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, the 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.
The Fundraising Effectiveness Project is provided free of charge every year. It now also provides a new report every quarter, so that you can keep up to date with the most recent benchmarking figures.
Here are 4 statistics from the annual 2018 Fundraising Effectiveness Project that you should consider when laying out your fundraising goals for the upcoming year.
1) Donor Retention Averaged 45.5%. Donor Attrition Averaged 55%
This first statistic is probably the most important for our purposes today. In 2017 the median donor retention rate for all non-profits was 45.3%. That’s 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 is 44%. The retention rate in the 2017 report was 43%, so while retention has gone up slightly this year, it has remained pretty constant across the decade.
What does this indicate? Well, it means that there is some reason why the over half of all 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 – to continue growing, you have to recruit more donors on top of the donors you have lost.
There are a lot of reasons why donors choose to not give again. We suggest you start to dig into why – is it your onboarding and cultivation program? Is it that you communicate too much, or not enough? Understanding the reasons behind donor retention and attrition can help you unpack and solve the donor retention problems. This takes significant time and resources but will save you acquisition costs in the long run.
2) The Gift Retention Rate Was 48%
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 48% indicates that, though only 45% 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. Understanding where some segments are underperforming will help inform your future fundraising strategies.
3) Every $100 Gained in 2017 Was Offset By $96 In Losses Through Gift Attrition
Yes, you read that right. And this, my friends, is why we all need to work really hard at retaining our current donors.
As shown in Figure 1 below, gains of $6.009 billion (54.2%) in gifts were offset by losses of $5.762 billion (-52.0%) through gift attrition. This means that every $100 gained in 2017 was offset by $96 in losses through gift attrition.
So while we are seeing the total revenue from charities increasing, it is only a net growth of 2.2% when you take into account the number of donors lost.
The largest growth in the sector came from new, upgraded and recaptured donors. Gains in the number of new and recaptured donors were offset by losses in the number of lapsed new and lapsed repeat donors, producing a net gain in donors of just 0.747%.
This potentially means that while organizations are doing more to acquire new donors, and to re-acquire lapsed donors, they are not preventing enough donors from lapsing to achieve a higher net growth.
3) Larger Organizations Had A Higher Net Growth Rate Than Smaller Organizations
Analysis of 2016- 2017 data indicates that gain/loss growth in giving performance varies significantly according to size (based on total amount raised) with larger organizations performing much better than smaller ones.
While all organizations had similar gains, the larger organizations had fewer losses, which means their overall net growth was higher. In short, larger organizations are doing better at retaining donors.
This may simply be because larger organizations have more resources to focus on retention.
“Growth rate is a direct result of continuous investment in fundraising. Examples are timely renewal and upgrading solicitations, extra thank you notes, invitations to special events, mailing quarterly newsletters and annual reports, and more. Smaller nonprofits with under $500,000 in annual revenues often do not have adequate resources to maintain such communications with current and past donors. The result of lack of contact is high donor losses, as in Figure 5c.”
– Jim Greenfield, Growth in Giving Working Group member
4 ) Monthly Giving Donors have a high retention rate than first time and repeat donors
As identified in The Non-Profit Recurring Giving Benchmark Study, monthly giving/recurring donors have a retention rate of 90%. They are the most valuable donors – they stick around for longer and therefore have a higher lifetime value to your organization. They are vital to long-term sustainable growth.
Monthly givers have a greater retention rate for a number of reasons, and it can often depend on their solicitation channels.
Two keys things that contribute to their retention rates are the automated payment methods and communications throughout the year – a combination of ease and affordability for the donor, as well as their acknowledgment and special treatment.
One interesting example in The Non-Profit Recurring Giving Benchmark Study was something as simple as card cancellations or a change in payment details. When a credit or debit card comes back as declined, organizations needed to do more to rescue these donors before they lapse.
For organizations that did not automatically update the lost card, 75% did not reach out to get an updated card. And when the card was canceled, just over half (53%) reached out. This means that these organizations could be losing huge numbers of donors every day due to incorrect payment details – even though the donor may still be interested in giving to them.
This goes to show that something as simple as setting up a donor details automation/journey can have a huge impact on donor retention, and therefore your bottom line. This could be just one of the things you start within your organizations’ retention strategy.
CauseVox automatically sends an email to rescue lapsed donors. See how CauseVox can help you save administration effort while reducing donor attrition.
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 understand segments of their donors, engage with them in the way they wish to be engaged and continue the relationship past the donation. In short, we need scalable personalization.
Here are 9 tried-and-true donor retention strategies:
- Send donors a personalized thank you after each donation.
- Provide 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.
- Have automation programs to communicate with card declines, card cancellations and lost cards before those donors lapse
- Run a journey or automation to convert new cash donors into regular givers – as they have a better lifetime value
“Retaining and motivating existing donors costs less than acquiring new donors.”
For most organizations, pursuing strategies for reducing donor and dollar losses is the least expensive strategy for increasing net fundraising gains.
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.
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This post has been updated on 1/31/2020 for freshness and accuracy.