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  • Writer's pictureNonprofit Learning Lab

Retain to Sustain: Understanding Donor Retention and Effective Strategies

This is a guest blog by Bre Alexander with iWave.


Retaining donors is crucial for the success of any nonprofit. While many nonprofits dedicate much time and many resources towards attracting new donors, they sometimes need to pay more attention to the trap of being stuck in a cycle of only trying to secure new donors. This can be costly and deprive them of the potential to create lasting donor relationships with existing donors.

 

Donor retention serves as a gauge of how well your organization is maximizing its current relationships. As a metric, it provides a snapshot influenced by various factors, including your practices and procedures.

 

Attracting new donors can cost 5x more than retaining your existing ones. If you're focusing primarily on donor acquisition, you're missing a large slice of the fundraising pie.



Donor Retention vs. Donor Acquisition

Donor retention measures how many donors continue to contribute to your organization after making their first donation. If you have a "high donor retention rate," you tend to keep your donors year after year. On the other hand, a nonprofit with a low donor retention rate must keep working hard to acquire new donors to keep thriving.

 

Retaining your donors is a more cost-effective method of raising funds compared to constantly needing to find and nurture new donors.

 

The Fundraising Effectiveness Project indicates that new retained donors are down almost 28% overall, while repeat retained donors are down nearly 3%.

 

Donor acquisition is the process nonprofits use to secure charitable donations and funding from individuals, foundations, and corporations to fuel their mission.

 

The donor acquisition process typically involves:

  • Identifying potential donors’

  • Outreach (usually via social media, email, or even direct mail)’

  • Advertising, and Nurturing prospects to secure the donation.

 

The process can last anywhere from a few days to years, depending on the donation size and the nonprofit's acquisition efficiency. As many nonprofits rely heavily on donations, it's among the highest leveraged tasks for teams.  

 

On the other hand, donor retention is building long-term relationships, ensuring your supporters continue to contribute. Retention is like maintaining a library, preserving its collection, and providing patrons with reasons to return for more! Just as libraries evolve to embrace new technologies and trends, fundraisers must innovate their strategies to engage donors effectively and sustain their support for the long term.

 

Calculating your donor retention rate.

Donor retention rate can be calculated with a simple formula:

 

Retention rate = (donors that gave this year ÷ donors that gave last year) x 100 (expressed as a percentage)

 

Donor retention rate varies across different nonprofits. It's helpful to dig into reports to understand trends so you know where your nonprofit stands relative to the average retention.

 

Donor Retention Strategies

There are several factors to take into account when developing your donor retention strategies. Initially, you need to ensure you're targeting the right donors; then, you must dive deeper into understanding them – their preferences, communication styles, and desired engagement. Doing so allows you to tailor your approach and leads to creating lasting donor relationships.

 

Understand Your Donors.

To retain your donor, you must first understand your donor.

 

Creating donor profiles is a great first step in understanding your donors better. A donor profile is a document that includes the attributes and giving behavior of your ideal donors – allowing you to get the complete picture of your donors and leading to a deeper understanding of who they are and what they care about. A comprehensive donor profile outlines four key elements:

  • Demographics – Age, gender, ethnicity, education level, income range, geographic location, marital/family status, profession, affiliations.

  • Psychographics – Values, motivations, personality traits, beliefs, causes of interest, passions, life experiences.

  • Giving History – Size/frequency of past donations, favored causes, patterns over time, responses to appeals.

  • Communication Preferences – Preferred channels (email, phone, mail), responsiveness, social media engagement.

 

A comprehensive donor profile provides nonprofits with the ability to identify, understand, and effectively engage their most likely supporters. Crafting personalized outreach and solicitation strategies based on donor profiles builds strong relationships and improves fundraising results.

 

Donors have different motivations for giving to nonprofits based on their personal history, past interactions, and sources of information.

 

A donor's background can provide key insights into their motivations and interests. For example, reviewing donation records over time can reveal patterns. Some donors consistently give at the end of the year to maximize tax deductions, while others donate sporadically based on current events or personal experiences.

 

Recognize your donors and express gratitude.

People give for various reasons, but one thing rings true for almost every donor: they want recognition. Think back to a project where you went above and beyond and got that ever-so-sweet kudos; it felt great, didn't it?

 

The goal is to create those same positive feelings for your donors. Reach out and thank them personally, outlining specifically how their donation made a difference. Be sure to send these notes of appreciation quickly after a donation.

 

We know sending out those personalized thank you notes and letters can be difficult, especially when they've stacked up on your desk. That's why iWave introduced NonprofitOS and Generative AI for fundraisers. NonprofitOS can create the first draft of your thank you notes!


Stay on top of recurring donation plans.

Churn from donors can happen for many reasons, including something as simple as credit cards on file expiring. Ensure you have a system to take action when there's a failed payment or the possibility of a failed payment. 

 

Take note of when your donors churn the most; it's typical for more of your monthly donors to churn in January compared to any other month. You may notice that within your organization, your monthly donors churn after a certain period. Understanding this data and identifying potential churn will help you to proactively take measures like reaching out ahead of churn and re-engaging!


Gather data and feedback.

Provide your donors with a feedback mechanism, and listen to them! Your donors have proven they care about your mission, and providing them with a way to suggest ideas and improvements can go a long way toward making them feel like they are part of your organization.

 

Gathering and analyzing data on your donor's behaviors, connections, preferences, and affinities will give you great insights. While this is less proactive than reaching out directly, understanding this data helps you form proactive donor retention strategies.

 


The longevity of many nonprofits hinges on their ability to retain donors. While pursuing and acquiring new donors is vital, equal focus should be on nurturing relationships with existing donors. By balancing donor retention with acquisition efforts, nonprofits can cultivate a sustainable and supportive donor base crucial for their continued success and longevity.

 

 

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