How Transparency Drives Donor Loyalty

Fundraisers love talking about donor retention, and for good reason!

Did you know that a once-retained donor is likely to remain loyal to your cause long after that initial gift is made?

In fact, the Fundraising Effectiveness Project found that while 19% of first-time donors are retained, 63% of repeat donors are retained, meaning that nonprofits are far more likely to retain a donor that has already given before. And boy, do we all work hard for those new donors!

The fact that retained donors remain so loyal is great news for nonprofits because we can always count on them to give. But, how do we create a loyal donor? What factors encourage donor retention? While there are many ways to increase retention rates, let’s talk about the importance of transparency in driving donor loyalty.

What is transparency? Well, you wouldn’t want to give to an organization that spends 50% of their donations on break room snacks, would you? You expect that donations that you give go toward helping those that the nonprofit serves. And your donors want to know the same thing. All nonprofits must be honest about where the dollars actually go and report that information. Yes, we think of transparency as just being about financials, and although this is important, overall transparency involves a whole lot more. Being transparent means that your organization is willing and able to distribute critical data about all aspects of your operations.

By being transparent, nonprofits are able to show donors that they have sound ethics and are responsible with donations, thus encouraging donor loyalty.

Is your nonprofit already transparent? I bet you’ve probably have been doing some, if not all of these steps to show transparency already, such as:

• Publishing the IRS Form 990 on your website
• Distributing an annual report detailing impact, client stories, and basic financials.
• Keeping your information on Charity Navigator and Guidestar up-to-date
• Getting the endorsement of a public figure in your community, as well as the Better Business Bureau
• Listing the names and roles of your board of directors directly on your website
• Regularly updating your donors on program results through email, direct mail, your website, or even social media

Here’s why transparency drives donor loyalty:

As in all relationships, the relationship between donors and fundraisers all boils down to trust. If your donors trust you and believe that your nonprofit is forthcoming and authentic, then they’ll be more likely to stay involved and give donations down the road. But it’s up to you to give them the information they need to establish that trust.

When push comes to shove, donors are looking to find a cause that they connect with, and that connection is often created because of shared values. Shared values, such as strong ethics, honesty, fiscal responsibility, and the propensity for collaboration are all evident when a nonprofit is transparent.

Show your donors that you believe in what they believe in through transparency and you’re bound to convert your one-time contributors into loyal and engaged donors.

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