Over 4.3 million Aussies made a charitable donation to a registered Not-for-Profit in 2024. That is billions in potential funding floating around the industry that can go to hiring new talent, expanding buildings, or providing essential community services.
Receiving those funds is an entirely different story. Australian NFPs need to spend a little to garner more interest. The trick is minimising the donator acquisition cost as much as possible to maximise funding received. Here is a quick overview for measuring this metric.
What is NFP donator Acquisition?
The goal of donator acquisition is simple. It is all the tricks, processes, and marketing you might use to attract more donators and secure additional financial support. That could be the fee for a Mailchimp email campaign or hosting a massive gala with a silent auction.
The strategies used to gain more donators are not only for money. donator acquisition costs might also include what you use to cultivate stronger relationships. That could mean communicating an NFP’s mission or providing information on impact in the local community.
Working Out the donator Acquisition Rate
Getting those donators requires some effort and expense. That is where the donator acquisition rate comes into play. You are measuring how effective your fundraising efforts are based on a straightforward formula:
DAR = (New donators/Total donators) x 100
So, if you have 400 total donators and 80 of them are brand new, you will have a DAR of 20%. That is different than the donator acquisition cost (DAC). That requires this formula:
DAC = Total Acquisition Expenses / Number of New donators
For example, if you spent $4,000 on new marketing and outreach and end up with 100 new donators, you would have a DAC of $40.
Now, we look at the bigger picture. Most nonprofit sectors have a DAR of 1.5% to 3%. Your goal is to have as low a DAR as possible while spending as little as needed for any new donators.
How To Acquire the Right donators for Your Nonprofit
There is a caveat to all these metrics. Yes, you want as many donators as possible for your NFP, but there is a balance. Attracting one-time donators will give you a spike in funding for a year, but it won’t generate organisational resilience for the future.
A much better strategy is to shoot for good DAR and DAC metrics, while also cultivating long-term relationships over a proven outreach strategy. In time, that will help you achieve much higher acquisition rates.
Think about it this way. Not every NFP is the same. While having a wealthy family donate $5,000 for a singular mission, if they donate $500 every year and pass that tradition on to new generations, your revenue potential is much higher in the long term. You are creating a good funding source and stable relationships that you know you can count on when things get tough.
Solid donator Acquisition Strategies to Try
With a better understanding of donator acquisition, it’s time to implement some new strategies and best practices you can spread throughout your NFP.
SMART Goals
Start by setting SMART goals for any donator acquisition initiatives. Those mean developing goals that are:
- Specific
- Measurable
- Achievable
- Relevant
- Time-Bound
A good starting point is to increase your donator acquisition rate by 5% over the next year, so if you historically have a DAR of 1%, this year you want 6%.
Goals like these make it easier for everyone in your organisation to get on the same page. They can be clearly communicated to volunteers, current donators, clients, staff, and stakeholders. They can be used in your annual reports or impact statements.
Measure and Adapt
You must keep track of your DAR and DAC. If you have a piece of software for fundraising, make sure it tracks these two metrics, so they are clearly displayed on your dashboard. That information will allow you to make better data-driven decisions for the future and adapt to any shifting changes in real time.
Design Custom Strategies
As already said, no two NFPs are the same. A strategy that works for the Australian Wildlife Conservancy is unlikely to be effective for SevGen or the Bobby Gold Smith Foundation.
You need to use messaging and strategies based on the target donator you want to build a relationship with. It should mirror your branding, goals, mission, and NFP culture. Remember, it’s not just about acquiring the donator, but retaining them over the long term.
Wrapping Up
Running an NFP takes a lot of work and management. A good way to ensure you’re receiving the much-needed funding for mission-critical activities is to understand the donator acquisition rate and related costs for any efforts. Use these metrics in your decision-making and watch as you grow over the longer term.
For some NFPs, having a dashboard integrated into a “members only” section of a website is a great way to start. Using a modern, clean, and mobile-responsive website design ensures you can communicate any new donator acquisition messaging needed.
Our team at Web 105 is here to create the perfect website that boosts your NFP’s online presence. Give us a call today and let’s discuss how we can support your donator relationships.
FAQs
What is a reasonable donator acquisition rate?
Most NFPs would be happy with a DAR of 1.5% to 3%, but if you can get 5% or higher, you’re a marketing rockstar.
What is the donator cost?
This is the total cost of all expenses related to convincing a potential donator to make a gift to your Australian NFP (i.e., marketing, communication, fundraising events, emails, etc.).
How much is a usual donation?
This is hard to measure. Base it on your target donator’s biography. Most financial advisors recommend donating between 1% and 10% of monthly income. So, if your target donator has a monthly income of $10,000, you would expect a gift of $100 to $1,000.