Donor retention is a HOT topic in the fundraising world. And it should be because retaining donors year-to-year makes your job a whole lot easier.
If you are unfamiliar with this topic, then here’s a quick brief.
What Is Donor Retention? Donor retention refers to the number or percentage of donors that continue to give to your organization after the first gift.
Why Should I Care About Donor Retention? A strong donor retention rate indicates a healthy organization that is operating appropriately, allocating enough resources to fundraising and has the support of people who believe in the cause.
How Is Donor Retention Calculated? Simply divide the number of returning donors by the total number of donors from year one. For example, if 60 donors out of 200 decided to give a gift again, your retention rate is 30% and your attrition rate (lost donors) is 70%
What Is A Good Donor Retention Rate? That depends on the size, age, budget, and donor makeup of your organization. We’ll discuss some of these details further down.
Read our free donor engagement and retention strategy playbook here to learn best practices for improving your organization’s donor retention.
As a fundraiser, it is hard to adjust your goals from a simple monetary one to a focus on donor retention. But, I’m here to tell you that by shifting your focus onto keeping your donors, meeting your financial goals will be much easier. Therefore, your goal should be to retain as many donors as possible from one campaign to the next.
Thanks to the Association of Fundraising Professionals (AFP) and the Urban Institute, average donor retention rates are calculated annually across the large spectrum of nonprofits. The resulting report- The Fundraising Effectiveness Project– is a great resource for nonprofits. It lays out current trends and provides nonprofits of every size and makeup with the tools to set reasonable benchmarks.
Here are 4 statistics from the 2015 Fundraising Effectiveness Project that you should consider when laying out your fundraising goals for the upcoming year.
1) Donor Retention Averaged 43%. Donor Attrition Averaged 57%
This first statistic is probably the most important for our purposes today. In 2014, the median donor retention rate for all nonprofits was 43%. That means that less than half of all donors decided to give again during this year.
In comparison, the average retention rate over the past 10 years sits at 44%. Retention peaked in 2008 at 50%.
What does this indicate? Well, it means that there is some reason why the majority of donors choose to give to another nonprofit or to not give altogether. Losing well over half of your donors yearly makes your job a whole lot harder.
“The majority of your donors last year, will not give again this year …” tweet this
Why? Because first-time donors need education about your mission and cultivation to ensure further engagement with your organization. This takes significantly more time and resources than securing donations from current donors.
2) The Gift Retention Rate Was 47%
Gift retention refers to the amount donated by returning donors from one year to the next. It is calculated by dividing the total donated by retained donors by the total raised during the previous year. For example, it you had 100 donors give $10,000 in 2014 and 50 of them returned in 2015 to give $5,000, your gift retention rate would be 50% ($5,000 / $10,000).
A median gift retention rate of 47% indicates that, though only 43% of actual donors are retained, those donors are giving more from year to year. It can also mean that nonprofits are doing a better job keeping donors giving larger gifts.
This is good news!
Results from calculating your own gift retention can show you exactly how much money you are losing through attrition, and give you insight where to allocate your efforts. You may find that you are retaining committed donors that routinely give substantial gifts, but are losing large numbers of your donors giving smaller gifts.
3) 19% Of First Time Donors Are Retained. 63% Of Repeat Donors Are Retained
Yes, you read that right. And this, my friends, is why we all need to work really hard at retaining our current donors. As donors continue to give, especially those that choose to increase their gifts yearly, are retained at much higher rates.
According to the study, there’s a difference in retention rates when comparing donors giving less than $100 versus more than $250. For first-time donors giving $250 or more, the retention rate is closer to 47%, while those giving under $100 are retained at a rate of only 18%
Researchers also found that there really is a solid connection between long-term retention and giving levels. Over 7 years, 53% of donors giving less than $100, while 76% of donors giving more than $250 were retained.
The bottom line? Repeat donors are retained at a much higher rate, and that rate increases significantly when the gift is larger.
4) Organizations Less Than 5 Years Retained 40% of Donors
Simply put, age matters in the world of fundraising.
The study found that although organizations less than 5 years old had retention rates around 40%, those that have been around for 30 or more years returned about 45% of donors.
Reasons for this are fairly simple. Not only is there brand and community-wide recognition for longstanding nonprofits but, they have stood the test of time and have been able to operate through numerous economic ups and downs. For many donors, age is indicative of trustworthiness.
Some Simple Solutions
You may have a handful of questions popping into your head at this point.
“What do I do with this information?” “What if I just started out?” “How do I begin tracking my rates?”
Whether you are a small nonprofit or a large international organization, you need your donors to return. But donors are a fickle group and their interests can change quickly. Nonprofits must look for ways to engage the donor to continue the relationship past the donation.
Here are 7 tried-and-true donor retention strategies:
- Send donors a personalized thank you after each donation.
- Set your donors up with volunteer opportunities.
- Learn about your donors, including their philanthropic passions, family, and employment.
- Regularly share your results with donors.
- Connect with them through social media, or ask them to sign up for your newsletter.
- Schedule donor-centric events such as networking opportunities or appreciation luncheons.
- Make your donor feel irreplaceable. Continue to let them know that you can’t do your work without their support.
“A 1% improvement in donor retention results in $1,000 to $100,000+ in additional funding …” tweet this
The Fundraising Effectiveness Project is full of more statistics regarding trends in the world of fundraising so it is worth a look- especially if you want to see where your nonprofit falls along the spectrum.