Donor acquisition is crucial for ministries and nonprofits to thrive. Gaining new donors each year helps offset natural donor loss and expands your organization’s reach and impact. But how much does it really cost to bring a new donor on board?
The answer lies in a key fundraising metric called Donor Acquisition Cost (DAC).
What Is Donor Acquisition Cost (DAC)?
Donor Acquisition Cost is the average amount your organization spends to secure one new donor. Understanding this cost helps you measure the effectiveness of your fundraising campaigns and make better budgeting and strategy decisions.
How to Calculate DAC
The basic formula is simple:
DAC = Total Acquisition Costs ÷ Number of New Donors
To apply this, first determine your total acquisition costs. This may include:
- Advertising and media buys (digital, print, radio, etc.)
- Creative development (graphic design, copywriting)
- Marketing materials and outreach campaigns
- Technology platforms or CRM systems used for acquisition
- Staff time dedicated to acquisition efforts
Keep in mind: What is included may vary based on your organization’s structure. Be consistent and clear about which costs are counted.
Why DAC Matters
Tracking your DAC helps answer big questions:
- Are we spending too much to acquire donors?
- Is our outreach strategy bringing in high-value supporters?
- Should we adjust our campaigns for better ROI (return on investment)?
High DACs can signal that your efforts are too expensive—or that you need to focus on more targeted outreach. However, if those donors give large or repeated gifts over time, the high cost may be worth it.
Low DACs can mean your acquisition is efficient—but be cautious. If you are not investing enough, you may attract donors who are less engaged or unlikely to give again.
Find the Right Balance
DAC should always be viewed in context. Compare it with:
- Average gift size
- Donor retention rate
- Lifetime donor value
When you strike a healthy balance between acquisition cost and donor value, your ministry or nonprofit sets itself up for sustainable growth and long-term impact.
Do you need help developing and optimizing a winning donor acquisition strategy? Inspire Media Group would love to help you maximize your impact! CLICK HERE today.
Article courtesy of Infinity Concepts