In the Trenches: Donor Attrition: The Insidious Statistic
There are many ways to measure the performance of a donor program. Gross and net revenue, the number of active donors and their corresponding lifetime values all are critical. But the rise of donor attrition is one insidious statistic that, if ignored, will rob a new donor program of needed growth and put a mature program on a plateau.
If an organization suffers from high attrition, two temporary effects might actually appear to be good news: Average gifts rise, and net revenue can increase as loyal donors continue to give at increased rates even as the donor file continues to shrink.
A recent benchmarking study by the Target Analysis Group, a Cambridge, Mass.-based market-research firm, confirms this trend. According to the study, 37 national fundraising organizations that raised more than $1 billion from 25 million donors in 2003 reported a 2.8 percent increase in revenue, while the total number of donors dropped by .07 percent in 2003 and 2.2 percent in 2002.
To be fair, the numbers seem to be getting better. But what can be said of an organization that has fewer donors today than it had last year? And the year before? Could these charities become extinct through donor attrition?
I put this doomsday scenario before a group of fundraising professionals who work with a variety of nonprofit organizations. And because each of us has a slightly different vantage point from our respective trenches, the insights varied. But some advice was consistent.
Attacking attrition: The experts weigh in
Some fundraising professionals see donor attrition as a natural evolution in the industry.
“This trend has been going on for quite a few years, but it is an economic decision on the part of the fundraiser, not a trend for the donors,” says Jim Kirschner, president of the fundraising firm Miles River Direct, which frequently works with membership organizations. “Fundraisers are hard pressed to earn net dollars from low-dollar donors, so they have switched tactics to acquire and maintain higher-dollar donors.”