I’m talking about the importance of continually prospecting for new donors.
Even in challenging economic times.
In fact, especially in challenging economic times.
Systematic acquisition efforts are key to your long-term growth and success. Without them, your organization risks stagnating or even shrinking.
The Power of Donor Acquisition
A little more than ten years ago, John Davis took charge of the Leadership Institute’s direct mail fundraising program. At the time, the Institute had about 10,000 active donors and was mailing 100,000 new-donor acquisition packages a year. That might sound impressive, but John and the team knew they could do more.
So, they did.
The direct mail prospecting program, a core component of the Leadership Institute’s long-term fundraising strategy, follows a classic pipeline approach:
- Smart acquisition efforts bring in first-time donors.
- Effective stewardship programs lead to repeat giving.
- Ongoing cultivation transforms annual donors into major and estate givers.
Simple, right? This is Fundraising 101. But the trick is maintaining the discipline and commitment to see this strategy through over time.
Aggressive Prospecting Pays Off
When John began in his role, Leadership Institute founder Morton Blackwell gave him a challenge: prioritize prospecting, even if it meant borrowing money to invest in donor acquisition. Morton’s conviction that donor acquisition was key to the organization’s future led to a significant increase in prospecting efforts.
Initially, the team ramped up from mailing 100,000 acquisition packages to 1,000,000 per year. By last year, the Leadership Institute had mailed more than 8,000,000 prospecting letters.
The results? They’ve grown from 10,000 active donors to nearly 100,000, and donor revenue jumped from $7 million to over $29 million annually. Last year alone, revenue increased by 44%.
Why Does This Work?
The Leadership Institute has demonstrated that it can recover its prospecting investment within two years. After that, renewals from these new donors provide an incredible stream of revenue. With consistent stewardship, donor giving increases year over year.
They plan their new-donor acquisition around recovering $0.50 for every $1 spent, and as long as they hit that target, they continue mailing at scale. Each year’s prospecting efforts build on the previous ones, creating a compounding growth effect.
The Importance of Prospecting in Tough Times
So, what does this mean for fundraising in difficult economic times?
It’s easy to see the short-term challenges—falling stock markets, rising interest rates, and general economic uncertainty. But the long-term strategy remains the same: systematic acquisition efforts ensure your organization’s future growth.
Leadership Institute’s approach has proven that steady, smart prospecting brings long-term revenue growth, even when the economic landscape looks rocky.
Stay tuned as we delve deeper into how large organizations like the Leadership Institute, American Target Advertising, and the Heritage Foundation navigate their fundraising efforts during challenging times.
