What You Don’t Know about Donor Retention will Hurt You

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The nonprofit sector is experiencing a serious problem, and it’s time we did something about it.

Fundraising experts and philanthropy researchers have been warning us that nonprofit organizations are losing donors at an alarming rate. Ken Burnett, Managing Trustee at SOFII and author of Relationship Fundraising sums it up best:

“Our nonprofit sector is bleeding to death. We’re hemorrhaging donors, losing support as fast as we find it, seemingly condemned forever to pay a fortune just to stand still. It’s time we stemmed the flow.”

Donor retention is definitely a serious issue. Over the past ten years, the average overall donor retention rate has been just 44.5 percent, according to the 2016 Fundraising Effectiveness Survey Report from the Association of Fundraising Professionals and The Urban Institute. The new-donor retention rate for last year was far worse, a pitiful 26.6 percent!

It’s time we did something about this problem. But, what can we do?

To be sure, we’re talking about a complex problem. So, not surprisingly, the solution is not simple. However, a new survey report from Gallup, the international polling company, points us in the right direction. To study the philanthropic behavior of Americans, Gallup surveyed over 17,000 donors.

Gallup found that 47 percent of those surveyed give money to three to five organizations and 15 percent give to six or more. While a strong majority of donors gives to three or more nonprofits, the bulk of their giving typically goes to just one or two of those organizations. The rest of the gifts are often one-time contributions. So, Gallup looked at what it would take to move one-time donors to become ongoing supporters.

The answer can be summed up in one word: Engagement.

Gallup’s Daniela Yu and Amy Adkins report:

“Donors invest money and effort in charitable organizations when they feel a strong emotional and psychological connection to them. They may donate to other organizations occasionally, but they keep going back to the causes that emotionally engage them.”

Before a nonprofit organization can successfully engage donors, Gallup believes it must first answer the following questions:

  • Point of difference: What is unique about the organization’s brand or service promise? Is it truly different, or can it apply to any charitable organization?
  • Clarity: Do both employees and donors know what the organization stands for?
  • Alignment: If donors are asked to describe the brand or service, would they give the same description, and would it be consistent with the charity’s description?
  • Performance: How is the organization delivering on its promise? Is the delivery consistent across different communication channels, among different donor groups and among different people who receive assistance?
  • Momentum: Does the brand or service promise encourage further giving and involvement? Does the organization make donors believe in a better future for the brand?

When it comes to giving decisions, 81 percent of donors say that an organization’s mission must be one they believe in. Also, 57 percent of donors want to know that their support, at any level will make a difference. However, charity missions are seldom unique. For example, if I want to fight cancer, there are a great number of charitable organizations dealing with the issue that will put my money to good use.

So, while organizational mission is critically important, donors look more deeply. Of those surveyed by Gallup, 61 percent say that they want to know exactly what their donation will be used for. In other words, bland requests for unrestricted support are not particularly inspiring.

If you think donors don’t do any research before giving, Gallup has a surprise for you: 50 percent do “some research” before giving while 31 percent do “a great deal of research.”

As you look to engage your organization’s supporters and potential donors, you’ll want to be prepared to express its mission in a way meaningful to the donor or prospect that also tells them what their gift will accomplish.

Once you’re prepared, here are just five of the many ways you can engage people:

Call. Phoning donors is a great way to make them feel important and appreciated. You can call them to invite them to a program, share some good news, or thank them. You can read more about this in my post “The Greatest Idea for Retaining and Upgrading Donors.”

Volunteer. You can invite people to volunteer. Research from Russell James, JD, PhD, CFP shows that those who donate to and volunteer with an organization are more than twice as likely to make a planned gift than those who only do one or the other.

Events. Invite people to fun events where they can enjoy themselves and learn more about the organization and what it accomplishes.

Surveys. Have you ever wondered why political fundraising appeals often involve a short survey? It’s because they are a powerful engagement tool. Surveys and focus groups give supporters a chance to share their opinions, and they give you a chance to learn more about them and their interests and concerns.

Email. You can email your supporters every two to six weeks, provided you communicate information that will be of value to recipients. In its booklet Nonprofit Guide to Email Engagement, Network for Good shares 10 email content ideas including: give an update about a client or crisis, share a recent success story, provide a testimonial from a service recipient or supporter, offer a special downloadable resource such as an estate planning guide.

The engagement possibilities are almost infinite. Just remember these five key elements of successful engagement tactics:

  • Be relevant to your donors.
  • Offer timely and/or meaningful information.
  • Honor the requests of your donors about how and when they wish to be contacted.
  • Keep communications warm and professional.
  • Provide a name, title, email address, street address, and telephone number so donors know they’re welcome to contact you. They may never do so, but they will appreciate that you’ve made it easy for them should they ever wish to reach out to you.

What are your favorite ways to engage prospects and donors? Let me know in the comments below!

As part of Bloomerang’s Content Donation Program, $100 was donated to Philadelphia Children’s Alliance.

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Michael Rosen
Michael J. Rosen is President of ML Innovations, Inc., a fundraising and marketing consulting firm serving nonprofit organizations and the companies that assist them. An AFP Certified Master Trainer and winner of the prestigious AFP/Skystone Prize for Research, Michael is the author of the bestselling book Donor-Centered Planned Gift Marketing, and the publisher of the popular blog Michael Rosen Says…. He has been named by Philanthropy Media as one of “America’s Top 25 Fundraising Experts.”
Michael Rosen

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By |2017-06-10T18:18:04-04:00August 22nd, 2016|Donor Retention|

5 Comments

  1. Sophie Penney August 22, 2016 at 4:50 pm - Reply

    Very helpful piece Michael. Curious though and unclear about which retention rate one might cite, 44.5% or 26.6% (and where does the second figure come from)? FYI not meant to be a challenge, simply clarifying so I can share with NPOs with which I consult.

  2. Michael J. Rosen August 23, 2016 at 6:57 pm - Reply

    Sophie, thank you for your kind comment. I’m glad you found the post helpful. As for the numbers, they can get a bit confusing. The larger retention percentage involves ALL donors (new and renewing). The smaller retention figure involves only NEW donors. Both figures come from the Fundraising Effectiveness Survey Report. As for which figure you might want to cite, it depends on the context and whether you’re interested in looking at all donors or just new donors.

  3. David B. Moore August 23, 2016 at 8:05 pm - Reply

    I have the same question as Sophie. Are you saying that the overall average of the last 10 years is 44.5 percent and essentially noting that the 10-year average is continually being lowered because this most recent year is 26.6 percent? I got the sense that all the numbers are based on the 2016 Fundraising Effectiveness Survey Report from the Association of Fundraising Professionals and The Urban Institute. Is that correct?

    • David B. Moore August 23, 2016 at 8:09 pm - Reply

      Please disregard. Your answer to Sophie didn’t appear when I posted, but I can see it now.

  4. Michael J. Rosen August 23, 2016 at 8:22 pm - Reply

    David, thank you for your question. I apologize for not being more clear about the stats. The larger retention figure involves both new and renewing donors while the lower figure involves only new (first time) donors. While it’s not surprising that first-time donors to a given charity would be less likely to renew their support than a multi-year donor to the same charity, it’s nevertheless stunning to see how few new donors renew their support. By the way, in the interest of accuracy, the Fundraising Effectiveness Survey Report looks at the “median” rather than “mean” (average) when looking at the numbers.

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