All That Work … For 49,421 Donors!
Good day, it’s Tom the grouch again.
Just browsing through the Fundraising Effectiveness Project’s 2017 report, a marvellous gift from Bloomerang, DonorPerfect, eTapestry and Neon.
The report examines year-to-year fundraising results (2015-16) from the 10,829 clients using the software of these firms.
Recently our sector has been losing more donors than gained each year. In some years (in this report), the ratio has been as high as 107 donors lost for each 100 gained.
However, 2016 apparently saw a HUGE turnaround … we only lost 99 donors for each 100 gained.
Or to put that accomplishment in perspective, the clients of these firms attracted 4,881,762 new and previously lapsed donors in 2016, while losing ‘only’ 4,832,341 donors. A net gain of 49,421 donors across 10,829 nonprofits.
Alas, retention rates were actually down slightly (averaging 45%, down 0.5%), so this spectacular net gain apparently came from somewhat improved acquisition rates.
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%.
One can’t blame ‘externalities’ for that kind of gap between best and worst performers … the culprit is crap fundraising.
Where does your nonprofit stand in that spectrum?
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.
All that work for a net gain of 49,421 donors?! With Donald Trump as foil (or hero) and the world going to hell in a handbasket?
Can someone find me good news here?
Roger, inspire me!
Tom
12 responses to “All That Work … For 49,421 Donors!”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
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I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
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Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
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Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
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There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
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I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
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I am not in any way saying that donor retention isn’t something we’d all like to be better at, and – full disclosure – I have not read the full report (yet). But it strikes me that this summary rests on a large assumption that the only valid way for a donor to give is with at least one gift each calendar year. It sounds like “lapsed” donors are counted as “acquired” donors and only gifts within a 12 month period are considered in order to be “retained,” so doesn’t that discount those donors who might feel committed to a charity, and perfectly happy with their stewardship, and just prefer to give once every 18 months or 2 years? Or when I actually read the report will the methodology tell me this has been accounted for?
It’s the organizations that think that donations are all online now… NOT true! You have to ask and many organizations simply don’t ask enough! And they think that direct mail is dead. NOT true!
If a donor gives in the fall and then they don’t hear from you for another year… they will not have the opportunity to give again. hence, you lose that donor.
Too many orgs are putting all their eggs in one basket… Well, if the donor is away or has other things going on,that one opportunity is lost.
Why do donors not give again? Because you did not ask them!
I’d love to see the Effectiveness Project look at how many times organizations ask for money and how many monthly donors they have in their database and see the positive impact that has on donor retention.
What say you?
Meredith, the report does differentiate between new and recaptured or reactivated donors. In fact we have developed a glossary of terms that has been adopted by the afp dictionary. You can find that glossary in the resources tab on afpfep.org where the report is also published.
The bottom line is that we did have to define retention, and since this is an annual report, annual retention is a natural fit. We measure gains as new or reactivated and losses as those lapsing from one year to the next.
After you read the report if you have further questions please don’t hesitate to reach out, ben.miller@donortrends.com and I would be glad to answer. I also welcome any recommendations on what you would like to see in this report. We are always looking for ways to improve.
Tom, thanks for sharing the report! It is the most complete and accurate compilation from across the entire nonprofit sector and is a stunning tribute to cooperation among the vendor companies providing the data.
There are several such reports measuring customer retention in nearly every sector of the commercial world. The one I most recently read was compiled by a group representing cloud based software technology firms in the United States. The average customer retention rate for the group was between 92% and 93%.
Perhaps there should be a difference, but more than double the success rate of retaining seems to point a need to potentially observe and compare day to day practices in communications and customer/donor service.
Erica: YES. Agree to all that. It would be great to see those numbers in this context. I see so many small organizations depend on an “annual appeal” – by which, they mean the one appeal they send a year. That’s close to “why bother?” territory. As you said, deciding that only fall is the time for your donors to give is anything but donor-focused. Donors need opportunities to give whenever they feel the time is right.
I think the FEP results are astoundingly depressing! I read it last weekend and prepared a video and watching the video I look like Im attending a funeral! Very somber. All that work and we’re not even matching inflation! As a 20 some years workaholic development and executive director I think fundraisers are not working hard enough or smart enough. And if you keep doing things the same way you’re doing them, you’re going to get the same lacklusterresults and that ain’t looking very good right now! Certainly not good enough!The secret to success really has to be analyzing your results and knowing what to prioritize in your fundraising plan then using solid researched strategies to forge ahead! Anyhow I think you’re really right to be grouchy about this news! It’s very annoying to realize as fundraisers we’re running in circles!
Tom – “Crap fundraising”? Really? You did this just to get response, didn’t you!
Cindy,
Are you questioning my adjective or my point? The retention gap between top and bottom performers is surely cause for heads to roll.
Tom
Tom – Thanks so much for picking up the report and I have to echo your sentiment in the first paragraph… “…a marvelous gift from Bloomerang, DonorPerfect, eTapestry and Neon.” These donor software firms are pioneers in the field of non-identifiable sharing of donor information…and the knowledge that we are obtaining through the research coming out of this information continues to be astounding! Working with senior researchers like Ben Miller at DonorTrends, Nathan Dietz, PhD of University of Maryland Do Good Institute, Scholars from the Center on Nonprofits and Philanthropy at the Urban Institute and others…and combining their findings with gurus from the field like Jim Greenfield, FAHP, ACFRE really produces outstanding information…while there is certainly more to learn, the reports get better every year. Check out more resources at afpfep.org and thanks for sharing this information!
Jay Love said:
“The one I most recently read was compiled by a group representing cloud based software technology firms in the United States. The average customer retention rate for the group was between 92% and 93%.”
Jay, I’m wondering if those retention rates are so high because 1) automated payments, either monthly for annually. and 2) once my firm is locked into using a particular technology platform across multiple department and users, its much more difficult to switch.
I’m wondering if a more useful retention benchmark would be magazine subscriptions. From what I read, I think they track donation retention rates pretty closely, with differences in first year drop off from multi-year purchasers. And fast growing mags from those that are not.
I’m wondering what you are seeing?
Thanks Gayle, I agree on-line subscriptions would be a wonderful comparison, as would longer term maintenance plans for appliances or cars.
And yes, some of the lofty rates in the commercial sector are due to automated payments and use of a particular technology platform…
Perhaps, there are a few lessons to be learned about suggesting automated payments via recurring gifts/pledges and volunteering to help on the project in some manner that your gift is supporting…
just saying, you know
Great ‘saying’ Jay! I just came back from a client meeting reviewing their programs. Their monthly donors are currently generating 46% of their revenue and their donor retention rates are 66% because of it! Just saying…