A Smarter and Easier Way to Raise Money: Donor Retention

One of the easiest ways to raise more money this year is to increase your donor retention rate.

Even a one percent increase can significantly boost your philanthropic revenue. This resource outlines some intentional and easy-to-implement strategies that will boost retention rates. But first, let’s start with a cautionary tale.

Consider a nonprofit with 1,000 donors. Even if the organization beats the national average and maintains a 60 percent retention rate, its donor base would fall to 600 in year two. After only five years, the organization would have only 78 of those 1,000 donors left.

Small Tweaks: Big Results

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 percent, it will add $19,692 to its bottom line the following year.

Nearly $20,000 with a single percentage point!

If this same organization raises its retention rate by 10 percent, it’ll see $196,920 in added revenue the next year! And if retention rates rise year after year, these results are compounded for even greater growth.

Most commercial fundraising software has a report built in that measures your organization’s retention based on the Fundraising Effectiveness Project (FEP) standards. The FEP report also allows you to benchmark your stats against your peers. Ask your software vendor about it.

Want to See More Major Gifts? Start with Retention.

Less than half of all repeat donors give again the following year—the average retention rate hovers around just 45 percent.

At the same time, the average major donor doesn’t become a major donor until they’ve given five gifts. If we think about the traditional donor pyramid, the first levels of the pyramid are seen as the entry point for first-time donors. Ideally, we thank, steward, and help their journey upward toward increased investment.

Today’s giving data shows that donors are leaving our pyramid’s first level faster than they are entering. That means that if your institution is like most, more than 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 important.

A strong and committed donor pool—one that has been carefully cultivated and gives year after year—is especially essential if your organization is considering a capital campaign in the coming years.

Donor Retention Starts with Two Words

"Thank you."

Thank yous should be heartfelt; they should also convey impact. Let your donors know what you are doing with their support.

Be sure you’re thanking your donors at a ratio of at least four thank yous to every one appeal. Actions like inserting a BRE in an annual report or sending an email to buy tickets to an event count as an appeal, even if they’re not personalized. Impact reports, newsletters, and updates can count as thank yous, but make sure you’re also sending traditional thank you communications.

Send a thank you right after a gift is made. If it’s a large gift, send a handwritten thank you.

Enlist your board. As a board member, one of my favorite stewardship touches is to call and thank donors—even those I don’t know. Surprisingly, I think I get more out of the call than the donor because we’re sharing stories about the work the organization does.

What's in It for donors?

Treat your donors as investors—because that’s what they are.

Develop a loyalty program that rewards donors for their ongoing support. University alumni groups do this well, but it can be done with any organization. Get creative.

Ask your donors for their feedback. The strategic planning process is a great opportunity to involve major donors through interviews and all donors through an electronic survey. Just don’t forget to communicate the results and share the plan with them once it’s finished.

Give donors the option of giving monthly or quarterly. It keeps the organization top of mind more often than a single appeal, and often leads to larger total gifts. Create a special society or group to celebrate these donors and make them feel special.

Treat New Donors Differently

Four out of every five donors don’t give a second gift.

You work hard to get their support, it’s worth the effort to keep them. Here are a few ideas to keep your newest donors:

  • Acknowledge their newness.
  • Hold a new donor virtual Q&A with the executive director twice per year.
  • When it’s time to renew their gift next year, thank them for their first-year investment and ask them to give again.
  • Put 30 minutes on your calendar each month to send a personal note to first-time donors that ties their first gift to mission impact.

Bottom Line

Low donor retention may stem from our cultural obsession with the new and the shiny.

Or maybe our boards equate new donors with more awareness for our cause. Whatever the reasons, proper donor stewardship should be a priority for all of us. Help board members understand the lifetime value of a donor—the ROI that comes with good stewardship practices that prioritize retention over acquisition.

Tailor Your Appeals

  • Tell a story with your appeals. Profile someone who a donor-funded program has impacted.
  • If your donors fund a specific initiative or you can group them by affinity groups, customize the appeal. Show them the real impact of their gift on the problem they most care about solving.
  • Go beyond the basic SYBUNT/LYBUNT language to show comprehensive support with text like this: “You’ve been a friend to [cause] since your first gift to [organization] in [year]! In fact, your donations over the years total [$amount]. Thank you…We’ve missed you since your last gift of [$amount] in [year].”

About the Author

Jeff Terry, Winkler Group Senior Account Manager, has more than 20 years of experience working with nonprofit organizations, specializing in digital outreach and donor database management. Prior to joining with Winkler Group, he was a leader in Blackbaud’s Enterprise division. Connect with Jeff on LinkedIn.

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