Levers to nonprofit growth: Why “Retention Is Cheaper” May Lead Nonprofits Astray…(Pt. 2)
In Part 1, we walked through the math behind the familiar idea among nonprofits that retention is cheaper than acquisition and how that comparison is more sensitive to assumptions than it first appears. Using the Cost Per Dollar Raised metric to determine/evaluate strategy is tricky. In realizing that efficiency is not the same thing as growth, we should be sure that the efficient math doesn’t deter us from understanding growth drivers in our marketing, fundraising and development.
So, let’s step away from modeled metrics and look at what observational and empirical research says about how organizations grow.
What the research shows
Across decades of research, including work from the Ehrenberg-Bass Institute and captured in How Brands Grow by Byron Sharp, there’s a consistent pattern: growth tends to come from reaching more people, not just getting more from the people you already have.
That pattern shows up in nonprofits as well. Research into donor behavior suggests that most supporters give infrequently - often once or twice per year - while only a small group gives on a regular basis.¹ This distribution isn’t unusual; it’s a reflection of how participation tends to work across categories and geographies. Taken together, it leads to a simple way of thinking about it for nonprofits: retention maintains, acquisition grows.
What this means in practice
None of this makes retention unimportant. It matters, and for many organizations, loyal supporters are the foundation that keeps things stable over time. However, it does challenge the weight we place on retention as a path to growth.
When retention becomes the primary focus, it shifts attention toward a relatively small group of existing supporters. Over time, that can mean less investment in reaching new people and fewer opportunities to expand the base. At a very practical level, it’s worth remembering you can’t retain people who were never reached in the first place.
The real constraint might be simpler than we think
A lot of nonprofit strategy is built around the idea that the primary barrier is persuasion - getting people to care more, trust more, or feel more urgency. The research suggests something more fundamental.
In one study of charitable support, non-awareness was found to be 14 times higher than active rejection.² Most people weren’t choosing not to support a given organization; they simply didn’t know it existed. That reframes the challenge in a meaningful way. It’s not that people are unwilling. It’s that they’re unaware.
And even when people do know you…action isn’t guaranteed
Awareness alone, though, doesn’t ensure action.
When someone knows an organization and even intends to support it, that intention doesn’t always translate into behavior. Research shows that people frequently don’t follow through because of time, effort, or simple complexity. At the same time, people who didn’t initially plan to give sometimes do, often because something brought the organization to mind at the right moment.³
So there are really two constraints working at the same time: people don’t give because they don’t know you, and even when they do, small amounts of friction can stop them. Growth, therefore, depends not just on being known, but on being easy for potential donors to act on.
5 Levers of Growth
If you step back and connect this to Part 1, a clearer picture starts to form. The math suggests the gap between acquisition and retention may not be as wide or as certain as it’s often presented. And even if retention is more efficient, efficiency alone doesn’t determine growth.
At the same time, the research points in a consistent direction: organizations grow by reaching more people, not just by getting more from the people they already have. And layered into that, behavior research adds another important dimension: even when people are aware and willing, they don’t always act if the path is unclear or fraught with effort.³
So, what does all this mean in practice?
1. Reach is critical to a growth strategy
Reach isn’t just an output of campaigns. It’s a system to be built and something to plan for.
It’s easy to focus on response rates, conversion, or ROI from individual efforts. But growth is also a function of how many people encounter your organization in the first place. If more people need to know you before they can support you, then expanding reach has to be intentional.
2. Design for the many, not just the few
Most donors will never engage deeply or frequently, and that’s not necessarily a problem to solve.
Growth tends to come from a broad base of donors doing a little, rather than a small group doing a lot. So, the question shifts from how to deepen every relationship to how to make it easier for more people to participate at some level.
3. If you’re not remembered, you’re not chosen
If awareness is a key barrier, then distinctiveness and clarity start to matter more than perfection.
Being recognizable, easy to recall, and clear in what you do creates the conditions for support later on. People can’t choose you if they don’t think of you or are overwhelmed with deep mission and storytelling craft.
4. Reduce friction wherever you can
Even small amounts of effort or complexity can stop action. If well-intentioned supporters don’t follow through, simplifying the path matters. Fewer steps, clearer options, and more obvious next actions can have an outsized impact.
5. Balance, not trade-offs
This isn’t really an argument against retention. Retention plays an important role in maintaining stability and deepening connection. However, growth tends to come from bringing new people in. Both matter; they just do different jobs. I’ve read some academics refer to this as a “bar bell” approach – an idea that I’d like to explore further, later.
The acquisition vs. retention conversation often gets framed around efficiency using math that is based on a variety of assumptions. Growth isn’t just about doing things efficiently. It’s also about doing the right things, enough times, with enough people.
For many nonprofits, that means reaching more people, being easier to notice, and making it simpler to act. Because in the end, strong missions don’t grow because they are deeply understood by a few. They grow because they are known and supported by many.
I suspect this is a shift in perspective for many in our nonprofit community, and I’d welcome how others to share their perspectives or to reach out for further information. Thanks! Mike.
References - Part 2
Faulkner, M., Romaniuk, J., & Stern, P. (2016). New vs Frequent Donors: How Nonprofit Fundraising Mirrors Brand Loyalty Patterns. Australasian Marketing Journal.
Faulkner, M., Truong, Y., & Romaniuk, J. (2016). Barriers to Increasing Donor Support: Evidence on the Incidence and Nature of Brand Rejection. Nonprofit & Voluntary Sector Quarterly.
Nguyen, C., et al. (2022). Mind the Gap: The Intention–Behaviour Gap in Charitable Giving. Journal of Business Research.