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The State of Donor Retention in One Image

Posted By Guest post by Jay Love, Chief Relationship Officer at Bloomerang, Friday, October 27, 2017
Updated: Thursday, October 19, 2017

Republished with permission

A picture truly is worth a thousand words.

The data from the most recent Fundraising Effectiveness Project report certainly tells a story, and has certainly generated no shortage of commentary.

Allow me to add my own 1,000 words to the mix:

Average Donor Retention: 46%

If you have worked or been associated with a nonprofit that engages in fundraising, then seeing the number associated with the percentage of donors being retained from one year to the next being below 50% may not surprise you.

However, if you function in the for-profit world seeing any form of customer retention below 90% would most likely shock you. Sadly, this is most often the case for the vast majority of charity board members too.

Why are customers more loyal even when they are spending less than $100 than donors writing a check for $5,000 or more? This is even more puzzling since donors writing checks of $5,000 or more certainly are capable of giving again and again even if at lower levels.

Do nonprofits just expect donors to give once therefore it is a self–fulfilling mandate?

Much of the reason stems from a far-reaching lack of knowledge. This lack of knowledge begins with not being aware of what other nonprofits achieve in donor retention and often flows downward because they are not even aware of their own level of donor retention.

Books have been written on how to improve your donor retention. A key first step is to know how to figure your current retention level, then compute and post it monthly. Just knowing if you are improving or getting worse will begin the steps to better results.

A critical key to improving donor retention is closely linked to the second bucket image.

First Time Donor Retention: 23%

As if the first overall average statistic for donor retention was not bad enough, the second stat is far worse. Could it really be the case that three of four first time donors never give again?

Yes, that is the case!

Why?

There are several reasons to consider here. The first is a portion of first time donors who gave in association with an event or peer-to-peer campaign. They may not even know that a portion of the event admission, auction item or support of their friend running a 5-k is even going to charity. Shame on us, if it is our event, since extra effort must be given to insure an awareness or link exists between the mission and the dollars donated.

Secondly, a portion of first time gifts are memorial or tribute related gifts regarding a special person in someone’s life. The link between the person being memorialized and their special love of your mission should be illustrated to the memorial donor in order to have any chance of retaining that donor.

Yes, this will take extra effort. Even then only a portion of such donors will be retained, but the effort can be worthwhile.

Outside of the two special cases above, most of the rest of the first time donors not giving again are a direct result of our lack of attention toward them. Just about any type of extra effort toward relationship building will spur improvement. Multiple touch points showing that we truly care about their support can make a huge difference in first time donor retention.

This is a case of where the extra effort will pay off with vastly improved donor retention for those donors motivated enough to make a second gift as pointed out below.

Repeat Donor Retention: 60%

Pure magic happens with the second gift from any first time donor!

Those repeat donors retain at better than two and a half times first time donors!

This magic is the result of the donor becoming aligned with your charity’s mission emotionally. The second gift is not just a token offering, but is a conscious decision. It is also the beginning of a long-term relationship providing just as much in the way of rewards for both parties…

Let’s dig a bit deeper into this mutual reward concept.

First and foremost, giving back is part of nearly every adult human being’s innermost desire to make the world around him or her a better place. There is a strong psychological lift associated for us as individuals every time our mind and heart senses such a result of the giving. It is a delightful and powerful side effect of years of devoted giving.

Second, this emotional alignment has a strong chance of increasing the amount of funding to the charity’s mission provided by the donor each year as well as the desire to introduce others. This often leads to even larger legacy related giving. Therefore repeat donors are literally the foundation of all giving often providing 90% or more the dollars donated each year!

Monthly Recurring Donor Retention: 90%

The final bucket image is major step that must be taken to reach the highest levels of overall donor retention. Since the average retention level of recurring donors is 90% they provide the essential lift needed to reach overall donor retention rates 50% higher than normal averages.

Why is not every charity engaged in fundraising pursuing this type of donor relationship vigorously?

There are a multitude of reasons, which will shed much needed light on how to address. They are:

  • It is not what we have done in the past
  • Recurring giving requires additional technology
  • Someone must be able to implement and use the technology
  • All appeals must be redesigned
  • The acknowledgement process should be modified

If a game plan or research can be established to address all five of the above reasons then you will be ready to turn the magically properties of monthly recurring giving on!

We just hit 1,002 words!

The picture still tells much more in my opinion.


 

 

Jay Love is Chief Relationship Officer at Bloomerang. A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman.

Tags:  annual giving  donor retention  fundraising  giving  major gifts  stewardship 

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