A Guide to Donor Retention
What is Donor Retention?
If you’re a fundraiser or nonprofit development professional, you’ve likely heard the term “donor retention.” It’s one of the hottest topics of discussion in the nonprofit sector. But what is donor retention? And why is it important?
Quite simply, donor retention is a measure of how many donors continue to donate to your organization. Nonprofits with a high donor retention rate have long-term supporters who come back year after year. Nonprofits with a low donor retention rate need to continually acquire new donors or larger gifts to keep up.
The Current State of Donor Retention
In 2006 the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute established the Fundraising Effectiveness Project (FEP) to conduct research on fundraising effectiveness and help nonprofit organizations increase their fundraising results at a faster pace.
Each year, FEP releases the findings of their annual survey. You can see the trend-line for retention rates below:
The FEP reports also drill down into donor frequency; specifically new and repeat donors. You can see that retention rates for new donors are even lower than the national average of all donor types. The good news is that if you can get a repeat gift, your retention rates increase drastically.
“The donor retention landscape is actually lousy at the moment and is going of all accounts, from bad to worse. The latest round of AFP data that came out was made for very depressing reading. We’re continuing to lose donors at a pretty alarming rate.
Over 70% of people that we recruit into organizations never come back and make another gift, so we’re caught on this treadmill where we have to spend lots of money on acquisition which most nonprofits lose money on anyway, just to stand still.”
– Professor Adrian Sargeant, Director of the Centre for Sustainable Philanthropy at Plymouth University
Maybe this is the first time you’ve ever thought about your donor retention rate, or maybe you’ve had a pretty good idea what your donor retention rate is, but don’t think it’s anything to be worried about. Here’s what can happen to your donor database after five years:
Starting # of Donors In Database
Attrition Rate (Percentage Lost)
Donors Remaining After 1 Year
Donors Remaining After 3 Years
Donors Remaining After 5 Years
You can see how quickly your pool of donors can evaporate. If you think those numbers are scary, wait until you see what that equates to in dollars and cents. Just a small change in your donor retention rate can cost your organization thousands of dollars!
Once They’re Gone, They’re (Almost All) Gone
Maybe you’re thinking “Okay, so what if donors don’t give in consecutive years. They might come back someday.”
According to FEP, the recapture rate for lapsed donors is an astonishing 5%, and has been on the decline for the last five years. If donors stop giving, there is a very small chance that they will ever give again.
Why Donor Retention Matters More Than Ever
If a new donor gives only once – as nearly 70% do – then you’re often left with a loss on your initial investment to gain that new donor. The true benefit of acquiring a donor can only come when that donor is retained over the long term.
While acquisition will always be important, to survive today nonprofits need to focus on ways to keep both new and existing donors coming back year after year.
Watch Bloomerang Co-Founder Jay Love discuss the donor retention issue with Amy Eisenstein, ACFRE on her video series for the Association of Fundraising Professionals.
Why Donors Stop Giving
In his 2001 study “Managing Donor Defection,” Dr. Adrian Sargeant surveyed the lapsed donors of 10 national nonprofits to ask them one simple question: why did you stop giving?
Aside from death and financial difficulties, these reasons for lapsing are almost entirely preventable.
It boils down to the quality of communications; quite simply, we tend not to treat our current donors very well, while instead focusing on new donor acquisition.
- 5% – thought charity did not need them
- 8% – no info on how monies were used
- 9% – no memory of supporting
- 13% – never got thanked for donating
- 16% – death
- 18% – poor service or communication
- 36% – others more deserving
- 54% – could no longer afford
Why Donors Keep Giving
- Donor perceives organization to be effective
- Donor knows what to expect with each interaction
- Donor receives a timely thank you
- Donor receives opportunities to make views known
- Donor feels like they’re part of an important cause
- Donor feels his or her involvement is appreciated
- Donor receives info showing who is being helped
In 2011, the DonorVoice collaborated with around 250 nonprofits to find out what they had done well to keep about 1,200 donors loyal for many years.
A survey was sent to those loyal donors with a list of 32 things that nonprofits do well for their donors. The survey asked recipients to rank them by order of importance; which items mattered most to them.
You can see that the top seven reasons almost directly correlate to the findings of Dr. Sargeant’s survey. They’re also just as controllable.
How To Retain More Donors
The strategies for retaining donors are simple, but that’s not to say they’re easy. Often times, it takes a large shift in the mindset of a nonprofit organization to begin focusing on retaining donors rather than just simply acquiring them.
Donors want to know how their dollars are being used, that you appreciate them and value their opinion, that you consider them the real change-agents (as opposed to your organization) and that the communications you send them are crafted just for them.