NEW NAME PROSPECTING: YOUR INVESTMENT IN

“PRECIOUS GEMS”

Mark Etling

Donor Development Manager

Missionary Association of Mary Immaculate

Belleville, Illinois

The “double whammy” in fundraising today:

-Shrinking active donor files

-Shrinking prospecting budgets

The temptation: drastically reduce or cut prospecting for short-term growth in net revenue:

-Looks good after Year 1

-Ends up bad in Years 2, 3, etc.

Two bottom lines - Dollars and Donors

-Net revenue: money that goes year by year to the Province, Motherhouse.

-Donor file: an extremely valuable asset; worth millions of dollars over time.

How much prospecting is enough?

-Short-term loss vs. long-term gain

Method 1: Prospecting to a budgeted dollar

amount

Budgeted loss: $200,000 Cost per new name: $20 New names added to file: 10,000

The problem with Method 1: Not enough new names

Active donors, 7/1/2015: 80,000Multi-year donor retention: 70%Active donors, 6/30/16: 56,000Active donors, new names included: 66,000 Active file shrinkage: 17.5%

Method 2: Prospecting to a budgeted donor file

size

Active donors, 7/1/15: 80,000Multi-year donor retention: 70%Active donors, 6/30/16: 56,000New donors needed for 0% growth: 24,000Prospecting loss @ $20/new name: $480,000

How do you recover the first-year loss?

In long-term donor value:

5,000 new donors @ $100 LTV = $500,00024,000 new donors @ $75 LTV = $1,800,000

What about cost to mail?

Assume: 12 mailings per year @ .60 per mailing over 5 years. Cost to mail = $36 per donor.

5,000 new donors @ $36 per donor = $180,000$500,000 revenue - $180,000 = $320,000 net.

24,000 new donors @ $36 per donor = $864,000$1,800,000 - $864,000 = $936,000 net.

Even when cost to mail is factored in, you still come out ahead.

Where to begin:

-Establish a goal: how many active donors do you want at the end of the fiscal year?

-How many new names do you need to reach your goal? Remember to factor in donor attrition.

-Build your mail plan to meet your goal.

And of course:

-Don’t forget about donor reactivation.

Some suggestions to improve new name

prospecting

#1. Co-ops – to expand the universe of potential new donors.

#2. Don’t suppress your lapsed names forever in the merge-purge.

#3. Make your donors available for exchange.

-Name protection is a myth – your donors are giving to other organizations.

#4. Mail to “super-dupes” – donors who are lapsed to your file, but are giving to two or more other organizations.

What’s working for you?

Thank you!