It turns out there’s a lot more to donor retention rates than you thought.
On a surface level, donor retention tells you how many of your donors are returning to give again. According to the Fundraising Report Card’s data, donor retention rates have hovered in the mid-30% range for the last few years. This means, for many organizations, 60-70% of their donors each year are brand new.
But as you’re about to see, you can dive a lot deeper into this fundraising metric.
There are layers and flavors of donor retention, and it’s only when you start looking at the data at a deeper level that you can really begin to formulate strategies for increasing donor retention.
In other words – not all retained or potentially retained donors are the same. Learn the differences and how to keep them engaged, and you can increase your retention rates across the board.
Donor Retention Rate Basics
First, the basics. Donor retention is calculated by adding up the number of donors who gave last year, and then adding up the ones who gave again this year. Divide the repeat donors this year by the total donors last year, and that’s your donor retention rate.
You can also calculate it for different time periods, and you can begin your ‘year’ whenever you want. It doesn’t have to start on January 1st.
For example, suppose you had 1000 donors last year, and 400 of them gave again this year. That would be a donor retention rate of 40%.
Why Donor Retention Rates Matter
This is one of your most important fundraising metrics, for three reasons.
Indicates Level of Stability
Repeat donors provide a base of financial stability. These are the people you can count on. If you can look at your past donor retention data and see a consistent baseline of repeat donors, you have something to build on.
It doesn’t mean you can take all these donors for granted. You need to engage, nurture, and appreciate them or they will begin to drop off. But they give you a strong foundation.
Shows Effectiveness of Follow-Up Communication
Why do donors give again? Because something about your mission, cause, or organization motivated them to act. In most cases, your follow-up communication played a role in this. If a donor gives and hears nothing from the organization, the chances of them giving again are far lower than if you do something as simple as sending a thank you email or letter.
Any follow-up is better than no follow-up. Retained donors are the evidence of the effectiveness of your follow-up marketing efforts.
One study found that retention doubles when a first-time donor receives a simple hand-written thank you letter. Are you sending thank you notes?
Reveals Opportunities for Easier Growth
If your retention rate feels low, this could be your greatest potential source of increased revenue. Why? Because once a donor gives a second time, their chances of giving again after that go way up.
The same is true for turning them into a monthly donor. Once they see themselves as a supporter of your nonprofit, they are more likely to make giving a regular part of their life.
Hyper-Focused Categories of Donor Retention
The Fundraising Report Card breaks donor retention down into three much more specific categories. With these, you’ll be able to see your true strengths and weaknesses when it comes to donor retention. Then, you’ll know where to devote more effort to increasing donor loyalty.
Here are the three categories. And to be clear – you can see this data for your own organization simply by using this tool for yourself. And you can have it in minutes.
First-Time Donor Retention Rate
This is the one most people talk about. Every year, you get new first-time donors. For most organizations, the majority of these people never give again. For our data, the current retention rate for first-time donors across all the organizations using the Fundraising Report Card is about 20%.
Clearly, there’s a lot of room for improvement there.
Reactivated Donor Retention Rate
What about donors who gave previously but then lapsed? It’s a good strategy to try and re-engage donors who gave at least once but then stopped. Some of them will respond and start giving again – if only you reach out and pursue them.
But then the question is – how many of those re-activated donors will continue to give after that? That’s the meaning behind this metric.
The FRC’s data currently reports a reactivated donor retention rate of about 36%. That means 36 out of 100 reactivated donors gave yet again after being reactivated.
That’s a very good sign. It means reaching out to lapsed donors is a smart investment of fundraising dollars. Not only are organizations that prioritize this succeeding at it, but in over one third of cases, the donors they reactivate also end up giving again.
That means these donors have given at least three times. They gave earlier, and then lapsed. Then, they gave when reactivated. And then they gave again, counting as a retained and reactivated donor.
Repeat Donor Retention Rate
Next, how many retained donors remain retained. Yes, it’s starting to sound circular, but it isn’t. We’re talking about donor loyalty.
These are donors who gave, gave again, and then continued to give without lapsing. These are your loyal rock star donors.
Data from the Fundraising Report Card says that 54% of retained donors will continue to give again this year.
As you can see, donor retention increases the more gifts a person gives to an organization. And each of these three types of donor retention rates merits its own plan for strategic follow-up and cultivation. We’ll talk about that in a moment.
