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The Year of Donor Retention?

I don’t know about you, but I have heard a lot more fundraisers talking about donor retention lately. It’s about time!

Our friends at Blackbaud had previously declared 2013 the year of donor retention and pushed the topic further in 2014 by suggesting some approaches for improving donor retention. The point is… this is a topic that is not going to go away until the collective scales are tipped in favor of nonprofit organizations retaining more donors! I, myself, still have not lost hope because I’ve seen organizations that HAVE increased their donor retention rate when they’ve placed a strategic focus on getting it done.

Given that nonprofits today lose three out of every four first-time donors, donor retention is one of the most critical issues facing fundraising today. I would even assert that this is THE most critical issue. Fixing this problem becomes even more urgent when we look at some of the contributing factors. Among those factors, many nonprofits don’t even know their donor retention rate or how to determine it!

Another factor has to do with the number of nonprofits. There are more nonprofits today than ever before. In fact, the number of nonprofits has increased by more than 25% over the last few years according to the Urban Institute. The growth rate of nonprofits has surpassed the rate of both the business and government sectors. What does this mean? More organizations are out there asking for support, giving donors more choices about where to invest. If donors are not cared for, they are going to invest somewhere else.

While the number of nonprofits increases, the cost of acquiring a new donor is also going up. I worked with an organization recently that was preparing to mail 10,000 acquisition letters to prospective donors. Each piece cost 60 cents, for a total cost of $6,000. With this particular list, they were expecting a 1% return.

Let’s say the average gift is $25. This means the mailing will bring in 100 new donors and $2,500. They’re already in the hole for $3,500 – on just this mailing. Using the current donor retention numbers, they will keep only 25 of these donors after the first gift. If these donors give the same amount next year, that would be $625. When you do the math, it just doesn’t add up!

I am not at all saying that acquisition isn’t important. It is essential. But we have to stop the leaky bucket by focusing on donor retention. Donors are telling us—through their departure—that how we’re treating them is not working. We need to rethink our relationship with donors and stop asking what our donors can do for us. We should be asking ourselves, “What can we do for our donors?”

The first step in truly making donor retention a strategic focus for your organization in 2015 is to analyze your donor retention rate. Don’t know where to start?  While it can be a bit of a mystery to determine the rate for some organizations, it can be done! We regularly help organizations determine their donor retention rate in Raiser’s Edge(RE) and getting started is as simple as an email to info@omaticsoftware.com. Some organizations also utilize the RE plug-in for the Fundraising Effectiveness Project

The next step in transforming your donor retention program is strategy. No amount of software or hope is going to fix your problems without a solid strategy in place first. I am a huge advocate for a “People, Process, and Technology” approach. Starting with executive leadership, everyone in your organization has a role in donor retention. Then, develop systems and processes to support your retention strategy. Finally, overlay technology to streamline your retention efforts and enable your staff to spend time engaging donors instead of managing data.

So, what should your donor retention strategy look like? Throughout the next several months I will be sharing some best practices and strategies that I have seen which have proven to be effective.

Successful fundraising strategies do take time so perhaps it’s more appropriate to say we are in the “Decade of Donor Retention”? Regardless, there is no time like the present for you and your organization. Together, we can make 2015 the year that you get donor retention on the right track towards creating lifetime supporters!

Raiser’s Edge is a trademark of Blackbaud, Inc.

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