There are a lot of paths to reaching your fundraising goal, and one of the best paths is by focusing on donor retention.

Prioritizing donor retention in your fundraising program allows you to decrease your donor acquisition costs and increase the lifetime value of your existing donors. Having a community of donors committed to your cause for the long haul is every nonprofit’s dream—a higher donor retention rate will help you make that dream a reality.

Even better? Increasing donor retention can actually be fun! That’s because donor stewardship (AKA thanking your donors) can be a highly effective donor stewardship strategy. Let’s get into the nuts and bolts of how you can implement thank yous as a donor retention strategy.

Why donor retention matters to nonprofits

Good donor management is essential for modern fundraising programs. This means that your organization is proactively cultivating stronger donor relationships with the intention of bringing donors (of all sizes!) through the development cycle. One of the goals of the development cycle is certainly getting a gift. But another goal of the development cycle is continuously building donor relationships so that loyal supporters stick around.

However, despite a lot of fundraising efforts on the part of nonprofits, donor retention for most nonprofits hovers about 45%, according to the Fundraising Effectiveness Project. That means having to find replacements for the 55% of vanishing donors to offset the donor attrition rate, which can be very expensive. And that's just to stay stable... for true growth, you need to attract even more donors!

What’s more, the Fundraising Effectiveness Project has reported that the recapture rate for lapsed donors is extremely low. We’re talking about 4%. So if part of your fundraising strategy rests on reactivating lapsed donors, it might be time for a reality check.

Now, that percentage of donors within the 45% combines both new and repeat donors. But when broken into donor segments, the Fundraising Effectiveness Project reported that the average donor retention rate for new donors is 20.3% and the average donor retention rate for repeat donors is 61.3%. This tells us that getting the second gift is essential and it increases the odds of retaining that donor by a significant amount.

Donor attrition is (in most cases) Very Preventable

Dr. Adrian Sargeant is one of the sector’s foremost researchers on donor retention. In his study, “Managing Donor Defection,” he found that aside from death and financial difficulties, common reasons for donors lapsing are very preventable. This study is behind a paywall, but Julia Campbell has summarized Dr. Sargeant's findings for you.

• 5% – thought charity did not need them
• 8% – no info on how monies were used
• 9% – no memory of supporting
• 13% – never got thanked for donating
• 16% – death
• 18% – poor donor experience or communication
• 36% – others more deserving
• 54% – could no longer afford

Of these 8 reasons for lapsing, 5 can be easily remedied by using donor stewardship as a retention strategy. Specifically: thought charity did not need them; no info on how monies were used; no memory of supporting; never got thanked for donating; poor donor experience or communication. These common reasons for donors lapsing can all be solved with better communication and more focus on relationships with donors.

The #1 secret to long-term donor retention

Here's your new, one-tactic donor retention plan: Turn your first-time donors into recurring donors.

Monthly donors are one of the most valuable assets to any organization. Not only does their commitment show that they truly believe in your mission, but it also provides a steady source of income, which can help to fund all sorts of activities and initiatives.

One of the best ways to ensure that your first-time donors become loyal donors is by using Funraise's recurring upgrade feature on your digital donation forms. It shows potential donors a better way to support: Instead of giving a lump sum, they can commit to smaller monthly donations that will have a larger long-term effect.

Additionally, an engaged donor base is a group will have strong relationships with your organization. Yet another big plus to pushing for a flourishing recurring plan? You can spend more time cultivating your major donors. 

How to calculate your nonprofit's donor retention rate

To start working on your donor retention rate, your nonprofit needs to know its current donor retention rate. Consider this your baseline. If you can use your donor database to calculate the donor retention rate for a few years prior, you can start to get an idea of your nonprofit retention rate trendline—that’s helpful for future goal setting. And remember, setting aside outliers like major donors is a good idea so you can get the most accurate retention rate.

The basic formula for calculating donor retention is:

As an example, calculating donor retention for 2019 would be the following formula:

If you use a donor management software like Funraise, pulling these data points should be fairly straightforward. Some donor management software options, like Fundraising Intelligence, may even give you your retention rate in real-time on a dashboard.

