Donor Retention: What to do to Finish 2020 Strong

Donor Retention: What to do to Finish 2020 Strong

November 18, 2020
Raj Khera

At WE Prosper Summit: 2020, nonprofit leaders discussed the latest trends and best practices including donor retention for finding donors during COVID-19. Two of these experts were Baily Benzle and Stu Manewith of Omatic Software. Their company has been around for 20 years and has more than 3,000 nonprofit clients worldwide.

Omatic uses data to strengthen relationships between nonprofits and their donors through correct messaging. Delivering the right message to the right donor at the right time is possible with data integration.

What is Data Integration?

Data integration is the consolidation of information from many sources. With centralized data, nonprofit organizations can better analyze information and make decisions. This data can help your organization target and engage donors.  

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The 90-Day Window

Baily and Stu mentioned the 90-day donor window: Donors who make a second gift within 90 days of their first, are more likely to repeat their giving. To keep supporters, nonprofits need to communicate with them shortly after their initial gifts.

A new donor who doesn’t make a second gift in 90 days is unlikely to renew their support. If they do donate again, their support will likely continue. This is why donor retention is so important.

The retention rate for new donors is 20% and 61.3% for existing supporters. It’s harder to turn a new donor into a repeat supporter. To avoid donor fatigue, it’s crucial to begin relationship building with donors immediately and keep it up.

New donors who aren’t engaged, thanked and informed of where their gifts go are less likely to give. By integrating data to learn about your donors and how to best engage them, you’ll likely stay at top of mind. When donors feel appreciated and are engaged, it’s easier to compel them to give repeatedly.

 

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When you retain donors, your organization saves money through lower attrition (the loss of donors) and raises more money. It costs more time, effort, and resources to attract new donors than it does to retain current ones. 

For a nonprofit organization to finish the year strong, you need to improve your retention rate. One very effective way of engaging donors is through storytelling for fundraising, sharing individual narratives showcasing the good that’s been accomplished thanks to your donors’ generosity. This approach appeals to donors’ sense of empathy and emotion while providing demonstrable proof of how their support is making an impact.

Why Donor Retention Rate is So Important

The key to building donor retention is actively cultivating relationships with supporters. A major component of successful donor retention is donor stewardship, which is based on frequent communication with your supporters to nurture their interest in your organization and its initiatives.

Your retention rate demonstrates how well your fundraising endeavors performed over the previous year. It also acts as a quantifiable metric of how your donors and supporters are re-engaged. If your donors are continually interacting with and engaging with your organization, they are considerably more likely to renew their support.

Donor retention rate is measured with a basic calculation: Divide the number of donors who gave during the current year by the number of donors who gave the previous year. The current year’s donors are the numerator and the previous year’s donors are the denominator. 

Calculate your denominator first and use it as the baseline by which everything is measured. The denominator is the number of donors who gave in the past year. The goal is to achieve a high retention rate.

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The Association of Fundraising Professionals (AFP) created the Fundraising Effectiveness Project (EFP) in 2006. The Fundraising Effectiveness Project helps nonprofits be more successful in their fundraising. The organization conducts research and publishes industry-recognized reports each year.

In 2019, the Fundraising Effectiveness Project mentioned that the donor retention rate for U.S. nonprofits was 45%. The retention rate for repeat donors in 2018 was 61%. For first-time givers, the retention rate was 20% or roughly one out of five new supporters.

The statistics of the Fundraising Effectiveness Project reveal how difficult it is to capture new donors. They show how important it is to stay on top of donors’ minds so they will give multiple times. It is possible to improve upon the low 20% average retention rate, thereby boosting the probability of donors giving.

Engaging your donors with a relevant message at the right time can improve retention rates. Instilling an urgent “the time to act is now” call-to-action is a successful strategy. For example, if you want to capitalize on Giving Tuesday and December year-end giving, you need to start in October.

Baily and Stu provide a great example of this successful retention strategy with a Wisconsin dance organization. The development director mentioned, “We are strong with donor retention at 75% for returning donors and 30% for new donors.” Compared to the 2019 fundraising average, that’s a 25% higher rate for returning donors and 50% higher for new ones.

For illustration, there were two grids: Grid A and Grid B. Grid A shows a donor retention rate of 41% and Grid B documents a donor retention rate of 51%. Grid A’s donors raised $675,000 and Grid B’s donors raised over $1 million.

Grid B’s retention rate of 51% resulted in donors giving for an extra five years before dissipating. With a better retention rate, these donors gave more than those in Grid A whose retention rate was 41%. Even the slightest improvement of donor retention can boost giving amounts.

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The grid example illustrates the findings of the Fundraising Effectiveness Project’s research. These results show that the dollar amounts from retained donors increase by 3% a year. With a strong retention rate, an organization can raise significantly more funds. 

How to Boost Donor Retention Rate

How do you retain donors in the crucial 90-day window? It has to do with correct messaging. Here are three tips to try:

  • Provide timely acknowledgment and appreciation. 
  • Show the impact of the gift and how that aligns with the donor’s intent.
  • Repeat the solicitation method that resulted in the first donation. 

2020 has been a challenging year, but you can finish strong with a high donor retention rate. When you communicate with donors within 90 days of their first gift, you increase the probability of receiving a second one. Reaching ideal donors with a relevant message at the appropriate time will likely compel donors to renew their support.