Why is it so much harder for nonprofits to raise more funds online in 2023? – eJewish Philanthropy

Over the past decade, I’ve worked with nearly 100 nonprofit organizations that all have two things in common: they want to do more good and they need to attract new donors to do so.

The importance of attracting new donors is clear. Organizations lose approximately 20% of their existing donor base each year. If they don’t grow their donor base, it’s only a matter of time before they become irrelevant.

But a shift in the world of digital fundraising will soon transform the way nonprofits think about generating new revenue, requiring them to realign their outreach and marketing strategy.

Digital fundraising is a vital aspect of the nonprofit industry, enabling organizations to reach a wider audience and raise more funds than ever before. However, as the cost of customer acquisition increases, the future of digital fundraising is rapidly changing, forcing nonprofits to adapt and find new ways to attract donors.

Customer Acquisition Cost (CAC) is the cost organizations incur to acquire a new donor or supporter. These costs have steadily increased over the past decade, making it harder for nonprofit organizations to meet their fundraising goals.

According to a study conducted by Nonprofit Hub, the average CAC for nonprofits was around $93 in 2012, while it had increased to $141 in 2018, a 51% increase. I personally managed Facebook Ads campaigns with a budget of $30,000 in 2015, campaigns that are now $90,000 (increase in CPM rates / lower CTR rates), a 200% increase in CAC , which results in a much lower return on ad spend (ROAS).

What caused this dramatic increase in CAC?

As more nonprofit organizations turn to digital fundraising methods, competition for donor attention and support has increased, leading to increased demand and costs associated with attracting new donors.

The results for email marketing are no better. We’ve managed email marketing campaigns with leading Christian and Jewish media companies for over a decade. In 2013, 30% of subscribers opened the emails sent. Since then, email list open rates have dropped nearly 2% annually, making it harder for nonprofits to reach potential donors.

In summary, it is three times more difficult to recruit a new donor today than it was 10 years ago.

Quiet, Despite increased costs, nonprofit organizations must continue to prioritize customer acquisition as a key component of their fundraising strategies. However, the strategy to do this has to change.

What can nonprofits do to attract new donors in today’s challenging environment? Here are six suggestions and technologies for fundraising strategies to optimize CAC and maximize ROI:

1. crowdfunding and technology: Crowdfunding is a proven way to attract new donors at a low CAC. Focus on psychological nudges like social proof and many other hacks to get donors to donate more and encourage their friends to donate through a peer-to-peer campaign. This will ensure your CAC stays low as your donors become your ambassadors. Learn more about crowdfunding and donor psychology Here.
2. Go all out and focus heavily on customer retention: Call donors to thank you, send transparency emails every month, be personal in your emails, and leverage tech tools like GiveCloud’s AI platform that boost monthly donations by Suggest donors to make smaller ongoing donations instead of larger one-time donations. According to a study conducted by Nonprofit Hub, the average retention rate for new donors is 46%. This means that while nonprofits spend more money recruiting new donors, they also struggle to retain them. By working harder to engage new donors, organizations can increase revenue without increasing expenses. Jonah Halper, President of altruicity and author of Make appointments with your donors, a statistic shared that converting a one-time donor to a monthly donor resulted in a 42% increase in his annual donation. Additionally, the LTV (Life Time Value) of monthly donors is 5 years, far exceeding that of the 46% of donors who stay for a second year. According to Jonah, this should be the main focus of the campaigns, which not only leads to more funds, but also gives donors a sense of true partnership.
3. upsales: The increasing cost of recruiting donors can be offset by adding value to new donors through upsales. Gavi Zeitlin of Zeitlin Consulting LLC recommends nonprofit organizations offer a gift immediately to each new donor when they become a monthly affiliate or increase their giving level.
4. build relationships: There is so much noise on the internet these days that many potential donors are becoming blind to marketing emails, ads and influencer videos. But it’s hard to forget your friends. Israel365 has invested in running events like this Orlando NRB Night Celebrating Israel’s 75th Anniversary to build real relationships with potential partners. By focusing on offline relationship building to complement your online efforts, you increase the value of your donors and justify higher customer acquisition costs.
5. Focus on awareness and engagement campaigns and REPEAT your message: Is it better to reach the same 100,000 subscribers 5 times or 5 groups of 100,000 subscribers once? A Recent study has shown that when trying to reach new audiences, it is better to reach the same 100,000 subscribers five times with a repeated message to influence new donors than to reach five separate groups with a one-time message. One suggestion from theprospectingengine.com’s Yoni Apler is to proactively create good content — like videos and podcasts related to your area of ​​expertise — that is separate from fundraising requests and establishes the organization as an authority over time.
6. Optimize your messages: To get better results, it is important to optimize your messages. A compelling message can have a significant impact and go viral, while a difficult request may require increasing amounts of money to promote. Itai Schimmel, CEO and Founder of Artza, an organization that supports small businesses and charities in Israel while maintaining connections with its people, history and stories, emphasizes the importance of constantly creating and testing new content to find the ones that matter the most resonate. Innovative messaging can lower the cost of customer acquisition by increasing response and conversion rates.

Digital fundraising is changing and nonprofits must adapt to the rising cost of customer acquisition to remain competitive. By harnessing the power of crowdfunding, customer engagement, personal connections, and time to educate the marketplace, nonprofits can reach broader audiences, attract new donors, and meet their fundraising goals while minimizing costs.

Shlomo Schreibman is a Licensed Industrial and Organizational Psychologist who serves as the Sales and Marketing Director for Israel365 Media. He writes and lectures on topics in psychology, digital marketing, and Judeo-Christian relations. Shlomo advises some of Israel’s largest corporations and NGOs on their marketing strategy focused on pro-Israel evangelical Christians.