Nonprofit awareness campaigns: do the math

Sean Triner, writing at 101fundraising, asks an important question: Brand awareness is King! Or is it?.

Sean lays out several reasons you should think twice before spending money on awareness campaigns. The most important point is that it’s almost impossible to make the return on investment work for you with awareness campaigns:

Effective fundraising … actually raises awareness anyway. Because of the income associated with it, this usually makes it more effective than any non-fundraising awareness activity.

Let’s play this out with numbers:

Suppose you have an effective donor acquisition channel that brings in new donors at a break-even rate. That is, the total you raise in the acquisition campaign is the same that you spend on it. To make the math easy, let’s say it costs $50 for each new donor, and the average gift of these new donors is $50, yielding a 1:1 ROI.

Let’s say last year your budget for this acquisition channel was $500,000. You got 10,000 new donors. Those 10,000 people are very aware of your organization. And likely to give again.

This year, you have a new Marketing VP, a genius from the commercial sector, and he wants to reallocate your $500k spend so it’s $300,000 on fundraising and $200,000 on an awareness campaign. He makes the case that the awareness campaign will dramatically improve the the results of the fundraising campaign.

How likely is that?

A really well-built awareness campaign might improve fundraising by 10%. In that scenario, your fundraising campaign would bring in 6,600 new donors.

Not bad? Hold your horses. Those 600 donors cost $200,000. With their $50 average gift, that’s a net cost per donor of $333. Put the two campaigns together, and the picture is not quite as grim: You spent $26 for every new donor. That’s not so bad. But remember: You spent nothing for every new donor last year. And you got a lot more of them.

For the awareness campaign to be worthwhile, it would have to improve fundraising by 67%. If you’ve been in fundraising for more than a couple of years, you know how unlikely that is. And the reality is that most awareness campaigns make no measureable difference for fundraising campaigns.

The truth is, if you have limited resources, there’s almost no way you can justify spending them on awareness campaigns. Fundraising campaigns (assuming they’re effective) are the ultimate awareness vehicles.


Comments

2 responses to “Nonprofit awareness campaigns: do the math”

  1. And this is just one more reason why “marketing” and “development” should not be siloed in separate departments.

  2. And this is just one more reason why “marketing” and “development” should not be siloed in separate departments.

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Jeff BrooksJeff Brooks has been serving the nonprofit community for more than 35 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com. More.


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The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

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Jeff Brooks has been serving the nonprofit community for more than 30 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com.

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