Don’t lose touch with the people who matter. For nonprofits, the people who matter are donors. They’re not just donations, but volunteers and advocates for your cause. Donor retention is how nonprofits stay in touch with donors, so that, years from now, strong relationships continue to endure.
What is donor retention?
Donor retention is a fundraising method that seeks gifts from existing donors. Regular, monthly, and annual donors are all forms of retained donors, as they give multiple gifts to nonprofits over long periods of time.
The goal is to get donors to give again and again and again, and to never lose their connection to your organization.
Imagine fundraising for a museum that raised $500,000 last year, but this year they want to raise $600,000. By retaining all of their donors from the previous year, the museum probably only has to raise $100,000 in new donations.
If donors from last year are lost, then the museum may have to raise more in new contributions, which requires more effort, time, and money to be put towards new donor acquisition.
Donor retention allows nonprofits to have reliable revenue from year to year, so they can devise reasonable fundraising budgets and have a good idea of the money that they’ll have to pursue their mission.
Why is donor retention important for nonprofits?
Retention is arguably more important than acquisition in terms of:
- Building relationships that matter
- Receiving bigger donations
- Acquiring knowledge that helps fundraisers
- Promoting your cause
Retention also tends to take less time than acquisition and costs less money.
Consider that 3 out of 4 donors leave and never return, and that the average donor retention rate hovers somewhere between 20-30%. Even if that number is closer to 30%, you’re losing far more donors than you’re retaining.
Every nonprofit will experience some level of donor attrition, but only seeking new donors in order to combat the losses may not be the best approach.
It costs about five times more to acquire one new donor than it does to retain a donor, and nonprofits tend to spend two to three times more recruiting donors than those donors will give through their first, and possibly only, donation.
Build relationships that matter
Donors are people who choose to invest in your organization, and, while their investments might come in monetary form, they deliver much more than that.
Donors might also volunteer for your nonprofit, serve on your board, tell friends about your cause, and engage in other activities that give your nonprofit more benefits than a mere check ever could.
Donor retention is a commitment to fostering relationships that will last, and that are desirable to all the parties involved.
Receive bigger donations
New donors are new money, but most donors don’t make their biggest donations the first time they give. Major gifts and planned donations are the result of building relationships over long periods of time.
The majority of planned gifts come from donors who give to a nonprofit 15 or more times during their lifetime.
Donor retention isn’t just about receiving the same $25 donation month after month. It’s about building relationships that donors care about, so that, eventually, they choose to give more in a big way.
This concept might be best understood through how consumer businesses cross-sell and up-sell existing customers. Once you’re committed to purchasing a product, why not buy this necessary accessory or that cool add-on?
The customers who are truly invested in getting the most out of their original purchase will spend a little more to make their experience that much better.
When donors continually give to your nonprofit, you should be asking for more as time goes on. For example, if a donor gives to your annual campaign, why not encourage them to also give to specific events throughout the year or to increase their donations to the major gift level?
Additionally, if consistent donors work for companies that offer matching gift grants, then your nonprofit can reap the benefits of doubled donations multiple times.
Request feedback from loyal donors
Close friends share secrets. When you retain donors, they grow more comfortable with your organization and gain trust in how you spend their money.
Once that level of trust is built, they’ll be far more inclined to provide feedback than new donors who don’t yet feel comfortable enough to share information with your organization.
Donor feedback helps fundraisers to improve their efforts and can include insights into:
- How donors perceive your ask strategies
- Accuracy of ask amounts
- If you’re making donors feel like valued parts of a larger community
- Other information
Fundraising is a nonstop process, and it’s important to always be tweaking and improving your efforts.
Direct feedback from trusted donors is one of the best ways to figure out what is and is not working.
You’ll also want to pursue personal information, such as hobbies, employment information, and other data that can help to personalize fundraising appeals. Personalization is key, as no one likes a generic email. Nonprofits can find additional donor information by conducting prospect research.
Improve promotional efforts
Marketing requires a lot of money and possibly even more effort. Wouldn’t it be nice if there was a way to spread the word without having to coordinate so many resources?
When donors give and keep on giving to your nonprofit, they likely have an affinity for your organization.
It’s probable that they’ll mention your nonprofit to friends and family, and maybe even encourage people to volunteer or donate to your cause.
Word of mouth is free marketing that generally won’t come from first time donors.
It’s people who have invested in your nonprofit for a long time who will care enough to promote your organization out of a genuine desire to share what they believe is a worthwhile cause.
With retention rates plummeting, it’s important for nonprofits to bring them back up. Money aside, nonprofit activities get easier when organizations have reliable donors who they can count on for support in a plethora of ways.
How do nonprofits retain donors?
Research states that a 10% increase in donor retention can raise the lifetime value of a nonprofit’s donor database by 200%.
Small improvements can lead to big gains, and there are more ways than a single article can detail as to how retention can be achieved.
How you see donors
I mentioned thinking of donors as friends so that you see them as more than money, and that extends further, to the point of realizing that your friends aren’t necessarily giving merely to help out. They’re purchasing the experience of being a donor.
It’s your responsibility to make that experience as meaningful as possible.
