How Your Nonprofit Can Boost Donor Retention Using Data

It is absolutely critical for nonprofits to retain as many donors as they can. Not only does retaining donors save money in the short term — it costs around two to three times more to attract a new donor than they will give in their first donation — but it also boosts their lifetime value.

However, nonprofits struggled to steward new donors in 2023, with the retention rate dropping 2.5% in June of last year.

In 2024, nonprofits are taking advantage of data to confront major challenges, including donor acquisition and retention. In NonProfit PRO’s “2024 Nonprofit Leadership Impact Study,” 36% of nonprofit leaders said their organizations are investing in tools to make smarter data decisions, and 33% said they are researching donor activity to reactivate, mobilize or identify relevant donor profiles.

As you look into data as a tool to support your organization’s donor retention, it’s helpful to have guidance from the pros. Here, two experts share their insights on how to use data to optimize donor retention.

Relevant Data for Donor Retention

First and foremost, you need to know where you stand when it comes to donor retention, said Lauren Sheehan, president of DonorPerfect. While retention rates across the industry have been dropping, your organization likely has a different rate than what industry as a whole is averaging; it could be lower or higher than average.

Once you’ve identified your retention rate, Sheehan said you must establish what she called the ideal donor profile or persona.

“I think it is important to understand which donors you're having success at retaining,” she said. “So if you take the concept of an ideal customer profile — that's something from the for-profit business space — and create and understand what your ideal donor profile would be, I think that can be really helpful.”

For this to yield the best results, you can’t just look at donation data and call it a day. According to Morgan Falor, consulting director at Armanino, you must look at overall engagement, as well as what she referred to as “feelings.” Some of these “feelings” include:

• Do donors engage with your emails?
• Do they attend your events?
• Are they engaged with you on social media?
• Do they volunteer with your organization?
• Are they responding to the case studies and impact stories you show them?
• How does their engagement compare to previous years’ engagement (e.g., donation amount)?

Sheehan added that because donor retention is positively correlated with the number of donations in a given year, you can look at how often certain donors are giving and steward them to become monthly donors.

“If you've got some folks that are donating three or four times a year, you can identify them and then put together a plan to… ask them to consider becoming a monthly sustainer,” Sheehan said. “If [that plan] follows suit, their retention level should go up.”

Collecting and Managing Data

When it comes to managing and assessing your donor data, having access to all of it in one place can make things easier. Falor said making sure your CRM can connect with your social media listening tools — such as HubSpot or Hootsuite — can boost your ability to successfully engage donors. When you’re more connected with donors, their retention levels will likely increase.

Once you’ve collected data, you need to organize it in a way that you can understand. For instance, Falor recommended creating a donor heat map to track engagement, where the more engaged donors are “red hot” and the less engaged are blue.

“For those ones that are blue — because you're always going to have them — how do we get them back over into maybe a purple category?” Falor said. “How do we bring them out of that blue? Using that data and tracking those feelings and just overall engagement with your organization will really help that.”

Donor Surveys

One underutilized tool for collecting donor data is to put out a donor survey on a regular basis, which can help you segment your donors and implement different marketing and fundraising strategies.

“If you don't have a donor survey that you're doing on an annual basis, you are missing a huge opportunity to engage with your donors, but also figuring out how to engage with them better in a more meaningful way, which will, in turn, drive retention,” Falor said. “So if I'm giving to, let's say, a Meals on Wheels, because I am very, very worried about impoverished seniors… That comes back on my donor survey, super easy to retain me. Tell me all about the stuff you're doing for impoverished seniors; you're going to get me to open my wallet every single time.”

While you can change your survey questions from year to year, Falor said you should include three standard questions that stay the same between surveys so you can track donor sentiments over time and gauge interest in your organization.

Because donors can join at any time of the year, you may be wondering when to send out your surveys. According to Falor, it’s not necessary to send out your annual survey on a donor-to-donor basis — say, by sending them the survey one year after their initial donation. Instead, she suggested choosing one point annually to launch the survey.

“I don't think it should be a one size fits all for every organization,” she said. “A best practice approach would be to send them out right about… the beginning [or end] of August. I feel like kids are starting to go back to school, people are getting off their vacations… You have time to get that data in before Q4, GivingTuesday, kind of all the year-end pushes.”

Segmenting to Retain More Donors

Remember that donor data is most effective — for donor retention and for other purposes — when you segment your donors. Once you’ve segmented, Sheehan emphasized the importance of tailoring your retention approach based on the groups you’ve created.

“You might want to have a communication plan for a first-time donor, a communication plan for somebody who gave previous years but hasn't given this year, or gave last year but hasn't given this year,” Sheehan explained. “Data helps you segment your database. Then you can use that information to put actions into place to either re-engage or keep those donors engaged so that they continue to give to your organization and you can sustain them.”

According to Falor, your nonprofit should have at least three or four donor segments. While the default segmentation method is to categorize by dollar amount, there are other ways to segment effectively. For example, you can segment donors by the year in which they began donating or engaging with your organization.

“That really helps you hone in on, ‘Wow, what we were doing back then was really successful? Because these people, when we first got them on and got them to that donor level, they're still here,’” she said.