When was the last time your nonprofit took a closer look at its donor retention efforts? Your donor retention strategy should focus on showing donors the value and urgency of regularly giving to your organization.
Donor retention calculates how many donors continue to give to your organization year after year (or campaign after campaign). You can find this metric by dividing the number of recurrent donors who contributed to your nonprofit this year by those who gave in the previous year. For example:
- Say you have 200 repeat donors who contributed to your nonprofit again this year out of the 350 who contributed last year. Your donor retention rate would be 57%.
In this guide, we’ll discuss the basics of donor retention and some strategies to help your organization retain more donors going forward. We’ll cover:
- Why donor retention is important
- Common reasons for donor lapse
- Why donors continue to give to nonprofits
- Strategies to boost your retention rate
To boost donor retention, you’ll need access to updated donor data to track supporter interactions, build relationships, and encourage future contributions. Let’s dive into exactly how to do so!
Why donor retention is important
Consider the amount of effort and funding your organization spends to attract new donors to your cause. From researching prospective supporters and hosting outreach events to using social media to reach a wider audience, searching for new donors is a costly task that can easily eat away at time and money.
It’s much less expensive to retain existing donors who are already on board with your cause. Earning that crucial second donation or “golden donation” from supporters can help boost your funding dramatically. This is because after supporters have contributed twice, they’ll be much more likely to give again in the future.
According to the latest Fundraising Effectiveness Report, the average repeat donor retention is about 41%, whereas the new donor retention rate is only about 14%.
It’s essential to be intentional about your organization’s direct marketing tactics and use a data-driven strategy to pinpoint potential supporters who are likely to give. To carry out an effective data-backed approach, you must acquire relevant data about your supporters and maintain proper data hygiene.
As a starting point, calculate your nonprofit’s donor retention rate with Bloomerang’s free donor retention calculator and compare it to the sector-wide average, which tends to hover between 40-45%. Then, revamp your retention strategy by understanding and addressing common causes of donor lapse.
Common reasons for donor lapse
Before boosting your donor retention rate, you need to consider why supporters stop giving to your nonprofit. This will help you address and fix the root cause of donor lapse.
Remember, it’s more costly to earn the support of a first-time donor than a recurring donor, and once these donors lapse, it’s very challenging to motivate them to give to your organization again. Focusing your communication efforts on encouraging repeat contributions is critical.
While there are some causes of lapse that you can’t control (like if a donor passes away or can no longer afford to give), there are many causes that you can mitigate.
Here are a few common causes for donor lapse that fall under your nonprofit’s control:
- Donors don’t know their impact on your mission. If donors don’t receive any information about how their gifts were used and how these donations fit into your organization’s overall mission and goals, they won’t feel as valued by your organization.
- Donors have little (or ineffective) communication with your nonprofit. Supporters may lapse because they haven’t received any updates from you or don’t have a clear understanding of how they can connect with you after their initial donation.
- Donors forget they contributed. Perhaps it’s been so long since donors heard from you that they forgot they donated.
Your nonprofit can correct these issues by improving its communication policies for more data-driven and personalized outreach.
For example, maintaining an updated donor database lets you identify your lapsed donors. Then, you can create a donor segment specifically to reach out to these lapsed supporters. Be sure to send a survey asking why they ceased their contributions and consider how you can change their minds and restart their engagement with your organization.
Make sure to also have a clear donor outreach cadence that kicks in right after donors give. For example, your communication plan might include an immediate donation receipt and thank you email, a longer follow-up email or phone call a few days later, and regularly occurring updates on how you’re putting donors’ gifts to good use.
Why donors continue to give to nonprofits
On the flip side, it’s vital to recognize what your nonprofit can start doing to better retain the supporters you already have. Once you’ve identified the factors that encourage retention, you can avoid disturbing the already-effective retention strategies you have in place.
There are plenty of reasons people stick around and continue donating to various organizations, including:
- Donors feel appreciated. Receiving timely thank-you notes and follow-up communications contributes to the overall feeling of goodwill toward your organization. Fundraising Letters recommends sending thank you letters on multiple channels, such as email and direct mail, to ensure supporters get your message. You can also invest in a digital donor wall, which allows you to publicly recognize donors for their generosity.
- Donors feel like their gifts make a difference. Show donors how their contributions made an impact on your mission. Explain how many meal kits you were able to create or how many new tablets you purchased for local students as a direct result of their contribution.
- Donors have the opportunity to make their voices heard at your organization. Donors appreciate when their feedback is heard and considered, making them more likely to engage with your various engagement activities, including donating. Ask donors for input using a quick survey or during a one-on-one meeting or phone call.
Essentially, improving your donor retention rate comes down to proper donor management strategies. Analyze your current strategies and use surveys to ask supporters what they value about your organization to get a good idea of why donors continue to give. Save the results of this survey in your nonprofit’s donor database so you can mark your starting point and track your progress.
Strategies to boost your retention rate
Improving your donor retention rate begins at the start of the donor journey during the recruitment phase. When you can connect with the right people who have a vested interest in your nonprofit’s mission, you’ll be one step closer to earning ongoing donor support.
It can take about 18-20 different touchpoints to connect with a new contributor for the first time, so using a data-driven strategy at the outset will ensure you’re reaching out to the right segment of people who will be the most receptive to your message.
You can also use prospect research data to determine how likely a specific individual is to contribute to your nonprofit based on indicators like their past giving history or personal experience with your cause.
Once you’ve encouraged prospects to give, you can boost your retention rate by creating a personalized and engaging experience for your supporters. Here are a few additional ideas you can use to bolster your retention rate strategy:
- Provide a variety of ways to get involved. Offer various opportunities for supporters to get involved—not just donate. This could include volunteering, peer-to-peer campaigns, or networking events. These opportunities allow donors to create personal connections with other supporters of your cause and strengthen their passion for your mission.
- Personalize your supporter communications. Customize outreach using supporters’ interests and past engagement data to drive your interactions with them. Always address your supporters by name in all communications, from your initial marketing materials to your thank you notes.
- Carefully plan your fundraising asks. After building up your supporter relationships, don’t wait too long to ask for another donation. Use the information in your CRM to determine supporters’ affinity to give and potential giving capacity to ask for the right amount from supporters. This ensures you’re not insulting them by asking for too much (or too little). If your database lacks any relevant donor information, like donors’ employers or other wealth data, consider supplementing your records with a data append. A data append involves pulling missing data from third-party resources.
When you take the time to build genuine relationships with donors, they’ll be much more receptive to your follow-up donation requests. Plus, they may even increase their gift amounts over time, leading to even greater fundraising resiliency for your organization.
Now that you have a refresher on donor retention, why it’s important, and how to increase it, you can start fostering mutually beneficial relationships with donors. Following these recommendations will allow you to maximize your fundraising strategy while freeing up more time to focus on your mission.
Co-Founder and current Chief Relationship Officer at Bloomerang
He has served this sector for 33 years and is considered the most well-known senior statesman whose advice is sought constantly.
Prior to Bloomerang, he was the CEO and Co-Founder of eTapestry for 11 years, which at the time was the leading SaaS technology company serving the charity sector. Jay and his team grew the company to more than 10,000 nonprofit clients, charting a decade of record growth.
He is a graduate of Butler University with a B.S. in Business Administration. Over the years, he has given more than 2,500 speeches around the world for the charity sector and is often the voice of new technology for fundraisers.