Donors typically look for three things when choosing to give to a particular nonprofit:
- Satisfaction that the nonprofit is fighting for a good cause
- Identification with the cause
- Trust that the organization is pursuing its mission in a good way
Don’t think like you’re selling a product, i.e. that you’re offering donors a chance to buy a piece of the pie that is fighting for your cause.
What you’re selling is the experience of being a donor.
Gifts make donors a part of something special: a community, a mission, a pursuit that needs money, but that thrives on human compassion.
How you treat donors
Once you’ve internalized that donor retention requires both a deep level of appreciation for and a meaningful connection to your donors, it’s time to practice what you preach and treat donors like actual human beings, as opposed to incredibly intelligent ATM machines.
Communications with donors should not all include donation requests.
Include communications that focus on teaching donors about your organization, informing them of upcoming events and volunteer opportunities, and sharing other information that’s geared towards building a relationship.
For example, a botanical garden fundraising campaign could send out information about an upcoming dinner hosted at the grounds, and then follow-up with donors who attended about giving a new gift.
A best practice is to perform these non-ask communications in the same medium as you’ll eventually request donations, so that every time a donor receives an email, phone call, or invitation to grab a cup of coffee, he or she won’t assume that all you’re after is money.
Non-ask communications help to build the kinds of relationships you need in order to retain donors. When you’re reaching out to people to volunteer or to talk about your organization in a capacity that doesn’t pertain to donations, you’re letting people know that you care about more than just their money.
The path to what you want is rarely as direct as you wish it would be, but work hard and you’ll get there.
Formulating a plan to increase retention
First, you’ll need to do some pre-planning. Before you can dive into setting a donor retention plan in place, you’ll want an accurate understanding of your current ability to retain donors.
In other words, you’ll want to look at how “leaky” your bucket is. In fundraising, the “leaky bucket” analogy is based on a simple principle.
If you take a bucket with holes in it and fill it with water, the bucket is going to leak. Essentially, if you have holes in your donor engagement strategy, you’re going to see donors slip through your fundraising bucket over time.
So, before you put your donor retention plan in place, you’ll want to assess just how leaky your fundraising bucket is (you can even take this quiz to help figure it out!), understand where you have gaps in your strategy, and target those holes in your donor retention plan.
It’s hard to retain donors without a defined strategy in place. Fundraisers need to be consistent in terms of timing, the types of communications they’re sending, and their methods of communication with donors.
Donor retention plans should outline a defined, consistent strategy that answers important questions, such as:
- What happens when someone donates?
- What materials are being sent to donors and when?
- What information are you trying to learn from donors?
Having detailed plans gets everyone on the the same page while streamlining the retention process.
For example, it is easier to send a thank you note when you have a template, as opposed to having to create an entirely new note each time someone donates.
Planning will help put a process behind those types of typical or ad hoc activities, saving your staff time and energy.
A large part of planning is taking the opportunity to improve donor communications and strategies. Not only can better communications drastically boost retention rates, but nonprofits need to be timely about reaching out to donors once donations are made.
Nonprofits have about 90 days after the donation is made to form a relationship. After 90 days, the chances of retention plummet.
A proper plan can help donor retention rates soar.
Executing strategies that work
We’ve saved arguably the most important part of donor retention for last: how to execute the strategies that will help your nonprofit keep more donors.
Retention strategies fall into a variety of categories:
- Sensory experiences — You want people to touch and interact with your organization, because those are the moments when they’re forming more intimate links to your cause. Emails and phone calls can help, but actually engaging with your nonprofit builds a tangible connection to your nonprofit. Whether your fundraising for a summer camp or to feed the homeless, encourage people to volunteer, tour your facility, and attend small group meetings in order to really get to know your nonprofit.
- No boring emails — Email might be the easiest, most popular way for nonprofits to contact donors. Many nonprofits use drip email campaigns to slowly show donors how their donations make a difference. The key is to avoid boring, automated emails, as donors can tell when you’re sending them the same message that everyone else is receiving. Get specific with email campaigns and give different donors the varied information that they want about your organization.
- Varied communication methods — While donors might prefer a certain form of communication, you want them to have multiple touch points with your organization. If they prefer emails then send emails the most, but also check in with phone calls and invite donors to events so that you can form a more personal connection. When you reach out to donors in multiple ways you stand to become more than mere emails in an inbox or just another volunteer opportunity. You can become a valued relationship.
- Multiple people reaching out to donors — You should also have multiple staff members communicating with donors. Everyone in your nonprofit should realize that they could be a touch point for donors, which makes them all part of the donor experience. For example, who knows which staff member a donor might approach at a volunteer event? Everyone, not just your fundraisers, must help to continue making the donation experience as phenomenal as possible.
Fundraising boils down to landing donations from two sources: new donors and existing donors. Of course you need to focus on both donor acquisition and retention, but retention plays a crucial role in any fundraising strategy.
Discover a better way to manage fundraising campaigns that focus on donor retention with the help of nonprofit CRM software.
Donors tend to increase their gifts over time, and loyal donors can do a lot of good that goes beyond their much needed monetary contributions. Donors are your friends, and if you treat them well, they’ll treat you well in return, and for a long time to come.