And we're off!
2015 is up and running, and we're five days in. Today is the first Monday of the new year. How's it going so far?
With all the calendar year end fundraising that recently happened, I find myself wondering how organizations are planning to steward, cultivate and renew those donors. In my opinion, donor retention is absolutely key to an organization's fundraising success.
The Chronicle of Philanthropy recently published an article on this topic, "Charities Show Strides in Keeping Loyal Donors, But Are Too Focused on Short-Term Results, Scholars Say." While there is room to improve, I find it encouraging that organizations are recognizing that this is important and taking steps to continue to do better. There are some great tools and resources linked in the article as well.
Near the end of the article, the study authors noted that you have to measure what works and what doesn't. This is so important! Without first determining what success looks like, and then measuring it, how do you know if you're spending your time in a valuable manner?
Personally, one of my go-to measures is retention rate -- what is the percentage of donors who gave last year are giving again this year? Or, to look at it as a math function retention rate for calendar year 2014 is:
If you have a donor base large enough, it can be more valuable to segment your database and look at different categories of donors. I like to look at the retention rate of donors who gave in the last 2 years and have given again. These are committed, core donors. (Other segments of donors you can look at are new donors, lapsed donors, recaptured donors, new donors who gave a second gift, etc. It depends on your organization and your goal.)
Follow the same process using date going back several years, and you can determine the overall trend for your organization.
Ideally, you'll want to see a trend going up. If you don't see that, you have room to improve.
The Chronicle article says 43%. And that was an improvement over past years!
Ouch.
I think it's safe to say that 41% or 43% retention is NOT good. That's beyond failing, and that's the average! Therefore, some organizations are doing very well, and others are doing even worse than that 41% or 43%.
I'd love to see overall retention rates above 70%. I'd love to see retention rates of core donors (my definition is donors who have given every year for the past 3 or more years.) above 80%.
Is that going to be easy? Absolutely not. Will every organization be able to reach those numbers? Maybe not.
Will it matter? Is it worth the effort? Absolutely YES!
In addition, a high retention rate can also indicate that donors are passionate about the mission. They keep coming back because the organization is doing good work and making a difference.
Beyond that, however, a strong retention rate means that we are treating our donors right. We recognize that they are people with passions and interests. Donors are not just a pool of cash we dip into as needed.
A strong retention rate means that we are focusing on our donors and working to partner with them properly to build long-term relationships. It means we respect them and their wishes. It means that they respect us and our organizations. It means that donors believe in what we do enough to continue their support.
A strong retention rate is one way to indicate we are properly stewarding and cultivating our donors.
That is a significant thing to think about as the new year starts.
What can you do to help your organization build strong relationships? What are you already doing? I'll talk more about my ideas in upcoming posts. Please share yours in the comments.
Happy Monday!
Best Wishes,
Danielle
With all the calendar year end fundraising that recently happened, I find myself wondering how organizations are planning to steward, cultivate and renew those donors. In my opinion, donor retention is absolutely key to an organization's fundraising success.
The Chronicle of Philanthropy recently published an article on this topic, "Charities Show Strides in Keeping Loyal Donors, But Are Too Focused on Short-Term Results, Scholars Say." While there is room to improve, I find it encouraging that organizations are recognizing that this is important and taking steps to continue to do better. There are some great tools and resources linked in the article as well.
Near the end of the article, the study authors noted that you have to measure what works and what doesn't. This is so important! Without first determining what success looks like, and then measuring it, how do you know if you're spending your time in a valuable manner?
What do you measure?
There are any number of things you can measure from your donor database that will help determine the overall health of your donor file. Retention rate, new donor conversion rates, long-term donor value, acquisition rates, lapsing metrics, and more all have value and can help you form and refine your fundraising strategies.Personally, one of my go-to measures is retention rate -- what is the percentage of donors who gave last year are giving again this year? Or, to look at it as a math function retention rate for calendar year 2014 is:
Number of donors who gave in both 2013 AND 2014
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Number of donors who gave in 2013
If you have a donor base large enough, it can be more valuable to segment your database and look at different categories of donors. I like to look at the retention rate of donors who gave in the last 2 years and have given again. These are committed, core donors. (Other segments of donors you can look at are new donors, lapsed donors, recaptured donors, new donors who gave a second gift, etc. It depends on your organization and your goal.)
Follow the same process using date going back several years, and you can determine the overall trend for your organization.
Ideally, you'll want to see a trend going up. If you don't see that, you have room to improve.
What is a "good" retention rate?
In his book Retention Fundraising, Roger Craver states that the current average multi-year retention rate in the United States is 41%. (128) In essence, as he states, out of 100 donors, 41 will give again, and 59 will walk away from your organization.The Chronicle article says 43%. And that was an improvement over past years!
Ouch.
I think it's safe to say that 41% or 43% retention is NOT good. That's beyond failing, and that's the average! Therefore, some organizations are doing very well, and others are doing even worse than that 41% or 43%.
I'd love to see overall retention rates above 70%. I'd love to see retention rates of core donors (my definition is donors who have given every year for the past 3 or more years.) above 80%.
Is that going to be easy? Absolutely not. Will every organization be able to reach those numbers? Maybe not.
Will it matter? Is it worth the effort? Absolutely YES!
Why does strong retention matter?
In my opinion every fundraiser, and probably every person working at a nonprofit organization should know and understand that it is easier to renew a donor than find a new one. It also costs less to keep a donor than find a new one. This is a well known standard in the commercial world. It's why companies spend considerable amounts of resources to keep customers coming back. When an organization has a strong retention rate, that organization is demonstrating one aspect of good management.In addition, a high retention rate can also indicate that donors are passionate about the mission. They keep coming back because the organization is doing good work and making a difference.
Beyond that, however, a strong retention rate means that we are treating our donors right. We recognize that they are people with passions and interests. Donors are not just a pool of cash we dip into as needed.
A strong retention rate means that we are focusing on our donors and working to partner with them properly to build long-term relationships. It means we respect them and their wishes. It means that they respect us and our organizations. It means that donors believe in what we do enough to continue their support.
A strong retention rate is one way to indicate we are properly stewarding and cultivating our donors.
That is a significant thing to think about as the new year starts.
What can you do to help your organization build strong relationships? What are you already doing? I'll talk more about my ideas in upcoming posts. Please share yours in the comments.
Happy Monday!
Best Wishes,
Danielle
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