[NEW DATA] Donor Retention Is On The Rise!

There has been a lot of good news recently concerning nonprofit performance, but none as exciting as the 2014 Fundraising Effectiveness Project (FEP) Survey Report, just released by the Urban Institute and the Association of Fundraising Professionals.

The annual FEP Survey Report is one of the few (if not the only) such research study that consists entirely of actual donor data from thousands of nonprofit fundraising databases. There is no supposition or estimating whatsoever!

Key Findings From The 2014 Report

The 2014 report summarizes data from 3,576 survey respondents, covering year-to-year fundraising results for 2012-2013.

• Respondents raised over $2.44 billion from 2.2 million donors
• For every $100 gained, $92 was lost from lapsed donors and smaller gifts from current donors (up from negative $19 in 2009)
• For every 100 new and returning donors, 102 lapsed (a +3 improvement from last year’s report)
• 43% of 2012 donors made gifts to participating nonprofits in 2013 (up from 39% in last year’s report)

Median Donor Retention Rose For The First Time in Years!

Perhaps the most exciting statistic in the 2014 report (especially to us at Bloomerang) is that the median donor retention rate increased from 39% in 2012 to 43% in 2013. In addition, the dollar retention rate increased from 40% in 2012 to 46% in 2013. We have seen those metrics drop year after year.

While retention is on the rise, neither metric has ever been above 50% in the nine years that this study has been conducted. And when you compare those rates to customer retention rates in the for-profit sector, you see that our sector still has work to do.

However, this increase is still cause for celebration.

How To Improve Donor Retention

If you find your donor retention rates falling below-average, look no further than Professor Adrian Sargeant‘s proven tactics and steps for improving donor retention:

• Connect often (especially in the 90 days after a first-time gift)
• Share mission performance data often
• Segment your database (by gift size/frequency)
• Develop the donor relationship like a personal friendship
• Find and use numerous human connectors
• Always communicate what donations are used for
• Be personal!

Perhaps this year’s rise in retention is due in part to Dr. Sargeant’s advice going mainstream!

Retention Trumps Acquisition, Every Time

Working just as hard (or harder) to keep existing donors as you do to acquire new donors is the key to fundraising success. Just look at the gain-loss offset trends over the last few years:

From 2012-2013, every 100 new and recovered donors recruited was offset by 102 donors lost through attrition. This is the very definition of an acquisition treadmill. Given that acquisition costs much more than retention, it’s critical that your organization outperforms this data set.

The cumulative results of an ever increasing retention rate will yield geometric increases in dollars raised Consider focusing on the segment of your database that provides the majority of your funding. This group should receive frequent phone calls, personal handwritten notes and in-person visits.

Even if you dislike statistics or charts, do yourself a favor and read this recent FEP report. The findings are incredibly valuable to your future fundraising success!

For more donor retention and communications insights, be sure to join us for BloomCon!