As I’ve indicated in the first three parts of this series, most nonprofits need to become a lot more savvy about ‘acquisition’.

At the same time it’s essential to understand how ‘acquisition’ and ‘retention’ operate in tandem to determine an organization’s future. Like a bicycle, the more finely tuned the two wheels are, the better the ride into the future.

We all know that acquisition and retention are the flip sides of the same coin. But until ‘flat’ or ‘down’ suddenly becomes the new ‘up’ only incompetent fundraisers will avoid dealing vigorously and seriously with both. And with both at the same time.

Serious fundraisers — especially those working with small and mid-sized organizations — should move immediately to download and read the just-released 2015 Fundraising Effectiveness Project Donor Retention Supplement. It’s a fact-filled, insightful adjunct to the 2015 Fundraising Effectiveness Project Report issued last fall by AFP and the Urban Institute.

The key takeaways of the new Donor Retention Supplement are highlighted in the Infographic by our sister company DonorTrends. Ben Miller, chief actuary and partner in DonorTrends and Heather McGinness of Meyer Partners worked on both the Supplement and the Infographic.

Key points:

• Only 46% of donors who gave in 2013 gave again in 2014.

• Although 2014 revenue increased by 2.6% over 2013, 2014 retention rates decreased by 1.4%.

• Low dollar equals low retention. New donors giving less than $100 have a first year retention rate of only 18% compared 30% for $100-$250 donors and 47% for those above $250.

• Clearly, as the DonorTrends Infographic notes, “Organizations looking to grow and compete in the modern landscape would do well to invest in higher value donors at the outset, and invest in converting them into loyal supporters of the organization.”

• Interestingly, average ‘repeat donor’ retention rates have remained steady at 64.8%. This average of course excluded new donors from the previous year.

There are real gems buried in the Supplement and believe me they’re worth digging out. You’ll find insights into retention by types of organizations, sizes of organizations and even by age of organizations,

(Older organizations grew their donor files by 15% and had retention rates between 45% and 49% for 2014. By comparison, younger less-established that grew 50%-98% retained only 36%-40% of their donors.)

Back to the bicycle. What the Supplement, and the Infographic, makes clear is that while ‘retention’ is fundamental for financial health, ‘acquisition’ matters a great deal — the relationship between acquisition and growth is twice as strong.

Of course, when it comes to the bottom-line, the most important question fundraisers should be asking and answering is not how many donors are being retained, but instead, what is the value of that retention. After all, only when value is understood, can an organization set expenses toward maintaining and improving retention.

On page 12 of the Supplement you’ll find a handy chart, organized by gross income, indicating what a 1% change in retention rates means to the bottom line.

To figure out your basic retention rate you can download a free Retention Calculator from DonorTrends and you can also get for videos and instructions for calculating retention rates on the website of Bloomerang, one of the sponsors of the FEP Fundraising Effectiveness Project.

So, jump on your two-wheel ‘acquisition/retention’ bicycle and pedal smartly into the future.

Roger

P.S. Part 1 of this series deals with the Investment Mindset. Part 2 covers the importance of the Life Time Value Metric. And Part 3 The Need for Better Acquisition Plans and Metrics.