In the Trenches: Donor Attrition: The Insidious Statistic
However, fundraising consultant John W. Graham, who advises a number of Christian ministries, points to the continuing tension between servicing existing donors and acquiring new ones. Because of this, development directors have cut back on acquisition efforts due to the time it takes for the investment to pay off.
“For a good while it took just 10 to 12 months to recoup the donor acquisition cost[s],” Graham affirms. “Now it takes 18 months to recoup the out-of-pocket costs to break even on a new donor.”
Mal Warwick, founder of the Berkeley, Calif.-based, full-service fundraising company Mal Warwick & Associates, put the issue in Darwinian terms: “There are fewer donors on file today only because some nonprofits are unwilling to pay the higher donor-acquisition costs necessary in today’s competitive marketplace.”
So is it inevitable that every organization faces a life cycle of growing, maturing, shrinking and then dying? Hardly.
Every fundraiser in my little group agrees that a successful nonprofit organization must always continue to seek new donors. But let’s face it, the days of a 2 percent response rate and a $20 average gift from new donors have gone the way of a $1 gallon of gas.
So if you realize net revenue from a contributor in a reasonable amount of time — say 18 months to two years — keep at it. Then develop and nurture the donor relationship with stewardship and relevant communications.
Five tips for stemming attrition
Successful organizations of all shapes and sizes know to do the following:
- Acquire renewable donors. Simply adding new low-dollar donors who are not committed to the cause won’t pay off in the long run. Understand how to compute the lifetime value of a donor and then invest in your most loyal donors.
- Keep supporters active. Whether you are running a donor-based or annual-membership program, don’t give up on the donor relationship until it becomes more costly to renew the contributor than to find a new one. Kirschner says that for the long-term success of a membership organization, the renewal rate is most important. For donor-based organizations, frequency and retention top the list.
- Reactivate lapsed members. Kelley Hamilton, vice president of development for Detroit Public Television, a viewer-supported PBS-member station serving the nation’s tenth-largest television market, recently turned to her inactive file to bring in new members. Hamilton has made reactivation a strategic target for FY 2005 and is beginning the process now. For local or regional organizations that can’t simply expand their geographic reach, reactivating a past contributor usually is more cost effective than finding a new one. A number of data-services firms offer innovative ways to mine productive names from lapsed donor files.
- Develop new relationships with donors. Graham, for example, has had great success recently in converting donors to members. Donors who had been giving twice a year increased the frequency of their giving to six to eight times when invited to join the organization as participating members.
- Offer automatic monthly giving. The financial sting of acquiring new donors doesn’t feel so bad when 90 percent or more of your monthly donors stay with you year after year. Invite them to make gifts automatically each month — through checking or credit card accounts — and you’ve developed a relationship that’s worth the investment.
No matter the size of your file, always remember that gifts come from individuals who are seeking a relationship with you. Stemming donor attrition and improving other performance metrics are only a part of the picture.