Are You Retaining Your Donors?

By Tim McCormick, Vice President
Cleveland, OH

It’s a simple question, but you may be surprised to learn that in studies conducted through the Association of Fundraising Professionals’ “Fundraising Effectiveness Project,” nonprofit organizations showed annual losses of 51.9% in revenue from downgraded or lapsed donors.

The organizations involved in the study compared their 2004 donors and giving with their 2005 results. These same organizations showed a 62.6% increase in revenues from new or upgraded donors. With a 10% net gain, it might not seem like donor retention is that big of an issue, however on a long-term basis, nonprofit organizations may not be able to replace lost donors with new acquisitions.

There is another potential threat to organizations that may be considering a major gift, capital or endowment effort. These types of efforts usually rely on a small group of key donors for a large percentage of the goal, but the remaining funds usually come from the constituencies that have supported the organization in the past. A shrinking donor base could make these efforts much more difficult.

For these and other reasons it is important to track your donor retention and to understand what is affecting your numbers.

If you’re like most organizations, you have a wide variety of fundraising efforts that you conduct throughout the year. When you are analyzing your donor retention, it is important to track the individual results from the different types of fundraising you conduct on an annual basis. The retention from a mailing campaign, for instance, will be different from an annual campaign where face to face visits are made. Depending on the type of software you are using to manage your donor base, you may be able to generate a number of reports that will help you start to analyze your donor retention.

Besides the statistical information, there may be other factors that impact your donor retention. For example, you may have expanded the services you offer, completed a special project, or had some other event that gave your organization positive exposure in the community and with your donors. Be sure to include these types of internal and external factors when performing your analysis. One effective way to do this is to graph or chart your numbers, showing change over time, and then mark significant events.

Once you have gathered the raw data and accounted for the internal/external factors, you should see some patterns emerging from your retention data. Using that information, you should be able to determine which of your efforts are most effective in retaining your donors. The data should be the basis for developing an action plan to address areas that need to be improved.

When developing the plan, make sure you go beyond the data and get your donors involved. Surveys, focus groups and telephone interviews are just some of the ways you can gather important information from your donors to help design your approach to improve retention.

Sample questions to use in this part of the process can be found at the AFP’s web site in the Resource Center under “What Do You Know About Your Donors.”  Beyond understanding why donors did not continue to give, or gave less, these tool will help you gain a great deal of information about how the donors perceive your organization.

The process to improve your donor retention is not a quick fix approach and it must involve more than just the development department. Top level administrators, key volunteers and the Board must see the value of increasing donor retention and be committed to implementing the plan that is developed. Look for more information in future issues of “News You Can Use” on ways to improve results with your donors.