Every nonprofit gets new donors every year. And, every nonprofit loses donors. Every year. Donors lapse for a great variety of reasons, many of which have nothing to do with what you’re doing. For example, they might move far away and stop giving to a local nonprofit. Other donors stop giving for reasons you might be able to influence. Also, frankly, most donors don’t even realize that they were expected to give again. To them, they gave once and that was enough.
But regardless of the reasons, tracking how many donors lapse each year tells you something about how well your mission is connecting with donors on a deep enough emotional level to motivate them to continue giving.
This is the reason to track your lapsed donors. It’s especially valuable when you can track it over several years, because you’ll notice if there are any significant changes in your lapsed donor rates, and you can investigate what may be causing them to increase or decrease.
In this latest entry in our Data Storytelling Series, you’re going to see how to use the lapsed donor metric to inform your team and your board how well your work is connecting with donors.
What Are Lapsed Donors?
A lapsed donor is any donor who gave money to a nonprofit one year but then didn’t give the following year.
You could alter this definition based on other factors. For example, a monthly donor who stops giving monthly could be considered lapsed just one month later. You could also measure lapsed by a longer timeline, such as two or three years, because some donors give irregularly and it doesn’t always happen every year, though they still consider themselves supporters.
But in general, the simplest way to measure this is to look at each year’s donor list and measure lapsed donors from the previous year. If you use a longer timeline, as long as you’re consistent, the data will be just as meaningful.
How to Calculate the Lapsed Donor KPI
Calculating lapsed donors requires having donor IDs and donation dates for at least the last two full years.
Tabulate all the donors from one year. Then, see which of those donor IDs do not show up the following year. That number is your number of lapsed donors. For example, suppose you had 1000 donors last year, and 600 of those donated again this year. That would mean you have 400 lapsed donors.
You could also turn it into a lapsed donor rate by dividing the number of lapsed donors by the total number of donors from the previous year. Using the previous example, simply divide 400 by 1000, and you have a 40% lapsed donor rate.
What Lapsed Donors Tell You
If you’re able to measure your lapsed donors over several years, you’ll likely observe one of two scenarios.
The first is that you might see a fairly consistent lapsed donor rate. It’s quite common for nonprofits to lose over half their donors each year, and most of these are first-time donors, but a good number of them will also be people who have given more than once.
If you see about the same percentage of lapsed donors each year, that tells you that what you’re doing – or not doing – is producing consistent results in terms of donor retention.
The other possibility is that your lapsed donors change from year to year.
You might see more and more lapsed donors each year, a bad sign because it means your message and mission are failing to connect with new donors. You might see fewer lapsed donors each year, which would mean the opposite. Or, it might fluctuate without a pattern year to year.
Whichever trends you observe, it’s important to keep in mind the strategies you can employ to motivate more donors to remain involved and keep giving.
Evaluate Your Fundraising Communications
If first-time donors aren’t giving a second time, that’s an indication something isn’t connecting after they gave. If it feels like too many one-time donors are lapsing, take a deep look at your fundraising communications, especially for new donors.
How often are they hearing from you? Are you beating them over the head with daily emails asking for more money? Are you disappearing, sending them nothing, not even a gift receipt? Somewhere in the middle? Communication frequency matters.
What you say matters too. Evaluate your messaging. Are you sending engaging content that gives them a chance to opt in with behaviors besides giving?
What channels are you using? Just email? Just social media? A mix?
Here are a few other ways to improve your outreach to new donors, as well as to lapsed donors. You don’t have to give up on donors just because they stopped giving.
Help Donors Get Inspired by Your Mission
Giving is an emotional act. It’s driven by some desire to make a difference in the world. For new donors especially, look for ways to draw them in and get them inspired about what you do. There are millions of nonprofits they could have given to. They chose yours for a reason.
If that reason can motivate them to give again, you want to build on their first gift. Give them something to cheer for. Something to celebrate. Draw them in with other opportunities and ways to participate. Clarify the needs they can meet. Make them feel good about their gift.
Show Gratitude
Make sure donors feel appreciated and thanked for giving. Always. It’s a simple thing, and its value isn’t just in the fact that it’s polite and professional. It also serves as a touchpoint. Rather than hearing nothing, they’re hearing something.
One aspect of nonprofit marketing that aligns with for-profit marketing is the idea of ‘touches’. People are busy and distracted, and you have to break through that. You have to get their attention, and then keep it long enough to be remembered. You have to become part of their lives.
You can’t do that sending three emails per year. They will forget you. So, sending a thank you email, and a thank you card if you can manage it, both count as additional touches that will solidify your organization’s place in their mind.
