“Donor retention” is a widely-used buzzword in the nonprofit fundraising sector, but you might wonder what it really means, or why you should have it on your radar. Taking a closer look at this term will ensure your organization is using the best strategies to maximize funding opportunities.
Donor retention is a calculation of how many donors continue to give to your organization year after year. 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. Here’s an 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%.
Donor retention is not the only important metric to keep an eye on, but it’s incredibly impactful if you’re focused on growing your organization’s revenue. In order to boost donor retention, you need access to data and information about your supporters. Keeping track of nonprofit donor analytics helps you build relationships and encourage future contributions.
In this guide, we’ll discuss the basics of donor retention and some strategies for helping your organization retain more donors going forward. We’ll cover:
- The importance and impact of donor retention
- Why donors lapse at your organization
- Why donors continue to give to your organization
- How to boost your retention rate
This will provide a clearer picture of the current state of your donor retention and help you boost this rate to save money at your organization while growing a sustainable funding stream. Let’s get started.
Importance and Impact of Donor Retention
Think of the amount of effort and funding your organization spends on attracting new donors to your cause. From researching prospective supporters to using social media to reach a wider audience, searching for new donors is a costly task that can easily eat away at both time and money. As a matter of fact, the cost of attracting new donors can be 50-100% more than the dollars donated by them.
In contrast, it’s much less expensive to retain existing donors already on board with your cause. Earning that crucial second donation or “golden donation” from supporters can help boost your funding dramatically because after supporters have contributed twice, they’ll be much more likely to give again in the future. Bloomerang found the repeat donor retention rate hovered around 62% from 2015-2019, whereas new donor retention was stuck around 22.5%.
Therefore, it’s important to be intentional about your organization’s direct marketing tactics and use a data-driven strategy to pinpoint potential supporters who are most likely to give. In order to execute an effective data-driven strategy, you’ll need to acquire relevant data about your supporters and maintain proper data hygiene.
By boosting your donor retention just a little bit, you can make a major impact on your fundraising goals. Retention creates a more viable fundraising strategy, making budgeting more accurate and predictable, but also saves you money.
Why Donors Lapse at Your Organization
Before you can boost your donor retention rate, you need to consider why supporters stop giving to your nonprofit. This will help you address the root cause of lapsing donors and help you address the issue, providing a solid foundation for your retention strategy.
One of the main reasons that donors lapse is because they feel unappreciated and don’t feel like their contribution truly makes a difference. For instance, perhaps you aren’t sending timely letters of gratitude to your donors, leaving them with a sense that their efforts have gone unnoticed. Remember, it’s more costly to earn the support of a first-time donor than a recurring donor, and once these first-time donors lapse, there’s a very slim chance they’ll 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 control, including:
- Donors not knowing their impact. Donors may not receive any information on how their gifts were used and how these donations fit into your organization’s overall mission and goals.
- Donors having little (or ineffective) communication with your organization. Supporters may lapse because they haven’t gotten any new updates from you or don’t have a clear understanding of where they can connect with you after their initial donation.
- Donors not remembering they contributed in the first place. Maybe it’s been so long since donors heard from you that they forgot they made a donation.
All of these reasons can be directly addressed by your organization by boosting your communication policies for more data-driven and personalized outreach.
For example, keeping an updated donor database allows you to identify your lapsed donors. Once you find these donors who have discontinued their engagement with your mission, you can create a donor segment specifically to reach back out to them. Be sure to include a survey asking why they decided to cease their contributions and how you can change their minds to restart their engagement with your organization.
Once you’ve identified the causes of donor lapse at your organization, you can start addressing those causes to improve the donor experience.
Why Donors Continue to Give to Nonprofits
On the flip side of the last section, it’s important to recognize what your nonprofit does well in order to retain the supporters you already have. Once you’ve identified these factors, you can be sure that you won’t disturb the already effective strategies you have in place as you work to improve your organization’s plans.
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.
- Donors feel like their donations matter. Giving donors the opportunity to see how their contributions actually made an impact on your mission increases the likelihood of their giving again.
- Donors feel their voice is heard in the organization. Donors appreciate when their feedback is heard and considered, making them more likely to engage with your various engagement activities, including donating.
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 CRM database so you can mark your starting point and keep track of your progress.
The new information you collect will guide you through the transition to a new donor relationship strategy and ensure you don’t lose sight of your donors’ priorities. Use your CRM database to analyze both strengths and weaknesses to track opportunities for improvement but also ensure you maintain the strategies that are already working for you.
As you adjust and tinker with your marketing outreach and stewardship strategies, you can track your improvement by resending the survey and getting a new benchmark for your supporters’ level of satisfaction with your organization.
How to Boost Your Retention Rate
AccuData says it best: “Understanding your audience is the best path to success.” By undergoing the process of figuring out why some of your donors continue to give while others don’t, you’ll give your nonprofit a better footing to launch your improved donor retention strategy.
In your retention plan, focus on engaging your supporters to nurture the relationship they have with your organization through active and frequent communication from the very first time they connect with your organization.
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 make certain that you’re reaching out to the right segment of people who will be the most receptive to your message.
You can also use data to figure out how likely it is that a specific individual will contribute to your cause based on indicators like their past giving history or personal experience with your cause. DonorSearch refers to this concept as “affinity to give,” and it can provide clues that might even lead you to individuals who are willing to contribute larger gifts. Using a cohesive data strategy brings first-time donors on board who are more likely to become repeat donors because of these personal ties or other connections to your mission.
Boosting your retention rate comes down to 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 engaging ways to get involved. Offer unique fundraising ideas, stewardship strategies, and volunteer opportunities. This roundup of online fundraising ideas provides engaging COVID-compliant activities such as hosting photo contests, virtual happy hours, and creating a cookbook of recipes contributed by supporters. Donors are more likely to stick around with your organization if they’re making new friends (or finding new yummy recipes!) while serving the community.
- Plan your fundraising asks well. Use the information in your CRM to determine supporters’ affinity and potential giving capacity in order to ask for the right amount from supporters. This ensures you’re not insulting them by asking for too much (or too little).
- Fine-tune your communications strategy and focus on personalizing outreach to your supporters. Customize outreach by using supporters’ interests and past engagement data to drive your interactions with them. Always address your supporters by name as well, from your initial marketing materials to the final thank-you note.
All of these ideas will bring you closer to your goal of improving your donor retention rate and saving your organization time and money.
Now that you have an overview of what donor retention is, why it’s important, and how to increase it, you can start your journey toward seeing more fruitful donor relationships. Following these recommendations will allow you to maximize your fundraising strategy while freeing up more time to run your organization.
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.