Do you know your organization’s donor retention rate?
I’d bet not.
According to the Association of Fundraising Professionals’ 2020 Fundraising Effectiveness Project (FEP), only 43.6% of the donors who made a gift in 2019 made another gift in 2020. That means more than half of donors who made a gift in 2019 didn’t make another one in the following year! And 2020 is no exception.
A chorus of voices have been beating the drum about the importance of donor retention through their research, in blogs, and in webinars—with stagnant results.
As important as it is to pay attention to donor retention, it’s equally important to know how to “move the needle”—and we do. But clearly, not enough of us do it.
It’s time to make keeping your donors a board-level priority, right up there with Finance, Governance, and Development itself.
The Donor Retention Crisis—and Why It Matters
In 2019, Dr. Adrian Sargent bemoaned the fact that first-time donor retention rates were below thirty percent: “The USA still holds the record for the most shockingly poor pattern of results. When did it become acceptable to lose 70% of newly acquired donors?”
That’s right, 70% of first-time donors never gave again. And then what happened? In 2020, in the context of increased overall giving, first-time donor retention fell by another 10% such that 80% of first-time donors did not make that key second gift.
Why are first-time donors such a big deal? Because according to the FEP, the 2020 repeat donor retention rate was 59.6%—whereas the new donor retention rate was 19.3%. Get that second gift and you’re well on your way to the third gift and the fourth one.
From Dr. Sargent’s research, we know that increasing the donor retention rate by 10% increases the value of the donor base by at least 50%. Other studies cite increases as high as 200%. This is due to the effect of compounding and the fact that some donors will go on to become major donors, loyal monthly donors, and/or include the organization in their estate plan.
We Know What to Do, But We Are Not Doing It
We know what donors want in order to be inspired to keep giving. We know specifically what to do to encourage that important second gift. You don’t have to look further than Penelope Burk’s research-based book Donor Centered Fundraising: How to hold on to your donors and raise much more money, which was published back in 2003.
Per Burk’s research, donors want to know what you did with their previous gift before you ask for another one. Donors also want to be thanked personally and promptly. Common sense, right?
But common sense is so simple to execute. It requires commitment and resources.
Specifically, you should commit to an action like having a board member call a first-time donor within 48 hours of them making a gift. This is the research standard—do your best. Why? Here are two reasons:
- Increases donation amounts by 40%—even if you leave a voicemail!
- Increases the likelihood of a second gift by 33%
We know from Dr. Sargent’s work that customer service is an important influencer of donor loyalty. In a nonprofit context, the donor thank you process is typically what donors see as customer service.
The Call to Action: A Board Committee Whose Sole Function Is Thanking Donors
I recommend creating a committee whose sole function is to thank donors.
It’s not a “Donor Relations Committee.” It’s not a “Donor Retention Committee.” It’s the “Thank You Committee” or the “Donor Thank You Committee.”
Serving on this donor thank you committee should have the same standing as sitting on Finance, Governance, Development—or any other Board Committee. Even if it’s a sub-committee of the Development Committee, it should have its own Chair, members, and staff support. The committee should be authorized to have non-voting, non-board members.
Annually, the committee should request and review both the overall donor retention rate and the first-time donor retention rate and report those numbers to the full board. When looking at these numbers, compete against yourself by looking at data from previous years as opposed to looking at the awful national averages.
The committee has one mission: to understand and execute researched ways to inspire donors to keep giving. These include personally—by phone, handwritten note, or personal video—thanking as many donors as they can as promptly as possible.
Here are a few things to keep in mind:
- Its members might include:
- Current board members, one of whom is the Chair
- Previous board members. Bonus: Keep them engaged.
- Staff. Some staff members volunteer to make thank you calls to take a break from their other work—just 15 minutes per day makes a difference.
- Non-board volunteers
- During busy seasons, additional members might be recruited for a six-week commitment.
- There should be an easy way for members to report back notes from donor conversations.
- This committee might meet periodically for research updates, training opportunities, to share stories, and build community. But there should be a minimum attendance requirement compared to the time spent by committee members thanking donors.
What if We’re Really Small and Can’t Do All of the Researched Practices?
Doing something is better than doing nothing. For example, Burk found that calling donors up to sixty days post-gift was beneficial. A staff member or volunteer might spend 15 minutes three days per week writing notes or making calls.
If you’re raising money from individual donors:
- Use a spreadsheet or nonprofit CRM to track donor information. Data entry and management takes time, but without it you’re spinning your fundraising wheels.
- Consider capturing phone numbers if you’re otherwise focusing on online tactics. Asking for a phone number creates additional “friction” as it is called, meaning you might reduce your donation rate. But if 80% of your new donors are going to say goodbye after one gift, the trade-off may be worth it. Test it out.
- Create and manage a small donor thank you committee made up of volunteers. The return-on-time investment will pay you back. Try it and see.
As a bonus, the members of a Donor Thank You Committee may become your most fulfilled and inspired ambassadors!
As your donor retention rate inches up, this translates the committee’s impact into dollars. For example, a 1% increase in donor retention can produce a 5%-20% increase in the value of your donor base. Compute the dollar range and share it to celebrate those wins.
Where else can you spend 30 seconds saying thank you to a voicemail and know that you are making a difference?
And when you do happen to reach a donor who wants to chat, it is often a wonderfully joyful experience—for the caller as much as the donor.
In conclusion: It’s time to do something different to improve donor retention rates—and that something is research-based action delivered through a board-level Donor Thank You Committee.
The post Solving the Donor Retention Rate Issue: The Case for Creating a Board-level Donor Thank You Committee appeared first on Bloomerang.