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 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 they stick around.
However, despite a lot of effort on the part of nonprofits to raise the big bucks, 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 45% average donor retention rate for the sector combines both new and repeat donors. But when segmented, 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 Big Duck 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 service 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 service or communication. These common reasons for donors lapsing can all be solved with better communication and donor stewardship.
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 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.
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 retention 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 ask.
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
A donation thank you letter is often the first stewardship touchpoint that donors will receive. If they make an online donation, 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. 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. The Truman Heartland Community Foundation has some great examples of donor stories and impact stories.
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:
- 4 Ways to Thank Your Donors on Valentine’s Day
- 15 Spring Fundraising Ideas for 2021 (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
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.