What's Wrong at the Top of Your Donor Funnel?

9 min read
January 30, 2025
What's Wrong at the Top of Your Donor Funnel?
14:34

I've hesitated to write this post, even though it's a topic I've discussed countless times with clients and our team.

I've been reluctant to say something publicly that might be misinterpreted — as criticizing one kind of agency, discrediting a type of fundraising, or advocating a single approach to philanthropy. That's not my intention.

But I've had this discussion so many times over the past two decades that I want to lay out my perspective in one place. So, here it is:

There's a problem at the top of your donor acquisition funnel.

The problem is that you're probably focusing too much on broadening it at the expense of cultivating the people already in it.

Let me explain.

Shouldn't We Just Spend More at the Top?

Recently, the Plenty team facilitated a donor journey workshop for a client — a large, well-run nonprofit with a strong track record in fundraising. Their philanthropy team is experienced, sophisticated, and well-resourced. But still, they grapple with the same questions that nearly every organization faces:

  • How do we get more donors?
  • How do we make acquisition more predictable?
  • How do we scale?

At the beginning of the sessions, one of the leaders in the room shared a core frustration: their direct mail donor acquisition campaigns typically see a response rate of about 0.5%. Email acquisition? Even lower. As good as their team is, they're still sending 200 pieces of mail to secure a single donor. That response rate is definitely on the low end for the industry, although not unheard of for acquisition campaigns.

Her report framed the context for the day. Does this approach work long-term? Are we chasing numbers instead of building relationships? How do we break from tradition and try something new?

For most of the workshop, we discussed how to lead from the front and try different tactics than they had tried in the past. It was a rich, deep discussion focused on meeting people where they are, understanding their needs, forging deep relationships, and building as personalized a partnership with donors as possible.

Good stuff — and a lot of work.

As we all grappled with how to implement the ideas, a team member paused and asked a question that hung in the room: "Wait. We just outlined a ton of new work we'd need to take on. 0.5% isn't fantastic, but it's predictable. Why wouldn't we just add to the money we spend at the top?"

It's a fair point. If mailing 10,000 pieces of direct mail attracts 50 new donors, why not double the investment to attract 100? Or triple it to get 150?

But here's the thing: it doesn't work that way.

 

It's Supposed to Be a Funnel

First things first, let's review the whole idea of a funnel. Over the last few years, many marketers have declared that the funnel model is outdated in a world of constant and varied touch points and nonlinear decision-making. While I find that discussion interesting and resonant, it is also largely academic. The funnel model isn't supposed to be a "real" thing – it's a model, a way of simplifying the world. And in practice, it is still widely used because it can be a helpful way of thinking about relationship-building.

The funnel is a model that maps the journey of potential supporters—from first becoming aware of your mission to eventually contributing to it. The idea is that this journey is a progression: You start by capturing someone's interest, engage them over time, and build a long-term relationship. Donors may make a gift at various points along the journey (not only at the bottom), but the core idea is that the relationship deepens along the way.

At its best, the funnel works as a sequence of intentional steps. You introduce your organization's purpose, nurture interest through storytelling and connection, and gradually invite participation—whether through a tour of your facility, a volunteer opportunity, an event, or a gift. As the donor journeys with you, how you interact and ask evolves and changes.

In theory, this process mirrors how we build trust in any relationship. We don't ask someone we just met to become our best friend. We start by getting to know each other, sharing stories, and investing time.

Unfortunately, many organizations inadvertently try to circumvent this process. Acquisition mailings intended to educate and introduce get twisted and confused by the temptation to "include a solicitation, too." We skip the "getting to know you" and go directly to "ask for money."

It's understandable. There's an urgency to fund our mission work. But sending a solicitation to a donor who barely knows you, let alone understands what you do and why it matters, is the equivalent of putting out the tin cup. It may effectively garner transactional donations but undermines the more extended, more authentic conversation we want and need to have.

