*Part one in a series of two articles about donor retention, this part focuses on retaining first-time donors.
Messaging from the non-profit community since the start of the pandemic has overwhelmingly focused on the need to communicate to donors. Communication is the first step to demonstrate an organization’s impact, a critical piece to retain donors year after year. We know that it is cheaper and easier to retain donors rather than acquire new ones, yet retention doesn’t receive enough attention as a powerful fundraising tool that will help to strengthen any organization’s yearly fundraising. I’ve sketched out this methodology below to demonstrate just how critical donor retention is to fundraising success. I then offer my best tips to retain donors that you can start to implement or add to your existing retention program.
Key takeaways:
- The average donor retention rate for nonprofits is about 45% (as reported annually by the Fundraising Effectiveness Project, a project established and led by The Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute).
- New donor retention rates (the percentage of donors retained who made a first-time gift to an organization) are lower than the average for all donors. However, it takes just one repeat gift (a second donation within a year of the date of the first gift) to dramatically increase overall retention rates. There is a big opportunity to retain donors after they make their first gift, which is when they are most interested and connected.
- You can calculate donor retention rate by dividing the number of repeat donors in a given year by those that donated in the previous year. For example, if you have 189 donors who gave again this year, but had 405 who gave last year, your donor retention rate would be 47%.
Let’s look at some numbers to see the impact of donor retention and attrition:
This is a simple, but revealing, calculation. In year one, this organization raised $50,000 in new dollars from 50 donors. In year two, I applied the average donor retention rate of 45%. We see that only $23,000 is retained from last year’s new contributions. Therefore, not only have we lost $27,000, but we’ll need to invest a significant amount in order to secure another $23,000 in new gifts to bring us back to where we were last year. Even with all that effort, year two is flat. We’ll have to work even harder to get ahead. It is MUCH easier to spend the time retaining year one donors than it is to acquire new ones to make up the difference from last year.
I noted above that there is an added imperative to retain first-time donors. Here are a few tips tailored specifically for this audience:
- Have a board member call and express thanks for their gift. The peer-to-peer engagement is a personal touch that offers the donor the chance to share why they are interested in the issue and what motivated them to give. That information is especially helpful in retaining gifts year after year.
- Offer an opportunity for first-time donors to engage with organizational leadership. One of my clients hosted a virtual coffee meeting for all new donors in 2020 that was well attended. Making new donors feel part of a special group is a good way to acknowledge their generosity and hosting a virtual event offers the organization a chance to share information and begin to build relationships.
- Start an education campaign. I include information below about communicating with donors across a variety of platforms. For first-time donors, take the opportunity to educate them about your mission, vision, past successes, and current impact. Remember that just because someone makes a gift, it doesn’t mean they know everything about what you do. Consider working with your marketing team on an automated onboarding campaign that is triggered when someone makes their first gift.
What other first-time donor retention tactics work for you? Let me know!
Continue reading The Data of Donor Retention: Part 2.