publication date: Aug 18, 2011
author/source: Alan Sharpe
Read through the diaries of the pioneers who settled the
Western parts of Canada and the United States and you'll discover that the most
desperate act of hunger was to eat your seed corn. Eating your seed corn sealed
your death, even though it prolonged your life for a while.
Charities today are making the same deadly mistake.
What is seed corn? Seed corn looks like popping corn - hard,
yellow kernels. You plant corn by placing the kernels in the ground one at a
time and covering them with soil. Then you wait months for the kernels to
sprout, grow into stalks and bear ears that you harvest and eat.
can't be reduced
One kernel of seed corn produces one stalk, which produces
at least one ear, which contains around 500 kernels. So if you plant one
kernel, you harvest at least 500 kernels. That's a good return on investment.
But to reap the harvest, you have to plant the seed corn. And you have to wait
for the results.
The dangerous thing about seed corn is that you can eat it
instead of planting it. In pioneer days, a desperate, starving family would
divide the hard kernels of seed corn and eat them, knowing they were destroying
their hope for the coming season. They prolonged their lives for a while at the
expense of their future.
Some boards of directors, scared of spending money in 2011's
near-recession, are instructing their charities to cut budgets for donor
acquisition. Some boards are demanding that all donor acquisition activity
cease until the economy improves. "We can't spend money now hoping for a return
tomorrow," they say.
They are eating their seed corn. Here's why.
Your donor file will shrink
If your charity is normal, the percentage of active donors
in your database shrinks by up to 15% each year. The average rate of attrition
Donor attrition is a fact of life (or a fact of death,
depending on how you look at it) at every nonprofit organization. Donors move,
lose their jobs, divorce, retire or die. This inevitable, weekly, natural donor
attrition is the main reason you must invest money in donor acquisition each
year. If you cut acquisition, the number of active donors in your database will
shrink every year. Guaranteed.
You will lose money
Boards of directors slash or eliminate donor acquisition
budgets because they're misguided. They think reducing spending saves money.
Well, cutting donor acquisition does save money in the short-term. But wait a
year and see what happens.
A year later your revenue will plummet. That's because for
every current donor you lose, you lose revenue. And for every new donor you
should have acquired, but didn't because you eliminated donor acquisition, you
A year later, at least 7% of your donors will have stopped
giving, and you'll notice that your bottom line will be smaller. Two, three,
four or five years later, the missing income from all the new donors you never
acquired will be as obvious as a FORECLOSURE sign stapled to your front door.
Your lifetime donor value will suffer
How much is each lost donor worth? Find out by calculating
how much a typical donor gives to your charity during the donor's lifetime. It's
likely to be hundreds of dollars, or in some cases, thousands. How many of
these donors are you willing to lose each week without replacing them?
The donor that you don't acquire today won't respond to your
most successful direct mail appeals. She won't join your monthly giving program
in two years. She won't give you a major gift in eight years. She won't leave
you a bequest in her will when she passes away.
The majority of donors who join monthly giving programs,
make major gifts and leave bequests are annual donors. Most were acquired
through direct mail. They have a high lifetime value only because they gave
that first new gift. If you don't get that first gift, you don't get the new
donor. And if you don't get the new donor, you don't get any of the revenue
Your mission will suffer without new donors
Net income is the only income you can use to carry out your
mission. The higher it is, the more you can do to improve the world. Every time
you lose a donor, your capacity to bring about meaningful change diminishes.
Every time you acquire a new donor, it increases.
If you want your donor file to grow, if you want your
revenue from monthly gifts, major gifts and bequests to grow, if you want to
continue transforming lives, you must invest in donor acquisition every year.
You must plant your seed corn.
is a fundraising practitioner, author, trainer and speaker. Through his weekly
email newsletter, books, handbooks and workshops, Alan helps nonprofit
organizations worldwide to acquire more donors, raise more funds and build
stronger relationships. Alan is the senior strategist at Harvey McKinnon Associates. For more information or to contact him,