Though it’s easy to focus your fundraising efforts on donor acquisition, there’s something else that’s just as, if not more, important — donor retention.
Perhaps you’re aware of the term and why it is so vital to the success of your organization, but it is still worth your time to review what it is, why it matters, and a few strategies that will help your nonprofit improve in this area.
What is donor retention?
Most simply put, donor retention is a measurement of how many people continue to donate to your organization after their initial gift. A nonprofit with a high donor retention rate has consistent donors coming back year over year, whereas one with a low retention rate has more donor turnover, forcing them to put more focus on frequently acquiring new donors to stay afloat.
Note: To calculate your organization’s donor retention rate, simply divide the number of repeat donors for year two by the total numbers for year one, and multiply by 100 (giving you a percentage value).
Why should you care about your donor retention rate?
According to the Fundraising Effectiveness Project (established and run by The Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute), overall donor retention year over year over the last five years has averaged around 40%. That means that most nonprofits are losing about 60% of their donors each year.
Perhaps even more jarring is that once you’ve lost that ~60%, only about 4% will ever return and give to your organization (this is called a recapture rate). So, while you should certainly care about donor acquisition (an absolutely necessary task in order to even have donors to retain), it should not be your only — or even primary — focus. Maintaining existing donors (versus constantly seeking out new ones) will ultimately save your organization significant amounts of time and money. In fact, it’s estimated that improving your retention rate by even just 10% will yield up to a 200% increase in projected value. On this topic, one author writes:
If a new donor gives only once… 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 (Bloomerang 2022).
With the importance of this in mind, let’s look at a few ways you and your organization can ensure you have a solid donor retention strategy.
Focus on the “Golden Donation”
The “golden donation” is what many call the second gift a donor gives to your nonprofit. It has earned this nickname because of the vital importance it has proven to have when it comes to overall donor retention.
In the last five years, new donor retention, specifically, has gone down even lower than the overall average to about 18-25%. But, the forecast for your nonprofit looks significantly better if you’re able to secure that second donation. Organizations who focus on getting the golden donation from their new donors see their overall retention rates go up to around 60% — nearly triple what it would be without this effort. So, while, yes, all of your donors are important, it is worth considering the long-term and large-scale impact that placing a specific emphasis on retaining new donors may provide your organization.
Communicate Clearly and Frequently
In your consideration of how to retain those brand new donors and your existing ones, one tactic is simple — good, consistent communication. More specifically, this may involve a few different things. First, always provide a timely and personalized thank you for any gift (regardless of the amount) that you receive. People want to know that their gift was received, appreciated, and put to good use.
Donors also want to understand what, exactly, their money was used for — so, good communication may also look like quarterly reports or summaries, success stories, or testimonials. Ultimately, one of the most important factors in driving someone’s gift (whether new or recurring) is their emotions, and frequent, personalized, and specific communication helps them understand how their gift is impacting your cause. When they can see how their money helps, they’re more likely to feel connected to your nonprofit in a meaningful and important way and therefore feel inclined to continue giving.
Solicit Feedback
Not altogether dissimilar from the point above, you should seek feedback from your donors, particularly those who are more seriously involved with your organization — whether that be determined by their time given or financial gifts.
Your donors fuel your organization, so although not every aspect of your business should be subject to the opinions of those who give, some things should be. And, allowing donors to feel ownership over how their money is used or what specific objectives or initiatives are pursued creates a particular sense of connectedness that is otherwise hard to achieve. This can be done relatively easily, whether through one-on-one conversations with certain people or a simple survey (or perhaps both). Be aware, though, that however you choose to do it, you should plan to take donor feedback seriously. Simply conducting a survey with no real intention of making any changes based on the results has the potential to leave people feeling ignored or disconnected.
And lastly, consider getting this type of feedback soon after a donor’s first gift — it will help endear them to your organization and help you understand them and their connection to your cause better, increasing your likelihood of retention.
Utilize Technology
Technology can help you on several fronts when it comes to donor retention. First, you almost certainly have a wealth of data sitting right in front of you. Look at your donors — determine who is already a long-term contributor to your organization and develop a strategy for continuing and deepening those relationships. Also, look at those who have given once (especially if that gift was recent) — create a plan for seeking that golden donation, making sure not to let too much time pass.
You can also use simple apps and tools on your phone or computer to create communication plans and set reminders to execute them. This may seem obvious, but a frequent barrier to following through on strategies like those you may come up with for donor retention is that they are easy to overcomplicate. So, consider the tools you are already using and how those may apply to this topic.
Lastly, you may also consider the ways Atticus can help. Our technology will help you find existing donors in your database who may be able to give significantly more and help you find net new donors. Atticus can act as both a donor acquisition tool and a donor retention tool in this way, helping you tackle two key areas at the same time.
On the donor acquisition side, Atticus will surface net new donors that care, specifically, about your cause, and are therefore, more likely to give not just significant one-time gifts, but to buy deeply into your mission, vision, and values. Thus, proving to be a long-term donor, if cultivated properly.
On the donor retention side, Atticus will surface existing donors from your organization’s data, helping flag donors that are either capable of giving more than they do or are in a season perfect for giving a new significant gift.
We believe part of a solid retention plan is finding highly aligned donors in the first place, and that’s exactly what we specialize in. As you think about your organization’s donor retention strategy, consider every aspect of the process. Finding and acquiring the right people is a significant step, but you must also take care to nurture and grow those relationships. It’s a tough task, but with a solid strategy and Atticus’s help, we’re confident you’ll start to see significant improvement.
