Donor acquisition is the process by which nonprofits attract new financial supporters who are passionate about their mission, usually through storytelling, networking, and prospect research.

Today’s nonprofit organizations typically find new donors to support their cause through several different methods (often using more than one method concurrently):

• Multichannel engagement
• Fundraising events
• Crowdfunding campaigns
• Networking through volunteers and board members
• Prospect research and wealth data (using public records and predictive analytics to target ideal donors)
• Paid social media ads

First, you will want to determine the number of new donors you acquired over a specific period of time – whether it’s the last month, the last year, or all-time. Then, divide that number by the total number of donors you had at the end of that period (including new ones). Multiply your result by 100 to get a percentage, and that’s your donor acquisition rate.

Acquisition costs are calculated by dividing the amount spent finding new donors by the number of new donors acquired. You will also want to take into account your return on ad spend (ROAS) by dividing the amount of revenue you gained by the overall campaign cost. To calculate retention costs, divide the amount spent by the number of donors retained.

Many fundraisers maintain that it is less expensive to keep a donor you already have than to acquire a new one. However, many nonprofits have been successful in acquiring and retaining new donors at the same time by spotlighting their monthly giving program.

The cost of acquiring a new donor will vary depending on a few factors: your communication channel, your nonprofit sector, whether or not your organization pays for advertising, and your donors’ lifetime value.

Here are some examples:

• Communication channels – Most social media platforms are free for nonprofits, while direct mail is one of the most expensive channels, often costing nonprofits more than $1 for every $1 they raise.
• Nonprofit sectors and paid advertising – For organizations using paid advertising, M+R Benchmarks reported the following in 2023: “On average, nonprofits spent $3.41 to acquire one new lead. Public Media nonprofits spent $16 on search to generate a single gift — and $469 per donation on Meta platforms (i.e. Facebook and Instagram). For Wildlife/Animal Welfare nonprofits, cost per donation was $40 for search, $70 for Meta, and $152 for display advertising.”
• Donor lifetime value – This is the average contribution your donors will make over a lifetime of engaging with your nonprofit. Acquisition costs may seem high at first, but as new donors continue to donate, your organization becomes more likely to receive a positive return on its investment. To calculate your donor lifetime value, multiply your average donor lifespan by your average donation amount and frequency.