Nonprofit organizations must do more than attract donors. They must focus on donor retention. Retaining donors lowers donor acquisition costs, increases donor lifetime value, promotes more reliable support and leads to larger donations.
Organizations must focus on donor retention strategies to see optimal returns on their fundraising efforts. A combination of personalized engagement, communication, donor programs, events, recognition and appreciation support nonprofit donor retention. The same also holds true for event sponsors when you host fundraising events. With the right approach, you’ll spend less time marketing and more time earning.
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Indiana University research reveals a 10-percent increase in donor retention can boost revenue by up to 200 percent. A Slideshare report reveals it can cost 6-7 times as much to acquire new donors than retain existing donors. A focus on donor retention means less spending and more profitability.
Consider this: according to RAIN Group Sales Training, it takes an average of eight touchpoints to get a sale. Fundraising requires a similar process:
But existing donors already have the information they need. Fundraising can be as simple as sending an email.
Donor retention also provides more lifetime value. Once you form a donor relationship, they will likely continue making donations each year. Often, they will outdo themselves by giving a little more each year to help your organization thrive.
Despite worthy causes and an increasingly socially conscious environment, the Fundraising Effectiveness Project Q1 2024 report shows that donor retention rates are down 3% year over year. The report also shows that 23% of donors churn within six months of their first donation, meaning more than 70% of donors only give to organizations once.
The report shows retention rates for new donors were down to 7.2 percent, a 7.6 percent year-over-year drop. Success rates in recapturing lapsed donors dropped 16.8 percent. The repeat donor retention rate decreased by 3.9 percent.
These numbers prove that it’s more important than ever to implement the right donor retention strategies and beat the odds.
So how do you improve donor retention? Here are some donor retention strategies to include in your marketing campaign.
Segmentation is a crucial donor retention strategy. It requires segmenting your audience into groups to ensure you send personalized, targeted material.
Many traditional companies segment according to demographics such as age, location, profession, income, ethnicity, etc. They customize messaging to ensure it is relatable to the group they’re targeting. This strategy forges deeper relationships and prevents consumers from feeling like “just another customer.”
Nonprofits may segment by demographics, but they should also consider factors like:
This type of segmentation helps organizations identify where donors are in the funnel so they can motivate them to take suggested actions.
Many donors give because they want to feel like they are a part of something. You can enhance this connection through consistent and meaningful communication.
Reach out through event emails and social media. Phone calls and snail mail provide a more personal touch and are strong methods for connecting with donors.
Let donors know how you used the funds, the current goals your organization is working toward and the struggles you are facing. Invite them to upcoming events and meetings and when they do attend, use post-event surveys to gather feedback on how they felt about the event. Make them feel like a vital part of your community. You can compile a post-event report to help in this evaluation process and guide decision-making going forward.
Recurring giving programs are a great way to keep donations coming. Here’s how they work:
A Vanco study of 25,000 nonprofits found that recurring givers donate two times as much as one-time givers. These statistics make recurring giving programs a worthwhile investment.
Check out Vanco’s Recurring Donation platform to learn how to boost your fundraising efforts.
Donors enjoy being part of a community. What better way to encourage this connection than through events and community-building initiatives? In addition to making donors feel like part of something, these events foster a connection between your organization and your donors, so they are more dedicated to the cause.
Several online and offline event formats are ideal for improving nonprofit donor retention rates. They run the gamut from fun community affairs to formal galas, such as:
Nonprofit organizations must thank donors for their donations, but an automated email may not be enough to boost donor retention rates. Here are some more effective strategies:
Award donors depending on how much they give. For example, award small donations with swag items. Award larger donations with plaques and dedications. The sliding scale of reward tiers will incentivize donors to give more.
Nonprofits should track donor retention rates to identify areas of improvement and build stronger relationships. A high retention rate indicates donor satisfaction. A low retention rate means you may have issues with your communication and engagement strategies. There are several key metrics to consider.
The donor retention rate indicates how many donors are still actively donating to your organization. Bloomerang offers this formula for calculating donor retention rate:
Divide the number of last-year’s donors by the previous-year’s donors and multiply by 100
So, if you had 500 donors in 2022 and 200 of those donors renewed their donations in 2023, your formula would be:
200 / (500x100)
Your retention rate would be 40%.
To determine your average gift size, divide the revenue for the year (or month) by the total number of gifts during that period. You can also find a median donation amount by sorting the donation amounts and identifying the middle point.
You may also determine a major donor retention rate. To do this, divide the number of recurring major donors by the total number of major donors and multiply by 100 to get a percentage.
Lifetime value (LTV) is another critical metric. It goes beyond average gift size, revealing how long a donor stays with your organization and their average gift size. It gives you an idea of how much you can expect from a donor before they stop giving. You can use this calculation to determine how much you should budget for donor retention and acquisition.
LTV is not difficult to calculate, but it requires digging deep into your database to find the information you need. Here’s what the formula looks like:
LTV = Lifespan x Average donation amount x (Total # of donations/Total # of donors)
Measure LTV over time to determine which direction your organization is headed.
The data you gain from these numbers allows you to make actionable insights. You can:
Once you have this information, you can work out a strategy to target donors accordingly. For example, ensure you reward donors who increase their donations. Consider sending surveys to stagnant donors to determine their preferences and determine if they would give more with special attention. Find ways to increase engagement with donors who are giving less.
Nonprofits may use various tools to track metrics, but few are more effective than customer relationship management tools (CRMs).
CRMs store contact details, donation history and communication preferences in one location so you can better understand donor behavior. You can run reports on contributions, event participation and retention and use automated processes like messaging, email marketing and social media posting to make your life easier.
We’ve put together 100+ pro tools and templates that are guaranteed to boost your nonprofit’s fundraising—no guesswork, no fluff. Here’s what’s inside:
The only question left: Are you ready to turn the chaos into success?
Donor segmentation involves segmenting your audience so you can create more personalized marketing materials. They help build deeper relationships with your donor base and make them feel like part of their community. Donors will be more likely to continue giving to your organization.
The Fundraising Report Card shows the average donor retention rate is around 35%. Most nonprofit organizations agree a good retention rate is between 35% and 45%.
A recurring donation system allows donors to sign up for automatic deductions from their accounts that are transferred to the nonprofit. Donors don’t have to think about making regular donations. The system charges them automatically, helping them retain support without the effort.
Several CRM tools track donor retention metrics and provide other features that make them ideal for nonprofit organizations. Recommended systems include:
Vanco supports donor retention efforts in several ways:
Imagine setting up your next fundraising event in just five minutes. That’s what Vanco does for you—no learning curve, just a quick setup and an easy, intuitive system. You can try it risk-free and discover what thousands of nonprofits already know: event management doesn’t have to be a chore.