Demonstrate Impact – Show Donors They’re Making a Difference
Most of all, donors want to know their gift mattered. Make sure your fundraising communications consistently demonstrate what donors are accomplishing by giving.
If your mission resonates with them, and if they see you doing great things with the money they’ve given, they will be more likely to give again. Personal stories of impact are far more effective than sharing big numbers.
And to be clear, you’ll never have zero lapsed donors. But this is why you want to track the lapsed donor metric – because if you change your fundraising communications strategy and notice the percentages of lapsed donors declining a bit in the ensuing years, you’ll know your efforts are paying off.
The data will tell the story of how well your communications are retaining new and repeat donors.
Personalize It
Lastly, the more you can personalize your outreach to new donors and lapsed donors, the more effective your efforts will be.
Thinking about actual lapsed donors now, what kinds of messages, and using which communication channels, could you use to reach out to them in a more personal way? A few ideas:
- Find when they first gave and reference that day in your communications
- Call them if you have their number – maybe save this for lapsed donors who gave above a certain amount
- Contact them in a different channel than the one you usually use
- Separate one-time donors from lapsed repeat donors in your mailing lists
- Ask what motivated them to give the first time
Limitations of This Metric
Like most fundraising metrics, lapsed donors reveal helpful information but also don’t tell the full picture. It’s important to know both categories so you’ll know the other metrics that pair up nicely with this one.
Here are the shortcomings of the lapsed donor metric.
Misidentifies infrequent donors
As mentioned earlier, some donors don’t give every year but still consider themselves supporters. They might be actively engaged with your fundraising communications. They might even be volunteering, advocating, or helping in other ways – but just not giving money every year.
So you need to be careful when running lapsed donor campaigns. It would be quite embarrassing to send an email asking “Where are you?” to someone who is actively volunteering and just helped at the annual gala.
It’s worth the time to make sure everyone you’re labeling as a lapsed donor really has disengaged from your organization. If they’re still opening and clicking on emails and liking social posts, they might still consider themselves supporters.
Ignores donation amounts
A one-time donor who gives $50,000 but then lapses is a lot different from another one-time donor who gives $10.
You wouldn’t want to run the same outreach campaign to both these donors. Not even close. But the lapsed donor metric doesn’t take donation amount into consideration. It’s worth it to segment your lapsed donors by giving amounts. This is another aspect of personalization.
Leaves out new donor acquisition
Donor acquisition is the flipside of lapsed donors. Putting these together is called donor churn, another metric. If you lose 500 donors, but gain 700 the same year, your donor churn is positive, and you’re growing your donor base.
That doesn’t mean you should stop pursuing lapsed donors. But at least you know you’re not in a crisis. Looking only at the ‘bad news’ metrics doesn’t provide an accurate picture of your organization’s finances.
Lapsed donors also pair up with reactivated donors. Donor reactivation measures how many lapsed donors give again. All these metrics are calculated in seconds with the Fundraising Report Card.
Ways to Turn Lapsed Donors into Stories
Your board wants to know what’s going on, and showing them hard data is a great way to meet their expectations.
Using powerful data visualization such as what the Fundraising Report Card provides once you upload your data and join the community is a great way to do this. Our system allows you to create graphs and charts, color coded to your preferences, for all your lapsed donor data as well as numerous other fundraising metrics.
With this, you can tell your board the story about how you have improved outreach to lapsed donors the last few years. The graphs will show them how your efforts have reduced lapsed donors. Or, you can present them with the story before you begin making changes, as a rationale for making them.
For example, maybe the data shows a disturbing increase in lapsed donors the last few years. Each year is getting worse. You can show this data and then propose a course of action to address it. The graphs will make your case – the story will be staring at them.
Data tells the story of what’s really happening.
Find a Previous Lapsed Donor
You can also personalize the data storytelling experience for your board and team.
Find a donor who lapsed at one point, and who your team reached out to and succeeded in reactivating. Find out when they first gave, why they stopped, and why they decided to give again.
This story will serve as a case study that will reveal how your outreach to lapsed donors works, and how at least one person responded to it. The best such stories will result in a previously lapsed donor becoming a monthly donor, a major donor, or a planned giving donor.
See How Many Lapsed Donors You Have – in Seconds
You can spend hours combing through your donor database and hassling with spreadsheets. Or you can just upload your data to the Fundraising Report Card and get your lapsed donor data in seconds.
And it’s all anonymous. You only need three items:
- Donor ID numbers
- Donation dates
- Donation amounts
With those categories and nothing else, you’ll suddenly have access to a treasure trove of fundraising data you can use to tell your board what’s happening, and to improve your fundraising communications and effectiveness.
Try it out – upload your data today for free