Why New Non-profits Shouldn’t Use Direct Mail to Raise Start-up Capital.

By Alan Sharpe, CFRE
Be warned. If you’re starting a non-profit and don’t have $100,000 in the bank, don’t use direct mail. You literally cannot afford to use direct mail to raise funds right now.

Launching a new non-profit is like launching a new business. You need to spend money to make money. You cannot start a non-profit with no money any more than you can start a business with no money. You need to raise start-up capital somehow, but that somehow shouldn’t be direct mail fundraising letters. Here’s why.

Direct mail fundraising loses money initially
You should expect your first direct mail appeal to lose money. You are new. People don’t know you. You have no track record. Plus, direct mail donor acquisition mailings almost always lose money. They gain new donors, yes, but usually at a cost of spending $1.25 to raise $1.

I’ll say it again: “Donor acquisition mailings lose money.” This is the main reason that direct mail is ineffective at raising start-up capital from strangers for new ventures. The business case is actually the other way around. You need start-up capital to launch a direct mail program.

Direct mail fundraising requires a popular cause
Direct mail is an effective way to raise funds when you have a cause that has broad appeal, either locally or nationally, such as heart disease, sick children or abandoned pets. If you’re starting a small, obscure non-profit in a small town, don’t expect to even break even with direct mail. You won’t.

Here’s an example of what I mean. I received a phone call from a non-profit on the west coast that was in a financial crisis. So they intended to rent a mailing list of strangers and mail an appeal letter, soliciting a donation. Their cause? Temporary shelter for lost reptiles. I’m not making this up. This tiny non-profit provides homes to lost pet boa constrictors, lizards and other exotic reptilian pets until their owners can be found.

I think you’ll agree that this non-profit does not champion a cause that has popular appeal, excuse the pun. They are not going to raise much money or attract many donors with direct mail. Their area of operation is small and their cause is unpopular, if not detested.

Direct mail fundraising needs volume to be successful
You are not likely to operate a successful direct mail fundraising program if you have only a few hundred supporters. For one thing, you will not qualify for discounts on postage. And for another, your costs for hiring professional writers and designers will be prohibitive. Direct mail fundraising works best when you mail to tens of thousands of donors over time asking for small donations. Can you afford that as a new non-profit? Probably not.

Direct mail fundraising needs frequency to be successful
Direct mail fundraising usually works only when you mail at least eight times a year (four appeals and four newsletters). If you do not have money in the bank for that kind of mailing frequency, then direct mail is not the way to go for your new non-profit. Not yet, anyway.

In the meantime, check out these resources to learn more about direct mailing:

Mail Superiority. Learn the proven, step-by-step process for raising funds and friends cost effectively, year after year.

Handbook Number 20 Think Like Your Donors to Raise More Funds with Direct Mail Letters. Discover the secrets to building long-term, profitable relationships with your donors.