The goal of a funnel isn't just to get more people to the bottom; it's to cultivate deeper engagement at every stage. When we short-circuit the process, we lose the chance to connect with donors in a meaningful way — and that's a missed opportunity for both the donor and the mission.

 

The Top of the Funnel Will Never Be Big Enough

There's a deeper problem, too. Blunty, the top of your funnel will never be big enough to sustain you.

Allow me to shift outside the nonprofit sector for a moment. A few years ago, I was talking with a friend who owns an IT consultancy. The conversation turned to marketing versus sales, and we both began to lament the time and money spent on mass marketing to grow the top of the funnel. Over the last decade, he said, it's well into hundreds of thousands of dollars. I could relate.

He said something that stuck with me. "The thing is, with the hit rate we get for people who come into us through mass digital marketing, the top of the funnel will never be big enough."

These same principles apply to fundraising, which isn't — or at least shouldn't be — a transactional event. For many donors, even small gifts (which may not be small to the donors!) are considered purchases. And the six and seven-figure gifts aren't going to come from your drip campaign, no matter how clever your subject lines are.

"But wait," you say. "Our conversion rate is way better than 0.5%. Ours is 2.5%." Sure, okay. Multiply that out. At a 2.5% response rate and your average donation amount, how many people would you need to mail or email, over and over again, to hit your goals? I can promise you it's a massive number of people. Eventually, working at the top of your funnel alone will never be enough to support your goals.

Even the venerable St. Jude, the exemplar of the potential of fundraising by mail, conducts over 34,000 regional events and programs nationwide each year to reach its community. Thirty-four thousand. That's a lot of personal touch. (Source.)

Eventually, you must build the ability to nurture the people you've acquired.

 

Diminishing Returns

Unfortunately, there's more. Acquisition costs don't rise linearly. The more you try to broaden your reach, the harder it is to find engaged prospects. You start sending messages to less interested audiences, paying for diminishing returns.

When I initially explain this dynamic to clients, it sounds counter-intuitive to them. We're used to seeing economies of scale. Discounts. Volume benefits.

These do exist, up to a certain inflection point. But after that, the incremental cost of each new donor starts rising, often significantly.

You can test this yourself quickly enough in the digital domain. But if you don't want to test it, you can intuitively think it through: If acquisition costs decreased incrementally with scale, there would be some large but finite dollar amount with which you could ensure that every person in the country becomes a donor. There would always be a positive ROI for acquisition. 

But the opposite happens. As you broaden your reach, finding new prospects and productive segments becomes harder; lists become less productive, and costs increase. Eventually, you have to turn to stewarding people you've already met.

Even when you successfully pour more people into the top, donors acquired through mass campaigns often remain transactional, never becoming long-term contributors. We've stuck the cup in their face, and their commitment to us mirrors the commitment we offered to them.

 

Hidden Costs

The real problem isn't just the size of the spend. It's the assumption that acquisition can continually scale while ignoring the deeper work of building relationships with donors already in your funnel.

There's a hidden cost to spray-and-pray campaigns. There's no model for the lost revenue that comes from irritating a potential or current donor with too many emails, tone-deaf solicitations, or wasteful mailings. (I've heard myself say that sentence so many times that I need to create the model.) If your conversion rate is 3%, what about the other 97% of people who don't donate to your campaign? Are they all potential targets for your next send?

No. Some percentage of the people who don't respond are going to become actively disengaged with your mission.

How many people are you pissing off? How many people are you teaching to automatically throw out your perfectly optimized letter before they open it?

1%? 10%?

 

Why the Top of the Funnel Is So Tempting

Let's be honest: working at the top of the funnel is exciting. It's fun to see numbers spike and to measure broad metrics like impressions, clicks, and opens. It's cool to think about branding, design, and outreach. It feels scientific to think about optimizing subject lines and running A/B tests.