Visualizing Retention Metrics Over Time
To have a clear sense of how your organization is doing with donor retention, you can’t just look at it for one year. You need to be able to see trends over multiple years. Then, you can begin to see the effects of things like fundraising events, Giving Tuesday, year-end appeals, major gifts fundraising, and your other campaigns and appeals throughout the year.
Using data visualization from the Fundraising Report Card tool, you can quickly update and generate graphs and charts showing your donor retention data over several years.
Is it going up or down over time? Is it bumping all over the place with no regular pattern? And how are the hyper-focused categories of donor retention doing?
You might discover that your organization has a flat first-time donor retention rate, but a continuously rising repeat donor retention. That would indicate your retention efforts are working well for your repeat donors, but that you’re failing to make much of an impact with first-time donors.
Now you know where you need to devote more attention.
Strategies to Improve Donor Retention Rates
Let’s briefly touch on several things you can do to raise your donor retention rate. You may find some of these to be more effective with the different retention rate categories discussed earlier.
Thank Them – Use Multiple Channels
This is of course easy to say. But guess what? It’s also easy to do. Thanking is easy. You just have to make it a priority.
Begin with the easiest one of all – an automated thank you email. Once this is set up, you don’t even have to think about it, and the donor feels their gift was appreciated.
But you can also send thank you letters, which as mentioned earlier led to a doubled retention rate in one study. Letters can be cards, postcards, or full-page letters. And you can send personalized emails that may include more details about their specific gift, or perhaps even a short video.
If you have their phone number and permission to text them, you can use SMS. You can also use social media and instant messaging if they’re following you on there.
And you can call them.
Make Calls to First-Timers
Remember – first-time donors have the worst retention rate. If you could raise this from 20% to 25%, and if you have a lot of donors, that could make a sizable impact to your long-term revenue. Especially if you later succeed at turning these donors into monthly or major donors.
One study found that calling within 48 hours of a first-time gift led to a fourfold increase in a second gift. That’s huge!
Communicate Impact Consistently
A well-known study by Adrian Sargeant revealed five reasons people stop giving that you can actually do something about. These were:
- Thought the nonprofit didn’t need them
- Received no information on how their gift was used
- Forgot they gave to that organization
- Never got thanked for giving
- Had a poor communication or giving experience
Thanking donors sincerely will obviously address the fourth item in that list, and to some degree items three and five.
But what do you say in your follow-up communication to donors? And how often do you stay in touch?
Donors need to hear from you on a regular basis. Put effort into talking about the difference their giving makes. Show impact. Tell stories. Give real examples of lives changed and worlds improved because of their gift. Tell them where their money is going.
Segment Donors for More Relevance
Not all donors should receive the same communication from you. It takes more work to segment, but you can communicate with much greater relevance and personalization if you break donors up into categories. Here are a few ways to do this:
- Size of gift – speak differently to donors who give larger gifts
- Frequency of gift – make monthly donors feel especially important and appreciated
- Demographics – speak to younger donors differently than retired donors
- Length of relationship – new vs long-time donors
- Programs of interest – talk about things donors have indicated matter to them
This could mean having slightly different versions of an email for each segment. It could mean some people get a printed newsletter, while others do not. It might mean using different language, or talking about your mission in different terms so donors feel like they are part of a group of similarly minded people.
Use Their Preferred Channels
If you can get information from donors indicating how they prefer to communicate, make that another type of segment. For instance, when a donor gives, ask if they want to be on your SMS list. Anyone signing up for that probably prefers SMS to email. So, send them texts in addition to emails.
Others might follow you on social media and communicate and give through that channel. That indicates they prefer that over email or other channels. You’ll connect more if you communicate with the media they use and prefer.
Celebrate Giving Milestones
Donors feel known if their past giving is remembered. Set up your CRM to send out a thank you email recognizing a past gift anniversary or other type of milestone.
Make Monthly Giving Easy
On your donation page, you should have buttons giving the choice of a one-time gift or a monthly gift. That choice makes it clear that monthly giving is a great and easy option for supporting your nonprofit organization.
If you make it easy, more people will do it.
Track Your Donor Retention Data
Lastly, don’t forget to track your data! That’s how you’ll know if your efforts to improve donor retention are working.
Tracking donor retention rates could not be easier than with the Fundraising Report Card. All you have to do is upload three categories of data – donor IDs, donation amounts, and donation dates – and our system will produce a wide array of data visualizations for numerous fundraising metrics, including donor retention.
You can customize your graphs and charts by whatever time periods you want. And you can customize them with colors and other design elements to make them appealing to your team, board, and anyone else who would benefit from seeing your data.