Written by Jessica Browning, Principal and Executive Vice President

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Long before COVID-19, the nonprofit sector faced a crisis: embarrassingly low donor retention rates. Today, less than half of the average organization’s donors will give again the following year.

Over time, the impact of this statistic is devastating. Consider a nonprofit with 1,000 donors. Even if the organization beats the national average and maintains a 60% retention rate, its donor base would fall to 600 in year two. After five years, the organization would have only 78 donors left. 

As professional fundraisers, we are spinning our wheels.  In 2017, $6.008 billion in gifts were generated from new, upgraded current and previously lapsed donors, but about the same amount ($5.762 billion) was lost through reduced gifts and lapsed donors. This means that of every $100 gained, $96 was lost through gift attrition.[1] The cause of low donor and donation retention rates is unknown.  Perhaps it’s because, as a culture, we’re obsessed with the new and the shiny.  Or maybe our boards equate new donors with more awareness for our cause. Whatever the reasons, the COVID-19 pandemic has forced us to return to fundamentals, and proper donor stewardship is at the top of that list.

Consider the Potential

The Fundraising Effectiveness Project estimates that if an organization (one that raises at least $1 million per year) raises its donor retention rate by just 1%, they will add $19,692 to their bottom line the following year.  If they raise their retention rate by 10%, that’s $196,920 in new revenue the next year.  And if retention rates rise year after year, these results are compounded for even greater growth.

Donor retention is critical for the long-term health of any institution or organization.

Figure 1: The Fundraising Effectiveness Project’s 2015 Donor Retention Supplement shows the impact of a 1% rise in retention rates for various sized organizations shown on the chart’s left-hand side.

The average major donor doesn’t become a major donor until after they’ve given five gifts. At current retention rates, half of your major gift prospects walk out the door each year.  These are donors who have already expressed an interest in your mission.  You’ve already accomplished the difficult task of donor identification and acquisition; keeping them should be equally as important.   

If your organization is considering a capital campaign in the coming years, you’ll need a strong and committed donor pool—one that has been carefully cultivated and engaged. A revolving door of donors fails to create that base of supporters you need for visionary projects that will transform your organization or institution.  Similarly, that same committed base of supporters is the one you can turn to in a crisis like COVID-19. 

Don’t assume that once a donor leaves, it’s easy to reengage them.  The recapture rate of a donor who has left is about 5%.  Your chances of getting those SYBUNTS back are slim, so do everything you can to keep them in the first place. 

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Long before COVID-19, the nonprofit sector faced a crisis: embarrassingly low donor retention rates. 80% of new donors will not make a second gift.  Marco Corona, Chief Development Officer at One80 Place in Charleston, South Carolina, will be our co-presenter. Over the last five years, One80 Place’s total donations from individuals has risen from $529,000 to $1.2 million because of an intentional retention plan.  Learn how to implement donor retention strategies that grow your revenue.

[1] Bill Levis, Ben Miller, and Cathy Williams, “2018 Fundraising Effectiveness Survey Report,” Fundraising Effectiveness Project, April 12, 2018, http://afpfep.org/wp-content/uploads/2018/04/2018-Fundraising-Effectiveness-Survey-Report.pdf)

The generous will prosper: those who refresh others will themselves be refreshed.
(Proverbs 11:25)

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