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What is Cost Per Donor (CPD)?

Definition Cost Per Donor (CPD), often referred to as Donor Acquisition Cost (DAC), is a fundraising metric used by nonprofits and charities. It calculates the cost of convincing one new person to make a donation to your cause. Unlike business metrics, this focuses on philanthropic support rather than sales.

The Formula To calculate CPD, divide the total costs associated with a fundraising campaign or appeal by the number of new donors who contributed.

Formula: Cost Per Donor = Total Campaign Costs / Total New Donors

Example Calculation Your organization sends out a direct mail appeal. The printing and postage costs total $5,000. From this mailing, you receive donations from 100 people who have never given before.

  • Total Cost: $5,000

  • New Donors: 100

  • Result: $5,000 / 100 = $50 Cost Per Donor.

Why CPD is Important Nonprofits must be transparent about how efficient they are with money. CPD helps organizations budget for growth. It is important to note that acquiring new donors is almost always expensive. It is common for the Cost Per Donor to be higher than the first donation amount.

The "Loss Leader" Strategy In the nonprofit world, it is generally acceptable to spend $1.00 to $1.25 to acquire a new donor. This means you might "lose" money on the first transaction. The goal is not immediate profit, but Donor Lifetime Value. If you spend $50 to acquire a donor who gives $20/month for five years, the initial cost was a wise investment.

How to Improve Your CPD

  1. Focus on Monthly Giving: Encourage smaller, recurring monthly gifts rather than one-time donations. This increases the lifetime value of the donor significantly.

  2. Peer-to-Peer Fundraising: Encourage your existing supporters to start their own fundraisers (e.g., birthday campaigns). The cost to acquire these new donors is often near zero because your supporters do the marketing for you.

  3. Storytelling: Donors give to people, not organizations. Ensure your campaign materials feature compelling, emotional stories about the specific individuals or animals your organization helps.