Fundraising Intermission #1: Retention (Again!)
Before we continuing exploring the new, new things and better ways to do the old, old things, Tom and I thought it good to pause for an intermission and remind ourselves and fellow Agitators of some fundraising fundamentals that we lose sight of at our peril.
Thus, in this two-part Agitator Intermission we want to: 1) reinforce attention to what we consider the most fundamental problem facing nonprofits — donor retention; and, (2) give a reminder that there are a set of basic principles that guide us all. Virtually immutable laws we ignore at our peril — and disastrous retention rates.
Let’s use Part 1 to focus on a startling Infographic prepared by Bloomerang, the new CRM company with a heavy focus on retention, founded by veteran Jay Love, who also started e-Tapesty decades ago. (See Agitator’s earlier review on Bloomerang here.
Please take a moment to study Bloomerang’s Donor Retention Infographic:
Using data from the Fundraising Effectiveness Project and a range of information from the commercial sector, the Infographic leads with this startling statistic:
- Commercial businesses retain 94% of their customers while the nonprofit sector retains only 41% of its donors.
- And, retention in our sector is getting worse not better. Over the past 5 years retention rates have dropped nearly 10%.
- Only 65 of the 2,377 nonprofits studied had a retention rate over 70%.
For those Agitator readers who wonder why Tom and I keep repeatedly hammering away on ‘retention’ and ‘donor commitment’, this Infographic shockingly tells why.
I urge you to read Jay Love’s full post on this infographic. You’ll find his insights and recommendations over on Katya Andressen’s terrific blog by clicking here.
While there’s plenty you can do to boost retention, there’s one action that leads the list: Once a year revisit the basics of fundraising.
That’s exactly what we’ll do tomorrow with help from another veteran — fundraising consultant Ken Burnett, who reminds us:
“Fundraising to change the world is no less important than making and serving of sushi or the art of judo or jujitsu.
“Yet in our ranks we have no such discipline that demands this level of dedication to mastering the basics before permission is granted to move forward.”
What’s your retention rate?
Roger
8 responses to “Fundraising Intermission #1: Retention (Again!)”
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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Thank heavens some people keep agitating about donor retention! Because really…as you two say…loyalty is the Holy Grail of fundraising. We the sector and the fundraising profession haven’t made much progress on the Agitator 2009 New Year’s resolution: doing something about the great unturned stone in our sector, donor retention.
I’m thrilled that Bloomerang is using Adrian’s research. What a great (an oh-so-obvious) idea to design a fundraising database around the concept of retention.
And I like your idea of this “intermission.” An intermission to remind us fundraisers of the fundamentals. If all fundraisers read Adrian’s books and research…If all fundraisers (and their bosses) read the new CompassPoint/Haas report UNDERDEVELOPED…If all fundraisers quit chasing money and think about donors and loyalty and and … Then maybe we would make more progress. I keep hoping.
Here are my equations:
Loyalty = Donor-centered organization + relationship-building program
Relationship building program = Donor-centered communications + extraordinary experiences for donors.
Roger, three cheers for a retention redux post! I wonder, though… When I look at the 2,377 nonprofits with 70+ percent retention rates, is that multi-year, first year, or what? Did I miss it in the post? Do we know if these 2,377 do any acquisition at all? (Brings to mind a Jeff Brooks post on the dark side of super-high RRs: shrinking database. http://www.futurefundraisingnow.com/future-fundraising/2011/04/donor-retention-tells-half-the-story.html) What I’d like to see is an Infographic that shows me what those rates are doing within the nonprofit, year on year: to me, that’s your litmus test. Am I all wrong on this? And: maybe a walk-through for everyone on easy ways to calculate and analyze retention rates? I’d be grateful to see how the masters do it. =)
Loving the fiery Agitator image this year! Lisa
P.S. Oldie but goodie from Mal Warwick’s 2008 e-news here: http://www.malwarwick.com/learning-resources/e-newsletters/april-2008.html.)
Thank you for the thoughtful comments on retention.
Simone…you’re absolutely right. Too much chasing, too little thinking.
Lisa…the data behind the infographic are confidential, so I can’t answer your good question on the acquisition volume of the 2,377 organizations survey.
On calculation of retention rates here’s the way most folks do it. For 1st year retention rates take the number of donors who gave in 2012 and whose first gift was in 2011.
To calculate a multiple year retention rate take the number of donors who gave this year AND in the previous year AND last year’s gift was NOT the first gift.
As for calculating the value of improving the retention rate, that’s bit more complicated, so we’ll work up a short screencast on that.
Roger, you’re the best. Thanks a million. I figure some people may be afraid to look foolish before the crowd for asking. I’m not, as you can see. =)Lisa
It’s obvious that Donor retention is far lower than years before. Investment in time and an organizational systems to bring recurring donations is important.
I recently left a position with an organization that has, for at least the last 5 years, been consistently losing 85 to 90% of its first-time donors within a year, and STILL doesn’t understand that its core problem is a complete failure to focus any resources or effort on donor stewardship!
As I keep emphasizing to my marketing and fundraising students: your FIRST job is to keep the customers or donors you already have. If you can’t do that, all efforts directed at acquisition will be utterly wasted.
Shaun G. Lynch, CFRE
@shaunlynch3
[…] People want to make a visible impact. Quickly. This is a tough one for many groups and the fact is that behavioral, political and social changes don’t happen fast. This makes it hard to keep activists and donors engaged over time and perhaps plays a role in falling donor retention rates. […]
Great Infografic and great comments 🙂