A Sober Reflection on Latest Retention Data
EVERYBODY PANIC!
It may not be necessary to run into the streets wailing uncontrollably and rending our garments. But there’s probably a need for more panic about retention than is evident out there.
Back in April, we looked at the 2017 Fundraising Effectiveness Project Report. The good news was that retention was up. The bad news was those gains might not be sustainable. And the implications were that we needed to rebuild our base of donors and worry that our gains were short-lived.
This worry was well-founded. Last week, the 2018 Fundraising Effectiveness Project Report came out for the first six months of the year. Year over year:
- Total donors are down 6.6%
- New donors are down 9.2%
- New retained donors are down 18%
- Repeat retained donors are down 2.1%
- Retention is down 6.4%
You might be asking if there’s any good news. Yes – there were still six months left in 2018 to close the gap when the data were compiled for this report was compiled. And now there three month-is left from today. That’s all I got by way of good news.
And believe me, I really looked. I’m a silver-lining kind of guy. Every silver lining I saw turned out to be more cloud.
Were there any donor lifecycles that had better retention than last year? No. They were all down.
Given that large donors saved us last year, were there any donor amounts that had better giving that last year? No. All down.
Given that we’ve seen number of donors decrease before, did the revenue from donors go up thanks to larger gifts? No. That helped a little, but overall revenue was still down 2% year-over-year.
Were Q1-Q2 of 2017 especially good months, giving us a tough act to follow? No. Retention was down year-over-year in 2017 also. In fact, put together, we can say that 2018 Q1 & Q2 had 23% fewer new donors and 46% fewer new retained donors than the same quarters just two years ago.
The best we can hope for and drive for is that perhaps gifts and retention are shifting to the end of the year from early in the year. But I suspect that last year was an anomaly, with Hurricane Maria and year-end changes to the tax code driving a one-time spike in end-of-year giving. At the very least, this does not portend well for the many organizations that run membership campaigns that start at the beginning of the year.
If this is the new normal, I don’t think it’s going to be the organizations with big reserves who survive it. It’s going to be those that put their resources into building and knowing about their donor file rather than their bank account. Those become an annuity, a solid (although, with this retention news, slightly less solid than before) foundation from which to build.
Nick
3 responses to “A Sober Reflection on Latest Retention Data”
Behavioral Science Q & A
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Nick – thank you for sounding the alarm on the quarterly fundraising report.
Even more shocking than these trends is the number of fundraisers that have NO idea how their organization compares against others, and more important, against themselves.
They might know that ‘acquisition is looking a little soft’ or ‘hmmmm, the August appeal response rates are down but a few big gifts are helping revenue.’
But ask about mid-year retention rates for new, existing, and lapsed donors. Most likely, you’ll see a blank look followed by a series of excuses around time, resources, database problems.
Could a medical professional ethically prescribe meds without taking your weight and blood pressure? No.
The same holds true for Fundraisers. We are making HUGE financial decisions based on very little information. We need to hold ourselves to a better standard – approach all marketing decisions with facts based on math/science.
More on the FEP results can be found here – along with an easy way to compare yourself against these terrifying quarterly #s: http://donorretention.donortrends.com/fep-fundraising-stats.
Thanks for sharing Nick!
I am so surprised about how few responses there are here since this is quite significant. Perhaps this indicates a lack of understanding about the need for change…
I agree the future of donor retention is in paying real attention to making donors happy. Whether that’s the little guys or the big ones, it’s not going to happen unless we find out what our donors really care about and strive to be relevant. And it’s hard given all the competition. It’s not just nonprofit competition. It’s all the companies out there engaged in ‘social good.’ Plus it’s kickstarter campaigns to help good causes and individual people. And, particularly in these times, it’s political fundraising. Plus calls to action asking folks to sign petitions, send postcards, make phone calls, etc. People are being bombarded with “asks” and are striving desperately to do what they can to make an impact. And many people are all over the place. They’re only going to stick with you if you know what you’re doing. And make a plan to consistently do it. There are plenty of articles telling people what to do. There’s loads of research. And there are principles to be applied from psychology, neuroscience and relationship marketing. But it’s not going to happen until leaders make a commitment to making this a priority. And put their money where their mouth is.