Focus on Donor Retention This Year
In one of my roles for The Salvation Army in Indiana, I am responsible for corporate development for the division. Whether it is for Golf 4 Kids, Angel Tree, Coats for Kids, Red Kettles or outright operational support, I identify, qualify, cultivate, solicit and steward many companies. I get to know the CEOs and chief operating officers of small and large businesses. For each corporate program, I seek to create an incremental basing program, where the base of support grows each year. For this to happen, I must ask a greater number of prospects while protecting, securing and increasing gifts from the same donors each year.
One corporate fundraising program at the Salvation Army Indiana Division for which I am responsible is the annual WIBC Radiothon for WIBC Radio in Indianapolis. The overall Radiothon goal has grown from $250,000 in 2017 to $400,000 last year. Our latest program was in December when we surpassed our goal by $35,000. More than $200,000 raised came from the corporate sector.
While I am happy with that result, I am disappointed that we lost four significant Radiothon corporate donors. The uncertain economy, corporate reduction in profits, changing leadership with differing agendas, plus high inflation led to corporate decisions not to participate. I spent hours with a variety of strategies employed in a losing effort to retain these donors. You cannot take any donor for granted, and the cultivation process, with an emphasis on donor retention, should continue year round for each donor in your portfolio.
Determine Your Retention Rate
The annual average donor retention rate is approximately 45%, according to the Fundraising Effectiveness Project. Your nonprofit’s donor retention rate for 2022 can be calculated by dividing the number of repeat donors in 2022 by those who donated in 2021. It is estimated that 70% of all first-time donors to a nonprofit organization will not make a second gift. Therefore, nonprofits with a low donor retention rate must continually acquire new donors or seek larger gifts to keep financial pace each year with giving.
It is important to develop long-term supporters for your organization. High donor retention rates yield recurring gifts with low acquisition costs, whereas low donor retention rates yield one-time gifts with high acquisition costs. A quality donor retention program provides your organization with a blueprint of what is working, builds strong donor relationships, promotes your cause, helps to generate larger donations, and saves your organization time and money.
Additionally, long-term donors are great prospects for volunteerism, as well as major, principal and planned gifts.
Analyze Donor Data and Strategy
The maximum number of donors your nonprofit can renew year over year is 100% of your existing donors. Seek to analyze your donors annually to determine if each donor gift amount is higher, lower or equal year after year. Seek to have your donors upgrade their giving each year. It is important that donors continue to give each year, and either maintain or increase their personal gift annually.
Donor retention allows nonprofits to have reliable revenue from year to year, which enables them to pursue their organizational mission. You can increase donor retention by evaluating your current donor retention rate and development program, create a detailed plan, establish ways to build a variety of donor relationships, communicate regularly in diverse, non-ask ways, measure fundraising success and prioritize new strategies on an ongoing basis.
Donor engagement is not only based upon length, but quality and intensity of the relationship. It is important to use your donor database and constantly examine potential for donor growth and advancement. Use past strategies that have worked and seek to build donor engagement through trust. Update them on how you are using their donations and encourage them to give throughout the year. Utilize best-of-class methods to maintain an initiative-taking and successful fundraising program.
Cultivate Donors Effectively
You need to retain donors from the beginning of their relationship with your organization, so it is vital that donors receive positive communication and are continually thanked. In every interaction with donors, emphasize gratitude. Make major donors feel like they are partners in your enterprise. Tell these stakeholders why you do what you do and the importance of investment in your brand. It is critical to employ emotion and relationships with donors before, during and after each gift is made.
Ask donors to please come back to your organization and continue to give each year. Spend time and attention both on donor acquisition and donor retention. It hurts to lose long-time donors, though, at times, there is nothing you can do about it. So study your donor database each year. The longer you have been in a fundraising position, the more comfortable you will feel and better understand your data. Study your organizational fundraising cycle. It is easier to retain an existing donor than recruit a new donor
With an uncertain economy projected for this year, take nothing for granted. Protect and grow your donor base. Focus on donor retention as a priority this year. That fact is of critical importance to your overall fundraising success in 2023.
The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.
Related story: Lifetime Value Starts With the Second Gift
Duke Haddad, Ed.D., CFRE, is currently associate director of development, director of capital campaigns and director of corporate development for The Salvation Army Indiana Division in Indianapolis. He also serves as president of Duke Haddad and Associates LLC and is a freelance instructor for Nonprofit Web Advisor.
He has been a contributing author to NonProfit PRO since 2008.
He received his doctorate degree from West Virginia University with an emphasis on education administration plus a dissertation on donor characteristics. He received a master’s degree from Marshall University with an emphasis on public administration plus a thesis on annual fund analysis. He secured a bachelor’s degree (cum laude) with an emphasis on marketing/management. He has done post graduate work at the University of Louisville.
Duke has received the Fundraising Executive of the Year Award, from the Association of Fundraising Professionals Indiana Chapter. He also was given the Outstanding West Virginian Award, Kentucky Colonel Award and Sagamore of the Wabash Award from the governors of West Virginia, Kentucky and Indiana, respectively, for his many career contributions in the field of philanthropy. He has maintained a Certified Fund Raising Executive (CFRE) designation for three decades.