This is a really important guest post. If you are in the business of fundraising in any way, it’s recommended reading. Please also share it, because our sector needs to see this data and act accordingly. Thanks to the author, Jay Love, for putting this together in such a compelling way. Jay is the former CEO of eTapestry. He is currently CEO of Bloomerang and SVP of Avectra while serving on numerous local and national nonprofit boards. He’s very smart about this topic.
By Jay Love
Ever since the Urban Institute and the Association of Fundraising Professionals created the Fundraising Effectiveness Project a few years ago, I have been tracking the results religiously. They provide a near real-time scorecard on what is driving the bulk of charitable giving in our country. The headline of the results is this: Repeat donors matter most. But we are terrible at keeping them. The good news is we could double the fundraising results of most nonprofits by doing a better job keeping our donors. Just imagine what impact such an increase could have on virtually all charity missions!
Here’s my team at Bloomerang’s visual analysis of just how badly we’re doing – and why I’m an advocate for doing better.
What jumps out at you here is the comparison of the commercial sector customer retention average result of 94% versus the charity sector donor retention result of 41%. That is a drastic difference by any means of comparison. I do not believe the donor retention percentage will ever be the same as those derived from customers paying for a service they use daily, and in most cases where they spent decent sums of money implementing. However, as the bottom right corner block of information states, there are nonprofits who achieve a rate of 70% or higher. Every organization should establish a goal for what their donor retention should be. Unfortunately, many organizations are not aware of their current rate or if they know it do not share it with either their staff or board.
What to do about it
To fix this problem at your nonprofit, you need to start with your own data. Track the various retention rates below, comparing those rates with the ones I share here. As the old adage goes, what is measured is what improves. Some key retention rates to track are:
1. First Year Donor Retention Rate by Dollars
2. First Year Donor Retention Rate by Number of Donors
3. Repeat Donor Retention Rate by Dollars
4. Repeat Donor Retention Rate by Number of Donors
5. Overall Donor Retention Rate by Dollars
6. Overall Donor Retention Rate by Number of Donors
Coupled with the above, are the added measures of tracking “upgrades” and “downgrades”. Together these metrics provide solid data to use for establishing individual key objectives and goals. Next, read the recommendations of Professor Adrian Sargeant. His website will give you an MBA in Donor Retention principles and practices here.
My hope is each of you reading this post garners an insight or a concept that allows you to improve your organization’s retention levels enough to truly double the lifetime value of your donor database.