Updated: Mar 1
Donor retention should be high on everyone’s list. After all, it costs much more to acquire a new donor than it does to retain an existing one. Yet, The Fundraising Effectiveness Project cites that the average retention rate is just under 44%. So what are nonprofit organizations doing wrong? Let’s look at five major reasons donors aren’t coming back, and they’re all a simple fix.
As a quick definition, donor retention simply refers to the ability of organizations who receive a donation from a person one year, to get them to donate again the next. So, the donor retention rate is reflective of the ability of an organization to keep donors coming back year after year. A vital key to sustainability, right?
Sounds simple, but why are so many organizations struggling to maintain their donors? I’ve boiled it down to these five influencers, many of which I’ve experienced as a donor myself.
Competition for the donor dollar is stiff and many organizations fail to recognize it. Year after year donor stats show that the total giving in the United States remains right around 2% as a percentage of the GDP (Gross Domestic Product.) While the percentage remains steady, the number of nonprofits in the Nation continues to blossom, with more than 1.9 million in existence today. The stark reality? We have more organizations competing for roughly the same amount of dollars.
The competition for the dollar is not just with other nonprofits and the factor becomes even more important with $5+ per gallon gas and inflationary pressures everywhere. Donors may be forced to put their money elsewhere, so the competition extends to everyday necessities.
I share the competition aspect with clients who have little sense of urgency around donor retention or even measuring it. We can’t take donors for granted and you need to know the status of your competition no matter where it lies, because it is potentially impacting your attraction.
Acknowledgement is basic, but it’s another primary reason donors don’t give again. They weren’t appropriately acknowledged. In fact, in some cases they were never acknowledged at all, and I can attest to such an experience. My business made a nice gift of an auction item to an organization, and I never received the customary thank you. Even after expressing that I’d like a receipt for tax purposes it was never received. Do you think I’ve ever given to that organization again?
Acknowledgement comes in many forms depending on the campaign and gift, but the bare minimum should be a thank you note. I encourage my clients to acknowledge a gift within 48 hours to show their appreciation, and in a personal way. Knowing it’s a competitive environment you want to be sure that you show your gratitude in a timely manner. Better late than never doesn’t apply here. Someone else will do the acknowledgement piece better and they’ll be more likely to receive the next gift.
Your donors need to hear from your organization more frequently than at the time of an appeal or when being thanked. I recommend no less than six “touches” per year. These communications need to let them know about your programs, your accomplishments, and how you used their donated dollars. Ask their opinions, get feedback, share board news, or provide them a personal note with your annual report. Many who don’t renew their gifts are just not sure about your efforts and they need to trust you’re using their gift well. How will they know that unless you communicate well?
Have you kept pace with the changing times and environment? Are you conducting business in basically the same way you did ten or twenty years ago? Needs have changed. Times have changed. Society has changed and maybe even staff or your office location. So how are you remaining relevant?
Today’s donors are savvy and there is access to more information via the web than there has ever been about your organization. If you are not staying relevant and adapting the way you are operating, then you have probably been left in the dust of another advancing organization or a new one that is hungrier. Constantly gather feedback and insight as part of your planning process and stay relevant if you expect to continue to garner the support of your donor’s hard-earned dollars.
What type of relationship do you have with your donors? No. What type of relationship do you REALLY have with your donors? We often “think” we know, but reality is something different. I encourage organizations to focus on developing strong relationships with the top 20% of their donors but to not forget the others. Value and protect your donor relationships and get to know them well. Today’s software can facilitate dozens of connections with donors, but you need to use it. The more you know about your donors and their interests, the less likely they are to leave your organization. Stay in touch, build the relationship, and capture their interest by linking them to the organization.
There are countless other reasons why donors don’t “renew” their gifts with you. However, most of them revolve around human connection or simple tasks. Every nonprofit leader needs to know their organization’s donor retention rate and be making strides to improve it. Start measuring your retention rate if you’re not. Then, focus on the efforts that will boost that rate significantly. Sustainable organizations get it, hopefully yours will too!
David J. Fry, MPS,CDT is Founder/CEO of Effective Advancement Strategies in Greensburg and author of Build a Nonprofit Castle and Purpose in the Darkness. He consults with businesses and nonprofits throughout Indiana. He may be contacted at firstname.lastname@example.org