Thank You Letters: the Springboard of Donor Retention

One of the most obvious methods of improving donor retention is often taken for granted: a proper thank you of any gift received from any donor. The thank you letter is so important that it should be considered the “springboard” of building donor retention improvement!

Sad But True Story of Donor Acknowledgement

Over the last 30 years I have had the personal pleasure of helping in some manner over 20,000 nonprofit organizations implement new and improved fundraising databases. I often revisit customers whenever I am in their particular area of the country. This is especially true for those I assisted first hand with their implementation.

On more than one occasion, I have returned to visit a customer who has been using the fundraising database for over five years to find the following as it relates to thank you letters being created by the system:

• The letter has not been updated since the time of implementation or
• Even if updated once a year, the same letter is sent to every donor even if:
  • They are a 1st time donor
  • They are a returning donor
  • They are a major donor
  • They brought other donors in
  • They are a lapsed donor returning

As you might guess, it is hard to make any of the donors feel truly special based upon this scenario.

Basic Guidelines for Donor Thank You Letters

I recently found this handy cheat sheet from the Council of Nonprofits outlining the basic guidelines for donor acknowledgement processes. Here is the link

Here is one of the sections of their chart. All gift acknowledgements should contain:

1. A statement that the nonprofit is a charity recognized as tax-exempt by the IRS under Section 501(c)(3); The amount donated (if cash or cash equivalents); or
2. A description of the property donated (it is best not to assign the property any cash value in your letter);
3. The date the donation was received
4. A statement whether or not your organization provided any goods or services in return for the donation, such as, “No goods or services were received in return for this gift” or
5. If the gift was of $75 or more and the nonprofit did provide something of more than insubstantial benefit in return for the gift, (such as tickets to a special event or a dinner) then the charity must include a good faith estimate of the value of the goods/services provided (such as the market value of tickets to the event or the actual cost of the dinner – even if it was donated to the charity.)

Notice how little emotion each of the above criteria brings to the table? Together they fulfill the legal and tax requirements, but if left alone the criteria may actually move any bonding with the donor in the opposite direction any charity would desire!

Truly strong relationships are based upon emotional bonds. Is there any place better to start such a bond than in the process of thanking the donor for the first gift? It is even more important to reach out and create such a bond if it gift after the first! The donor has moved beyond a casual acquaintance and is offering to be a long term supporter and friend of your organization. Let’s not leave them feeling unappreciated!

Improving Donor Retention Requires Going Beyond the Basics

Now for the best secret I have learned from the research of our Bloomerang Chief Scientist Dr. Adrian Sargeant: extra effort in the acknowledgement process is a significant factor in retaining each of those donors.

The donors want to feel the following:

• Their gift truly made a difference
• Their gift was deeply appreciated
• They will be kept informed of how big a difference they made
• If they bring others in as donors those donors will feel special too

Every organization engaged in fundraising can make the above four items come to life with a bit of extra effort and attention. If you compare the time, cost and effort to find, cultivate and garner a brand new donor, this extra effort becomes quite attractive and cost effective!

During the last few years, the case for knowing and improving every fundraising organization’s donor retention percentages has nearly reached a fever pitch. I am hoping all of this attention will soon start leading to solid suggestions and game plans for addressing this ever-increasing concern of falling donor retention!