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Jun 24, 2019

The Most Common Analysis

This year, we have been interviewing (and hiring) new analysts for our growing company. One of the candidates we were talking with recently asked us a great question: What is your most common ad-hoc analysis?

Anyone who has worked with nonprofit organizations is likely familiar with this one. And sadly, it’s killing nonprofits: The Stop Acquisition Analysis.

A healthy donor database requires a significant investment in acquiring new donors each and every year to replace the inevitable lapsing of current donors. We all have seen the LTV on new donors. An investment in new donors generally breaks even some time in year 2, and then those donors are profitable from year 3 onward.

The problem is that nonprofit boards of directors are oftentimes focused solely on the current fiscal year. When budgets are tight (when aren’t they?), the first place they look to cut their budget is new donor acquisition.

And thus, begins a descent into nonprofit hell.

With your data and our stats tools, we can put together an analysis of what the (bleak) revenue projection looks like when you stop acquisition. The lack of new donors will cause a decline in file size. A decline in file size results in a decline in revenue followed by a decline in the organization’s budget – which of course will lead to a cut in new donor acquisition the next year. And then, the descent into nonprofit hell accelerates.

One of my career goals is to see the day when the Stop Acquisition Analysis is not so popular. Until then, if you are fighting for your acquisition budget from a stingy BOD, then you may want to show them the revenue projections if they cut acquisition.

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