The 2015 Fundraising Effectiveness Project report has been released, a joint study of the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute which has been published each year since 2006.  The 2015 report covers data collected in 2014.

As in years past, there is cause for concern – actually, worry – when looking at the numbers.  Overall, donor retention is at -3%.  That is, for every 100 donors gained by charities, 103 were lost (lapsed).  

Although the donors acquired may have been somewhat more generous than those lost, resulting in a net gain in gifts received by charities of 5%, that is no cause for celebration.  For larger charities, the news is somewhat better.  For smaller charities, the news is much worse.  But for all charities, the issue of donor retention is something we must explore and understand at a deeper level if we are to make any progress toward a sustainable, effective fundraising model.

How to stem the tide?

Those of us who have followed the nonprofit sector for any length of time know that donor retention has been a concern year after year.  There may be no magic bullet, but acquiring new donors, year after year, to replace those who lapse, is truly poor stewardship of the donated dollars that charities are entrusted with.  Every donor wants to believe that his or her donation is going toward the cause they have responded to – not toward re-solicitation or acquisition of even more one-time donors.  How can we move beyond this wasteful cycle?

Good stewardship is certainly the place to start.

  1. Thank your donors.  We recommend thanking donors for their gifts – whether received on line, as a telephone pledge, or via direct mail -- within 48 hours.  You can use any of these channels to thank them, preferably several of them.
  2. Personalize your messages as much as possible.  A handwritten note, or even a live signature, can make all the difference.
  3. Make your message truly reflect gratitude. Ditch the formal “On behalf of the board of directors, we want to thank you for your $50 contribution,” in favor of “You have made a hungry child very happy!”
  4. Offer your new donor ways to engage with your organization beyond monetary contributions.  Invite them to volunteer in meaningful ways, to follow and interact with the organization on social media, and to learn more about your mission and the problems and challenges you’re facing together.
  5. We recommend a well-planned and documented stewardship plan.  You can find our sample plan here.[SB1]

Know thy donor

While stewardship is a good starting place, what we’ve shared above is really nothing new.  We all know that stewardship is key to making donors feel appreciated and needed, beyond their signature on a check.  The truth is, all donors are not the same.  For example,

  • Some may give one time gifts in response to a request from a friend, as a memorial or honor gift, or for other reasons we just can’t know when the donation comes in.  Soliciting that donor 6 more times this year is truly an egregious waste of money and resources.
  • Others may give because a particular message resonated with them.  If you know what that message is, can you personalize your future solicitations to amplify that theme?  Only if you know what the message is and can segment your donors by interest areas.
  • Still others may be testing you.  Future major donors often send a $100 or $500 first-time donation – not a major gift, but often higher than your average first-time gift.  Are you aware of these cues and do you steward potential major donors – those who have the potential to provide significant or transformational impact – more personally?

Donor Intelligence

How do you get to know your donors?  There are several ways we can suggest:

  1. Ask them about themselves.  If you make thank you calls to first-time donors over a certain level - $100, $250, $500, $1000 – make sure you plan the call.  First, you want to express appreciation and gratitude.  Second, you want to find out what motivated the gift.  How they chose your organization.  What passions they share with you.
  2. Create a simple survey.  There are numerous basic online survey tools available to nonprofits at a relatively low cost (or even no-cost for very basic needs).  Alternatively, some email providers also bundle survey capabilities so you may check with your email provider.  Your survey should ask your constituents:
    • How did you find out about us?
    • What motivated you to give?
    • Which of our programs is most interesting to you?
    • How would you like to be involved?
    • What communications do you wish to receive?

​Do keep the survey short and sweet – preferably multiple choice to allow for easy coding in your database.  But also allow a free text option so they can share what’s on their mind.

  1. Screen your new donors regularly.  If you get many new donors each month, you might screen on a monthly basis.  If fewer, perhaps you’ll screen quarterly.  This will help you segment your donors into the right programs from the beginning of their journey with you.  You’ll quickly uncover new major gift prospects who you can impact your organization.  With this knowledge, you can steward and cultivate these donors in a more personal and resource-intense manner.
  2. Enrich your data.  Periodically, you may choose to enrich your data with external data appends to reveal lifestyle and interests.  Understanding that John Doe loves the theater, while Jane James loves the outdoors, can give you real intelligence about who an appeal with resonate with, and who will likely pass.  That can save your organization a lot of money and frustration.
  3. Finally, predictive modeling can help.  A data scientist can ingest all of the data you have on your donors, including
    • response data to appeals
    • screening data
    • lifestyle and interest codes from your surveys and/or data appends

All of these variables can be evaluated and weighted to determine what characteristics describe someone who is likely to give again, and which are likely to lapse.  Knowing this in advance of expending limited resources on those unlikely to give will save you a bundle.  Knowing which are most likely to give, and at what level they can give, will raise you a bundle.

Cracking the donor retention code

There’s no one, easy answer to why many donors choose not to continue giving.  A portion of nonprofit support will always come from one-time donors, and their reasons for giving that one gift may be very reasonable as we come to understand them.  Nonprofits should appreciate those gifts, as we appreciate all gifts, large and small.  But we, as a sector, need to understand our donors, and their motivations, better. Understanding that someone is a one-time donor will enable us to thank them, and move on.  We won’t waste resources soliciting them 6, 8 or 12 more times.  We’ll thank them, and communicate the impact of their gift, and make them feel welcome to give again, on their timetable.  We’ll invest resources in those who are ready to give again, and those who want to be involved in other ways – volunteering, advocating, educating.

A little knowledge is not a dangerous thing, it will help us be better stewards and more effective fundraisers.  Decide now what actions you’ll take to be a better fundraiser in 2016, and watch your retention rates climb!

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