Donor Retention Is More Important Than Ever

Once again, the lazy days of summer have given way to the hectic pace that defines the approaching year-end holiday season. For nonprofits, the fourth quarter ushers in a busy and critical time as many organizations launch year-end giving campaigns to meet annual fundraising goals.

Typically, nonprofits have relied on November-December campaigns to capitalize on the peak giving season. After all, depending on the source, the average nonprofit raises anywhere from 17% to 30% of its revenue in December alone. Just like holiday shopping deals, however, the trend is shifting earlier. Some organizations start as early as September and more than half launch campaigns in October, according to Donorbox.

What’s behind this shift? Some recent findings may provide some clues.

First, fewer individuals are giving. According to the Fundraising Effectiveness Project’s (FEP) 1Q 2024 report, the number of micro donors – those who give $1 to $100 – showed the largest year-over-year drop at 10.4%. This group constitutes nearly 60% of all donors. The other categories – small, midsize, major and supersize – showed smaller year-over-year declines. And although the number of supersize donors ($50K+) shrunk less than 1%, this group represents nearly half of the total dollars raised.

Second, issues with donor retention are real. The same FEP report shows a sizeable year-over-year decline in the number of new donors (10.3%) and “new retained donors” (12.1%). New retained donors gave to an organization last year, but not before. The number of “repeat retained donors” also dropped by 6.5%. This group gave to an organization last year, but not for the first time. It represents the largest percentage of total donors at 50.4% AND it also represents nearly 60% of total dollars raised.

Overall, the FEP estimates the overall donor retention rate for 2023 at about 42%, a 2.5% decrease from 2022. And once you lose a donor, the chance they will return is very low – FEP reports a recapture rate of just 4%.

The Power of Gratitude & Engagement

Nonprofits often spend major time and resources attracting new donors, but as many of these statistics point out, building meaningful and sustained connections with existing donors – especially those who just gave for the first time – is critical.

To help you develop a sustainable donor retention strategy, consider the following:

Develop a Manageable Plan

While nonprofits understand the importance of donor retention, their teams are often spread thin. Make sure you develop a donor retention plan your organization has the capacity to execute. Segment your donors by giving level and get a firm handle on retention rates for each group. The more data you can extract, the better you’ll be positioned to prioritize efforts and focus on areas where improvement will offer the greatest impact.

Gratitude, Gratitude, Gratitude

Always thank donors promptly and sincerely. When you receive a gift, send the donor a personalized response, showing your gratitude and describing the impact that donation will have on achieving the organization’s mission. You can map out a response protocol based on levels of giving. Mid-level gifts, for example, can prompt a hand-written letter from your organization’s leadership, while a larger gift results in a personal note and phone call from a board member.

Engage Donors with Impactful Stories

Once you’ve expressed your initial gratitude, it’s time to build on the momentum. To keep donors interested and engaged, take the time to educate them about your organization’s work through personal and impactful stories. Show donors how their gifts are making a difference in the community and helping achieve your nonprofit’s mission. Donors are more likely to give again when they develop an emotional connection to your mission. This can be done through personal stories from clients, employees and volunteers featured in quarterly impact reports, videos and in-person events.

Make Recurring Donations Easy

According to Double the Donation, the majority of donors – 63% – prefer to give online. It’s the perfect opportunity to offer a recurring giving option on all your online donation forms. If you make it simple – check a box and select from a few options such as monthly, weekly or annually – you’ll be more likely to boost donor retention and better manage your finances throughout the year. Whenever possible, connect online giving amounts to tangible results. For example, a monthly donation of $100 feeds a family of four for three weeks.

Put a Face to Your Organization

Donors are more likely to stay engaged with your organization if you facilitate personal connections. While annual galas and other large events play a critical role in fundraising, don’t overlook the power of small, informal gatherings, such as in-person tours, lunch and learns and Q&A sessions with organization leadership. When leaders are accessible and approachable, it helps donors create stronger connections and build trust with the organization.

The giving landscape continues to create challenges for many nonprofits. As you embark on your year-end fundraising efforts, consider the importance of turning last-year’s donors into lasting donors to help you meet your goals and achieve sustainable success.