Perhaps most striking is the performance difference in retention between the top 20% organizations, who lost on average 14.1% of their new donors, whereas the bottom 20% lost a whopping and unforgivable 68.3%.
Who did the worst? The little guys… organizations with revenue less than $100k and, as the authors say, the least resources to put into donor engagement. They held their own in terms of gains, but suffered significantly higher losses.
Makes you wonder why they even bother.
How are you doing?
Does your annual giving program boil down to hope and a single annual mailing?
When I work with smaller organizations, I often have a hard time persuading them to invest in a real program. Money is absolutely an issue, and I get that. But you don’t raise money unless you spend money.
Money spent on your fundraising program isn’t waste. It’s not overhead. It’s an investment in your organization’s success.
And it will bring a better return than what you’ll get at the bank.
The Fundraising Effectiveness Survey Report tells us growth in dollars is up slightly across all size organizations. Retention is not. The report cites a 45% donor retention rate in 2016.
We’re scrambling after new donors before we have plans in place to keep them. That’s wasteful.
Also from the report: every $100 gained in 2016 was offset by $95 in losses through gift attrition.
Are you running to stay in place?
The smallest organizations didn’t even see dollar growth. They’re losing ground in every way.
You need to focus on retention
Donor retention – and the overall growth of your program – doesn’t just happen. It’s not a mushroom, growing quietly in the dark without much fuss on your part.
If you need to fund your mission, you probably need to raise money. So why isn’t an investment in this area a priority?
Retention is cheaper than acquisition. Retaining your donors is a smart way to put your organization on stronger footing. And the donors you keep are the ones who will increase their giving over time.
These donors are precious! Don’t let them slip through your hands.
Why do your donors leave?
There are many reasons donors stop giving. Here’s an infographic from Bloomerang to check out. Some might surprise you. For instance, donors might not remember ever giving to you before. That’s not their faulty memory. That’s a missed opportunity to create an experience they can’t forget.
They may never have heard about whether their gift had any impact. They might have disliked how you communicated with them – too often or not at all.
And sometimes, it’s something out of your control. Their income changed. Someone passed away or moved. Those you can’t control. The others, you can.
Roger Craver in his excellent book, Retention Fundraising, suggests identifying the experiences that make your donors feel most connected. How? Ask them.
When you have 10,000 donors that might be quite an undertaking. When you have 500, it’s not such a reach.
Talk to your donors
Roger suggests surveying your donors about their experience with your organization. To get useful information out you need to ask the right questions. Broad “what do you think of us?” won’t give you much that’s actionable.
Roger suggests looking at areas such as donor services (when I need something, how do you respond?), engagement (do your publications make me feel great for giving?), and fundraising (are your appeals appealing?). Your brand matters. Your programs matter. And how you talk about all of them matter.
The key here is to identify the areas you do well, the areas you do not – but also the areas that don’t matter much to your donors. If you’re spending resources on the “doesn’t matter” stuff, you can stop.
I have done and love surveys as a simple engagement/fundraising device. Roger takes that quite a few steps farther down the road. Read the book, please – it will be very helpful to you.
It takes money – and focus – to make money
I know: smaller organizations don’t have the staff. It feels impossible to put a year-round program (asking, thanking, reporting) in place.
First, know you’re not alone. Most nonprofits are smaller organizations – according to Blackbaud, 37% have revenue less than 1 million a year.
So how do you start?
How do you make it possible to invest in fundraising and especially retention?
- Plan first. That means shifting priorities, most likely. Perhaps you need to revisit your mission and focus – are you doing things “just because” that don’t really fit? Don’t do fundraising as an after-thought. Make a plan each year. A calendar. Projections for each segment and source. This has to be honest though. You can’t backfill your financial needs with fundraising dreams. Stretch, but within reality.
- Commit to a culture of philanthropy in the organization. Fundraising is everyone’s job. Have everyone thank donors – hand out cards at each staff meeting. Repeat to your board, your staff and your funders: fundraising IS mission. Until you invest as much in that as you do your program(s), you will always struggle.
- Talk to funders. Many community foundations have programs to support capacity growth.
- Bring your board in. Maybe there’s a reserve fund that could be used. Or maybe a few board members will finance this initiative.
- Invest in fundraising staff – or invest in outside help. If you’re not communicating well now, for instance, learn how by working with an expert.
- Worry less about fancy and more about consistent and genuine. You don’t need a brochure. You don’t need glossy paper. You do need emotional, personal communication – and consistency.
Smaller? This could be your big advantage
Small organizations can do a fabulous job with retention – if they make it a priority. You can get to know each of your donors. You can build the strong, personal relationships that drive the best fundraising programs.
You just have to do it.
Your messaging and donor love
I want to talk more specifically about communications and messaging, too. This is another area where you don’t need be a large organization to do a great job.
- If you consistently remove the donor from your communications – except to ask for money – why would you be surprised when retention drops?
- If donor-focus is only about adding “you” to your writing, you’re missing the genuine respect for donors that is crucial to retention.
- If your idea of philanthropy is “send us the money and we’ll get the job done”, where is the emotional connection in that for your donor?
- If you’re not willing to cede the starring role, you’re probably not winning donors over. Give it some serious thought. Because changes in attitude can lead to financial changes as well.
I’ve seen a large international organization focus on their staff in their communications. They do good work. But the message to donors is “We do the hero work. You send the bucks.”
But that hero work doesn’t happen without donors’ bucks. So move over and make room for new heroes.
Create a monthly giving program
One way you can help ease the staff load while raising more money is to concentrate on seeking monthly gifts.
You can read more here about how to start a monthly giving program.
What you measure is what you do
So, you’ve identified some changes and put them in place. How do you know it’s working?
You need to measure retention and each donor’s lifetime value. One is a year over year. The other gives you a moving picture of your donors.
That $50 a year forever donor? Her lifetime value makes her more important than you might have guessed. And a great prospect for planned giving.
If your fundraising system can’t give you that information, you’ll have to do those calculations yourself. That’s far from ideal, but possible. Then make plans to move to a database system that provides what you need to know.
Improving your retention rate can have tremendous impact on your long-term success. A 10% improvement in attrition can yield up to a 200% increase in projected value over time. That’s not peanuts!
Donors are critical to your work.
You have to believe that to succeed with fundraising. Donors are not foolish – they know when they’re being taken advantage of. They know when an organization actually cares about their involvement.
Whatever your size, it’s really not hard to be that organization. Remember, this isn’t a one-time exercise. It’s an attitude change. It’s about what kind of organization you will be.
Do you want to be the organization that connects with donors and thrives? Say yes and you’ll stand out in the crowd.
Or do you want to keep taking two steps back for every step up?
And while you’re at it, subscribe to The Agitator. Every day, Roger Craver and Tom Belford share the great information you need to make the world a better place.
Photo thanks to Jacob Culp