What’s going on? That’s the question that has fundraisers everywhere scratching their heads.
Donor retention over the past decade has been abysmal.
It’s probably the biggest problem you have, though it may not be where your efforts are currently focused.
It’s time to refocus. Because all that hard work you put into acquiring new donors is, effectively, being wasted.
The Data on Donor Retention
The 2017 Fundraising Effectiveness Survey Report revealed charities are losing donors almost as fast as they can find them. Every 100 donors gained was offset by 99 lost through attrition. Whoa! Equally bleak, every $100 gained was offset by $96 lost.
So, if you’re only counting dollars raised (and ignoring those lost) and/or numbers of new donors acquired (and ignoring those you don’t renew), you’re blinding yourself to the problem.
Net/net, despite all your hard work, you’re barely treading water. It’s time to stop just working hard and start working smart. Here are 3 common sense strategies to make your work pay off!
1. Figure out Your Donation Retention Rates
Too many nonprofits simply don’t track how many donors and/or gifts they’re renewing. Whenever I make a presentation before a group of nonprofits, I ask how many folks know their retention rates for new, ongoing and overall donors. I’m always surprised by how many folks don’t raise their hands. Some folks say they could look them up (could you?), while others say they couldn’t even do that.
I’m sure you’ve heard the adage “What gets measured gets done.”
It’s true. In spades.
If you don’t have a current system and infrastructure in place that enables you to track your retention rates, and compare this year with previous years and with average national benchmarks, put this in your plan for the coming year. Otherwise, you’re operating blindly. You can’t know if your results are good, bad or indifferent.
Here are the key metrics you want to be able to track, both for numbers of donors and for numbers/sizes of donations:
- First-time retention
- Ongoing retention
- Overall retention
- Lapse rate (donors who gave last year but not this)
- Recapture rate (donors who lapsed last year, but who gave again this year)
- Upgrade rate (donors who made larger gifts this year)
- Downgrade rate (donors who made smaller gifts this year)
- Average gift size
- Numbers of donors at different giving levels (commonly under $100; $100 – 249; $250-499; $500 – 999; $1,000 – 2,499; $2,500 – 4,999; $5,000 – 9,999; $10,000+)
2. Plan Ahead for How to Increase Donor Retention
Once you know your numbers, you can build a plan that builds on your strengths and addresses your weaknesses. If you’re at all like the average nonprofit, you’re losing about 77% of first-time donors. That’s a big weakness. It means your one-time donors are not feeling satisfied by their experience with you. Uh, oh!
I recommend putting a donor acknowledgment plan in writing.
If you don’t make your gratitude practice intentional, you’ll likely get around to it as time allows. Which means thanking donors becomes a back-burner strategy. Instead, it should be a core strategy. In fact, donor retention is one of the 3 key goals for your non-profit's donor stewardship program.
Here are the key things your donor gratitude plan should include:
- How quickly thank you letters will get mailed (I recommend 48-hour turn-around)
- What elements will be included in your thank you (e.g., one-sentence opener; brief impact story; tax deduction info; contact info; testimonials from folks helped)
- Who will receive additional hand-written notes (e.g., gifts above a certain amount; volunteers; board; alumni, etc.)
- Who will receive thank you phone calls
- Whether acknowledgements for online gifts will differ (i.e., will those who receive an immediate online receipt also receive a mailed thank you? I recommend it!)
- Who will be responsible for all aspects of the plan
3. Work Your Donor Retention Plan by Every Segment
Too often nonprofits don’t really try to retain donors who aren’t major donors. The truth is that many leaders (executive directors and board presidents) don’t care much about the ‘little folk’ who give them only 3 – 20% of their goal. They’d rather put energy into acquiring one more major donor than into retaining 10% more of their smaller donors. And there’s merit in this philosophy. Quality generally beats quantity (but not always — especially if you’re a multi-national emergency relief organization).
Dr. Adrian Sargeant has shown that a 10% increase in overall donor retention can result in a 200% increase in the lifetime value of your donor base. This may mean very little to many people in your nonprofit TODAY. Yet the future will be here before you know it.
Plus smaller donors can often be a gateway to increasing levels of support. Sadly, in their focus on the day-to-day, too few nonprofits consider the fact that often it’s the small, consistent donors who are the folks who leave bequests!
Being a non-major donor doesn’t mean you don’t have capacity to give more (especially if you own a house and die without heirs). Many, many bequests come from folks who shock the heck out of their beneficiaries. One charity I worked for got one to the tune of $4.2 million. So put that in your ‘these-donors-are not–worth-stewarding’ pipe and smoke it!
The Bottom Line on Donor Retention
You’ve worked hard to acquire each and every one of your donors. It just makes sense to put in place a smart, strategic plan to build their loyalty over time.
With so much competition for philanthropy, and most donors giving larger gifts to fewer organizations, placing a greater focus on developing long-term supporters who return year after year and increase their giving over time is just common sense.
About the Author
Claire Axelrad is a well-respected fundraising consultant, author and speaker and the founder of Clairification. She has over 30 years experience helping non-profits build cultures of philanthropy, not fundraising.
Photo Credit: Aidan Morgan