But these metrics can be deceiving. Open rates don't tell you how many donors are genuinely impacted by what you do versus how many felt guilty walking past your outstretched hand. You don't know how many relationships you've built or how much sustainable growth you've created. You can't tell which donors really understand what you do and will ask their networks to support it, too.

Acquisition also feels easier to scale. For all its flaws, mail and email campaigns are finite — you send it, you track it, and you move on. Cultivating relationships, on the other hand, takes time, nuance, and patience. It isn't always easy to quantify the near-time results, and a good cultivation strategy requires that rarest of skills: patience.

 

The Overlooked Middle and Bottom of the Funnel

This brings us to the heart of the matter: relationships are the long game.

During the workshop I mentioned, we encouraged the team to think about the middle and bottom of their funnel: the donors they'd already engaged. Instead of focusing exclusively on acquisition, we challenged each other to prioritize cultivating meaningful relationships.

Here's what that looks like in practice:

  • Get out from behind the desk. None of the prospective donors you need to meet work in your office! They are out in the world. Meet them there. Spend time with donors, learning their passions and aspirations.
  • Invest in stewardship. Host events, send personal notes, and celebrate milestones. As content continues to proliferate, give the thing that's more and more unique: your presence.
  • Play the long game. Not every interaction needs to result in a gift. Building trust over time is what creates loyalty. Remember, engagement is a two-way process. Ask questions. Listen.

It isn't easy, but this work pays dividends: higher lifetime value, stronger loyalty, and, most importantly, more meaningful human connections.

 

Balancing the Funnel

"Wait! Are you saying we shouldn't do acquisition? Or use email? Or direct mail? That can't be right because in my CFRE class we…"

No. I'm not saying, "Don't do acquisition." And yes, mail can be very effective. So can email. 

What I'm saying is that it's about balance.

Acquisition gets donors into the funnel. Cultivation keeps them there. Here's how to think about balancing these efforts:

  • Sharing incredible stories of need and impact. Great campaigns don't just ask for money—they tell a compelling story, illustrate the impact of donations, and make the recipient feel like an essential part of the mission.
  • Measure engagement. Track how often donors engage with your mission, not just how much they give.
  • Ask, listen, segment, and personalize. When you use mail and email, think in terms of segments rather than broad messages. Set up systems to collect and track donors' interests and send them messages that build on those preferences.
  • Diversify and combine your tactics. Pair digital ads and mail with personalized outreach and stewardship events.
  • Invest in retention. Keeping existing donors is many times more cost-effective than constantly acquiring new ones. (It's also easier! You know exactly who you need to contact.)
  • Follow up! I know this is the nonprofit equivalent of "eat your broccoli, " but this is where all the action is. Engage with supporters, using thank-you notes, impact reports, and invitations to engage further.

 

The Invitation

If you're spending most of your time and budget to acquire more donors, I invite you to shift your focus. What if you redirected just 10% of that energy toward deepening relationships with your existing community?

Building relationships takes time, emotional intelligence, and patience. However, it's also incredibly rewarding to become friends with people who are as committed to your mission as you are.

The very successful CEO of a large community foundation executive recently told me, "I eat out for lunch every single workday of the year."

He means that he is building relationships all the time.

When he told me that, he wasn't complaining. He didn't look put upon, tired, or overworked; he was smiling broadly.

This person is superb at cultivating donor relationships, mainly because he regards them simply as "relationships."

The most successful organizations I've worked with don't just chase numbers. They play the long game. They invest in their communities. They build relationships.

They make friends.

And they create sustainable growth by becoming kindred spirits with the special people who believe in their mission.

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EXPLORING FURTHER

Move beyond the tin cup! Learn more about how to create broad-based campaigns that are engaging, interactive, and inspiring with our free Introduction to Peer-to-Peer Fundraising.

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And, to create an effective workshop that helps your team discuss the issues that matter most to build a plan you'll actually follow, learn more about Compass, our team alignment workshop

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