Donor retention has to be the number 1 goal for every non-profit. According to Rebecca Koenig, for every $100 in new donations nonprofits gained in fiscal year 2014 over the previous year, they lost $95 in lapsed or reduced donations. This survey was conducted by the Center on Nonprofits and Philanthropy at the Urban Institute.
While that 5% net gain in gifts is “disappointing,” said Nathan Dietz, senior research associate at the Center, the news regarding donors themselves is even worse: For every 100 new donors gained in 2014, participating nonprofits lost 103.
The study also reveals a large amount of “churn in the donor universe,” Mr. Dietz said. “It’s hard to predict for any individual donor in general whether they’re going to be still on the rolls next year, donating money next year.” In my mind, it’s all about donor retention.
Bottom line – these poor donation / donor retention rates matter. As we all know, it usually costs less to keep a current donor than to find a new one. Therefore, reducing these losses is the cheapest way to increase fundraising gains.
Penelope Burk, president of Cygnus Applied Research, which conducts the annual Burk Donor Survey, agrees. Her research shows that individual donors are giving to fewer nonprofits — although not necessarily giving less money over all. That means nonprofits that rely on acquiring large numbers of donors are going to find it increasingly difficult to make money from direct marketing or major events.
“Big efforts should go into assuring whoever we do acquire has the best possible opportunity to be retained long term,” Ms. Burk said. “Getting them to give again and getting more generous gifts from people who do give again is where the most important money lies anyway.”