Why is this happening? How come only 1 out of every 10 first year donors stays loyal to your NPO and gives in the second year? Most of you reading this know I have been involved with helping fundraisers for three decades. I have watched this dip lower and lower over those years. I believe there are definite reasons why.
On the other hand, I have watched fundraising events, especially those with peer to peer sponsorships grow bigger and bigger every year. Is there a correlation? I personally think there is.
Perhaps the fact that these events, which have been revolutionized with technology tools who have made it literally a few clicks of the mouse easy to solicit one’s friends and family and allow more and more of the average NPO’s annual budget to be covered, is masking the tragedy that happens the second year with all of those new found donors.
Let me pose a key question:
Are those new donors loyal to the friend or family member who solicited them or to your charity?
That is a hard question to truthfully answer for some fundraisers.
Who can blame many fundraisers, if for instance their task is to raise one million dollars and a key event or two achieves 90% of that budget number; why worry about all of the extra effort needed to build truly strong personal relationships. Heck, building strong personal relationships requires a ton of phone calls, face to face meetings, handwritten notes and plotting step by step plans! If deep down you are not an outgoing person, this is hard work, which has many setbacks and few rewards at first.
However, the peer to peer solicitations and other events like galas and golf tournaments, which bring an influx of new donors, just do not lead to DONOR RETENTION unless those extra efforts are made. If they are not made, we have created a never ending treadmill of bringing donors in the front door and watching them exit the back door almost as quickly as they came.
Hence the 10% RETENTION RATE of 1st year donors for most charities. In addition, I do not think we know the long term consequences of not finding the future major donors needed to sustain most NPO missions.
It is not uncommon for the top 10% of the donors of any NPO to be supplying 90% of the funds raised before event fundraising moves the 90% downward. What if over the next 20 years the 90% ATTRITION RATE of New Donors makes finding major donors and legacy donors much more difficult than it is now?
What if NPO’s move to this new model and the flow of first year event donors falls drastically off? (My hunch tells me from watching my kids and their attitudes that today’s 20 and 30 year olds may not respond to peer pressure to attend a gala like those of us in our 50’s and 60’s do now.)
Thankfully, my next hunch may provide an answer every NPO facing this dilemma may want to hear.
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. Prior to Bloomerang, he was the CEO and Co-Founder of eTapestry for 11 years, which at the time was the leading SaaS technology company serving the charity sector. Jay and his team grew the company to more than 10,000 nonprofit clients, charting a decade of record growth. Prior to starting eTapestry, Jay served 14 years as President and CEO of Master Software Corporation. MSC provided a widely used family of database products for the non-profit sector called Fund-Master. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman. Jay is also the author of Stay Together: How to Encourage a Lifetime of Donor Loyalty.