Awhile back I cited Ken Burnett’s article, 7 Things for Fundraisers to Do Now.

Today I want to focus on his recommendation #4:

Fundraisers make too many false economies because they have failed to adequately present the commercial case for investment in donor development. A hundred dollars invested wisely makes much more sense to donors than 50 dollars wasted. And we’ll get a better and safer return from investing our available funds in donor development than we would from any amount of reserves tied up in stocks and shares.

Amen.

Ken’s talking about donor development, where your numbers should be fairly reliable for calculating a return on investment. Heaps of testable ways to enhance lifetime value of existing donors/members.

But let’s go beyond that for a moment, and think about investing in donor prospecting. Think optimistically … at some point people will be more relaxed about their finances and ready to try new things. Hopefully that will spill over to reaching out to causes and charities they haven’t previously supported. How will you test and, with good fortune, capitalize upon that opportunity? Cautiously, I suppose.

However, here’s another possibility.

In a prior incarnation, I once had a prospect package that was doing gangbusters, with lots of outside list potential, coupled with a growing supply of online-generated names that were doing extremely well in the mail (integrated, multi-channel fundraising does work!). We looked at the numbers and decided we had a real case for substantially increasing our prospecting investment … beyond the budget that could be extracted from normal cash flow.

The organization had a decent-sized reserve fund. So we made the case to the business-minded Board members who watched over those funds. And we persuaded them to invest in expanding our prospecting program. As I recall, we showed them what the return would look like over a five year period. And our prospecting package delivered.

Sure, a lot of key elements came together here — strong prospecting package with legs, reliable prospecting and lifetime value projections, entrepreneurial CEO and Board members. Not a strategy for every organization.

But you don’t need to contemplate prospecting to reap the value of Ken’s recommendation. Notching up your renewal rate 5-10 points would do wonders for your fundraising program, wouldn’t it?

Look at that return against today’s “safe” return from your nonprofit’s investment portfolio!

Tom