According to the Fundraising Effectiveness Project, the average overall nonprofit donor retention is 46 percent. That means that for every 100 people who give to your nonprofit, 64 will probably not give again. And that isn’t the worst news. The average first-time donor retention rate is a mere 23 percent. That means that out of every 100 donors you’ve gained this year, 77 will most likely not give again. It costs an average of six times more to recruit a donor than retain one. Do the math. How much money are you losing through donor attrition?
The Importance of Donor Retention
We talked about how to acquire new donors in How to Find People Interested in Giving to Your Nonprofit. If you’re going to all that trouble to find new donors, wouldn’t it be nice to keep them? Wouldn’t keeping the donors you already have, particularly your first-time donors, be a cost-effective fundraising technique worth investing in? If you spend six times more recruiting a donor than retaining a donor, which is more cost effective? Indeed, the most cost beneficial fundraising technique you can use to realize increased revenues is to improve your donor retention rate.
Don’t get me wrong. You do need to recruit new donors every year as there will always be some level of donor attrition, just because of donor life changes. You must acquire new donors. But don’t do it at the expense of your current donors. Retaining current donors is just as important as acquiring new ones. When you develop your fundraising plans, make sure one of your goals addresses donor retention. And when you develop a fundraising budget, make sure you have resources allocated to improving your donor retention rate. Your fundraising results will improve. It’s worth it.
So, how do you improve your donor retention rate?
Improving Your Donor Retention Rate by Thanking Your Donors
The first thing you need to do is thank every single donor for every single contribution within 48 hours of receiving their donation. As we pointed out in Bringing in the Money: The Importance of Thanking Your Donors in Achieving Fundraising Success, most nonprofits don’t do this. Make sure that you do. It is common courtesy to thank people when they have gone out of their way for you. No matter what size the donation is, that donor is choosing to share their hard-earned dollars with you. They are going without something in order to donate to your organization. They need to be acknowledged and appreciated for that. The number one thing you can do to ensure that donors will give again is to thank them.
And thank them a lot. Market research shows that it 7-10 times for a message to be remembered. That doesn’t mean send 7-10 thank you notes. That means to thank donors through a variety of channels over time. Hold a donor appreciation event. Thank donors through handwritten client notes. Thank them through board phone calls. Thank them in your agency newsletters. Thank them at public events. Thank them individually and as a group each time you have opportunity. Thank donors whenever you can. You want them to know how much you appreciate them. Thank and thank again. No one has ever been offended by being authentically thanked too much.
And when you thank them, give them more than a simple thank you for whatever dollar amount they donated. As we saw in Successful Nonprofit Fundraising: It's Not About the Money, donors are not ATM’s who spit out dollars. They are people looking to make a difference, to impact a community issue. They want to know how their contribution made a difference. They want to hear about mission fulfillment. Show them how their donation was used. How much mission does their donation allow you to fill? A meal that fed a runaway youth? Five gallons of clean water that prevented a disease? An hour of suicide prevention counseling that saves a life? Housing for a month? Medicine to 25 people? Ten pounds of garbage from a cleanup? Twelve weeks of employment skills training that results in a job? Tell donors what they did. Use the word ‘you’ liberally. Highlight impact. Focus on the human needs they met, not your agency’s financial need. Just as in your ask, make your thank you mission focused. If you want donors to give again, give them what they want. Show them how they are the heroes in making the difference they desire.
Improving Your Donor Retention Rate by Engaging Your Donors
The key to getting that first-time donation is to engage the potential donor. The key to retaining an unknown first-time donor is to engage them in your cause them immediately. They key to retaining your repeat donors is to keep them engaged. Donors who are engaged are much more likely to repeat, and even increase, their donations. So, how do you engage people in your cause?
First, start by engaging them in a conversation. As we talked about in Creating Donor Communications that Work, get to know your donors. Make your interactions personal. Make it a two-way relationship. Ask questions. Answer questions. Ask them to do something other them donate to your agency. Tell them the results of what they did. Give them feedback so they know their collective impact. Ask for feedback on how the experiences went. Ask them what is meaningful to them and act on their responses. Let them know how important that relationship is to you. Not in financial ways but in ways the donor makes a difference in the lives of the people you serve. Talk to your donors person to person, through text and email, in your social media posts. Communicate, communicate, communicate. Engage your donors in conversation.
Then go beyond conversation. Listen to your donors and respond to them by structuring meaningful experiences for them. Find out what the motivation is behind the donation and structure experiences involving them that meet whatever is driving them to give. Don’t assume you know what they want. Ask them and then give as much of it to them as you can. They may want to hob nob with other donors, maybe corporate donors or legislators. They may want to participate in service delivery. They may want to meet a board member. They may want a leadership experience. They may want to learn new skills. They may want social experiences. The list goes on. Whatever it is they want, try and figure out how to meet the underlying motivation. Listen to your donors and respond to them beyond a simple conversation.
Once you start a two-way relationship, continue it. Ask them to do something, like share a social media post, attend a community event, sign a petition, make another donation, ask a neighbor to join them at an event. Take the relationship to the next level. Then thank, thank, thank and thank again. Start the engagement process all over again. Thank them, no matter what the contribution. Show them how they made a difference. Ask for feedback. Respond to their motivations. Structure a meaningful experience. Deepen the relationship. Make the relationship stronger. Strong relationships with donors not only lead to repeat donations, they often also mean more frequent and/or bigger donations. Think about how that will improve your fundraising results.
And don’t always ask for money. Donors often complain that the only time they hear from a nonprofit is when it needs money. I will repeat it again. Donors are not ATM machines. They are more than the money they give. Donors are people who want to make an impact. They have a lot to give. They want to give more than money. Start a conversation with them. Listen to what you hear. Respond in a meaningful way. Treat your donors as a whole person. Know their motivations. Meet their needs. Then they will respond to your requests for money.
Bringing It All Together
- It is less expensive to retain as opposed to recruit a donor. Make sure your annual fundraising plan addresses donor retention and your budget allocates resources toward improving your donor retention rate.
- The number one thing you can do to ensure that donors will give again is to thank them. Thank donors 7-10 times through a variety of channels over time. Show your donors the impact they made through their donation.
- Engage your donors in a conversation. Find out what the motivation is behind the donation and structure experiences involving them that meet whatever is driving them to give. Continue a two-way relationship that involved more than money.