods of solicitation?

I already gave the answer for colleges, since they have a pre-set potential donor pool. A few well-designed surveys will quickly weed out the alumni who will never donate, allowing you to focus on the ones who may. This is one of the primary tasks of MarketSmart’s lead generation software.

Hospitals and disease research organizations can do this too, as can arts-based nonprofits that have an existing audience of people who have paid to attend their productions.

But for many causes, it gets a little harder because you don’t have an organic email list of people to survey.

For these causes, here are three ways to attract new donors without having to spend gobs of money on donor acquisition.

Be Findable

You have a website, but what are you doing with it? If someone searches for ‘human trafficking organizations’, will your organization’s human trafficking website come up (or whatever primary words describe your nonprofit)? What if they search for ‘human trafficking organizations in Kansas City’, for local organizations?

For people who care about an issue enough that they decide, proactively, that they want to get involved, you want them to find you. That means not just having a website. It means producing smart content that will allow such people to find you when they search online.

What should you do to be findable by these people?

• Write website articles with titles that people like these might search for
• Produce consistent new articles for your site to increase your site traffic
• Stop listening to naysayers who declare “people won’t read all these words”

An organization spending thousands of dollars every month on mailings and other marketing could easily re-allocate some of that to producing one new article per week, and for far lower costs. If you do this, you will be found by people who want to find you.

Be Known

Next, get your stories out there. Engage with the media. Write guest columns in the local newspaper. Contact news reporters and become a source. Get quoted. Get a story done on you by the local TV news – which is always looking for feel-good stories.

If you start showing up in the public conversation, people who already care about your cause will see your organization’s name repeatedly. When they reach a point in their life where they want to start donating, who will they think of? Whichever organization’s name they already know.

For example, someone who cares about helping veterans will already be reading articles and watching videos about veterans issues. Whenever there’s a news report about something related to veterans, they will watch or read it.

Being known through media also increases your credibility. You will have already earned their trust.

If your organization’s name shows up in those reports with enough regularity, yours will be the one they think about when they decide to donate.

Be Engagable

When new potential supporters find your website – which is ultimately how just about anyone will first engage with your organization – what are you doing there to sustain that engagement and collect their information?

You need to appeal to their pre-existing interest and passion, and make it easy for them to get involved.

Not every future donor will donate right away, and you don’t need them to. What you’re looking for most are recurring and potential major donors. Your top goal at this point is to get their contact information.

Once you have that, you can begin sending them surveys and other engaging email content, just like colleges, hospitals, and arts organizations can already do with their existing databases.

How do you get their contact information?

You need more than just a bland web form. You need to make them interested and motivated to give you their email.

Use a video to tell a powerful story. Offer an eBook or other type of format with one of your best stories. Present information that is infused with emotion that will produce resonance in someone who cares about your cause.

And offer these assets in exchange for their email. Yes, you need to put some of it on the site without any barriers. But then, offer something more in exchange for their email.

The people who care about your cause will happily sign up. And once that happens, you can begin nurturing, qualifying, and cultivating them using surveys and other engagement fundraising methods.

Have an Email List of Supporters Already?

If you’re a large or mid-size nonprofit and you already have a sizable email list, but you don’t know how to identify or qualify potential major donors from that list, MarketSmart’s system was created specifically for organizations like yours.

Our system automates the process of donor discovery and donor engagement, so your gift officers don’t have to waste all their time chasing down bad leads, or performing tasks that software can do just as well.

Schedule a free demo and see how it works

Related Resources:

• How Fundraising Overcomplicated Philanthropic Facilitation
• 4 Primal Motives for Major Gifts – the REAL Reasons People Make Transformational Gifts
• How Many Major Donors Are You Overlooking Right Under Your Nose?
• Comfort Zones: The Places That Foster the Fullest Expressions of Philanthropy

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