Donor stewardship ideas

There are lots of ways to approach donor stewardship; where should your nonprofit start if you want to use thank you's as a donor retention strategy? An easy way to build a donor engagement strategy around donor stewardship is to build a donor stewardship matrix. A donor stewardship matrix basically lays out which stewardship touchpoints each segment of donors will receive. The donor stewardship matrix should include immediate gift follow-up and ongoing stewardship after the immediate gift follow-up. By including both of these elements, you’ll thank donors quickly and build a relationship between one gift and the next donation request.

The best part about a donor stewardship matrix is that you can set up Donation Tasks in Funraise to automatically trigger as donors hit these milestones. You can assign a portfolio of donors to each of your team members based on their giving behavior. And best of all, as these tasks are fulfilled, you can see the interactions in each donor's profile, providing robust and clear donor engagement history.

Here’s an example of a donor stewardship matrix from Training Resources for the Environmental Community.

Thank You Letters to Donors

Thank you notes for donations are often the first stewardship touchpoint that donors will receive. If they make a gift through an online donation form, you can likely set up your donor management software to automatically send out an email thank you letter. If you receive an offline donation in the mail, your nonprofit's thank you letter may take several business days to reach the donor, which is all the more reason to make it a memorable letter.

A great donation thank you letter includes the following:

• Acknowledgment of the gift and gift amount
• Reference the donors’ history with the organization (ie “Thank you for being a donor since 2015”)
• A short vignette or quote that connects donors to the impact of their gift
• Uses donor-centered language (ie “Because of your support..”)

Here’s a great donor thank you letter example from Keep Truckee Meadows Beautiful

Through pictures and vivid language, this donor thank you letter from Keep Truckee Meadows Beautiful does a wonderful job of helping donors see their impact and understand why their donation was so important to the organization.

Donor Appreciation Events

Donor appreciation events can be another great addition to your donor stewardship plan for donor retention. These days, donor appreciation events can be virtual or in-person. An appreciation event programming should be centered around donor impact. This means stories about what donors made possible. These stories can come from clients, beneficiaries, or frontline staff members. The key is to avoid a bunch of speeches that just focus on how great your organization is; this can quickly alienate the people you most want to thank.

Donor appreciation events can be a great opportunity to include donors’ families, especially if you have donors who have younger children or adult dependants. Fundraising events can be a great way for donors to share their philanthropy with their loved ones; plus, you'll get higher attendance rates if it means that donors don’t have to find carers for their dependants. For instance, a nonprofit housing society could host a holiday donor appreciation event where donors gather to build gingerbread houses and hear stories from housing residents.

Impact Stories in Donor Stewardship

Another staple of your donor stewardship should be impact stories. In addition to sharing an impact story in a thank you letter, you can integrate impact stories into newsletters, social media, annual reports, thank you pages, and more. The benefit of sharing impact stories is that they very clearly help donors understand their impact, which is what many donors want to know about after they've made a donation.

Showcasing impact stories that tell a donor’s story is another way to talk about impact with your donor community. These kinds of donor stories provide social proof for giving and can be a great way to recognize a donor’s contribution.

Inspiring Donor Stewardship FTW

The best donor stewardship inspires donors, puts a smile on their faces, and makes them glad they made a donation. There are endless ways to bring a little surprise and delight into your donor stewardship. This could be literal (like tucking a confetti packet into a thank you card) or figurative (like through the tone you strike in your copy or images).

Tapping into an awareness day, holiday, or season theme is a great way to make your stewardship a little more special. Here are a few resources you may want to check out:

• 50+ Spring Fundraising Ideas (plus a downloadable Spring Fundraising calendar!)
• Holiday-Themed Stewardship Ideas to Delight Your Donors and Bring in the Donations
• Donor Stewardship Ideas for International Women’s Day
• Advice from Experts: Your Guide to Donor Retention

Bottom Line: Lean into your data and your creativity to increase your nonprofit's donor retention rate

Prioritizing donor retention and building a donor retention strategy should be an essential part of any fundraising plan. And a truly great donor retention strategy is part science and part art. Using the power of your data from inside your donor management software and bringing in creativity to how you execute stewardship touchpoints, you can create a truly robust and effective donor retention strategy. Data alone can take you far and creativity alone can get you somewhere, but by combining both into one solid strategy you can make significant strides towards increasing your donor retention rate and the amount of money your nonprofit can raise.